ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and is entered into this
_____ day of ___________________, 2000, by, between and among XXXXXXX COMPUTER
RESOURCES, INC., a Delaware corporation ("Purchaser No. 1"), XXXXXXX SELECT
INTEGRATION SOLUTIONS, INC. ("Purchaser No. 2"), DATANET, INC., a North Carolina
corporation ("DataNet"), DATANET TECHNICAL SERVICES, LLC, a North Carolina
limited liability company ("DTS"), DATANET TANGIBLE PRODUCTS, LLC, a North
Carolina limited liability company ("DTP"), and DATANET PROGRAMMING, LLC, a
North Carolina limited liability company ("DP") (DataNet, DTS, DTP and DP
hereinafter referred to collectively as the "Sellers" and individually as the
"Seller"), XXXXXXX XXXXX ("X. Xxxxx"), XXXXXXX XXXXX ("X. Xxxxx"), XXXXXXX
XXXXX ("X. Xxxxx") and XXXXXXX XXXXXXXXXX ("X. Xxxxxxxxxx")(X. Xxxxx, X. Xxxxx,
X. Xxxxx and X. Xxxxxxxxxx hereinafter referred to collectively as the
"Shareholders" and individually as the "Shareholder").
W I T N E S S E T H :
WHEREAS, DataNet is a full service provider of a variety of computer service and
support solutions to large and medium size commercial, governmental and other
professional customers throughout the Raleigh, North Carolina Metropolitan area;
and
WHEREAS, Shareholders are the owners of Three Thousand Five Hundred Ninety-Nine
(3,599) shares of the outstanding stock of DataNet, in the following
proportions: X. Xxxxx - 2774 shares, X. Xxxxx - 375 shares, X. Xxxxx - 375
shares and X. Xxxxxxxxxx - 75 shares, which stock constitutes substantially all
of the outstanding stock of Seller; and
WHEREAS, DataNet owns One Hundred Percent (100%) of all the membership interests
in DTS, DTP and DP, which entities provide certain technical, selling and
programming services, respectively, for DataNet.
WHEREAS, Purchaser No. 1 is in the business of marketing and selling a broad
range of microcomputers and related products including equipment selection,
procurement and configuration; and
WHEREAS, Purchaser No. 2, a wholly-owned subsidiary of Purchaser No. 1, is a
single source provider of integrated desktop management and network services
including life cycle services, internetworking services, and end user support
services; and
WHEREAS, Purchaser No. 1 desires to purchase certain of the assets of the
Sellers used in their business of marketing and selling a broad range of
microcomputers and related products including equipment selection, procurement
and configuration ("Business No. 1") and assume certain of the liabilities of
the Sellers in connection with Business No. 1 and Purchaser No. 2 desires to
purchase certain of the assets of the Sellers used in their integrated desktop
management and network services business ("Business No. 2") and assume certain
of the liabilities of the Sellers in connection with Business No. 2; and Sellers
desire to sell certain of such assets, subject to such liabilities, but only (i)
upon the terms and subject to the conditions set forth in this Agreement, (ii)
the representations, warranties, covenants, indemnifications, assurances and
undertakings of each Seller, each Shareholder and of Purchaser No. 1 and
Purchaser No. 2 contained in this Agreement, (iii) the agreement of each Seller
to refrain from competition with Purchaser No. 1 and Purchaser No. 2 for five
(5) years from the Closing of this transaction, (iv) the agreement of X. Xxxxx
to refrain from competition for the later of five (5) years from the Closing
Date or one (1) year after the termination of his employment with Purchaser No.
1 pursuant to and in accordance with, the terms of his Employment Agreement to
be executed upon Closing, and (v) the agreements of X. Xxxxx, X. Xxxxx and X.
Xxxxxxxxxx to refrain from competition for the later of three (3) years from the
Closing Date or one (1) year after the termination of each of said respective
individual's employment with Purchaser No. 1 pursuant to and in accordance with
the terms of his respective Employment Agreement to be executed upon Closing.
NOW, THEREFORE, in consideration of the above premises and the mutual promises,
covenants, agreements, representations and warranties herein contained, the
parties hereto agree as follows:
1.
DEFINITIONS
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1.1 Affiliate. "Affiliate" shall have the meaning ascribed to such term in Rule
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405 promulgated under the Securities Act of 1933, as amended.
1.2 Assumed Liabilities No 1. The "Assumed Liabilities No. 1" are the
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liabilities of each Seller assumed or paid at Closing by Purchaser No. 1
pursuant to Section 3.1 of this Agreement.
1.3 Assumed Liabilities No 2. The "Assumed Liabilities No. 2" are the
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liabilities of each Seller assumed or paid at Closing by Purchaser No. 2
pursuant to Section 3.2 of this Agreement.
1.4 Balance Sheet. The "Balance Sheet" is the audited balance sheet of DataNet
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as of December 31, 1999, included as part of the Financial Statements.
1.5 Closing. The "Closing" shall be the consummation of the transactions
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contemplated under this Asset Purchase Agreement.
1.6 Closing Date. The "Closing Date" shall be as of 9:00 a.m., E.D.T., July 28,
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2000.
1.7 Code. The "Code" is the Internal Revenue Code of 1986, as amended, 26
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U.S.C. 1 et seq.
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1.8 Court. A "Court" is any federal, state, municipal, domestic, foreign or
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other governmental tribunal or an arbitrator or person with similar power
or authority.
1.9 Disclosure Schedule. The "Disclosure Schedule" is the Disclosure Schedule
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dated the date of this Agreement and delivered by each Seller to Purchaser
No. 1 and Purchaser No. 2, respectively.
1.10 Encumbrance. An "Encumbrance" is any security interest, lien, or
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encumbrance whether imposed by agreement, understanding, law or otherwise,
on any of Purchased Assets No. 1 and/or Purchased Assets No. 2 (as defined
herein).
1.11 Excluded Assets. An "Excluded Asset" is any asset set forth in Section 2.4.
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1.12 Financial Statements. The "Financial Statements" are the audited financial
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statements of DataNet for the year ended December 31, 1999, to be issued
after the Closing of this transaction, including any and all notes thereto,
and the unaudited financial statements of DTS, DTP and DP for the year
ended December 31, 1999, including any and all notes thereto, and the
unaudited financial statements of DataNet for the year ended December 31,
1998, including any and all notes thereto.
1.13 Funded Debt of Business No. 1. "Interest Bearing Debt" of each Seller
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related to Business No. 1 as reflected on the Pro Forma Balance Sheet No.
1.
1.14 Funded Debt of Business No. 2. "Interest Bearing Debt" of each Seller
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related to Business No. 2 as reflected on the Pro Forma Balance Sheet No.
2.
1.15 Governmental Entity. A "Governmental Entity" is any Court or any federal,
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state, municipal, domestic, foreign or other administrative agency,
department, commission, board, bureau or other governmental authority or
instrumentality.
1.16 Knowledge of Any Seller and Shareholders or Sellers' Knowledge. "Knowledge
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of Seller and Shareholders and/or Sellers' Knowledge" shall mean actual
knowledge of any Shareholder or Member.
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1.17 "Members" or "Member" shall mean DataNet, Inc., the owner of 100% of the
membership interest of DTS, DTP and DP.
1.18 Net Asset Amount No. 1. "Net Asset Amount No. 1" shall have the meaning set
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forth in Section 5.1.
1.19 Net Asset Amount No. 2. "Net Asset Amount No. 2" shall have the meaning set
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forth in Section 5.1.
1.20 1999 NPBT. The net profit before taxes of DataNet for the period commencing
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January 1, 1999 and ending December 31, 1999, as set forth in Section 5.2.
The determination of the 1999 NPBT of DataNet shall be determined in
accordance with the provisions set forth in Section 5.2.
1.21 NPBT. The net profit before taxes of Purchaser No. 1's Raleigh, North
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Carolina Division and Purchaser No. 2's Raleigh, North Carolina Division
for the applicable period as set forth in Section 4.6. The determination of
NPBT shall be determined in accordance with the provisions set forth in
Section 4.6.
1.22 Person. Any natural person, firm, partnership, association, corporation,
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company, limited liability company, limited partnership, trust, business
trust, governmental authority or other entity.
1.23 Pro Forma Balance Sheet No. 1. The "Pro Forma Balance Sheet No. 1" is the
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balance sheet of each Seller prepared as described in Section 5.1 and
adjusted for Excluded Assets of each Seller and Excluded Liabilities
relating to Business No. 1 of each Seller as of the Closing Date.
1.24 Pro Forma Balance Sheet No. 2. The "Pro Forma Balance Sheet No. 2" is the
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balance sheet of each Seller prepared as described in Section 5.1 and
adjusted for Excluded Assets of each Seller and Excluded Liabilities
relating to Business No. 2 of each Seller as of the Closing Date.
1.25 Purchase Price No. 1. The "Purchase Price No. 1" is the total consideration
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paid by Purchaser No. 1 to each Seller for Purchased Assets No. 1 as set
forth in Sections 4.1 and 4.6.
1.26 Purchase Price No. 2. The "Purchase Price No. 2" is the total consideration
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paid by Purchaser No. 2 to each Seller for Purchased Assets No. 2 as set
forth in Sections 4.1(f), 4.2 and 4.6
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1.27 Purchased Assets No. 1. The "Purchased Assets No. 1" are the assets of each
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Seller, used in Business No. 1, acquired by Purchaser No. 1 pursuant to the
terms of this Agreement.
1.28 Purchased Assets No. 2. The "Purchased Assets No. 2" are the assets of each
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Seller, used in Business No. 2, acquired by Purchaser No. 2 pursuant to the
terms of this Agreement.
1.29 DataNet's Accountant. "DataNet's Accountant" shall mean Xxxxx Xxxx, PLLC.
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1.30 December 31st Pro-Forma Balance Sheet No. 1. The "December 31st Pro-Forma
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Balance Sheet No. 1" is the unaudited balance sheet of each Seller on a
consolidated basis adjusted for Excluded Assets of each Seller and Excluded
Liabilities relating to Business No. 1 of each Seller as of December 31,
1999.
1.31 December 31st Pro-Forma Balance Sheet No. 2. The "December 31st Pro-Forma
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Balance Sheet No. 2" is the unaudited balance sheet of each Seller on a
consolidated basis adjusted for Excluded Assets of each Seller and Excluded
Liabilities relating to Business No. 2 of each Seller as of December 31,
1999.
1.32 Tax or Taxes. Any federal, state, provincial, local, foreign or other
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income, alternative, minimum, any taxes under Section 1374 of the Code, any
taxes under Section 1375 of the Code, accumulated earnings, personal
holding company, franchise, capital stock, net worth, capital, profits,
windfall profits, gross receipts, value added, sales, use, goods and
services, excise, customs duties, transfer, conveyance, mortgage,
registration, stamp, documentary, recording, premium, severance,
environmental, including taxes under Section 59A of the Code), real
property, personal property, ad valorem, intangibles, rent, occupancy,
license, occupational, employment, unemployment insurance, social security,
disability, workers' compensation, payroll, health care, withholding,
estimated or other similar tax, duty or other governmental charge or
assessment or deficiencies thereof (including all interest and penalties
thereon and additions thereto whether disputed or not).
1.33 Tax Return. A "Tax Return" is a report, return or other information
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required to be supplied to a Governmental Entity in connection with Taxes
including, where permitted or required, combined or consolidated returns
for any group of entities that includes any of the Sellers.
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2.
TERMS
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2.1 Agreement.
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Each Seller agrees to sell and convey to Purchaser No. 1 the Purchased
Assets No. 1 as hereinafter set forth in Section 2.2 owned by such entity.
Each Seller agrees to sell and convey to Purchaser No. 2 the Purchased
Assets No. 2 as hereinafter set forth in Section 2.3 owned by such entity.
Purchaser No. 1 agrees to purchase the Purchased Assets No. 1 and Purchaser
No. 2 agrees to purchase the Purchased Assets No. 2. The agreements of
Purchaser No. 1 and Purchaser No. 2 and each Seller are expressly
conditioned upon the terms, conditions, covenants, representations and
warranties as hereinafter set forth.
2.2 Assets to be Sold by Each Seller and Purchased by Purchaser No. 1.
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At the Closing of this Agreement, Purchaser No. 1 shall purchase and each
Seller shall sell all the assets of such Seller used in Business No. 1,
except for the Excluded Assets relating to Business No. 1. The Purchased
Assets No. 1 shall include, but not be limited to:
(a) The tangible personal property and assets of each Seller of every kind
and description, real, personal or mixed, wherever located, used in
Business No. 1, including without limitation, all such assets as
reflected on the December 31, 1999 Pro Forma Balance Sheet No. 1
(excepting those assets disposed of, and including those assets
acquired, in the ordinary course of business since the date of the
December 31, 1999 Pro Forma Balance Sheet No. 1).
(b) All intangible assets of each Seller which are used in Business No. 1
of Sellers, including without limitation, all purchase orders,
contract rights and agreements, work in process, customer lists,
supplier agreements, patents, trademarks and service marks (including
the goodwill associated with the marks), office supplies, computer
programs, claims of each Seller, the right to use of the corporate and
trade names of or used by each Seller, or any derivative thereof, as
all or part of a corporate or trade name;
(c) All investment securities, cash and cash equivalents and customer
notes receivable relating to Business No. 1;
(d) All inventory of Business No. 1 which shall be valued on a moving
average basis at the lower of cost of acquisition, less any trade or
cash discounts, or market;
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(e) All accounts receivable and vendor receivables relating to Business
No. 1;
(f) Certain vehicles of each Seller set forth on attached Exhibit A;
(g) All prepaid expenses applicable to Business No. 1, including but not
limited to all prepaid software licenses;
(h) All vendor rebates, spiff money, retainage amounts under any contracts
and any customer deposits relating to Business No. 1;
(i) All distribution contracts and authorizations of each Seller relating
to Business No. 1;
(j) All base artwork, photo materials, plates (if owned by such Seller),
separations and other materials that are used by such Seller for
printing brochures and promotional materials including all
intellectual property rights therein relating to Business No. 1;
(k) The assignment of any telephone numbers used in Business No. 1 of each
Seller;
(l) The entire right, title, benefit and interest of each Seller now
existing or hereafter arising, in or to all indemnities, guaranties,
warranties, claims and choses of action of each Seller against other
parties with respect to Purchased Assets No. 1, including by way of
example and not limitation, any rights under insurance policies and
any other rights thereunder, but only with respect to Purchased Assets
No. 1;
(m) Each Seller's rights under the agreements set forth in Schedule 2.2(m)
with respect to the parties set forth therein, pursuant to which such
parties agreed not to disclose, use or communicate information
regarding such parties' business (which is part of Business No. 1) and
not to engage in certain activities competitive with Business No. 1.
(n) All other fees, assets, property, business and going concern value,
and rights of each Seller (including the rights under covenants or
agreements not to disclose confidential information or not to compete,
if any) and rights under the respective asset purchase agreements,
stock purchase agreements or other documents set forth on Disclosure
Schedule 2.2(n) (and related documents) pursuant to which such Seller
acquired certain of the assets of the parties set forth in such
Disclosure Schedule.
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2.3 Assets to be Sold by Each Seller and Purchased by Purchaser No. 2.
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At the Closing of this Agreement, Purchaser No. 2 shall purchase and each
Seller shall sell all the assets of such Seller used in Business No. 2,
except for the Excluded Assets relating to Business No. 2. The Purchased
Assets No. 2 shall include, but not be limited to:
(a) The tangible personal property and assets of each Seller of every kind
and description, real, personal or mixed, wherever located, used in
Business No. 2, including without limitation, all such assets as
reflected on the December 31, 1999 Pro Forma Balance Sheet No. 2
(excepting those assets disposed of, and including those assets
acquired, in the ordinary course of business since the date of the
December 31, 1999 Pro Forma Balance Sheet No. 2).
(b) All intangible assets of each Seller which are used in Business No. 2
of the Sellers, including without limitation, all purchase orders,
contract rights and agreements, work in process, customer lists,
supplier agreements, patents, trademarks and service marks (including
the goodwill associated with the marks), office supplies, computer
programs, claims of each Seller, the right to use of the corporate and
trade names of or used by each Seller, or any derivative thereof, as
all or part of a corporate or trade name;
(c) All investment securities, cash and cash equivalents and customer
notes receivable relating to Business No. 2;
(d) All inventory of Business No. 2 which shall be valued on a moving
average basis at the lower of cost of acquisition, less any trade or
cash discounts, or market;
(e) All accounts receivable and vendor receivables relating to Business
No. 2;
(f) Certain vehicles of each Seller set forth on attached Exhibit A-1;
(g) All prepaid expenses applicable to Business No. 2, including but not
limited to all prepaid software licenses;
(h) All of each Seller's fixed rate contracts and time and material
contracts relating to Business No. 2;
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(i) All vendor rebates, spiff money, retainage amounts under any contracts
and any customer deposits relating to Business No. 2;
(j) All of each Seller's service contracts relating to Business No. 2;
(k) All distribution contracts and authorizations of each Seller relating
to Business No. 2;
(l) All base artwork, photo materials, plates (if owned by such Seller),
separations and other materials that are used by each Seller for
printing brochures and promotional materials including all
intellectual property rights therein relating to Business No. 2;
(m) The assignment of any telephone numbers used in Business No. 2 of each
Seller;
(n) The entire right, title, benefit and interest of each Seller now
existing or hereafter arising, in or to all indemnities, guaranties,
warranties, claims and choses of action of each Seller against other
parties with respect to Purchased Assets No. 2, including by way of
example and not limitation, any rights under insurance policies and
any other rights thereunder, but only with respect to Purchased Assets
No. 2;
(o) Each Seller's rights under the agreements set forth in Schedule 2.3(o)
with respect to the parties set forth therein, pursuant to which such
parties agreed not to disclose, use or communicate information
regarding such parties' business (which is part of Business No. 2) and
not to engage in certain activities competitive with Business No. 2;
and
(p) All other fees, assets, property, business and going concern value,
and rights of each Seller (including the rights under covenants or
agreements not to disclose confidential information or not to compete,
if any) and rights under the respective asset purchase agreements,
stock purchase agreements or other documents set forth on Disclosure
Schedule 2.3(p) (and related documents) pursuant to which such Seller
acquired certain of the assets of the parties set forth in such
Disclosure Schedule.
2.4 Excluded Assets.
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The Excluded Assets are set forth on Exhibit B hereto.
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2.5 Lease Agreements.
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Each Seller, singly and/or jointly, is/are the lessee(s) under certain
lease agreements calling for payments of more than $5,000.00 per year
covering the following real and personal properties:
(i) None
At the Closing, each Seller and Purchaser No. 1 or Purchaser No. 2 shall
execute necessary documentation for the assignment of these leases and all
of each Seller's right and interest thereunder to Purchaser No. 1 and/or
Purchaser No. 2, as agreed upon by the parties and, at the Closing, each
Seller shall assign all its respective rights and interest in said leases
to Purchaser No. 1 and/or Purchaser No. 2, as applicable. Purchaser No. 1
and Purchaser No. 2 agree to indemnify and hold each Seller harmless from
any liability with respect to the aforementioned leases occurring after the
Closing Date which is assumed by such party. To the extent that the
assignment of any lease shall require the consent of other parties thereto,
this Agreement shall not constitute an assignment thereof and each Seller
shall obtain any such necessary consents or assignments by the Closing, or
as reasonably possible after the Closing.
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2.6 Instruments of Transfer.
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Except as otherwise provided herein, at Closing, each Seller will deliver
to Purchaser No. 1 and Purchaser No. 2, respectively, such bills of sale,
endorsements, assignments and other good and sufficient instruments of
transfer and assignment as shall be effective to vest in Purchaser No. 1
and Purchaser No. 2, as applicable, good title and interest in and to
Purchased Assets No. 1 and Purchased Assets No. 2, respectively. At or
after the Closing, and without further consideration, each Seller will
execute and deliver to Purchaser No. 1 and Purchaser No. 2, as applicable,
such further instruments of conveyance and transfer and take such other
action as Purchaser No. 1 and/or Purchaser No. 2 may reasonably request in
order to more effectively convey and transfer to Purchaser No. 1 and/or
Purchaser No. 2, as applicable, any of the Purchased Assets No. 1 and/or
Purchased Assets No. 2 or for aiding and assisting and collecting and
reducing to possession and exercising rights with respect thereto. Each
Seller and Shareholder agree to use their best efforts to obtain and
deliver to Purchaser No. 1 and Purchaser No. 2, as applicable, such
consents, approvals, assurances and statements from third parties as
Purchaser No. 1 and Purchaser No. 2, as applicable, may reasonably require
in a form reasonably satisfactory to Purchaser No. 1 and Purchaser No. 2.
In addition to the foregoing, each Seller will deliver to Purchaser No. 1
and Purchase No. 2, as applicable, the originals or copies of all of such
Seller's books, records and other data relating to Purchased Assets No. 1
and Purchased Assets No. 2, respectively; and simultaneously with such
delivery, each Seller shall take all such acts as may be necessary to put
Purchaser No. 1 in actual possession, and operating control of Purchased
Assets No. 1 and put Purchaser No. 2 in actual possession, and operating
control of Purchased Assets No. 2. Each Seller shall cooperate with
Purchaser No. 1 and Purchaser No. 2 to permit such parties, if possible, to
enjoy such Seller's ratings and benefits under workmen's compensation laws
and unemployment compensation laws to the extent permitted by such laws.
2.7 Instruments Giving Certain Powers and Rights.
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At the Closing, each Seller shall, by appropriate instrument, constitute
and appoint Purchaser No. 1 and Purchaser No. 2, their respective
successors and assigns, the true and lawful attorney of each Seller with
full power of substitution, in the name of Purchaser No. 1 and/or Purchaser
No. 2, as applicable, or the name of such Seller, on behalf of and for the
benefit of Purchaser No. 1 and Purchaser No. 2, as applicable, to collect
all accounts receivable and/or vendor receivables and other items being
transferred and assigned to Purchaser No. 1 and/or Purchaser No. 2, as
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applicable, as provided herein, to endorse, without recourse, any and all
checks in the name of each Seller the proceeds of which Purchaser No. 1
and/or Purchaser No. 2, as applicable, is entitled to hereunder, to
institute and prosecute, in the name of such Seller or otherwise, all
proceedings which Purchaser No. 1 and/or Purchaser No. 2, as applicable,
may deem proper in order to collect, assert or enforce any claim, right or
title of any kind in or to Purchased Assets No. 1 and/or Purchased Assets
No. 2, as applicable, to defend and compromise any and all actions, suits
and proceedings in respect of any of Purchased Assets No. 1 and/or
Purchased Assets No. 2, as applicable, and to do all such acts and things
in relation thereto as such party may deem advisable. Purchaser No. 1
and/or Purchaser No. 2, as applicable, shall provide such Seller with
notice of any collection action(s) instituted by it under this provision.
Each Seller agrees that the foregoing powers are coupled with an interest
and shall be irrevocable by such Seller, directly or indirectly, by the
dissolution of such Seller or in any manner or for any reason. Each Seller
further agrees that Purchaser No. 1 and/or Purchaser No. 2, as applicable,
shall retain for its own respective account any amounts collected pursuant
to the foregoing powers, and each Seller shall pay or transfer to Purchaser
No.1 and/or Purchaser No. 2, as applicable, if and when received, any
amounts which shall be received by such Seller after the Closing in respect
of any such receivables or other assets, properties, rights or business to
be transferred and assigned to Purchaser No. 1 and/or Purchaser No. 2, as
provided herein. Each Seller further agrees that, at any time or from time
to time after the Closing, it will, upon the request of Purchaser No. 1
and/or Purchaser No. 2 and at such Seller'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 Purchaser No. 1 and/or
Purchaser No. 2, as applicable, or to aid and assist in the collection or
granting of possession by Purchaser No. 1 and/or Purchaser No. 2, as
applicable, of any of the Purchased Assets No. 1 and/or the Purchased
Assets No. 2, or to vest in Purchaser No. 1 good and marketable title to
Purchased Assets No. 1 and to vest in Purchaser No. 2 good and marketable
title to Purchased Assets No. 2.
To the extent that any assignment does not result in a complete transfer of
the contracts to Purchaser No. 1 and/or Purchaser No. 2, as applicable,
because of a provision in any contract against such Seller's assignment of
any its right thereunder, each Seller shall cooperate with Purchaser No. 1
and Purchaser No. 2 in any reasonable manner proposed by Purchaser No. 1
and/or Purchaser No. 2, as applicable, to complete the acquisition of the
contracts and such Seller's rights, benefits and privileges thereunder in
order to fulfill and carry out such Seller's obligations under this
Agreement. Such additional action may include, but is not limited to: (i)
entering into a subcontract between such Seller and Purchaser No. 1 and/or
Purchaser No. 2, as applicable, which allows such party to perform such
Seller's duties under such contracts and to enforce such Seller's rights
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thereunder; (ii) the sale of DataNet stock owned by the Shareholders
(and/or the membership interest in DTS, DTP or DP owned by DataNet) to
Purchaser No. 1 and/or Purchaser No. 2, as applicable, on terms to which
all parties may mutually agree in good faith to allow such party to operate
such Seller as a wholly or partially-owned subsidiary or affiliate to
enforce the contracts; or (iii) entering into a new multi-party agreement
with such customers which allows Purchaser No. 1 and/or Purchaser No. 2, as
applicable, to perform such Seller's obligations and enforce such Seller's
rights under the contracts.
3.
ASSIGNMENT OF LIABILITIES
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3.1 Liabilities to be Paid Off at Closing or Assumed by Purchaser No. 1.
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A. At the Closing, Purchaser No. 1 shall assume and pay off or discharge
when due (and secure the release of each Seller and any Shareholder
from any and all personal liability or guaranty with respect to such
obligation), the following:
(i) Sellers' obligations to Branch Banking and Trust Co. under a
floor plan credit facility, the outstanding amount of which is on
the December 31, 1999 Pro Forma Balance Sheet, and as of the
present date is $-0-, which floor plan credit facility is
collateralized by a security interest in each of the Seller's
assets.
The Assumed Liabilities to be paid off as set forth in Section 3.1 A. (i),
as may be incurred, increased or decreased since the December 31, 1999 Pro
Forma Balance Sheet No. 1 to the Pro Forma Balance Sheet No. 1 for
operations in the ordinary course of business or any other transaction
permitted by this Agreement, and subject to the satisfaction of the Net
Asset Amount No. 1 requirement set forth in Section 4.1(d) as of the
Closing Date.
It is the intent of the parties that Purchaser No. 1 shall pay off at
Closing, or assume and pay off or discharge when due, all obligations of
each Seller set forth in Section 3.1 A above for which any Shareholder
(and/or Member) has personal liability and Purchaser No. 1 agrees to use
its best efforts to secure the release of any Shareholder or Member from
such liability after the Closing if such releases are not secured prior to
Closing.
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B. All of the trade accounts payable of the Sellers relating to Business
No. 1 incurred in the ordinary course of business consistent with
Sellers' prior practices, the outstanding amount of which totaled
3,172,141 in the aggregate, on the December 31, 1999 Pro Forma Balance
Sheet No. 1, and as may be incurred, increased or decreased since the
December 31, 1999 Pro Forma Balance Sheet No. 1 to the Pro Forma
Balance Sheet No. 1 for operations in the ordinary course of business
or any other transaction provided by this Agreement, and subject to
the satisfaction of the Net Asset Amount No. 1 requirement set forth
in Section 4.1(d) as of the Closing Date.
3.2 Liabilities to be Paid Off at Closing or Assumed by Purchaser No. 2.
--------------------------------------------------------------------
At the Closing, Purchaser No. 2 shall assume and pay off or discharge when
due (and secure the release of each Seller and any Shareholder (and/or
Member) from any and all personal liability or guaranty with respect to
such obligation), the following:
A. (i) DataNet's obligation to Branch Banking and Trust Co. under a
vehicle loan, the outstanding amount of which is on the
December 31, 1999 Pro Forma Balance Sheet No. 1 is
$37,400.00, and as of the Closing Date is $_____________,
which is collateralized by a security interest in certain
vans owned by Seller(s);
B. All of the trade accounts payable of the Sellers relating to
Business No. 2 incurred in the ordinary course of business consistent
with Sellers' prior practices, the outstanding amount of which totaled
244,156 in the aggregate, on the December 31, 1999 Pro Forma Balance
Sheet No. 2; and as may be incurred, increased or decreased since the
December 31, 1999 Pro Forma Balance Sheet No. 2 to the Pro Forma
Balance Sheet No. 2 for operations in the ordinary course of business
or any other transaction provided by this Agreement, and subject to
the satisfaction of the Net Asset Amount No. 2 requirement set forth
in Section 4.2(d) as of the Closing Date.
3.3 Executory Contracts to be Assumed by Purchaser No. 1.
------------------------------------------------------------
At the Closing, Purchaser No. 1 shall assume and pay, perform and discharge
when due the following:
(i) All of the obligations and liabilities of each Seller arising after
the Closing under the contracts described in Section 2.2.
(ii) All future liabilities for merchandise in transit FOB shipping point
relating to Business No. 1 which has not been received and/or entered
into inventory by such Seller and for which no xxxx has been posted by
such Seller as of the Closing.
-14-
3.4 Executory Contracts to be Assumed by Purchaser No. 2.
------------------------------------------------------------
At the Closing, Purchaser No. 2 shall assume and pay, perform and discharge
when due the following:
(i) All of the obligations and liabilities of each Seller arising after
the Closing under the contracts described in Section 2.3.
(ii) All future liabilities for merchandise in transit FOB shipping point
relating to Business No. 2 which has not been received and/or entered
into inventory by each Seller and for which no xxxx has been posted by
such Seller as of the Closing.
3.5 Excluded Liabilities.
---------------------
Notwithstanding anything in this Agreement to the contrary, Purchaser No. 1
and Purchaser No. 2 shall not assume or become responsible for any claim,
liability or obligation of any nature whatsoever, whether known or unknown,
accrued, absolute, contingent or otherwise (a "Liability") of any of the
Sellers except Assumed Liabilities No. 1 and Assumed Liabilities No. 2 that
are specifically assumed by such party. Without limiting the generality of
the foregoing, the following are included among the Liabilities of any of
the Sellers which Purchaser No. 1 and Purchase No. 2 shall not assume or
become responsible for (unless specifically included as Assumed Liabilities
No. 1 or Assumed Liabilities No. 2):
(a) all Liabilities for any Taxes whether deferred or which have accrued
or may accrue or become due and payable by any of the Sellers either
prior to, on or after the Closing Date, including, without limitation,
all Taxes and fees of a similar nature arising from the sale and
transfer of Purchased Assets No. 1 and Purchased Assets No. 2 to
Purchaser No. 1 and Purchaser No. 2, respectively;
(b) all Liabilities and obligations to directors, officers, employees or
agents of any of the Sellers, including, without limitation, all
Liabilities and obligations for wages, salary, bonuses, commissions,
vacation (provided that Sellers' employees that become employees of
Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0 xxxxx xx able to take any
unused vacation days for the current year during the remaining portion
of the year as part of Purchaser No. 1's and/or Purchaser No. 2's own
vacation program for its employees) or severance pay, profit sharing
or pension benefits, and all Liabilities and obligations arising under
any bonus, commission, salary or compensation plans or arrangements,
whether accruing prior to, on or after the Closing Date;
-15-
(c) all Liabilities and obligations with respect to unemployment
compensation claims and workmen's compensation claims and claims for
race, age and sex discrimination or sexual harassment or for unfair
labor practice based on or arising from occurrences, circumstances or
events, or exposure to conditions, existing or occurring prior to the
Closing Date and for which any claim may be asserted by any of the
Sellers' employees, prior to, on or after the Closing Date;
(d) all Liabilities of any of the Sellers to third parties for personal
injury or damage to property based on or arising from occurrences,
circumstances or events, or exposure to conditions, existing or
occurring prior to the Closing Date and for which any claim may be
asserted by any third party prior to, on or after the Closing Date;
(e) all Liabilities and obligations of any of the Sellers arising under or
by virtue of federal or state environmental laws based on or arising
from occurrences, circumstances or events, or exposure to conditions,
existing or occurring prior to the Closing Date and for which any
claim may be asserted prior to, on or after the Closing Date;
(f) all Liabilities of any of the Sellers including any costs of
attorneys' fees incurred in connection therewith, for litigation,
claims, demands or governmental proceedings arising from occurrences,
circumstances or events, or exposure to conditions occurring or
existing prior to the Closing Date;
(g) all Liabilities based on any theory of liability or product warranty
with respect to any product manufactured or sold prior to the Closing
Date and for which any claim may be asserted by any third party, prior
to, on or after the Closing Date;
(h) all attorneys' fees, accountants' or auditors' fees, and other costs
and expenses incurred by any of the Sellers and/or any Shareholder
and/or any Member in connection with the negotiation, preparation and
performance of this Agreement or any of the transactions contemplated
hereby;
(i) all Liabilities of any of the Sellers in connection with the Excluded
Assets;
-16-
(j) any Liabilities of any of the Sellers with respect to any options,
warrants, agreements or convertible or other rights to acquire shares
of its capital stock of any class and/or of its membership interests
of any class, respectively;
(k) any Liabilities of any of the Sellers incurred incident to any
indemnification for breach of any representations, warranties,
covenants, or other agreements made by any of the Sellers under any of
the asset purchase, stock, reorganization, or other legal
transaction(s) set forth in Disclosure Schedules 2.2(n) and/or 2.3(p);
(l) any Liabilities of any of the Sellers with respect to any loans or
advances made by any Shareholder, Member or any Affiliate to any
Seller;
(m) all other debts, Liabilities, obligations, contracts and commitments
(whether direct or indirect, known or unknown, contingent or fixed,
liquidated or unliquidated, and whether now or hereinafter arising)
arising out of or relating to the ownership, operation or use of any
of Purchased Assets No. 1 and/or Purchased Assets No. 2 on or prior to
the Closing Date or the conduct of the Business No. 1 of the Sellers
and/or Business No. 2 of the Sellers prior to the Closing Date, except
only for the liabilities and obligations to be assumed or paid,
performed or discharged by Purchaser No. 1 and/or Purchaser No. 2
constituting Assumed Liabilities No. 1 or Assumed Liabilities No. 2;
(n) any Liabilities of any Seller incurred incident to the redemption of
all the issued and outstanding shares of common stock of the Redeemed
Shareholders or of the membership interest of the Redeemed Member.
Each Seller shall pay all of its liabilities not being assumed hereunder by
Purchaser No. 1 or Purchaser No. 2 within the customary time for payment of
such liabilities.
It is the intent of the parties that upon Closing, all employees of each
Seller will be terminated by such parties and Purchaser No. 1 or Purchaser
No. 2 will extend offers of employment to such individuals.
-17-
4.
CONSIDERATION FOR
-----------------
PURCHASED ASSETS NO. 1 AND PURCHASED ASSETS NO. 2
-------------------------------------------------
4.1 Purchase Price No. 1 for Purchased Assets No. 1.
-------------------------------------------------------
Subject to the other terms of this Agreement, Purchase Price No. 1 for
Purchased Assets No. 1 shall be the sum of:
(a) Seven Million Eight Hundred Forty-Four Thousand Fifty-Four Dollars
($7,844,054.00);
(b) The liabilities assumed or paid off at Closing under Section 3.1; and
(c) Any amount that may be paid pursuant to Section 4.6 that is allocated
to Purchase Price No. 1.
The sum of the items contained in Sections 4.1(a), (b) and (c) above shall
be adjusted by the amounts determined under Sections 4.1(d), (e) and/or
(f), as follows:
(d) If Net Asset Amount No. 1 of all of the Sellers on a consolidated
basis as of the Closing Date as shown on the Pro Forma Balance Sheet
No. 1 is less than $1,928.356.00, Purchase Price No. 1 shall be
decreased on a dollar-for-dollar basis to the extent of such deficit.
If Net Asset Amount No. 1 of all of the Sellers on a consolidated
basis as of the Closing Date as shown on Pro Forma Balance Sheet No. 1
is greater than $1,928.356.00, Purchase Price No. 1 shall be increased
on a dollar-for-dollar basis to the extent of such excess. The
determination of Net Asset Amount No. 1 shall be made in the manner
provided for in Section 5.1 hereof.
(e) If the 1999 NBPT of DataNet is less than $1,898,000.00, the Purchase
Price No. 1 and Purchase Price No. 2 (to be allocated according to the
respective percentages determined by the parties) shall be decreased
on a dollar-for-dollar basis equal to the difference between
1,898,000.00 and such 1999 NBPT. In the event that DataNet's 1999 NPBT
is greater than 1,898,000.00 in the aggregate, no increase to Purchase
Price No. 1 and/or Purchase Price No. 2 shall be made under this
Section 4.1(e). The determination of DataNet's 1999 NPBT shall be made
in the manner provided for in Section 5.2 hereof.
(f) The Purchase Price No. 1 shall be decreased by the amount of Sellers'
Funded Debt of Business No. 1 which is assumed or paid off by
Purchaser pursuant to Section 3.1.
-18-
4.2 Purchase Price No. 2 for Purchased Assets No. 2.
------------------------------------------------------
Subject to the other terms of this Agreement, the Purchase Price for
Purchased Assets No. 2 shall be the sum of:
(a) Three Million Five Hundred Forty-Three Thousand Nine Hundred Forty-Six
Dollars ($3,543,946.00);
(b) The liabilities assumed or paid off at Closing under Section 3.2; and
(c) Any amount that may be paid pursuant to Section 4.6 that is allocated
to Purchase Price No. 2.
The sum of the items contained in Sections 4.2(a), (b), (c), above
shall be adjusted by the amounts determined under Sections 4.2(d),
and/or (f) and Section 4.1(e), as follows:
(d) If Net Asset Amount No. 2 of all of the Sellers on a consolidated
basis as of the Closing Date as shown on the Pro Forma Balance Sheet
No. 2 is less than $871,231.00, Purchase Price No. 2 shall be
decreased on a dollar-for-dollar basis to the extent of such deficit.
If Net Asset Amount No. 2 of all of the Sellers on a consolidated
basis as of the Closing Date as shown on Pro Forma Balance Sheet No. 2
is greater than $871,231.00, Purchase Price No. 2 shall be increased
on a dollar-for-dollar basis to the extent of such excess. The
determination of Net Asset Amount No. 2 shall be made in the manner
provided for in Section 5.1 hereof.
(e) The Purchase Price No. 2 shall be decreased by the portion of any
deficit in DataNet's 1999 NPBT, if any, allocated to Purchase Price
No. 2 under Section 4.1(e).
(f) The Purchase Price No. 2 shall be decreased by the amount of Sellers'
Funded Debt of Business No. 2 which is assumed or paid off by
Purchaser No. 2 pursuant to Section 3.2.
4.3 Payment of the Purchase Price for Purchased Assets No. 1.
----------------------------------------------------------------
Subject to the conditions, covenants, representations and warranties
hereof, at Closing, Purchaser No. 1 shall deliver:
-19-
(a) By certified or bank cashier's check or by wire transfer to DataNet,
the amount of One Million Five Hundred Fifty-One Thousand Five Hundred
Fifty-Three Dollars and Ninety-Six Cents ($1,551,553.96);
(b) By certified or bank cashier's check or by wire transfer to Xxxxxxxxx
& Dreidame Co., LPA, and Xxxxxx & Xxxxx, the amount of One Hundred
Seventy-Two Thousand Two Hundred Dollars ($172,200.00), which funds
shall be held pursuant to the terms of the Escrow Agreement attached
hereto as Exhibit C;
(c) By certified or bank cashier's check or by wire transfer to DTS, the
amount of One Hundred Two Thousand Seven Hundred Fifty-Seven Dollars
and Twelve Cents ($102,757.12);
(d) By certified or bank cashier's check or by wire transfer to DTP, the
amount of Three Million Eight Hundred Seventy-Eight Thousand Two
Hundred Eighty-Five Dollars and Sixty-Four Cents ($3,878,285.64);
(e) By certified or bank cashier's check or by wire transfer to DP, the
amount of Seven Hundred Sixty-One Thousand Six Hundred Fifty-Seven
Dollars and Sixty-Eight Cents ($761,657.68); and
(f) The remaining sum of One Million Three Hundred Seventy-Seven Thousand
Six Hundred Dollars ($1,377,600.00), as may be adjusted as set forth
in Section 5.1, shall be payable to DTP pursuant to the terms of
Purchaser No. 1's subordinated promissory note. The note shall bear
interest at the prime rate of Chase Manhattan Bank as of the date of
Closing. The principal of the note shall be payable in two (2) equal
annual installments, with the first principal payment commencing on
the first annual anniversary of the Closing, and the remaining
principal payment being due on the second annual anniversary date of
the Closing. Interest on the unpaid principal balance of the note
shall be paid quarterly with the first interest payment being due and
payable ninety (90) days from Closing. Such note and all obligations
of Purchaser No. 1 thereunder will be subordinated and made junior in
right of payment to the extent and in the manner provided in a
Subordination Agreement to be executed between Deutsche Financial
Services Company and Purchaser No. 1 and DTP. A copy of said note is
attached hereto as Exhibit D. Such note shall be subordinate to
Purchaser No.1's lender pursuant to the terms of a Subordination
Agreement in the form attached hereto as Exhibit E.
-20-
(g) The Assumed Liabilities No. 1 assumed or paid off under Section 3.1;
and
4.4 Payment of the Purchase Price for Purchased Assets No. 2.
-----------------------------------------------------------------
Subject to the conditions, covenants, representations and warranties
hereof, at Closing, Purchaser No. 2 shall deliver:
(a) By certified or bank cashier's check or by wire transfer to DataNet,
the amount of Seven Hundred Thousand Nine Hundred Ninety-Two Dollars
and Forty-Four Cents ($700,992.44);
(b) By certified or bank cashier's check or by wire transfer to Xxxxxxxxx
& Dreidame Co., LPA, and Xxxxxx & Xxxxx, the amount of Seventy-Seven
Thousand Eight Hundred Dollars ($77,800.00), which funds shall be held
pursuant to the terms of the Escrow Agreement attached hereto as
Exhibit C;
(c) By certified or bank cashier's check or by wire transfer to DTS, the
amount of Forty-Six Thousand Four Hundred Twenty-Five Dollars and
Sixty-Nine Cents ($46,425.69);
(d) By certified or bank cashier's check or by wire transfer to DTP, the
amount of One Million Seven Hundred Fifty-Two Thousand Two Hundred Ten
Dollars and Thirty-Five Cents ($1,752,210.35);
(e) By certified or bank cashier's check or by wire transfer to DP, the
amount of Three Hundred Forty-Four Thousand One Hundred Seventeen
Dollars and Twelve Cents ($344,117.12); and
(f) The remaining sum of Six Hundred Twenty-Two Thousand Four Hundred
Dollars ($622,400.00) as may be adjusted as set forth in Section 5.2,
shall be payable to DTP pursuant to the terms of Purchaser No. 2's
subordinated promissory note. The note shall bear interest at the
prime rate of Chase Manhattan Bank as of the date of Closing. The
principal of the note shall be payable in two (2) equal annual
installments, with the first principal payment commencing on the first
annual anniversary of the Closing, and the remaining principal payment
being due on the second annual anniversary date of the Closing.
Interest on the unpaid principal balance of the note shall be paid
quarterly with the first interest payment being due and payable ninety
(90) days from Closing. Such note and all obligations of Purchaser No.
2 thereunder will be subordinated and made junior in right of payment
to the extent and in the manner provided in a Subordination Agreement
to be executed between Deutsche Financial Services Company and
Purchaser No. 2 and DTP. A copy of said note is attached hereto as
Exhibit F. Such note shall be subordinate to Purchaser No. 2's lender
pursuant to the terms of a Subordination Agreement in the form
attached hereto as Exhibit G.
-21-
(g) The Assumed Liabilities No. 2 assumed or paid off under Section 3.2.
4.5 Allocation of Purchase Price.
-------------------------------
Purchase Price No. 1 to be paid to the Sellers hereunder, including the
liabilities assumed or paid by Purchaser No. 1 pursuant to Section 3.1,
shall be allocated as set forth on Exhibit H attached hereto. Purchase
Price No. 2 to be paid to the Sellers hereunder, including the liabilities
assumed or paid by Purchaser No. 2 pursuant to Section 3.2, shall be
allocated as set forth on Exhibit H-1 attached hereto. Each Seller,
Purchaser Xx. 0, Xxxxxxxxx Xx. 0 and each Shareholder and Member agree that
each shall act in a manner consistent with such allocation in (a) filing
Internal Revenue Form 8594; and (b) in paying sales and other transfer
taxes in connection with the purchase and sale of assets pursuant to this
Agreement.
4.6 Potential Adjustment to Purchase Price.
------------------------------------------
If the net profits before taxes ("NPBT") of the Purchaser No. 1's and
Purchaser No. 2's Raleigh, North Carolina Divisions in the aggregate during
any of fiscal years 2000 (July 28, 2000 to January 5, 2001), 2001, 2002,
2003, 2004 and (January 6, 2005 to July 27, 2005) exceed the applicable
NPBT threshold for such year set forth below:
Fiscal Year 2000 - Closing Date to January 5, 2001 - pro rate
$2,250,000.00)
Fiscal Year 2001 - $2,400,000
Fiscal Year 2002 - $2,550,000
Fiscal Year 2003 - $2,700,000
Fiscal Year 2004 - $2,850,000
(January 5, 2005
to July 27, 2005) - Pro rate $2,250,000
Purchaser No. 1 and Purchaser No. 2 (according to the percentages set forth
below) shall pay DataNet, by bank check or wiring within ninety (90) days
following the end of the fiscal year, an amount equal to fifty percent (50%) of
the aggregate NPBT of Purchaser No. 1's and Purchaser No. 2's Raleigh, North
Carolina Divisions in excess of the NPBT Threshold for the applicable year or
-22-
portion thereof, subject to a cumulative limitation of Six Million Dollars
($6,000,000.00) during such aggregate period. Any NPBT shortfall in any year
shall not be offset against any excess NPBT in any subsequent year(s) hereunder,
it being the intent of the parties that the NPBT Threshold set forth herein
shall apply to each applicable year separately, subject, however, to the
cumulative limitation of Six Million Dollars ($6,000,000.00) during such
aggregate period. Such cash payment by Purchaser No. 1 and Purchaser No. 2
shall be additional Purchase Price No. 1 and Purchase Price No. 2, in the
proportions set forth below, which will be added to the good will allocation of
Purchase Price No. 1 and Purchase Price No. 2, in the proportions set forth
below. Commencing upon the installation of the Astea (MAS and Accounting)
System at the Purchaser's Xx. 0 xxx Xxxxxxxxx'x Xx. 0 Xxxxxxx, Xxxxx Xxxxxxxx
Divisions, a 1.5% MAS royalty fee on gross sales by Purchaser No. 1's and
Purchaser No. 2's respective Raleigh, North Carolina Divisions shall be made
incident to said determination. For each subsequent year described above in
this paragraph for which Purchaser No. 1 and Purchaser No. 2 may be required to
pay additional Purchase Price No. 1 and Purchase Price No. 2, in the proportions
set forth below, the parties shall, in good faith, agree upon the MAS royalty
fee to be charged hereunder based on the level of services and support being
provided by Purchaser No. 1 and Purchaser No. 2 to its respective Raleigh, North
Carolina Divisions. Provided, however, such MAS royalty fee shall be 1.5% if
the parties are unable to come to an agreement for each subsequent year. For
purposes of this Section, the term "Raleigh, North Carolina Divisions" shall be
defined as Business No. 1 and Business No. 2 acquired from Seller, by Purchaser
No. 1 and Purchaser No. 2, respectively. Provided, however, commencing upon the
Astea (MAS and Accounting) System conversion, the term "Raleigh, North Carolina
Divisions" shall include Purchaser No. 1's and Purchaser No. 2's existing
Triangle, North Carolina branch. Purchaser No. 1 and Purchaser No. 2 shall pay
their respective percentage of any amounts due hereunder, which percentage shall
be predicated on the respective NPBT contribution made by each of their Raleigh,
North Carolina Divisions to the computation set forth above. Purchaser No. 1
and Purchaser No. 2 will continue to explore the viability of the E-1 Consulting
business unit as it pertains to Purchaser No. 2's company wide professional
service strategy and the potential financial ramification it could have on the
earn-out of Seller under Section 4.6.
For purposes of this Section, the term "NPBT" shall mean the net profit
before taxes of Purchaser No. 1's and Purchaser No. 2's Raleigh, North
Carolina Divisions during the applicable period. The NPBT shall be
determined by the internally-generated financial statements of Purchaser
No. 1 and Purchaser No. 2 determined in the manner set forth above in
accordance with generally accepted accounting principles, consistently
applied, provided that no effect shall be given to any gain or loss
attributable to sale of assets by said Raleigh, North Carolina Divisions
not in the ordinary course of business, and provided that no effect shall
be given to any increase in the amounts of depreciation, amortization or
-23-
other expense or deduction taken on tangible or intangible assets of
Purchaser No. 1 and/or Purchaser No. 2, if such increase is attributable to
the reevaluation of such assets incident to their acquisition pursuant to
the terms of this Agreement. Said determination of NPBT shall be subject to
verification as described below. In addition, for purposes of determining
NPBT for any particular year, except as noted above, no item of income or
expense will be allocated by Purchaser No. 1 or Purchaser No. 2 to
Purchaser No. 1's and/or Purchaser No. 2's Raleigh, North Carolina
Divisions unless such items are reasonably calculated to contribute to the
increase in profits of such Raleigh, North Carolina Divisions, it being the
intent of the parties that the Purchaser No. 1 and Purchaser No. 2 shall
exercise the utmost good faith with respect to allocations of income and
expense to Purchaser No. 1's and Purchaser No. 2's Raleigh, North Carolina
Division. Incident to the determination of NPBT of Purchaser No. 1's and
Purchaser No. 2's Raleigh, North Carolina Divisions, no compensation of any
executive or other employee of Purchaser No. 1 and/or Purchaser No. 2 or
their respective affiliates who do not work directly for Purchaser No. 1's
and/or Purchaser No. 2's Raleigh, North Carolina Division shall be
allocated to such division. Any payment made to DataNet pursuant to this
Section 4.6 shall not be charged against the NPBT for any year.
Within ninety (90) days after the end of each fiscal year or period
described herein, Purchaser No. 1 and Purchaser No. 2 will deliver to
DataNet a copy of the report of NPBT prepared by Purchaser No. 1 and
Purchaser No. 2 for the subject period along with any supporting
documentation reasonably requested by DataNet. Within thirty (30) days
following delivery to DataNet of such report, DataNet shall have the right
to object in writing to the results contained in such determination. If
timely objection is not made by DataNet to such determination, such
determination shall become final and binding for purposes of this
Agreement. If timely objection is made by DataNet to Purchaser No. 1 and
Purchase No. 2 and DataNet and Purchaser No. 1 and Purchaser No. 2 are able
to resolve their differences in writing within thirty (30) days following
the expiration of the thirty-day (30-day) period, then such determination
shall become final and binding as it regards to this Agreement. If timely
objection is made by DataNet to Purchaser No. 1 and Purchaser No. 2 and
DataNet and Purchaser No. 1 and Purchaser No. 2 are unable to resolve their
differences in writing within thirty (30) days following the expiration of
the thirty-day (30-day) period, then all disputed matters pertaining to the
report shall be submitted to and reviewed by an arbitrator (the
"Arbitrator") which shall be an independent accounting firm selected by
Purchaser No. 1 and Purchaser No. 2 and DataNet. If Purchaser No. 1 and
Purchaser No. 2 and DataNet are unable to agree promptly on an accounting
firm to serve as the Arbitrator, each shall select by no later than the
30th day following the expiration of the sixty-day (60-day) period, an
accounting firm, and the two selected accounting firms shall be instructed
to select promptly another independent accounting firm, such newly selected
firm to serve as the Arbitrator. The Arbitrator shall consider only the
disputed matters pertaining to the determination and shall act promptly to
resolve all disputed matters, and its decision with respect to all disputed
matters shall be final and binding upon DataNet and Purchaser. Expenses of
the Arbitration shall be borne one-half (1/2) by Purchaser No. 1 and
Purchaser No. 2 and one-half (1/2) by DataNet. Each party shall be
responsible for its own attorney and accounting fees.
-24-
4.7 Certain Closing Expenses.
--------------------------
Except as set forth below, each Seller shall be responsible for and shall
pay all federal, state and local sales tax (if any), documentary stamp tax
and all other duties, or other like charges properly payable upon and in
connection with the conveyance and transfer of the Purchased Assets No. 1
by such Seller to Purchaser No. 1 and the conveyance and transfer of the
Purchased Assets No. 2 by each Seller to Purchaser No. 2.
-25-
5.
POST-CLOSING ADJUSTMENTS
------------------------
-26-
5.1 Within sixty (60) days after the Closing Date (the "Post Closing
Date"), DataNet's Accountant will deliver to Purchaser No.1 and to
Purchaser No. 2 copies of Pro Forma Balance Sheet No. 1 and Pro Forma
Balance Sheet No. 2, respectively, prepared by DataNet's Accountant along
with any supporting documentation reasonably requested by Purchaser No. 1
or Purchaser No. 2 reflecting Net Asset Amount No. 1 and Net Asset Amount
No. 2 as of the Closing which shall be defined as the total of the
Purchased Assets No. 1 less the total of the Assumed Liabilities No. 1
relating to Business No. 1, as reflected on Pro Forma Balance Sheet No. 1
(the "Net Asset Report No. 1") and the total of the Purchased Assets No. 2
less the total of the Assumed Liabilities No. 2 relating to Business No. 2,
as reflected on Pro Forma Balance Sheet No. 2 (the "Net Asset Report No.
2"). The Pro Forma Balance Sheet No. 1 and the Pro Forma Balance Sheet No.
2 shall be prepared using the same accounting methods, policies, practices
and procedures, with consistent classifications, judgments, estimations and
methodologies as used in the preparation of the December 31, 1999 Pro Forma
Balance Sheet No. 1 and the December 31, 1999 Pro Forma Balance Sheet No.
2. Within thirty (30) days following delivery to Purchaser No. 1 of Net
Asset Report No. 1 and to Purchaser No. 2 of Net Asset Report Xx. 0,
Xxxxxxxxx Xx. 0 and Purchaser No. 2 shall have the right to object in
writing to the results contained therein. If timely objection is not made
by Purchaser No. 1 and/or Purchaser No. 2 to Net Asset Report No. 1 and/or
Net Asset Report No. 2, as applicable, Net Asset Report No. 1 and Net Asset
Report No. 2 shall become final and binding for purposes of this Agreement.
If timely objection is made by Purchaser No. 1 and/or Purchaser No. 2 to
Net Asset Report No. 1 and/or Net Asset Report No. 2, and the Sellers and
Purchaser No. 1 and/or Purchaser No. 2, as applicable, are able to resolve
their differences in writing within fifteen (15) days following the
expiration of such thirty (30) day period, then Net Asset Report No. 1
and/or Net Asset Report No. 2, as resolved, shall become final and binding
as it relates to this Agreement. If timely objection is made by Purchaser
No. 1 and/or Purchaser No. 2, as applicable, to Net Asset Report No. 1
and/or Net Asset Report No. 2 and/or Sellers and Purchaser No. 1 and/or
Purchaser No. 2, as applicable, are unable to resolve their differences in
writing within such fifteen (15) day period, then all disputed matters
pertaining to Net Asset Report No. 1 and/or Net Asset Report No. 2 shall be
submitted to and reviewed by an arbitrator (the "Arbitrator") which shall
be an independent accounting firm selected by the Sellers and Purchaser No.
1 and/or Purchaser No. 2, as applicable. If Purchaser No. 1 and/or
Purchaser No. 2, as applicable, and the Sellers are unable to agree
promptly on the accounting firm to serve as the Arbitrator, each shall
select by not later than the seventh (7th) day following the expiration of
the Net Asset Report objection period, a nationally recognized accounting
firm, and each selected accounting firm shall be instructed to jointly
select promptly another nationally recognized accounting firm, such third
accounting firm shall serve as the Arbitrator. The Arbitrator shall
-27-
consider only the disputed matters pertaining to the determination and
shall act promptly and fairly to resolve all disputed matters and its
decision with respect to all disputed matters shall be final and binding
upon the Sellers, Purchaser No. 1 and Purchaser No. 2, as applicable. The
expenses of the arbitration shall be borne one-half (1/2) by Purchaser No.
1 and/or Purchaser No. 2, as applicable, and one-half (1/2) by the Sellers.
Each party shall be responsible for its own attorney and accounting fees.
If the Net Asset Amount No. 1 (as shown on the Net Asset Report No. 1) is
less than $1,928,356.00, the Purchase Price No. 1 to be paid to the Sellers
on an aggregate basis shall be decreased on a dollar-for-dollar basis for
such difference by the Sellers first repaying to Purchaser No. 1 by
certified or cashier's check or wire transfer, from the Escrow Fund under
Sections 4.3(b) or 4.4(b), and if the Escrow Fund is insufficient, then by
certified or cashier's check or wire transfer, from the cash paid under
Sections 4.3(a), (c), (d) and (e). If the Net Asset Amount No. 1 is greater
than $1,928,356.00, the Purchase Price No. 1 to be paid to Sellers shall be
increased on a dollar-for-dollar basis for such excess by Purchaser paying
to Sellers, on an aggregate basis, by certified or cashier's check or wire
transfer such excess (to be allocated among the Sellers as determined by
the Sellers). If the Net Asset Amount No. 2 (as shown on the Net Asset
Report No. 2) is less than $871,231.00, the Purchase Price No. 2 to be paid
to the Sellers on an aggregate basis shall be decreased on a
dollar-for-dollar basis for such difference by Sellers first repaying to
Purchaser No. 2 from the Escrow Fund under Sections 4.4(b) or 4.3(b), and
if the Escrow Fund is insufficient, then by certified or cashier's check or
wire transfer from the cash paid under Sections 4.4(a), (c), (d) and (e).
If the Net Asset Amount No. 2 is greater than $871,231.00, the Purchase
Price No. 2 to be paid to the Sellers shall be increased on a
dollar-for-dollar basis by Purchaser No. 2 paying to the Sellers by
certified or cashier's check or wire transfer such excess (to be allocated
among the Sellers as determined by the Sellers).
5.2 Within thirty (30) days after the Closing, DataNet will deliver to
Purchaser No. 1 and Purchaser No. 2 a determination of DataNet's 1999 NPBT
prepared by DataNet's Accountant, along with any supporting documentation
reasonably requested by Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0, as
applicable. DataNet's 1999 NPBT shall be prepared in accordance with
generally accepted accounting principles using the same principles. Within
forty-five (45) days following delivery of such reports, Purchaser No. 1
and Purchaser No. 2 shall have the right to object in writing to the
results contained in such determination. If timely objection is not made by
Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0 of such determination, such
determination shall become final and binding. If timely objection is made
by any party, and Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0 and DataNet are
able to resolve their differences in writing within fifteen (15) days
following the expiration of the 1999 NPBT objection period, then such
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determination as resolved shall become final and binding as it relates to
this Agreement. If timely objection is made by any party, and DataNet and
Purchaser No. 1 and/or Purchaser No. 2 are unable to resolve their
differences in writing within ten (10) days following the expiration of the
1999 NPBT objection period, then all disputed matters relating to the
report shall be submitted to and reviewed by an Arbitrator according to the
process and procedure set forth in Section 5.1 above. The expenses of the
arbitration shall be borne one-half by Purchaser No. 1 and Purchaser No. 2
and one-half by DataNet. Each party shall be responsible for its own
accounting and attorney fees. Any net reduction in the Purchase Price No. 1
and/or Purchase Price No. 2 as a result of said adjustment shall be made in
the manner set forth in Section 4.1(e) and shall be reflected by decreasing
the face amount of the promissory notes set forth in Sections 4.3(f) and
4.4(f). The parties agree to implement any adjustment to any interest
payments that may have been made prior to the date of such determination to
reflect the adjustment set forth above.
6.
EMPLOYMENT AGREEMENTS
---------------------
6.1 Employment Agreements of Shareholders.
----------------------------------------
At Closing, Purchaser No. 1 shall enter into Employment Agreements with X.
Xxxxx, X. Xxxxx, X. Xxxxx and X. Xxxxxxxxxx. Copies of said Employment
Agreements are attached hereto and made a part hereof as Exhibits I, I-1,
I-2 and I-3.
7.
COVENANT NOT TO COMPETE AGREEMENTS
----------------------------------
7.1 Covenant Not to Compete Agreements of Seller and Shareholders.
---------------------------------------------------------------------
At Closing, each Seller and each Shareholder shall enter into Covenant Not
to Compete Agreements with Purchaser No. 1 and Purchaser No. 2. Copies of
said Covenant Not to Compete Agreements are attached hereto and made a part
hereof as Exhibits J, X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-00,
X-00, X-00, X-00, X-00 xxx X-00.
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8.
BULK SALES ACT
--------------
8.01 Compliance with Bulk Sales Act.
----------------------------------
Purchaser No. 1 and Purchaser No. 2 waive compliance with the provisions of
any applicable bulk sales law and the Sellers and Shareholders, jointly and
severally, agree to indemnify and hold harmless Purchaser No. 1 and
Purchaser No. 2 from any liability incurred as a result of the failure to
so comply, except to liabilities explicitly assumed hereunder by Purchaser
No. 1 and/or Purchaser No. 2.
9.
REPRESENTATIONS AND WARRANTIES
------------------------------
OF SELLERS AND EACH SHAREHOLDER
-------------------------------
Except as set forth in the Disclosure Schedule attached hereto, Sellers and
Shareholders, jointly and severally, represent and warrant to Purchaser No.
1 and Purchaser No. 2 that the following statements are true and correct as
of the date hereof, and shall be true and correct as of the Closing Date:
9.1 Organization, Good Standing, Qualification and Power of Sellers.
----------------------------------------------------------------------
(a) DataNet is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina and has the
corporate power and authority to own, lease and operate the Purchased
Assets No. 1 and the Purchased Assets No. 2 and to conduct Business
No. 1 and Business No. 2 currently being conducted by it. DataNet is
duly qualified and validly existing in North Carolina and in good
standing in each of the other jurisdictions in which it is required by
the nature of its business or the ownership of its properties to so
qualify. DataNet has no corporate subsidiaries and has three (3)
wholly owned limited liability companies. The Disclosure Schedule
correctly lists, with respect to DataNet, each jurisdiction in which
it is qualified to do business as a foreign corporation.
(b) DTS, DTP and DP are limited liability companies duly organized,
validly existing and in good standing under the laws of the State of
North Carolina and have the corporate power and authority to own,
lease and operate the Purchased Assets No. 1 and the Purchased Assets
No. 2 owned by them, and to conduct the portions of Business No. 1 and
Business No. 2 currently being conducted by each of them. DTS, DTP and
DP are duly qualified and validly existing in North Carolina and in
good standing in each of the other jurisdictions in which such entity
is required by the nature of its respective business or the ownership
of its properties to so qualify. The Disclosure Schedule correctly
lists, with respect to DTS, DTP and DP, each jurisdiction in which it
is qualified to do business.
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9.2 Capitalization.
--------------
(a) The authorized capitalization of DataNet consists solely of
______________ (______) shares of common stock, without par value, of
which Three Thousand Five Hundred Ninety-Nine (3,599) shares are owned
by the Shareholders, representing Ninety-Eight and 95/100 Percent
(98.95%) of the issued stock are currently owned by the Shareholders,
are fully paid and nonassessable and have not been issued in violation
of the preemptive rights of any person. Except as set forth in the
Disclosure Schedule, DataNet is not obligated to issue or acquire any
of its securities, nor has it granted options or any similar rights
with respect to any of its securities.
(b) DataNet owns One Hundred Percent (100%) of the membership interest in
DTS. Such membership interest is fully paid and nonassessable and has
not been issued in violation of the preemptive rights of any person.
Except as set forth in the Disclosure Schedule, DTS is not obligated
to issue or acquire any of its membership interest, nor has it granted
options or any similar rights with respect to any of its membership
interest.
(c) DataNet owns One Hundred Percent (100%) of the membership interest in
DTP. Such membership interest is fully paid and nonassessable and has
not been issued in violation of the preemptive rights of any person.
Except as set forth in the Disclosure Schedule, DTP is not obligated
to issue or acquire any of its membership interest, nor has it granted
options or any similar rights with respect to any of its membership
interest.
(d) DataNet owns One Hundred Percent (100%) of the membership interest in
DP. Such membership interest is fully paid and nonassessable and has
not been issued in violation of the preemptive rights of any person.
Except as set forth in the Disclosure Schedule, DP is not obligated to
issue or acquire any of its membership interest, nor has it granted
options or any similar rights with respect to any of its membership
interest.
-31-
9.3 Authority to Make Agreement.
------------------------------
Each Seller and each Shareholder have the full legal power and authority to
enter into, execute, deliver and perform their respective obligations under
this Agreement and each of the other agreements, instruments and other
instruments to be delivered incident hereto ("Other Seller Documents").
This Agreement and the Other Seller Documents have been duly and validly
executed and delivered by each Seller, each Shareholder and each Member,
and are the legal and binding obligation of each of them, enforceable in
accordance with their respective terms, subject to principles of equity,
bankruptcy laws, and laws affecting creditors' rights generally. Each
Seller has taken all necessary action (including action of DataNet's Board
of Directors and its Shareholders, and including the action of its members
as to DTS, DTP and DP, under their respective Operating Agreements) to
authorize and approve the execution and delivery of this Agreement and the
Other Seller Documents, the performance of its obligations thereunder and
the consummation of the transactions contemplated thereby.
9.4 Existing Agreements, Governmental Approvals and Permits.
------------------------------------------------------------
(a) The execution, delivery and performance of this Agreement and the
Other Seller Documents by each Seller, the sale, transfer, conveyance,
assignment and delivery of the Purchased Assets No. 1 to Purchaser No.
1 and of the Purchased Assets No. 2 to Purchaser No. 2 as contemplated
in this Agreement, and the consummation of the other transactions
contemplated thereby: (i) do not violate any provisions of law,
statute, ordinance or regulation applicable to any Seller, any
Shareholder or Purchased Assets Xx. 0 xxx/xx Xxxxxxxxx Xxxxxx Xx. 0,
(xx) (except for any of Sellers' secured creditors set forth in
Sections 3.1 and/or 3.2, whose consent shall be obtained prior to
Closing and except as set forth in Disclosure Schedule), will not
conflict with, or result in the breach or termination of any provision
of, or constitute a default under (in each case whether with or
without the giving of notice or the lapse of time or both) the
Articles of Incorporation or Bylaws of DataNet, or the Operating
Agreements of DTS, DTP or DP, or any indenture, mortgage, lease, deed
of trust, or other instrument, contract or agreement or any license,
permit, approval, authority, or any order, judgment, arbitration
award, or decree to which any Seller or any Shareholder is a party or
by which any Seller or any Shareholder or any of their assets and
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properties are bound (including, without limitation, the Purchased
Assets No.1 and/or Purchased Assets No. 2), and (iii) will not result
in the creation of any encumbrance upon any of the properties, assets,
or Business No. 1 or Business No. 2 of any Seller or of any
Shareholder. None of the Sellers, nor any Shareholder, nor any of
their assets or properties (including, without limitation, the
Purchased Assets No. 1 and/or Purchased Assets No. 2) is subject to
any provision of any mortgage, lease, contract, agreement, instrument,
license, permit, approval, authority, order, judgment, arbitration
award or decree, or to any law, rule, ordinance, or regulation, or any
other restriction of any kind or character, which would prevent any
Seller or any Shareholder from entering into this Agreement or any of
the Other Seller Documents or from consummating the transactions
contemplated thereby.
(b) None of the Sellers or any Shareholders or Members are a party to,
subject to or bound by any agreement, judgment, award, order, writ,
injunction or decree of any court, governmental body or arbitrator
which would prevent the use by Purchaser No. 1 of Purchased Assets No.
1 or by Purchaser No. 2 of Purchased Assets No. 2 in accordance with
present practices of any Seller after the Closing Date or which, by
operation of law, or pursuant to its terms, would be breached,
terminate, lapse or be subject to termination or default under (in
each case whether with or without notice, the passage of time or both)
upon the consummation of the transactions contemplated in this
Agreement.
(c) No approval, authority or consent of, or filing by any Seller with, or
notification to, any foreign, federal, state or local court, authority
or governmental or regulatory body or agency or any person is
necessary to authorize the execution and delivery of this Agreement or
the Other Seller Documents by any Seller or any Shareholder, the sale,
transfer, conveyance, assignment and delivery of the Purchased Assets
No. 1 to Purchaser No. 1 or of Purchased Assets No. 2 to Purchaser No.
2, or the consummation of the other transactions contemplated thereby,
or to continue the use and operation of Purchased Assets No. 1 by
Purchaser No. 1 or Purchased Assets No. 2 by Purchaser No. 2 after the
Closing Date.
9.5 Financial Statements.
---------------------
(a) Copies of the Financial Statements are attached to the Disclosure
Schedule. Each of the Financial Statements are true and complete in
all material respects and were prepared in accordance with generally
accepted accounting principles applied on a consistent basis
throughout the periods indicated and fairly present in all material
respects the financial condition and operations of each Seller as of
the respective dates thereof and the results of its operation and
changes in financial position for the respective periods then ended.
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(b) Except to the extent reflected, reserved against, or disclosed on Pro
Forma Balance Sheet No. 1 and/or Pro Forma Balance Sheet No. 2, or the
Financial Statements, or the Disclosure Schedule, each Seller had, as
of such date, no material liabilities or obligations of any nature,
whether accrued, absolute, contingent, or otherwise, including without
limitation, unfunded pension or other retirement plan liabilities and
tax liabilities whether or not incurred in respect of or measured by
such Seller's income, for any period prior to the date of said
Financial Statements, or arising out of transactions entered into or
any set of facts existing prior thereto. Except to the extent
disclosed on the Disclosure Schedule, there exists no basis for the
assertion against any Seller, as of the date of the Financial
Statements or of Pro Forma Balance Sheet No. 1 and/or Pro Forma
Balance Sheet No. 2, of any material liability of any nature or in any
amount not fully reflected, reserved against, or disclosed in the
Financial Statements or in Pro Forma Balance Sheet No. 1 and/or Pro
Forma Balance Sheet No. 2.
9.6 Customers.
---------
The Disclosure Schedule includes a correct list of the twenty-five (25)
largest customers of the Sellers by sales in dollars for each of 1999 and
January through May of 2000 and the amount of business done by the Sellers
with each such customer for such periods. Each Seller has no knowledge that
any of the current customers of such Seller will or intend to (a) cease
doing business with such Seller; or (b) materially alter the amount of
business they are presently doing with such Seller; or (c) not do business
with the Purchaser No. 1 and/or Purchaser No. 2, as applicable, after the
Closing.
-34-
9.7 Intangible Property.
--------------------
The Disclosure Schedule includes an accurate list and summary description
of all patents, franchises, distributorships, registered and unregistered
trademarks, trade names and service marks, licenses, brand names and
company lists and all applications for the foregoing, presently owned
and/or held (as a licensee or otherwise) by the Sellers. Each Seller is not
a licensor in respect to any patents, trade secrets, inventions, shop
rights, know-how, trademarks, trade names, copyrights, or applications
therefor. The Disclosure Schedule contains an accurate and complete
description of such intangible property and the items of all licenses and
other agreements relating thereto. All of the above-mentioned intangibles
used in the Sellers' Business No. 1 and/or Sellers' Business No. 2 are the
sole property of the respective Seller and do not require the consent of or
consent to any other person as a condition to their use or the transaction
provided for herein and do not infringe upon the rights of others.
9.8 Significant Agreements.
-----------------------
The Disclosure Schedule contains an accurate and complete list of all
contracts, agreements, licenses, instruments and understandings (whether or
not in writing) to which any Seller is a party or is bound and that are
material to Business No. 1 and/or Business No. 2, assets, financial
condition or results of operations of each Seller. Without limiting the
generality of the foregoing, such list includes all such contracts,
agreements, licenses and instruments:
(a) Providing for payments of more than Five Thousand Dollars ($5,000.00)
per year, other than purchase orders incurred in the ordinary course
of business;
(b) Providing for the extension of credit other than consistent with
normal credit terms described in the Disclosure Schedule;
(c) Limiting the ability of the Sellers to conduct Business No. 1 or
Business No. 2 or any other business or to otherwise compete in its or
any other business, including as to manner or place;
(d) Providing for a guarantee or indemnity by any Seller, including but
not limited to any indemnification provided under any asset purchase
agreement, stock purchase agreement, or other transaction that any
Seller is a party to;
(e) With any Affiliate of any Seller;
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(f) With any labor union or employees' association connected with Sellers'
Business Xx. 0 xxx/xx Xxxxxxx' Xxxxxxxx Xx. 0;
(g) For the employment or retention of any director, officer, employee,
agent, shareholder, consultant, broker or advisor of any Seller or any
other contract between any Seller and any director, officer, employee,
agent, shareholder, consultant or advisor which does not provide for
termination at will by any Seller without further cost or other
liability to any Seller as of or at any time after the Closing.
(h) In the nature of a profit sharing, bonus stock option, stock purchase,
pension, deferred compensation, retirement, severance,
hospitalization, insurance or other plan or contract providing benefit
to any person or former director, officer, employee, agent,
shareholder, consultant, broker or advisor of any Seller, or such
person's dependents, beneficiaries or heirs;
(i) In the nature of an indenture, mortgage, promissory note, loan or
credit agreement or other contract relating to the borrowing of money
or a line of credit by any Seller or relating to the direct or
indirect guarantee or assumption by any Seller of obligations of
others;
(j) Leases or subleases with respect to any property, real, personal or
mixed, in which any Seller is involved, as lessor or lessee; and
(k) Distributorship Agreement(s) or License Agreement(s) with respect to
any property which any Seller has entered into as licensor.
True and correct copies of all items so disclosed in the Disclosure
Schedule (if written) have been provided or made available to Purchaser Xx.
0 xxx/xx Xxxxxxxxx Xx. 0. Each of such items listed, or required to be
listed, is a valid and binding obligation of the parties thereto
enforceable in accordance with its terms, subject to principles of equity,
bankruptcy laws, and laws affecting creditors' rights generally, and there
have been no material defaults or claims of material default by any Seller
and there are no facts or conditions that have occurred or that are
anticipated to occur which, through the passage of time or the giving of
notice, or both, would constitute a default by any Seller, or would cause
the acceleration of any obligation of any party thereto or the creation of
an Encumbrance upon any asset of any Seller. There are no material oral
contracts, agreements or understandings made by any Shareholder, material
to Purchased Assets No. 1 or Purchased Assets No. 2, except such as have
been disclosed in the Disclosure Schedule and for which an accurate summary
description has been provided.
-36-
9.9 Inventory.
---------
Except as specifically described on the Disclosure Schedule, all inventory
is reflected on the December 31, 1999 Pro Forma Balance Sheet, and at the
Closing Date will consist of items of quality and quantity which are usable
or saleable in the ordinary course of business of any Seller in the conduct
of Business No. 1 and/or Business No. 2, and items of below standard
quality and items not usable or saleable in the ordinary course of Sellers'
business have been written down in value in accordance with good business
practices to estimated net realizable market value or adequate reserves
have been provided therefor. The values at which the inventory are carried
on the list attached to the Disclosure Schedule reflect the normal
valuation policy of any Seller in setting inventory at the lower of cost or
net realizable market values, all in accordance with generally accepted
accounting principles. Except as set forth on the Disclosure Schedule,
since December 31, 1999, the inventory of each Seller has been maintained
at normal and adequate levels for the continuation of the Business No. 1
and/or Business No. 2 in its normal course. No change has occurred in such
inventory which affects or will affect the usability or salability thereof,
no write-downs or write-offs of the value of such inventory has occurred
and no additional amounts have been reserved with respect to such
inventories except in each case those adjustments made in the ordinary
course of business. The Disclosure Schedule lists the location of all
inventory together with a brief description of the type and amount at each
location.
9.10 Accounts Receivable and Vendor Receivables.
----------------------------------------------
All accounts receivable and vendor receivables of the Sellers which have
arisen in connection with Business No. 1 and/or Business No. 2 or otherwise
and which are reflected on the Financial Statements and all receivables
which have arisen since December 31, 1999 through the Closing shall have
arisen only from bonafide transactions in the ordinary course of business
and represent valid, collectible and existing claims, net of any reserve as
reflected on the Pro Forma Balance Sheet No. 1 and/or the Pro Forma Balance
Sheet No. 2. Subject to customer credit, the payment of each account and
vendor receivable will not be subject to any known defense, counterclaim
condition (other than Sellers' performance in the ordinary course of
business) whatsoever. The Disclosure Schedule hereto accurately lists, as
of the Closing Date, all receivables arising out of or relating to Business
Xx. 0 xxx/xx Xxxxxxxx Xx. 0, the amount owing and aging of such accounts
receivable, the name of the party from whom such account receivable is
owing, any security in favor of any Seller for the repayment of such
account receivable which any Seller purports to have. Each Seller has made
available to Purchaser No. 1 and Purchaser No. 2 complete and correct
copies of all instruments, documents and agreements evidencing such
accounts receivable and of all instruments, documents or agreements (if
any) creating security therefor.
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9.11 Taxes.
-----
Except as to Taxes not yet due and payable, and except for Taxes the
payment of which is being diligently contested in good faith and by proper
proceedings and for which adequate reserves have been established in
accordance with generally accepted accounting principles, and except as set
forth in the Disclosure Schedule, each Seller has filed all returns and
reports that are now required to be filed by it in connection with any
federal, state or local tax, duty or charge levied, assessed or imposed
upon them, or their property, including unemployment, social security and
similar taxes; and all of such taxes have been either paid or adequate
reserves or other provision has been made therefor. Each Seller,
Shareholder and Member shall pay, without right of reimbursement from
Purchaser No. 1 and/or Purchaser No. 2, all of Sellers', Shareholders' and
Members' income Taxes including but not limited to any Taxes attributable
to any gain under Section 1374 of the Code, including any interest and
penalties thereon, that relate to the activities of Sellers through the
Closing including this transaction, as due.
-38-
9.12 Title to Purchased Assets; Encumbrances.
-------------------------------------------
(a) With respect to Purchased Assets No. 1 and Purchased Assets No. 2
sold, at the Closing each Seller shall have good title to Purchased
Assets No. 1 and/or Purchased Assets No. 2 owned by it being acquired
by Purchaser No. 1 and/or Purchaser No. 2, respectively, and except
for matters expressly set forth in Section 3.1, Section 3.2 Section
3.3 or Section 3.4, which Encumbrances, if any, upon Purchased Assets
No. 1 and/or Purchased Assets No. 2 shall be removed at Closing, free
and clear of all Encumbrances whatsoever; immediately after the
transfer of Purchased Assets No. 1 being acquired by Purchaser No. 1
from each Seller and Purchased Assets No. 2 being acquired by
Purchaser No. 2 from each Seller, Purchaser No. 1 will own all of said
Purchased Assets No. 1 and Purchaser No. 2 will own all of said
Purchased Assets No. 2, free and clear of all Encumbrances whatsoever,
whether perfected or unperfected; and, by way of illustration but not
limitation, there are not any unpaid taxes, assessments or charges due
or payable by any Seller to any federal, state or local agency, or any
obligations or liabilities or any unsatisfied judgments against, or,
to the best of each Seller's knowledge, any litigation or proceedings
pending or threatened against any Seller by any of Seller's employees,
clients, customers, creditors, suppliers, or any other party (nor
state of facts for any such obligation, liability, litigation or
proceeding), that could become a claim, obligation, liability, lien or
other charge of or against Purchaser Xx. 0, Xxxxxxxxx Xx. 0, or
Purchased Assets No. 1 or Purchased Assets No. 2. To the best of
knowledge of each Seller, all of each Seller's tangible and other
operating assets used in Business No. 1 and/or Business No. 2 which
are being sold hereunder to Purchaser No. 1 and/or Purchaser No. 2,
respectively, are, in all material respects, in good operating
condition and repair, free of all structural, material or mechanical
defects and conform with all applicable laws and regulations.
(b) Except as otherwise specifically set forth herein, each Seller is not
a party to any contract, agreement, lease or commitment that would
result in any claim, obligation, liability, lien or other charge
against Purchaser No. 1 and/or Purchaser No. 2 or Purchased Assets No.
1 or Purchased Assets Xx. 0, xxx Xxxxxxxxx Xx. 0 xxx Xxxxxxxxx Xx. 0
are not obligated to assume the obligations under any contract,
agreement, lease or commitment of any Seller, except as specifically
set forth herein.
9.13 Pending Actions.
----------------
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Each Seller has not been served with or received notice of any actions,
suits, arbitrations, OSHA, EPA or other governmental violations, or any
other proceedings or investigations, either administrative or judicial,
strikes, lockouts or NLRB charges or complaints ("Actions and Disputes").
To the best of Sellers' knowledge, there are no Actions or Disputes pending
or threatened against or affecting (directly or indirectly) any Seller or
their respective property or assets, nor are there any facts or conditions
which exist which would give rise to any such Actions or Disputes which, if
determined adversely to any Seller, would have a material adverse effect
upon Sellers' Business Xx. 0 xxx/xx Xxxxxxx' Xxxxxxxx Xx. 0.
9.14 Insurance.
---------
The Disclosure Schedule contains an accurate and complete listing (showing
type of insurance, amount, insurance company, annual premium and special
exclusions) of all policies of fire, liability, worker's compensation and
other forms of insurance owned or held by any Seller. All such policies are
in full force and effect; are sufficient for compliance with all
requirements of law and of all agreements to which any Seller is a party;
are valid, outstanding and enforceable policies; provide adequate insurance
coverage for the assets and operations of any Seller and will remain in
full force and effect through the Closing. There are no outstanding
requirements or recommendations by any insurance company that issued a
policy with respect to any of the properties and assets of any Seller by
any Board of Fire Underwriters or other body exercising similar functions
or by any Governmental Entity requiring or recommending any repairs or
other work to be done on or with respect to any of the properties and
assets of any Seller or requiring or recommending any equipment or
facilities to be installed on or in connection with any of the properties
or assets of any Seller.
9.15 Status of Business.
--------------------
(a) Since December 31, 1999, Business No. 1 and Business No. 2 of the
Sellers have been operated only in the ordinary course, and, except as
set forth in the Disclosure Schedule, there has not been with respect
to Business Xx. 0 xxx/xx Xxxxxxxx Xx. 0:
(i) Any material change in its condition (financial or other),
assets, liabilities, obligations, business or earnings, except
changes in the ordinary course of business, none of which in the
aggregate has been materially adverse;
(ii) Any material liability or obligation incurred or assumed, or any
material contract, agreement, arrangement, lease (as lessor or
lessee), or other commitment entered into or assumed, on behalf
of Business No. 1 and/or Business No. 2, whether written or oral,
except in the ordinary course of business;
-00-
(xxx)Xxx xxxxxxxx or sale of material assets in anticipation of this
Agreement, or any purchase, lease, sale, abandonment or other
disposition of material assets, except in the ordinary course of
business; (iv) Any waiver or release of any material rights,
except for rights of nominal value;
(v) Any cancellation or compromise of any material debts owed to any
Seller or material claims known by any Seller against another
person or entity, except in the ordinary course of business;
(vi) Any damage or destruction to or loss of any physical assets or
property of any Seller which materially adversely affects
Business No. 1 and/or Business No. 2 or any of the properties of
any Seller (whether or not covered by insurance);
(vii)Any material changes in the accounting practices, depreciation
or amortization policy or rates theretofore adopted by any
Seller, or any material revaluation or write-up or write-down of
any of their assets;
(viii) Any direct or indirect redemption, purchase or other
acquisition for value by DataNet of its shares, or by DTS, DTP or
DP of its respective membership interests, or any agreement to do
so;
(ix) Any material increase in the compensation levels or in the method
of determining the compensation of any of the Sellers' officers,
directors, agents, employees or members, or any bonus payment or
similar arrangement with or for the benefit of any such person,
any increase in benefits expense to any Seller, any payments made
or declared into any profit-sharing, pension, or other retirement
plan for the benefit of employees of any Seller, except in the
ordinary course of business;
(x) Any loans or advances between any Seller and any Shareholder or
Member, or any family member or any associate or Affiliate of any
Seller or of any Shareholder or Member;
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(xi) Any material contract canceled or the terms thereof amended or
any notice received with respect to any such contract terminating
or threatening termination or amendment of any such contract;
(xii)Any transfer or grant of any material rights under any leases,
licenses, agreements, or with respect to any trade secrets or
know-how;
(xiii) Any labor trouble or employee controversy materially adversely
affecting Business No. 1 and/or Business No. 2 or assets; or
(xiv)Any dividend or other distribution on or in respect of shares of
DataNet's capital stock, or in respect of any membership interest
of DTS, DTP or DP.
(b) Each Seller is not
(i) in violation of any outstanding judgment, order, injunction,
award or decree specifically relating to Business Xx. 0 xxx/xx
Xxxxxxxx Xx. 0, xx
(xx) in violation of any federal, state or local law, ordinance or
regulation which is applicable to Business No. 1 and/or Business
No. 2, except where such violation does not have a materially
adverse effect on Business No. 1 and/or Business No. 2.
Each Seller has all permits, licenses, orders, approvals,
authorizations, concessions and franchises of any federal, state or
local governmental or regulatory body that are material to or
necessary in the conduct of Business No. 1 and/or Business No. 2,
except where failure to have such permit, license, order, approval,
authorization, concession or franchise does not have a materially
adverse effect on Business Xx. 0 xxx/xx Xxxxxxxx Xx. 0. All such
permits, licenses, orders, approvals, concessions and franchises are
set forth on the Disclosure Schedule and are in full force and effect
and there is no proceeding, or to the knowledge of any Seller,
threatened to revoke or limit any of them.
(c) No claim, litigation, action, investigation or proceeding is pending
or, to the knowledge of any Seller, threatened, and no order,
injunction or decree is outstanding, against or relating to Business
No. 1 and/or Business No. 2 or its assets, and each Seller does not
know of any information which could result in such a claim,
litigation, action, investigation or proceeding, which, if determined
adversely to such Seller, would have a material adverse effect upon
Sellers' Business Xx. 0 xxx/xx Xxxxxxxx Xx. 0.
-00-
(x) Xx the Closing, each Seller shall have accrued or paid in full, to all
employees of Business No. 1 and/or Business No. 2, all wages,
salaries, commissions, bonuses, vacations and other direct
compensation for all services performed by them. To the best of
Sellers' Knowledge, each Seller is in compliance with all federal,
state and local laws, ordinances and regulations relating to
employment and employment practices at Business No. 1 and/or Business
No. 2, and all employee benefit plans and tax laws relating to
employment at Business No. 1 and/or Business No. 2. There is no unfair
labor practice complaint against any Seller relating to Business No. 1
and/or Business No. 2 pending before the National Labor Relations
Board or similar agency or body and, to the best of Sellers'
Knowledge, no condition exists that could give rise to any unfair
labor practice complaint. There is no labor strike, dispute, slowdown
or stoppage actually pending or, to the Knowledge of any Seller,
threatened against or involving Business No. 1 and/or Business No. 2.
Each Seller has no labor contracts or collective bargaining agreements
with respect to any of its employees.
9.16 Environmental Laws.
-------------------
(a) To the best of Sellers' Knowledge, the real estate located at 0000
Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxx Xxxxxxxx, which is leased by Sellers,
("Real Estate") has not been used or operated in any fashion involving
producing, handling and disposing of chemicals, toxic substances,
wastes and effluent materials, x-rays or other materials or devices in
material violation of any laws, rules, regulations or orders, and to
the best of Sellers' Knowledge, the Real Estate is in material
compliance with applicable laws, regulations, ordinances, decrees and
orders arising under or relating to health, safety, and environmental
laws and regulations, including without limitation the Federal
Occupation and Safety Health Act, 29 U.S.C. 651, et seq.; Federal
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. 6901, et
seq.; Federal Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. 9601, et seq.; the Federal Clean
Air Act, 42 U.S.C. 2401, et seq.; the Federal Clean Water Act, 33
U.S.C. 1251, et seq.; and all state and local laws that correspond
therewith or supplement such laws.
-43-
(b) To the best of Sellers' Knowledge, the Real Estate has not been
operated, in violation of any laws, rules, regulations or orders, so
as to involve or create any surface impoundments, incinerators, land
fills, waste storage tanks, waste piles, or deep well injection
systems or for the purpose of storage, treatment or disposal of a
hazardous waste as defined by RCRA or hazardous substance, pollutant
or contaminate as defined by CERCLA and, to the best of Sellers'
Knowledge, no acts have been committed that would make the Real Estate
or any part thereof subject to remedial action under RCRA or CERCLA or
corresponding state or local laws.
(c) To the best of Sellers' Knowledge, there have not been, are not now
and as of the Closing Date, there will be no solid waste, hazardous
waste, hazardous substance, toxic substance, toxic chemicals,
pollutants or contaminants, underground storage tanks, purposeful
dumps, or accidental spills in, on or about the Real Estate or any of
the assets of any Seller, whether real or personal, owned or leased,
or stored on any real property owned or leased by any Seller or by any
Seller's lessees, licensees, invites, or predecessors.
(d) Each Seller is not engaged in, and to the best of Sellers' Knowledge
and belief, is not threatened with any litigation, or governmental or
other proceeding which may give rise to any claim against the Real
Estate. Specifically, there are no pending suits, charges, actions,
governmental investigations, or other proceedings, involving, directly
or indirectly without limitation, the laws, statutes and regulations
set forth in subsection (a), above, whether initiated by a third party
or by any Seller and there are none, to the best of Sellers'
Knowledge, threatened against or relating to or involving the Real
Estate or the transactions contemplated by this Agreement. Each Seller
is not in default with respect to any order, writ, injunction or
decree of any federal, state, local or foreign court, department,
agency or instrumentality.
(e) The Disclosure Schedule will list all waste disposal sites, dump sites
and other areas either on the Real Estate or offsite at which
hazardous or toxic waste generated by any Seller has been disposed (in
each case identifying such waste) and it will specifically identify
each such site or area which is or has been included in any published
federal, state or local (domestic or foreign) superfund or other list
of hazardous or toxic waste sites or areas.
(f) To the best of Sellers' Knowledge, each Seller has obtained all
permits, and licenses and other authorizations required by all
environmental laws; and all of such permits, licenses and other
authorizations are in full force and effect as of the date hereof.
A true and correct list of all such permits, licenses and other
authorizations is set forth in the Disclosure Schedule.
-44-
9.17 Certain Employees
------------------
(a) Each of the following is included in the list of agreements set forth
in the Disclosure Schedule: all collective bargaining agreements,
employment and consulting agreements, bonus plans, deferred
compensation plans, employee pension plans or retirement plans,
employee profit-sharing plans, employee stock purchase and stock
option plans, hospitalization insurance, and other plans and
arrangements providing for employee benefits of employees of the
Sellers.
(b) The Disclosures Schedule contains a true, complete and accurate list
of the following: the names, positions, and compensation of the
present employees of each Seller, together with a statement of the
annual salary payable to salaried employees and a summary of the
bonuses and description of agreements for additional compensation and
other like benefits, if any, paid or payable to such persons for the
period set forth in the Disclosure Schedule. Except as listed in the
Disclosure Schedule, to the best of Sellers' Knowledge, all employees
of the Sellers are employees-at-will.
(c) Each Seller has no retired employees who are receiving or are entitled
to receive any payments, health or other benefits from such Seller.
9.18 Payments to Employees.
-----------------------
All accrued obligations of each Seller relating to employees and agents of
such Seller, whether arising by operation of law, by contract, or by past
service, for payments to trusts or other funds or to any governmental
agency, or to any individual employee or agent (or his heirs, legatees, or
legal representatives) with respect to unemployment compensation benefits,
profit sharing or retirement benefits, or social security benefits have
been paid or accrued by such Seller. All obligations of each Seller as an
employer or principal relating to employees or agents, whether arising by
operation of law, by contract, or by past practice, for vacation and
holiday pay, bonuses, and other forms of compensation which are or may
become payable to such employees or agents, have been paid or will be paid
or accrued by such Seller.
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9.19 Change of Corporate Name.
---------------------------
At the Closing, the Sellers, if requested by either Purchaser No. 1 and/or
Purchaser No. 2, will adopt and file with the Secretary of State of North
Carolina an Amendment to the Charter of DataNet (also including DTS, DTP
and DP, if so requested) changing the name of DataNet to a name
substantially dissimilar to DATANET, INC., and each Seller shall also
execute a Consent for Use of Similar Name form, as set forth in the
Disclosure Schedule, granting to Purchaser No. 1 and/or Purchaser No. 2 (as
may be agreed by such parties) the use of the name DATANET, INC., DATANET
TECHNICAL SERVICES, LLC, DATANET TANGIBLE PRODUCTS, LLC and DATANET
PROGRAMMING, LLC.
9.20 Brokers and Finders.
---------------------
Except as set forth in the Disclosure Schedule, no broker, finder or other
person or entity acting in a similar capacity has participated on behalf of
any Seller in bringing about the transaction herein contemplated, or
rendered any service with respect thereto or been in any way involved
therewith.
9.21 Preservation of Organization.
------------------------------
Except as set forth on the Disclosure Schedule, since December 31, 1999,
the Sellers have kept intact Business No. 1 and/or Business No. 2 and
organization of the Sellers; retained the services of all the Sellers'
material employees and agents, retained the Sellers' arrangements with the
manufacturers of the products distributed by each Seller in the same manner
as conducted prior to such date, and engaged in no transaction other than
in the ordinary course of Sellers' Business Xx. 0 xxx/xx Xxxxxxxx Xx. 0.
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9.22 Absence of Certain Business Practices.
-----------------------------------------
None of the Sellers, or, to Sellers' Knowledge, any officer, employee or
agent of any Seller, nor any other Person acting on its behalf, has,
directly or indirectly, within the past five years given or agreed to give
any gift, bribe, rebate or kickback or otherwise provide any similar
benefit to any customer, supplier, governmental employee or any other
Person who is or may be in a position to help or hinder any Seller or
Business No. 1 and/or Business No. 2 (or assist any Seller in connection
with any actual or proposed transaction relating to Business No. 1 and/or
Business No. 2 or any other business previously operated by any Seller) (i)
which subjected or might have subjected any Seller to any damage or penalty
in any civil, criminal or governmental litigation or proceeding, (ii) which
if not given in the past, might have had a material adverse effect on
Business Xx. 0 xxx/xx Xxxxxxxx Xx. 0, (xxx) which if not continued in the
future, might have a material adverse effect on Business No. 1 and/or
Business No. 2 or subject any Seller to suit or penalty in any private or
governmental litigation or proceeding, (iv) for any of the purposes
described in Section 162(c) of the Code or (v) for the purpose of
establishing or maintaining any concealed fund or concealed bank account.
9.23 Suppliers.
---------
The Disclosure Statement sets forth the names of and description of
contractual arrangements (whether or not binding or in writing) with the
ten (10) largest suppliers of the Sellers by sales or services in dollars.
Assuming that Purchaser No.1 and/or Purchaser No. 2, as applicable,
continues to conduct Business No. 1 and/or Business No. 2 in the ordinary
course consistent with Sellers' prior practices generally and specifically
with respect to Sellers' current suppliers, each Seller has no direct
knowledge that any of the current suppliers of the Sellers will, or intend
to, (a) cease doing business with any Seller; or (b) materially alter the
amount of business they are currently doing with any Seller; or (c) not do
business with Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0 after the Closing.
9.24 Product Liability Claims.
--------------------------
To the best of Sellers' Knowledge, there are no material product liability
claims against any Seller, either potential or existing, which are not
fully covered by product liability insurance coverage with a responsible
company which, if determined adversely to any Seller, would have a material
adverse effect upon Sellers' Business Xx. 0 xxx/xx Xxxxxxxx Xx. 0.
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9.25 Employee Benefit Plans.
------------------------
For the purposes of this Section 9.25, "Seller" shall include all persons
who are members of a controlled group, a group of trades or businesses
under common control, or an affiliated service group (within the meanings
of Sections 414(b), (c) or (m) of the Code), of which any Seller is a
member.
(a) The Employee Benefit Plans presently maintained by DataNet or to which
any Seller has contributed within the past six (6) years, including
any terminated or frozen plans which have not yet distributed all plan
assets, are fully set forth in the Disclosure Schedule. For purposes
of this provision, the term "Employee Benefit Plan" shall mean:
(i) A Welfare Benefit Plan as defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
established for the purpose of providing for its participants or
their beneficiaries, through the purchase of insurance or
otherwise, medical, surgical, or hospital care or benefits, or
benefits in the event of sickness, accident, disability, death or
unemployment (including any plan or program of severance pay), or
vacation benefits, apprenticeship or other training programs, or
day care centers, scholarship funds, or prepaid legal services,
or any benefit described in Section 302(c) of the Labor
Management Relations Act of 1947;
(ii) An Employee Pension Benefit Plan as defined in Section 3(2) of
ERISA established or maintained by any Seller for the purpose of
providing retirement income to employees or for the purpose of
providing deferral of income by employees for periods extending
to the termination of covered employment or beyond; and
(iii)Any other plan or arrangement not covered by ERISA but which
provides benefits to employees or former employees and results in
an accrued liability on the part of any Seller either by contract
or by operation of law.
(b) With respect to any such Employee Benefit Plans, the Seller represents
and warrants that, to the best of Sellers' Knowledge;
(i) Each Seller has not, with respect to any Employee Benefit Plans,
engaged in any prohibited transaction, as such term is defined in
Section 4975 of the Code or Section 406 of ERISA.
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(ii) Each Seller has, with respect to any Employee Benefit Plans,
substantially complied with all reporting and disclosure
requirements required by Title I, Subtitle B, Part 1 of ERISA.
(iii)There was no accumulated funding deficiency (as defined in
section 302 of ERISA and Section 412 of the Code) with respect to
any Employee Pension Benefit Plan which is a defined benefit
pension plan, whether or not waived, as of the last day of the
most recent fiscal year of the plans ending prior to the date of
this Agreement.
(iv) Except as described on the Disclosure Schedule, there are no
contributions due to any Employee Pension Benefit Plan for the
most recent fiscal year of the plans ending prior to the date of
this Agreement and the Sellers' Financial Statements reflect any
liability of any Seller to make contributions to the Employee
Pension Benefit Plans, and a pro rata portion of the
contributions (including matching contributions) for the plan
year on which the Closing Date occurs shall have been made on or
prior to the Closing Date for the period ending on the Closing
Date.
(v) No material liability to the Pension Benefit Guaranty Corporation
("PBGC") has been asserted with respect to any Employee Pension
Benefit Plan which is a defined benefit pension plan.
(vi) There has been no reportable event as described in Section
4043(b) of ERISA since the effective date of Section 4043 of
ERISA with respect to any Employee Pension Benefit Plan which is
a defined benefit plan.
(vii)Except for claims for benefits by participants and beneficiaries
in the normal course of events, to the best of Sellers'
knowledge, there are no claims, pending or threatened, by any
individual or Governmental Entity, which, if decided adversely,
would have a material adverse effect upon the financial condition
of any Employee Benefit Plan, the plan administrator of any
Employee Benefit Plan, or any Seller.
(viii) Each Seller has made available for inspection all annual
reports for such Seller filed on Internal Revenue Service ("IRS")
Form 5500 or 5500C, all reports for each Seller prepared by an
actuary for the last three plan years, the plan and trust
documents and the Summary Plan Description, as amended, for each
Employee Benefit Plan and the last filed PBGC1 Form (if
applicable) for each Employee Benefit Plan, with respect to any
Employee Benefit Plans other than multi-employer plans (within
the meaning of Section 3(37) of ERISA), and other reports filed
with the PBGC during the last three plan years.
-49-
(ix) All Employee Pension Benefit Plans are intended to be qualified
retirement plans under the Code. The IRS has issued, and each
Seller has made available for inspection, one or more
determination letters with respect to the qualification of all
Employee Pension Benefit Plans stating that the IRS has made a
favorable determination as to the qualification of such Plan
under Section 401(a) of the Code, and that continued
qualification of the Plan in its present form will depend upon
its effect in operation. The time for adoption of any amendments
required by changes in the Code since such determination letters
were issued, or changes required by the IRS as a condition for
continued qualification of such plans has not expired, or did not
expire without such amendments being made. Such plans are now,
and always have been, established in writing and maintained and
operated in accordance with the plan documents, ERISA, the Code,
and all other applicable laws. Except as described in the
Disclosure Schedule, such Plans are now and always have been,
established in writing and maintained and operated substantially
in accordance with the plan documents, ERISA, the Code and all
other applicable laws, in all material respects.
(x) There is no liability arising from the termination or partial
termination of any Employee Benefit Plan, except for liabilities
as to which adequate reserves are reflected on the Financial
Statements, and there exists no condition presenting a material
risk of such liability.
(xi) Each Seller has timely made any contributions it is obligated to
make to any multi-employer plan within the meaning of Section
3(37) of ERISA. Each Seller has no liability arising as a result
of withdrawal from any multi-employer plan, no such withdrawal
liability has been asserted and no such withdrawal liability will
be asserted with regard to any withdrawal or partial withdrawal
on or before the date of this Agreement.
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9.26 Assets Necessary to the Business.
------------------------------------
Each Seller owns, leases or holds under license all assets and properties
(tangible and intangible) necessary to carry on Business No. 1 and Business
No. 2 and operations as presently conducted and as shown on the Financial
Statements. Such assets and properties are all of the assets and properties
necessary to carry on Sellers' Business No. 1 and Business No. 2 as
presently conducted and Shareholders (other than through their ownership of
stock in DataNet and/or as set forth on the Disclosure Schedule) nor any
member of his family owns or leases or has any interest in any assets or
properties presently being used to carry on Business No. 1 or Business No.
2 of any Seller.
9.27 Transactions with Affiliates.
------------------------------
Except as disclosed on the Disclosure Schedule, there is no lease,
sublease, contract, agreement or other arrangement of any kind whatsoever
entered into by any Seller and its Shareholders or Members or Affiliate.
9.28 Territorial Restrictions.
-------------------------
Except as described in the Disclosure Schedule, each Seller is not
restricted by any written agreement or understanding with any other Person
from carrying on the Business No. 1 and/or Business No. 2 anywhere in the
world. Neither Purchaser nor any of its Affiliates will, as a result of its
acquisition of Purchased Assets No. 1 and/or Purchased Assets No. 2 become
restricted in carrying on Business No. 1 and/or Business No. 2 anywhere in
the world as a result of any contract or other agreement to which any
Seller is a party or by which it is bound.
9.29 Redemption of Certain Shareholders.
-------------------------------------
Each Seller, the Shareholders and Members represent and warrant that, on
the date(s) set forth in the Disclosure Schedule, DataNet redeemed all the
issued and outstanding shares of common stock of DataNet owned by certain
individuals set forth in the Disclosure Schedule (the "Redeemed
Shareholders"), and DP redeemed all the issued and outstanding membership
interest in DP owned by Xxx Xxxxxxxxx (the "Redeemed Member"). In
connection with the redemption of shares of common stock from the Redeemed
Shareholders and in connection with the redemption of the membership
interest in DP from the Redeemed Member, the Sellers, Shareholders and
Members disclosed all material facts concerning this Agreement and each
Seller and Shareholders transactions with Purchaser No. 1 and Purchaser No.
2, including all material terms, conditions and considerations that
occurred prior to the redemption. In making such disclosures to the
Redeemed Shareholders and the Redeemed Member, and in redeeming the
Redeemed Shareholders' shares of common stock of DataNet and in redeeming
the Redeemed Member's membership interest in DP, the Sellers and
Shareholders and Members did not make any untrue statement of a material
fact, or omit to state a material fact necessary to make all such
statements and disclosures not misleading. Each Seller, Shareholder and
Member shall indemnify and hold harmless Purchaser No. 1 and Purchaser No.
2, their respective successors and assigns, against all loss, liability,
damage or expense (including, without limitation, interest, penalties and
reasonable attorneys' fees) arising from and in connection with any
misrepresentation or material omission or breach of the representations and
warranties set forth in this paragraph.
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9.30 Full Disclosure.
----------------
None of the representations and warranties made by any Seller named herein,
or made on its behalf, including any disclosures made in the Disclosure
Schedule, contains or will contain, to the best of Sellers' knowledge, any
untrue statement of material fact or omits or will omit any material fact.
10.
REPRESENTATIONS AND WARRANTIES
------------------------------
OF PURCHASER XX. 0 XXX XXXXXXXXX XX. 0
--------------------------------------
Purchaser No. 1 hereby represents and warrants to the Sellers that the following
statements are true and correct as of the date hereof, and shall be true and
correct as of the Closing Date:
10.1 Organization, Good Standing and Power of Purchaser No. 1.
----------------------------------------------------------------
(a) Purchaser No. 1 is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has
full corporate power and lawful authority to execute, deliver and
perform this Agreement and conduct Business No. 1 of the Sellers
currently conducted by the Sellers in each of the jurisdictions in
which the Sellers currently conduct Business No. 1, which are the only
jurisdictions where the failure to be so qualified by Purchaser No. 1
will have a material adverse effect on the business prospects or
financial condition of Purchaser No. 1.
-52-
10.2 Status of Agreements.
----------------------
(a) All requisite corporate action (including action of its Board of
Directors) to approve, execute, deliver and perform this Agreement and
each of the other agreements, instruments and other documents to be
delivered by and on behalf of Purchaser No. 1 ("Other Purchaser No. 1
Documents") in connection herewith has been taken by Purchaser No. 1.
This Agreement has been duly and validly executed and delivered by
Purchaser No. 1 and constitutes the valid and binding obligation of
Purchaser No. 1 enforceable in accordance with its terms. All Other
Purchaser No. 1 Documents in connection herewith will, when executed
and delivered, constitute the valid and binding obligation of
Purchaser No. 1 enforceable in accordance with their respective terms.
(b) No authorization, approval, consent or order of, or registration,
declaration or filing with, any court, governmental body or agency or
other public or private body, entity or person is required (except for
Purchaser No. 1's primary lender, Deutsche Financial Services Company,
whose consent shall be obtained prior to Closing) in connection with
the execution, delivery or performance of this Agreement or any Other
Purchaser No. 1 Documents in connection herewith.
(c) Neither the execution, delivery nor performance of this Agreement or
any of the Other Purchaser No. 1 Documents in connection herewith does
or will:
(i) conflict with, violate or result in any breach of any judgment,
decree, order, statute, ordinance, rule or regulation applicable
to Purchaser No. 1;
(ii) conflict with, violate or result in any breach of any agreement
or instrument to which Purchaser is a party or by which Purchaser
No. 1 or any of Purchaser's assets or properties is bound, or
constitute a default thereunder or give rise to a right of
acceleration of an obligation of Purchaser No. 1; or
(iii)conflict with or violate any provision of the Articles of
Incorporation or By-Laws of Purchaser No. 1.
10.3 Brokers and Finders.
---------------------
No broker, finder or other person or entity acting in a similar capacity
has participated on behalf of Purchaser No. 1 in bringing about the
transaction herein contemplated, or rendered any service with respect
thereto or been in any way involved therewith.
Purchaser No. 2 hereby represents and warrants to the Sellers that the following
statements are true and correct as of the date hereof.
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10.4 Organization, Good Standing and Power of Purchaser No. 2.
----------------------------------------------------------------
(a) Purchaser No. 2 is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has
full corporate power and lawful authority to execute, deliver and
perform this Agreement and conduct Business No. 2 of the Sellers
currently conducted by the Sellers in each of the jurisdictions in
which the Sellers currently conduct Business No. 2, which are the only
jurisdictions where the failure to be so qualified by Purchaser No. 2
will have a material adverse effect on the business prospects or
financial condition of Purchaser No. 2.
10.5 Status of Agreements.
----------------------
(a) All requisite corporate action (including action of its Board of
Directors) to approve, execute, deliver and perform this Agreement and
each of the other agreements, instruments and other documents to be
delivered by and on behalf of Purchaser No. 2 ("Other Purchaser No. 2
Documents") in connection herewith has been taken by Purchaser No. 2.
This Agreement has been duly and validly executed and delivered by
Purchaser No. 2and constitutes the valid and binding obligation of
Purchaser No. 2 enforceable in accordance with its terms. All Other
Purchaser No. 2 Documents in connection herewith will, when executed
and delivered, constitute the valid and binding obligation of
Purchaser No. 2 enforceable in accordance with their respective terms.
(b) No authorization, approval, consent or order of, or registration,
declaration or filing with, any court, governmental body or agency or
other public or private body, entity or person is required (except for
Purchaser No. 2's primary lender, Deutsche Financial Services Company,
whose consent shall be obtained prior to Closing) in connection with
the execution, delivery or performance of this Agreement or any Other
Purchaser No. 2 Documents in connection herewith.
(c) Neither the execution, delivery nor performance of this Agreement or
any of the Other Purchaser No. 2 Documents in connection herewith does
or will:
-54-
(i) conflict with, violate or result in any breach of any judgment,
decree, order, statute, ordinance, rule or regulation applicable
to Purchaser No. 2;
(ii) conflict with, violate or result in any breach of any agreement
or instrument to which Purchaser No. 2 is a party or by which
Purchaser No. 2 or any of Purchaser's assets or properties is
bound, or constitute a default thereunder or give rise to a right
of acceleration of an obligation of Purchaser No. 2; or
(iii)conflict with or violate any provision of the Articles of
Incorporation or By-Laws of Purchaser No. 2.
10.6 Brokers and Finders.
-------------------
No broker, finder or other person or entity acting in a similar capacity
has participated on behalf of Purchaser No. 2 in bringing about the
transaction herein contemplated, or rendered any service with respect
thereto or been in any way involved therewith.
10.7 Full Disclosure
----------------
None of the representations and warranties made by Purchaser No. 1 herein
contains or will contain, to the best of Purchaser No. 1's knowledge, any
untrue statement of material fact or omits or will omit any material fact.
None of the representations and warranties made by Purchaser No. 2 herein
contains or will contain, to the best of Purchaser No. 2's knowledge, any
untrue statement of material fact or omits or will omit any material fact.
11.
INTERIM OPERATIONS
------------------
11.1 Sellers' Covenants.
-------------------
From the date of the December 31, 1999 Pro Forma Balance Sheet No. 1 and
the December 31, 1999 Pro Forma Balance Sheet No. 2 to the Closing Date,
and except as set forth on the Disclosure Schedule, the Sellers shall not:
(i) change its articles of incorporation or bylaws or articles of
organization or operating agreements or merge or consolidate with
or into any entity, or acquire control of any entity, or obligate
itself to do so;
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(ii) issue or agree to issue any shares of the capital stock of
DataNet or any stock options, warrants, rights, calls or
commitments of any character calling for or permitting the issue,
transfer, sale or delivery of any such capital stock, or issue or
agree to issue any membership interest in DTP, DTS and DP, or any
options, warrants, rights, calls or commitments of any character
calling for or permitting the issue, transfer, sale or delivery
of any such membership interest;
(iii)declare, set aside or pay any dividend or other distribution on
or in respect of shares of its capital stock, or purchase, redeem
or otherwise acquire, or agree to purchase, redeem or otherwise
acquire, any of its capital stock;
(iv) authorize, guarantee or incur indebtedness for borrowed money,
including but not limited to, borrowing for the payment of any
taxes, except in the ordinary course of business;
(v) sell or agree to sell any of the Purchased Assets No. 1 and/or
Purchased Assets No. 2, except in the ordinary course of
business;
(vi) mortgage, pledge or subject to any security interest any of the
Purchased Assets No. 1 and/or Purchased Assets No. 2;
(vii)make any capital expenditures or capital additions or
betterments, or commitments therefor, aggregating in excess of
$5,000.00;
(viii) refrain and cause its officers, employees and agents to refrain
from seeking other offers to purchase the stock or assets of any
Seller;
(ix) enter into any long-term contractual arrangements or blanket
purchase orders which extend past the Closing Date without the
express written consent of Purchaser No. 1 and Purchaser No. 2;
(x) increase the salaries of any existing employees, hire new
managers or employees, pay or award bonuses, make loans, or
permit draws by any individuals without Purchaser No. 1's and
Purchaser No. 2's express written consent.
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11.2 Conduct of Business.
---------------------
Each Seller will operate the Business No. 1 and Business No. 2
substantially as presently operated and only in the ordinary course of
business and, consistent with such operation, will use its best efforts to
preserve intact for the benefit of Purchaser No. 1 and Purchaser No. 2, the
present business organization of the Business No. 1 and the Business No. 2
and the relationships and good will of suppliers, customers, clients and
others having business relations with Business No. 1 and Business No. 2.
Without limiting the generality of the foregoing, each Seller will not take
any of the actions contemplated by, or which would give rise to, a result
contemplated by Section 9.15(a) hereof.
11.3 Access to Information.
-----------------------
From the date hereof until Closing, each Seller shall make available or
cause to be made available to the accountants, attorneys or other
representatives of Purchaser No. 1 and Purchaser No. 2 for examination
during normal business hours, upon reasonable requests, all properties,
assets, books of accounts, title papers, insurance policies, contracts,
leases, commitments, records and other documents of every character
relating to the Business No. 1 and Business No. 2.
11.4 Other Actions.
--------------
From the date hereof until Closing, each Seller shall not take any action
which shall prevent the representations, warranties and covenants of Seller
set forth herein from being true and correct at the Closing.
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12.
SURVIVAL OF AND RELIANCE UPON REPRESENTATIONS,
WARRANTIES AND AGREEMENTS; INDEMNIFICATION
------------------------------------------
12.1 Survival of Representations and Warranties.
----------------------------------------------
The parties acknowledge and agree that all representations, warranties and
agreements contained in this Agreement or in any agreement, instrument,
exhibit, certificate, schedule or other document delivered in connection
herewith, shall survive the Closing and continue to be binding upon the
party giving such representation, warranty or agreement and shall be fully
enforceable to the extent provided for in Sections 12.3 and 12.4 hereof, at
law or in equity, for the period beginning on the date of Closing and
ending three (3) years thereafter, except for the representations,
warranties and agreements designated and identified in Sections 3.1, 3.2,
3.3, 3.4, 4.2, 9.3, 9.11, 9.12, 9.13, 9.16, 10.2 and 10.4 which shall
survive the Closing and shall terminate in accordance with the statute of
limitations governing written contracts in the State of North Carolina and
Exhibits I, I-1, I-2 and I-3, and Exhibits J, X-0, X-0, X-0, X-0, X-0, X-0,
X-0, X-0, X-0, X-00, X-00, X-00, X-00, X-00 and J-15, which shall terminate
as provided therein.
12.2 Reliance Upon and Enforcement of Representations, Warranties and
-----------------------------------------------------------------------
Agreements.
----------
(a) Each Seller hereby agrees that, notwithstanding any right of Purchaser
No. 1 and/or Purchaser No. 2 to fully investigate the affairs of each
Seller, and notwithstanding knowledge of facts determined or
determinable by Purchaser No. 1 and/or Purchaser No. 2 pursuant to
such investigation or right of investigation, Purchaser No. and/or
Purchaser No. 2 have the right to rely fully upon the representations,
warranties and agreements of any Seller contained in this Agreement
and upon the accuracy of any document, certificate or exhibit given or
delivered to Purchaser No. 1 and/or Purchaser No. 2 pursuant to the
provisions of this Agreement.
(b) Purchaser No. 1 and/or Purchaser No. 2 hereby agree that,
notwithstanding any right of any Seller to fully investigate the
affairs of Purchaser No. 1 and/or Purchaser No. 2, and notwithstanding
knowledge of facts determined or determinable by any Seller pursuant
to such investigation or right of investigation, each Seller have the
right to rely fully upon the representations, warranties and
agreements of Purchaser No. 1 and/or Purchaser No. 2 contained in this
Agreement and upon the accuracy of any document, certificate or
exhibit given or delivered to each Seller pursuant to the provisions
of this Agreement.
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12.3 Indemnification by Sellers, Shareholders and Members.
---------------------------------------------------------
Provided Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0 make a written claim for
indemnification against any Seller, and/or Shareholders and/or Members
within any applicable survival period specified in Section 12.1, and
subject to the limitations set forth in Section 12.7, each Seller,
Shareholders and Members (jointly and severally), shall indemnify Purchaser
Xx. 0 xxx/xx Xxxxxxxxx Xx. 0 against and hold them harmless from:
(i) any and all loss, damage, liability or deficiency resulting from or
arising out of any inaccuracy in or breach of any representation,
warranty, covenant, or obligation made or incurred by any Seller
herein or in any other agreement, instrument or document delivered by
or on behalf of any Seller pursuant to the provisions of the
Agreement;
(ii) any imposition (including by operation of law) or attempted imposition
by a third party upon Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0 of any
liability of any Seller which Purchaser No. 1 has not specifically
agreed to assume pursuant to Section 3.1 of this Agreement and/or
which Purchaser No. 2 has not specifically agreed to assume pursuant
to Section 3.2 of this Agreement;
(iii)any liability (except for any Assumed Liabilities No. 1 or Assumed
Liabilities No. 2 described in Sections 3.1 and 3.2, respectively) or
other obligation incurred by or imposed upon Purchaser Xx. 0 xxx/xx
Xxxxxxxxx Xx. 0 resulting from the failure of the parties to comply
with the provisions of any law relating to bulk transfers which may be
applicable to the transaction herein contemplated;
(iv) any and all costs and expenses (including reasonable legal and
accounting fees) related to any of the foregoing.
Except as otherwise provided in this Agreement, nothing in this Section
12.3 shall be construed to limit the amount to which, or the time by which,
by reason of offset or otherwise, that Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx.
0 may recover from any Seller or any Shareholder or any Member pursuant to
this Agreement resulting from any Seller's or any Shareholder's or any
Member's breach or violation of any representation, warranty, covenant or
agreement contained herein.
Any amounts to which Purchaser No. 1 and/or Purchaser No. 2, their
successors or assigns, is entitled to indemnification pursuant to the
provisions of this Section, shall first be offset against the amount
payable to Seller against the subordinated promissory notes, then against
any payments due under Section 4.6. Provided, however, the offset in any
one year may not exceed the aggregate amount payable of principal and
interest due on said applicable subordinated promissory notes for said
year, and any amount, if any, payable under Section 4.6 for such year.
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12.4 Indemnification by Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0.
-----------------------------------------------------------------
Provided Shareholders and/or any Seller and/or any Member make a written
claim for indemnification against Purchaser No. 1 and/or Purchaser No. 2,
as applicable, within any applicable survival period specified in Section
12 and subject to the limitation set forth in Section 12.8, Purchaser No. 1
and/or Purchaser No. 2, as applicable, shall indemnify each Seller and each
Shareholder and each Member against and hold them harmless from any and all
loss, damage, liability or deficiency resulting from or arising out of: (i)
any Assumed Liabilities of Purchaser No. 1 or any Assumed Liabilities of
Purchaser No. 2 , as applicable; (ii) any liability of Purchaser No. 1
and/or Purchaser No. 2 arising out of Purchaser No. 1's and/or Purchaser
No. 2's operations subsequent to the Closing (except to the extent such
liability is the result of a breach of a covenant or warranty of any Seller
hereunder); (iii) any inaccuracy in or breach of any representation,
warranty, covenant or obligation made or incurred by Purchaser No. 1 and/or
Purchaser No. 2, as applicable herein or in any other agreement,
instrument, or document delivered by or on behalf of Purchaser No. 1 and/or
Purchaser No. 2 pursuant to the provisions of this Agreement; and (iv) any
and all related costs and expenses (including reasonable legal and
accounting fees). Except as otherwise provided herein, nothing in this
Section 12.4 shall be construed to limit the amount to which, or the time
by which, by reason of offset or otherwise, that any Seller may recover
from Purchaser No. 1 and/or Purchaser No. 2 pursuant to this Agreement
resulting from its breach or violation of any representation, warranty,
covenant or agreement contained herein.
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12.5 Notification of and Participation in Claims.
------------------------------------------------
(a) No claim for indemnification shall arise until notice thereof is given
to the party from whom indemnity is sought. Such notice shall be sent
within ten (10) days after the party to be indemnified has received
notification of such claim, but failure to notify the indemnifying
party shall in no event prejudice the right of the party to be
indemnified under this Agreement, unless the indemnifying party shall
be prejudiced by such failure and then only to the extent of such
prejudice. In the event that any legal proceeding shall be instituted
or any claim or demand is asserted by any third party in respect of
which Sellers/Shareholders/Members on the one hand, or Purchaser Xx. 0
xxx/xx Xxxxxxxxx Xx. 0, as applicable, on the other hand, may have an
obligation to indemnify the other, the party asserting such right to
indemnity (the "Party to be Indemnified") shall give or cause to be
given to the party from whom indemnity is sought (the "Indemnifying
Party") written notice thereof and the Indemnifying Party shall have
the right, at its option and expense, to participate in the defense of
such proceeding, claim or demand, but not to control the defense,
negotiation or settlement thereof, which control shall at all times
rest with the Party to be Indemnified, unless the Indemnifying Party
irrevocably acknowledges in writing full and complete responsibility
for and agrees to provide indemnification of the Party to be
Indemnified, in which case such Indemnifying Party may assume such
control through counsel of its choice and at its expense. In the event
the Indemnifying Party assumes control of the defense, the
Indemnifying Party shall not be responsible for the legal costs and
expenses of the Party to be Indemnified in the event the Party to be
Indemnified decides to join in such defense. The parties hereto agree
to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such third party legal proceeding,
claim or demand.
(b) If the Party to be Indemnified is also the party controlling the
defense, negotiation or settlement of any matter, and if the Party to
be Indemnified determines to compromise the matter, the Party to be
Indemnified shall immediately advise the Indemnifying Party of the
terms and conditions of the proposed settlement. If the Indemnifying
Party agrees to accept such proposal, the Party to be Indemnified
shall proceed to conclude the settlement of the matter, and the
Indemnifying Party shall immediately indemnify the Party to be
Indemnified pursuant to the terms of Sections 12.3 and 12.4 hereunder.
If the Indemnifying Party does not agree within fourteen (14) days to
accept the settlement (said 14-day period to begin on the first
business day following the date such party receives a complete copy of
the settlement proposal), the Indemnifying Party shall immediately
assume control of the defense, negotiation or settlement thereof, at
that Indemnifying Party's expense. Thereafter, the Party to be
Indemnified shall be indemnified in the entirety for any liability
arising out of the ultimate defenses, negotiation or settlement of
such matter.
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(c) If the Indemnifying Party is the party controlling the defense,
negotiation or settlement of any matter, and the Indemnifying Party
determines to compromise the matter, the Indemnifying Party shall
immediately advise the Party to be Indemnified of the terms and
conditions of the proposed settlement. If the Party to be Indemnified
agrees to accept such proposal, the Indemnifying Party shall proceed
to conclude the settlement of the matter and immediately indemnify the
Party to be Indemnified pursuant to the terms of Sections 12.3 or 12.4
hereunder. If the Party to be Indemnified does not agree within
fourteen (14) days to accept the settlement (said 14-day period to
begin on the first business day following the date such party receives
a complete copy of the settlement proposal), the Party to be
Indemnified shall immediately assume control of the defense,
negotiation or settlement thereof, at the Party to be Indemnified's
expense. If the final amount paid to resolve the claim is less than
the amount of the original proposed settlement made by the
Indemnifying Party, then the Party to be Indemnified shall receive
such indemnification pursuant to Sections 12.3 or 12.4 hereof,
including any and all expenses incurred by the Party to be Indemnified
incurred in connection with the defense, negotiation or settlement of
such matter up to the maximum of the original proposed settlement. If
the amount finally paid to resolve the claim is equal to or greater
than the amount of the original proposed settlement proposed by the
Indemnifying Party, then the Indemnifying Party shall provide
indemnification pursuant to Sections 12.3 and 12.4 for the amount of
the original settlement proposal submitted by the Indemnifying Party,
and the Party to be Indemnified shall be responsible for all amounts
in excess of the original settlement proposal submitted by the
Indemnifying Party and all costs and expenses incurred by the Party to
be Indemnified in connection with such defense, negotiation or
settlement.
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12.6 Excluded Liabilities.
---------------------
(a) Notwithstanding anything contained herein to the contrary, in the
event any Excluded Liability would attach to Purchased Assets No. 1
and/or Purchased Assets No. 2 under any successor liability statute or
otherwise, notwithstanding the fact that such liability was an
Excluded Liability, Seller and Shareholders and Members shall be
jointly and severally responsible for the payment of such Excluded
Liability and the lien on Purchased Assets No. 1 and/or Purchased
Assets No. 2 (which would represent a breach of certain
representations under the Agreement) related to such liability.
12.7 Limitation on Liability.
-------------------------
The maximum liability that any Shareholder may be individually required to
pay to Purchaser No. 1 and Purchaser No. 2 under this Section 12 shall not
exceed an amount equal to the total consideration paid to Sellers hereunder
by Purchaser No. 1 and Purchaser No. 2 hereunder multiplied by the
following respective percentages:
X. Xxxxx - 77.32%
X. Xxxxx - 10.31%
X. Xxxxx - 10.31%
X. Xxxxxxxxxx - 2.06%
12.8 Limitation on Liability.
-------------------------
Notwithstanding anything contained in this Agreement to the contrary, the
maximum amount that Purchaser No. 1 and/or Purchaser No. 2, as applicable,
may be collectively required to pay to the Sellers under this Section 12 as
a result of any and all breaches shall be limited to the total
consideration paid under this Agreement by Purchaser No. 1 and Purchaser
No. 2, as applicable, to the Sellers.
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13.
THE CLOSING
-----------
13.1 Date, Time and Place of Closing.
------------------------------------
Consummation of the transactions contemplated hereby (the "Closing") shall
take place on July 28, 2000 (the "Closing Date"), at 9:00 a.m. EDT at the
offices of Xxxxxxxxx & Dreidame, 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx,
Xxxx 00000, or on such other Closing Date, or at such other time and/or
place as the parties may mutually agree upon.
13.2 Conditions Precedent to Purchaser No. 1's and Purchaser No. 2's
-----------------------------------------------------------------------
obligations.
-----------
The obligation of Purchaser No. 1 and/or Purchaser No. 2 to perform in
accordance with this Agreement and to consummate the transactions herein
contemplated is subject to the satisfaction of the following conditions at
or before the Closing:
(a) Each Seller shall have complied with and performed all of the
representations, warranties, agreements and covenants hereunder
required to be performed by it prior to or at the Closing;
(b) There shall be no pending or threatened legal action which, if
successful, would prohibit consummation or require substantial
rescission of the transactions contemplated by this Agreement;
(c) The business, aggregate properties and operations of the Sellers shall
not have been materially adversely affected as a result of any fire,
accident or other casualty or any labor disturbance or act of God or
the public enemy, and there shall otherwise have been no material
adverse change to the business, aggregate properties, or operations of
the Sellers since December 31, 1999;
(d) Each Seller shall have delivered to Purchaser No. 1 and/or Purchaser
No. 2, as applicable, at or before the Closing, the following
documents, all of which shall be in form and substance reasonably
acceptable to Purchaser No. 1 and Purchaser No. 2 and its counsel:
(i) The instruments of transfer required by Sections 2.6 and 2.7;
(ii) Releases (or copies thereof) of all liens, claims, charges,
encumbrances, security interests and restrictions on Purchased
Assets No. 1 and Purchased Assets No. 2 necessary to provide
Purchaser No. 1 with good title to each of the Purchased Assets
No. 1 at the Closing and to provide Purchaser No. 2 with good
title to each of the Purchased Assets no. 2 at the Closing;
-64-
(iii)Certified copies of the corporate actions taken by the Board of
Directors and Shareholders of DataNet authorizing the execution,
delivery and performance of this Agreement;
(iv) Certified copies of the actions of the members taken by DTP, DTS
and DP authorizing the execution, delivery and performance of
this Agreement;
(v) Certificates of Existence for each Seller from the Secretary of
State of North Carolina dated no earlier than fifteen (15) days
prior to Closing;
(vi) Opinion Letter of Xxxxxx and Xxxxx, containing the opinions set
forth in Exhibit K;
(vii)Each Seller and each Shareholder shall have entered into the
non-competition agreements as set forth in the respective
Exhibits;
(viii) X. Xxxxx, X. Xxxxx, X. Xxxxx and X. Xxxxxxxxxx shall have
entered into his respective Employment Agreement set forth in the
respective Exhibits;
(e) DataNet will adopt and file with the Secretary of State of North
Carolina an Amendment to the Charter of DataNet changing the name of
DataNet to a name substantially dissimilar to DATANET, INC., and each
Seller shall execute a Consent for Use of Similar Name form as set
forth in Section 9.19.
(f) Purchaser No. 1 and Purchaser No. 2 shall have received assurances in
form and substance satisfactory to it (that may include insurance
certificates) that each Seller has made all provisions necessary under
applicable law, with regard to an employer's obligation to provide for
a continuation of health insurance and other benefits of any employee,
who is not employed by such Seller following termination of
employment.
13.3 Conditions Precedent to Seller's Obligations.
------------------------------------------------
The obligation of each Seller to perform in accordance with this Agreement
and to consummate the transactions herein contemplated is subject to the
satisfaction of the following conditions at or before the Closing:
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(a) Performance by Purchaser No. 1 and Purchaser No. 2 of all of the
representations, warranties, agreements and covenants to be performed
by it at or before the Closing;
(b) There shall be no pending or threatened legal action which, if
successful, would prohibit consummation or require substantial
rescission of the transactions contemplated by this Agreement;
(c) Purchaser No. 1 shall deliver to the Sellers at or before the Closing
the following documents, all of which shall be in form and substance
acceptable to the Sellers and their counsel:
(i) A certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to DataNet at the Closing pursuant to
Section 4.3(a) hereof;
(ii) A certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to DTS at the Closing pursuant to
Section 4.3(b) hereof;
(iii)A certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to DTP at the Closing pursuant to
Section 4.3(c) hereof;
(iv) A certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to DP at the Closing pursuant to
Section 4.3(d) hereof;
(v) A certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to Escrow Agent at the Closing
pursuant to Section 4.3(e) hereof;
(vi) A Promissory Note as set forth in Section 4.3(f) hereof;
(vii)An assumption of liability agreement under which Purchaser No. 1
assumes the liabilities set forth in Section 3.1;
(viii) Certified copies of the corporate actions taken by Purchaser
No. 1 authorizing the execution, delivery and performance of this
Agreement;
(ix) Certificate of Good Standing for Purchaser No. 1 from the
Secretary of State of Delaware dated no earlier than fifteen (15)
days prior to the date of Closing;
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(x) Opinion Letter of Xxxxxxxxx & Dreidame, counsel for Purchaser No.
1, addressed to Seller and dated the Closing Date, containing the
opinions set forth in Exhibit L;
(d) Purchaser No. 2 shall deliver to the Sellers at or before the Closing
the following documents, all of which shall be in form and substance
acceptable to Sellers and their counsel:
(i) A certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to DataNet at the Closing pursuant to
Section 4.4(a) hereof;
(ii) A certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to DTS at the Closing pursuant to
Section 4.4(b) hereof;
(iii)A certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to DTP at the Closing pursuant to
Section 4.4(c) hereof;
(iv) A certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to DP at the Closing pursuant to
Section 4.4(d) hereof;
(v) A certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to Escrow Agent at the Closing
pursuant to Section 4.4(e) hereof;
(vi) A Promissory Note as set forth in Section 4.4(f) hereof;
(vii)An assumption of liability agreement under which Purchaser No. 2
assumes the liabilities set forth in Section 3.2;
(viii) Certified copies of the corporate actions taken by Purchaser
No. 2 authorizing the execution, delivery and performance of this
Agreement;
(ix) Certificate of Good Standing for Purchaser No. 2 from the
Secretary of State of Delaware dated no earlier than fifteen (15)
days prior to the date of Closing;
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(x) Opinion Letter of Xxxxxxxxx & Dreidame Co., LPA, counsel for
Purchaser No. 2, addressed to Seller and dated the Closing Date,
containing the opinions set forth in Exhibit M.
(e) Purchaser No. 1 shall have entered into the Employment Agreements with
X. Xxxxx, X. Xxxxx, X. Xxxxx and X. Xxxxxxxxxx as set forth in
Exhibits I, I-1, I-2 and I-3.
(f) Purchaser No. 1 shall have entered into a Lease Agreement with Xxxxxxx
X. Xxxxx and Xxxx X. Xxxxx in the form attached hereto as Exhibit N.
14.
GENERAL PROVISIONS
------------------
14.1 Publicity.
---------
All public announcements relating to this Agreement or the transactions
contemplated hereby will be made by Purchaser No. 1 and Purchaser No. 2
with the consent of the Sellers, which consent will not be unreasonably
withheld, except for any disclosure which may be required because of
Purchaser No. 1's being a publicly-traded corporation on the
over-the-counter market.
14.2 Expenses.
--------
Purchaser No. 1 will bear and pay all of its expenses incident to the
transactions contemplated by this Agreement which are incurred by Purchaser
No. 1 or its representatives, Purchaser No. 2 will bear and pay all of its
expenses incident to the transactions contemplated by this Agreement which
are incurred by Purchaser No. 2 or its representatives, and each Seller
shall bear and pay all of the expenses incident to the transactions
contemplated by this Agreement which are incurred by such Seller or their
respective representatives.
14.3 Notices.
-------
All notices and other communications required by this Agreement shall be in
writing and shall be deemed given if delivered by hand or mailed by
registered mail or certified mail, return receipt requested, to the
appropriate party at the following address (or at such other address for a
party as shall be specified by notice pursuant hereto):
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(a) If to Purchaser No. 1, to:
Pomeroy Computer Resources, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
(b) If to Purchaser No. 2, to
Pomeroy Select Integration Solutions, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxxx X. Xxxxx III, Esq.
Xxxxxxxxx & Dreidame
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxx 00000
(c) If to Seller, to:
DataNet, Inc.
0000 Xxxxx Xxxx Xxx
Xxxx Xxxxxx, Xxxxx Xxxxxxxx 00000
DataNet Technical Services, LLC
0000 Xxxxx Xxxx Xxx
Xxxx Xxxxxx, Xxxxx Xxxxxxxx 00000
DataNet Tangible Products, LLC
0000 Xxxxx Xxxx Xxx
Xxxx Xxxxxx, Xxxxx Xxxxxxxx 00000
DataNet Programming, LLC
0000 Xxxxx Xxxx Xxx
Xxxx Xxxxxx, Xxxxx Xxxxxxxx 00000
With a copy to:
Xxxxxxxx Xxxxx, Esq.
Xxxxxx & Xxxxx, L.L.P.
2500 Two Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
(d) If to Shareholders, to:
Xxxxxxx Xxxxx
0000 Xxxxx Xxxx Xxx
Xxxx Xxxxxx, Xxxxx Xxxxxxxx 00000
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(e) If to Members, to:
DataNet, Inc.
0000 Xxxxx Xxxx Xxx
Xxxx Xxxxxx, Xxxxx Xxxxxxxx 00000
14.4 Binding Effect.
---------------
Except as may be otherwise provided herein, this Agreement and all the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives,
successors and assigns.
14.5 Headings.
--------
The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or
interpretation of this Agreement.
14.6 Exhibits.
--------
The Exhibit and Disclosure Schedule referred to in this Agreement
constitute an integral part of this Agreement as if fully rewritten herein.
14.7 Counterparts.
------------
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, but all of which constitute together one and
the same document.
14.8 Governing Law.
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This Agreement shall be construed in accordance with and governed by the
laws of the State of North Carolina, without regard to its laws regarding
conflict of laws.
14.9 Severability.
------------
If any provision of this Agreement shall be held unenforceable, invalid, or
void to any extent for any reason, such provision shall remain in force and
effect to the maximum extent allowable, if any, and the enforceability or
validity of the remaining provisions of this Agreement shall not be
affected thereby.
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14.10 Waivers; Remedies Exclusive.
-----------------------------
No waiver of any right or option hereunder by any party shall operate as a
waiver of any other right or option, or the same right or option with
respect to any subsequent occasion for its exercise, or of any right to
damages. No waiver by any party of any breach of this Agreement or of any
representation or warranty contained herein shall be held to constitute a
waiver of any other breach or a continuation of the same breach. No waiver
of any of the provisions of this Agreement shall be valid and enforceable
unless such waiver is in writing and signed by the party granting the same.
Except as otherwise provided in the Subordinated Promissory Notes, the
Employment Agreements, Lease Agreement and the Covenant Not to Compete
Agreements, the indemnification provided for by Section 12 herein shall
constitute the exclusive remedy of any party with respect to (i) the
matters for which such indemnification is provided and (ii) any other
matters arising out of, relating to or connected with this Agreement or the
transactions contemplated hereby, and whether any claims or causes of
action asserted with respect to any such matters are brought in contract,
tort or other legal theory whatsoever. Such limitations set forth in this
Section 14.10 shall not impair the rights of any of the parties: (a) to
seek non-monetary equitable relief, including (without limitation) specific
performance or injunctive relief to address any default or breach of this
Agreement; or (b) to seek enforcement, collection, damages or any
non-monetary equitable relief to address any subsequent default or breach
of any transfer document, assumption, consent or agreement to be delivered
at Closing hereunder. In connection with the seeking of any non-monetary
equitable relief, each of the parties acknowledge and agree that the other
parties hereto would be damaged irrevocably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the parties
hereto agree that the other parties hereto shall be entitled to an
injunction or injunctions or prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof by any competent court having jurisdiction over the
parties.
14.11 Assignments.
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Except as otherwise provided in this Agreement, no party shall assign its
rights or obligations hereunder prior to Closing without the prior written
consent of the other party.
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14.12 Entire Agreement.
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This Agreement and the agreements, instruments and other documents to be
delivered hereunder constitute the entire understanding and agreement
concerning the subject matter hereof. All negotiations between the parties
hereto are merged into this Agreement, and there are no representations,
warranties, covenants, understandings, or agreements, oral or otherwise, in
relation thereto between the parties other than those incorporated herein
and to be delivered hereunder. Except as otherwise expressly contemplated
by this Agreement, nothing expressed or implied in this Agreement is
intended or shall be construed so as to grant or confer on any person, firm
or corporation other than the parties hereto any rights or privilege
hereunder. No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by the parties hereto.
14.13 Business Records.
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Each Seller, Shareholder and Member shall be permitted to retain copies of
such books and records relating to Purchased Assets No. 1 and/or Purchased
Assets No. 2 and relating to the accounting and tax matters of Business No.
1 and/or Business No. 2 and to have access to all original copies of
records so delivered to Purchaser No. 1 and/or Purchaser No. 2 at
reasonable times, for any reasonable business purpose, for a period of six
(6) years after the Closing.
14.14 Dissolution of DataNet.
------------------------
Purchaser No. 1 and Purchaser No. 2 acknowledge that following the Closing,
DataNet may adopt a plan of liquidation with the intent to dissolve the
corporation. Provided, however, DataNet and each Shareholder agree that the
plan of liquidation will not be effectuated and implemented by DataNet
until all the conditions set forth in Section 2 of this Agreement regarding
the transfer of all the respective purchased assets have been effectuated
by DataNet. DataNet acknowledges that Purchaser No. 1 and Purchaser No. 2
will suffer irreparable harm in the event that DataNet would liquidate
prior to satisfying all of its obligations under the terms of this
Agreement and the exhibits hereto.
15.
LEASE
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15.1 At Closing, X. Xxxxx and Xxxx X. Xxxxx will cancel the current lease with
DataNet for the real estate located at 0000 Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxx
Xxxxxxxx. As a condition of Closing of this Agreement, X. Xxxxx and Xxxx X.
Xxxxx shall enter into a Lease Agreement with Purchaser No. 1 in the form
attached hereto as Exhibit O.
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The parties hereto have executed this Agreement as of the date first above
written.
WITNESSES: DATANET, INC.
___________________________ By:__________________________________
___________________________ Its: ________________________________
DATANET TECHNICAL SERVICES, LLC
___________________________ By:__________________________________
___________________________ Its: ________________________________
DATANET TANGIBLE PRODUCTS, LLC
___________________________ By:__________________________________
___________________________ Its: ________________________________
DATANET PROGRAMMING, LLC
___________________________ By:__________________________________
___________________________ Its: ________________________________
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___________________________ SHAREHOLDERS:
___________________________ _____________________________________
XXXXXXX XXXXX
___________________________
___________________________ _____________________________________
XXXXXXX XXXXX
___________________________
___________________________ _____________________________________
XXXXXXX XXXXX
___________________________
___________________________ _____________________________________
XXXXXXX XXXXXXXXXX
XXXXXXX COMPUTER RESOURCES, INC.
___________________________
___________________________ By:__________________________________
Xxxxxxx X. Xxxxxxx
Chief Financial Officer
XXXXXXX SELECT INTEGRATION
___________________________ SOLUTIONS, INC.
___________________________ By:__________________________________
Xxxxxxx X. Xxxxxxx
CEO and President
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