EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
Between
WESTERN MICRO TECHNOLOGY, INC.,
And
R&D HARDWARE SYSTEMS COMPANY OF COLORADO
January 2, 1996
TABLE OF CONTENTS
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Page
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ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 PURCHASE AND SALE; CLOSING . . . . . . . . . . . . . . . . . . 1
2.1 Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . 1
2.2 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . 3
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Allocation of Purchase Price . . . . . . . . . . . . . . . . . 3
2.5 Earn-Out . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF HARDWARE . . . . . . . . . . 9
3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Financial Statements . . . . . . . . . . . . . . . . . . . . 10
3.5 Business Changes . . . . . . . . . . . . . . . . . . . . . . 11
3.6 Fixed Assets; Properties . . . . . . . . . . . . . . . . . . 12
3.7 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . 13
3.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.9 Compensation . . . . . . . . . . . . . . . . . . . . . . . . 14
3.10 Compliance with Law . . . . . . . . . . . . . . . . . . . . . 15
3.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.12 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . 16
3.13 No Default . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.14 Business and Customers . . . . . . . . . . . . . . . . . . . 17
3.15 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.16 Right to Use Name . . . . . . . . . . . . . . . . . . . . . . 17
3.17 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . 17
3.18 Certain Advances . . . . . . . . . . . . . . . . . . . . . . 18
3.19 Union Activities . . . . . . . . . . . . . . . . . . . . . . 18
3.20 Underlying Documents . . . . . . . . . . . . . . . . . . . . 18
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3.21 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . 18
3.22 Compliance with Vendor and Customer Agreements . . . . . . . 18
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF WMT . . . . . . . . . . . . 19
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.3 Capital Structure . . . . . . . . . . . . . . . . . . . . . . 20
4.4 Financial Statements . . . . . . . . . . . . . . . . . . . . 20
4.5 SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . 21
4.6 Information Supplied . . . . . . . . . . . . . . . . . . . . 22
4.7 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.8 Shares of Common Stock . . . . . . . . . . . . . . . . . . . 22
4.9 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . 22
4.10 Business Changes . . . . . . . . . . . . . . . . . . . . . . 23
4.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.12 Compliance with Law . . . . . . . . . . . . . . . . . . . . . 23
4.13 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 5 COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . 24
5.1 Conduct of Business in Normal Course . . . . . . . . . . . . 24
5.2 Preservation of Business and Relationships . . . . . . . . . 24
5.3 Maintenance of Insurance . . . . . . . . . . . . . . . . . . 25
5.4 Employees and Compensation . . . . . . . . . . . . . . . . . 25
5.5 Distributions; Changes in Stock . . . . . . . . . . . . . . . 25
5.6 Issuance of Securities . . . . . . . . . . . . . . . . . . . 25
5.7 Governing Documents . . . . . . . . . . . . . . . . . . . . . 26
5.8 No Other Bids . . . . . . . . . . . . . . . . . . . . . . . . 26
5.9 No Dispositions . . . . . . . . . . . . . . . . . . . . . . . 26
5.10 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 6 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . 26
6.1 Access to Information . . . . . . . . . . . . . . . . . . . . 26
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6.2 Legal Conditions . . . . . . . . . . . . . . . . . . . . . . . 27
6.3 3(a)(10) Fairness Hearing . . . . . . . . . . . . . . . . . . 28
6.4 Good Faith . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.5 WMT Governing Documents . . . . . . . . . . . . . . . . . . . 28
6.6 Hardware Corporate Tax Returns . . . . . . . . . . . . . . . 28
6.7 Lock-up . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.8 Current Available Information . . . . . . . . . . . . . . . . 29
6.9 Limited Resales . . . . . . . . . . . . . . . . . . . . . . . 29
6.10 Legend; Stop Transfer Instructions . . . . . . . . . . . . . 29
ARTICLE 7 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . 30
7.1 Conditions to Obligations of WMT and Hardware . . . . . . . . 30
(a) Government Approvals . . . . . . . . . . . . . . . . . . 30
(b) Third-Party Approvals . . . . . . . . . . . . . . . . . . 30
(c) Legal Action . . . . . . . . . . . . . . . . . . . . . . 30
(d) Securities Laws . . . . . . . . . . . . . . . . . . . . . 31
7.2 Conditions to Obligations of WMT . . . . . . . . . . . . . . 31
(a) Representations and Warranties . . . . . . . . . . . . . 31
(b) Performance of Obligations . . . . . . . . . . . . . . . 31
(c) Opinion of Hardware's Counsel . . . . . . . . . . . . . . 32
(d) Shareholder Approval . . . . . . . . . . . . . . . . . . 32
(e) November 30, 1995 Financial Statements . . . . . . . . . 32
(f) No Material Adverse Change . . . . . . . . . . . . . . . 32
(g) Non-Compete Arrangements . . . . . . . . . . . . . . . . 32
(h) Vendor Consent . . . . . . . . . . . . . . . . . . . . . 32
(i) Dedicated Staff . . . . . . . . . . . . . . . . . . . . . 32
(j) Hardware Customers . . . . . . . . . . . . . . . . . . . 33
(k) Escrow Agreement. . . . . . . . . . . . . . . . . . . . . 33
(l) Intentionally left blank . . . . . . . . . . . . . . . . 33
(m) Indemnity Obligations Agreement . . . . . . . . . . . . . 33
7.3 Conditions to Obligations of Hardware . . . . . . . . . . . . 33
(a) Representations and Warranties . . . . . . . . . . . . . 33
(b) Performance of Obligations of WMT . . . . . . . . . . . . 33
(c) Opinion of WMT's Counsel . . . . . . . . . . . . . . . . 34
(d) No Material Adverse Change . . . . . . . . . . . . . . . 34
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(e) Nasdaq Listing Application . . . . . . . . . . . . . . . . 34
(f) Escrow Agreement. . . . . . . . . . . . . . . . . . . . . 34
7.4 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 8 INDEMNIFICATION AND ESCROW . . . . . . . . . . . . . . . . . 34
8.1 Indemnification by Hardware . . . . . . . . . . . . . . . . . 34
8.2 Escrow Fund . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.3 Escrow Period . . . . . . . . . . . . . . . . . . . . . . . . 36
8.4 Protection of Escrow Fund . . . . . . . . . . . . . . . . . . 36
8.5 Distributions; Voting . . . . . . . . . . . . . . . . . . . . 37
8.6 Claims Upon Escrow Fund . . . . . . . . . . . . . . . . . . . 37
8.7 Objections to Claims . . . . . . . . . . . . . . . . . . . . 37
8.8 Resolution of Conflicts; Arbitration . . . . . . . . . . . . 38
8.9 Distribution upon Termination of Escrow Period . . . . . . . 39
8.10 Escrow Agent's Duties . . . . . . . . . . . . . . . . . . . . 39
8.11 Indemnification by WMT . . . . . . . . . . . . . . . . . . . 40
8.12 Indemnification Procedure . . . . . . . . . . . . . . . . . . 41
ARTICLE 9 PAYMENT OF EXPENSES . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 10 TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . 43
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . 43
10.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 11 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.2 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 45
11.4 Announcements . . . . . . . . . . . . . . . . . . . . . . . . 45
11.5 Binding Nature . . . . . . . . . . . . . . . . . . . . . . . 46
11.6 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . 47
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Exhibits
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Exhibit A Assignment and Assumption Agreement
Exhibit B Disclosure Schedule
Exhibit 7.2(c) Opinion of Hardware's Counsel
Exhibit 7.2(g) Agreement Not to Compete
Exhibit 7.2(h) Vendor Consents
Exhibit 7.2(m) Indemnity Obligation Agreement
Exhibit 7.3(c) Opinion of WMT's Counsel
Exhibit 8.2 Escrow Agreement
Schedules
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Schedule 2.1(b) Inventories
Schedule 2.1(c) Accounts Receivable
Schedule 2.1(f) Permits
Schedule 2.1(g) Accounts Payable
Schedule 2.4 Allocation of Purchase Price
Schedule 2.5 Earn Out
Schedule 3.2 Capital Stock
Schedule 3.6 Fixed Assets
Schedule 3.9 Compensation
Schedule 3.13 Assigned Contracts
Schedule 3.14 Customers
Schedule 5.4 Employees and Compensation
Schedule 5.5 Distributions; Changes in Stock
Schedule 7.2(j) Designated Customers
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ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT, made and entered into as of the 2nd day of
January, 1996 by and between WESTERN MICRO TECHNOLOGY, INC., a California
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corporation ("WMT"), and R&D HARDWARE SYSTEMS COMPANY OF COLORADO, a Colorado
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corporation ("Hardware"),
W I T N E S S E T H:
WHEREAS, WMT desires to purchase from Hardware, and Hardware desires to
sell to WMT, substantially all of Hardware's operating assets, together with the
associated goodwill, on the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and of the mutual
provisions, agreements and covenants herein contained, WMT and Hardware agree as
follows:
ARTICLE 1
DEFINITIONS
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Certain terms are defined elsewhere in this Agreement, and, whenever such
terms are used in this Agreement, they shall have their respective defined
meanings, unless the context expressly or by necessary implication otherwise
requires.
ARTICLE 2
PURCHASE AND SALE; CLOSING
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2.1 Purchase and Sale of Assets. Subject to the terms and conditions set
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forth in this Agreement, Hardware agrees to sell, convey,
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transfer, assign, and deliver to WMT, and WMT agrees to purchase from Hardware
on the Closing Date (as defined below), all of the following assets of Hardware
(collectively, the "Purchased Assets"):
(a) Intentionally left blank.
(b) Inventories. All of Hardware's inventories relating to
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Hardware's business which are on hand as of the date of the Closing, including,
without limitation, those listed in SCHEDULE 2.1(b) (the "Inventories");
(c) Accounts Receivable. All of Hardware's trade accounts receivable
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arising out of the operation of Hardware's business in the ordinary course which
are unpaid as of the Closing Date, including, without limitation, those listed
in SCHEDULE 2.1(c) (collectively, the "Accounts Receivable");
(d) Intangibles. The right to use the corporate name "R&D Hardware/
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Western Micro," and to refer to the business as "formerly R&D Hardware Systems
Company of Colorado," for a period of one (1) year following the date of
Closing;
(e) Books and Records. All papers and records in Hardware's care,
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custody, or control relating to any or all of the above described Purchased
Assets and the operation thereof, including, without limitation, all purchasing
and sales records, customer and vendor lists and all accounting and financial
records (collectively, the "Books and Records"), excluding the minute books,
corporate seal and stock records of Hardware; and
(f) Permits. To the extent transferable, all of Hardware's rights
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in, to or under any governmental licenses, environmental and other permits,
approvals and authorizations which relate to the Purchased Assets, including,
without limitation, all those listed in SCHEDULE 2.1(f).
The Purchased Assets shall be conveyed on the Closing Date to WMT by Hardware
free and clear of all liabilities, obligations, liens and
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encumbrances, excepting only those continuing obligations consisting of the
trade accounts payable arising out of the operation of Hardware's business in
the ordinary course which are unpaid as of the Closing Date, including, without
limitation, those listed in SCHEDULE 2.1(g) (collectively, the "Accounts
Payable") which shall be assigned by Hardware to Buyer pursuant to the terms and
conditions of an Agreement of Assignment and Assumption, substantially in the
form of EXHIBIT A attached hereto (the "Agreement of Assignment and
Assumption").
2.2 Assumption of Liabilities. Except for any continuing obligations
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under the Accounts Payable, which WMT is assuming and agrees to pay in the
normal course of business, WMT is not assuming any debt, liability or obligation
of Hardware, whether known or unknown, fixed or contingent, including, without
limitation, any liabilities or obligations arising out of or connected in any
way with any retirement, medical, life, disability or other employee benefit
plan of Hardware. All liabilities arising from or related to Hardware's
operations or Hardware's ownership of the Purchased Assets through the Closing
Date shall remain the responsibility of Hardware.
2.3 Purchase Price. As consideration for the purchase of the Purchased
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Assets, WMT shall pay the following amounts (collectively, the "Purchase
Price"):
(a) One Million Dollars ($1,000,000) payable by certified check
or wire transfer; provided, however that if the net book value of Hardware is
less than $600,000 as reflected in the Closing Balance Sheet (as hereinafter
defined), the amount payable under this subparagraph (a) shall be reduced and
equal 1.66 times the actual net book value; and
(b) One hundred twenty-five thousand (125,000) shares of Common
Stock, no par value, of WMT ("WMT Common").
2.4 Allocation of Purchase Price. The parties agree that the Purchase
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Price shall be allocated as set forth in SCHEDULE 2.4 and that such allocation
will be used by the parties in reporting the transaction contemplated hereby for
federal, state, county and local tax purposes.
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2.5 Earn-Out.
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(a) Within thirty (30) days after each of the four (4) six (6) month
periods ending June 30, 1996, December 31, 1996, June 30, 1997 and December 31,
1997, WMT shall calculate, and deliver notice of such calculation to Hardware
(the "Calculation"), an earn-out payment to be paid to Hardware if Hardware
Gross Profit Dollars, as defined below, during any such six (6) month period
exceed $437,500 (the "Earn-Out Payments"), as follows: The Earn-Out Payment
shall equal $15,000 for each $25,000 of Hardware Gross Profit Dollars earned in
excess of $437,500 in each six (6) month period up to an aggregate amount of
$187,500.
Notwithstanding the foregoing, (i) if at the time of payment of the
Earn-Out Payment for the six (6) month period ended December 31, 1997 the
cumulative Hardware Gross Profit Dollars for the four (4) six (6) month periods
exceeds $4,000,000, WMT shall include in such Earn-Out Payment an additional
amount equal to $105,000; and (ii) if during any of the three (3) six (6) month
periods ended June 30, 1996, December 31, 1996 and June 30, 1997 Hardware Gross
Profit Dollars do not result in an Earn-Out Payment for any such period, the
Hardware Gross Profit Dollars for the period for which no Earn-Out Payment was
made shall be included in the next period for the purpose of calculating the
next period's Earn-Out Payment and the Earn-Out Payment for the next period
shall equal $15,000 for each $25,000 of Gross Profit Dollars earned in excess of
$437,500 times the number of periods for which no Earn-Out Payment was made up
to an aggregate amount of $187,500 times the number of periods for which no
Earn-Out Payment was made. For example, assume that Hardware Gross Profit
Dollars equal $400,000 for the six month period ended June 30, 1996 and that
Hardware Gross Profit Dollars equal $1,250,000 for the twelve month period ended
December 31, 1996. No Earn-Out Payment would be earned or paid for the period
ended June 30, 1996 because the Hardware Gross Profit Dollars did not exceed
$437,500; however, on a cumulative basis the Earn-Out Payment for the period
ended December 31, 1996 would equal $225,000 [$1,250,000 - ($437,500 X 2) =
$375,000 / $25,000 = 15 X $15,000 = $225,000.]
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(b) The Earn-Out Payments, and any interest accrued thereon, shall be paid
in shares of WMT Common. The value of the WMT Common will be calculated based on
the ten (10) day simple average of the closing prices of WMT Common in the last
ten (10) trading days of the six month period for which the Earn-Out Payment
relates (the "Average"); provided, however that (i) if the Average exceeds
$12.00 per share, the value of the WMT Common will be calculated based on $12.00
per share, and (ii) if the Average is less than $3.00 per share and in
satisfaction of the Earn-Out Payment WMT is required to issue 31,250 shares of
WMT Common, WMT shall also make a cash payment to Hardware at the time of
payment of the WMT Common equal to the difference between the Earn-Out Payment
and the WMT Common times the Average times .3333. Notwithstanding the above,
WMT shall not be required to issue more than an aggregate amount of 125,000
shares of WMT Common under this Section 2.5 or 31,250 shares during any six
month period.
(c) Hardware Gross Profit Dollars shall be calculated on the following
sales ("Hardware Sales"):
1. WMT sales to dealers identified on SCHEDULE 2.5;
2. Sales to dealers that are recruited after the date of Closing
as dealers for WMT by any of the Hardware employees identified on
SCHEDULE 5.4, or by any person hired as his or her direct replacement;
and
3. Sales to any person or entity that was an affiliate of
Hardware as of the Date of Closing. For the purpose of this
Agreement, "affiliate" shall include any person or entity who directly
or indirectly controls, is controlled by or under common control with
Hardware.
Hardware Gross Profit Dollars shall mean gross Hardware Sales net of
returns and customary allowances (excluding allowance for doubtful accounts but
including actual write-offs) less the actual (specifically identifiable) product
cost net of manufacturer's price protection and other
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nonpromotional manufacturer cost reductions ("Hardware Costs") determined in
accordance with generally accepted accounting principles consistent with
Hardware's audited financial statements for the year ended December 31, 1994 and
the policies and procedures set forth in the notes thereto.
For the purpose of calculating the Earn-Out Payments, separate books and
records shall be maintained by WMT with respect to the Hardware Sales and
Hardware Costs. Such books and records shall be maintained in accordance with
generally accepted accounting principles and consistent with Hardware's past
accounting practices.
Hardware will be entitled to reasonable rights to audit the Earn-Out
Payments. Upon receipt of the Calculation from WMT, Hardware shall have ten
(10) business days in which to request in writing that WMT deliver within four
(4) business days of such request the books and records, and back up invoices
and schedules, to Hardware or its accountant to confirm the calculation. If
within ten (10) business days Hardware does not request such books and records
or if within ten (10) business days after receipt of such books and records
Hardware does not object to such Calculation, WMT shall deliver instructions to
its transfer agent to issue and deliver to Hardware the WMT Common as soon as
reasonably practicable. If Hardware requests such books and records and within
ten (10) business days after receipt of such books and records, Hardware objects
in writing to WMT of the Calculation, WMT and Hardware shall work together in
good faith to see if they can reach an agreement on the appropriate Earn-Out
Payment. If within 14 days the parties have not reached an agreement, the
parties shall choose a nationally recognized accounting firm mutually agreed
upon by WMT and Hardware who shall calculate the amount, or if no such agreement
can be reached, then each of WMT and Hardware shall appoint one nationally
recognized accounting firm, which accounting firms shall pick a third nationally
recognized accounting firm to which such disputes shall be referred. In the
event that either WMT or Hardware shall fail to select a nationally recognized
firm in accordance with the provisions of this subsection within thirty (30)
days after notice by the other party that such selection should be made, and
such other party has selected a nationally
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recognized accounting firm pursuant to the provisions hereof, such dispute shall
be referred to the nationally recognized accounting firm selected by such party.
The decision of such nationally recognized accounting firm shall be conclusive
and binding on both parties. Each of WMT and Hardware shall pay the costs and
expenses of its own accountant and Hardware shall pay the costs of the
nationally recognized accounting firm selected by both parties or their
representatives (the "Independent Accountant); provided, however, that if a
dispute arises that is resolved by the Independent Accountant and the amount of
the Earn-Out Payment as calculated by the Independent Accountant exceeds by more
than 10% the Calculation, WMT shall pay the costs and expenses of Hardware's and
the Independent Accountant's costs and expenses.
(d) In the event an Earn-Out Payment has been calculated and there is no
dispute regarding the amount of such Earn-Out Payment, but WMT does not instruct
its transfer agent to deliver the WMT Common within 45 days after the end of the
six month period for which the Earn-Out Payment relates (the "Due Date"),
interest shall accrue thereafter with respect to such Earn-Out Payment at the
rate per annum equal to the Prime Rate as listed in the Money Rates section of
the Wall Street Journal plus three percent (3%) (the "Default Rate"). In the
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event there is a dispute regarding the amount, if any, and payment is not made
by the Due Date, Hardware, shall be entitled to receive interest from the Due
Date at the Default Rate on the amount of the payment ultimately to be paid to
Hardware if such amount exceeds by 10% the Calculation.
(e) During the period subsequent to Closing and ending on December 31,
1997, (i) WMT shall conduct its business in conformity with sound business
practices and consistent with past practices and shall use its best efforts to
maintain the level and quality of staffing and business activities necessary to
permit Hardware to earn the Earn-Out Payments, (ii) if WMT (A) sells 50% or more
of its assets, (B) sells more than 50% of its common stock to a single acquiror
or group of related acquirors or (C) merges into another company and the
surviving company is not owned or controlled by more than 50% of WMT's
shareholders immediately prior to such merger, WMT will cause such sale or
merger to be subject to the assumption by the buyer or surviving company of all
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of WMT's obligations under this Agreement and (iii) WMT shall not take any
voluntary action for the purpose of preventing Hardware from being able to earn
the Earn-Out Payment or avoiding or seeking to avoid the observance or
performance of any of the terms under this Section 2.5, and shall at all times
in good faith assist in carrying out all such action as may be reasonably
necessary or appropriate in order to protect the rights of Hardware with respect
to its ability to earn the Earn-Out Payments against impairment.
Notwithstanding this paragraph (e), nothing contained herein shall require the
officers and directors of WMT to maintain WMT's business in a manner or take
actions that would violate their fiduciary duties to WMT and its shareholders.
(f) If between the date hereof and December 31, 1997, WMT commences a
voluntary case under the federal bankruptcy laws or a petition is filed against
WMT under the federal bankruptcy laws and is not dismissed within ninety (90)
days, Hardware shall be entitled to seek recovery of any Earn-Out Payments due
as an unsecured creditor of WMT in the related bankruptcy proceedings.
2.6 Closing Date. The Closing under this Agreement (the "Closing") shall
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be held not more than two (2) business days following the satisfaction of all
conditions specified in this Agreement, unless duly waived by the party entitled
to satisfaction thereof. In any event, if the Closing has not occurred on or
before January 31, 1996, this Agreement may be terminated as provided in Section
10.1(c). Such date on which the Closing is to be held is herein referred to as
the "Closing Date." The Closing shall be held at the offices of Pillsbury
Madison & Sutro, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx, at 10:00 A.M. on
such date, or at such other time and place as WMT and Hardware may agree upon in
writing.
-8-
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF HARDWARE
------------------------------------------
Except as otherwise set forth in the disclosure schedule attached hereto as
EXHIBIT B (the "Disclosure Schedule") or in any document expressly referenced in
the Disclosure Schedule, Hardware represents and warrants to WMT as of the date
hereof as follows:
3.1 Organization. Hardware is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Colorado, and is
not required to be qualified in any other jurisdiction except where the failure
to be so qualified will not have a material adverse effect on Hardware and has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted.
3.2 Capital Stock. All of the outstanding shares of capital stock of
-------------
Hardware are held by the persons and in such amounts as is set forth in SCHEDULE
3.2 attached hereto. There are no options, warrants, calls, rights, commitments
or agreements of any character to which Hardware is a party or by which it is
bound obligating Hardware to issue any shares of capital stock of Hardware or
obligating Hardware to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. Except as set forth on SCHEDULE 3.2,
there are no voting trusts, proxies or other agreements with respect to the
shares of capital stock of Hardware.
3.3 Authority. Hardware has all requisite corporate power and authority
---------
to enter into this Agreement and, subject to satisfaction of the conditions set
forth herein, to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Hardware. This Agreement has been duly executed
and delivered by Hardware and constitutes the valid and binding obligation of
Hardware, enforceable in accordance with its terms, subject to the effect of
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the rights of
-9-
creditors and the effect or availability of rules of law governing specific
performance, injunctive relief or other equitable remedies. Provided the
conditions set forth in Article 7 are satisfied, the execution and delivery of
this Agreement do not or will not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation under
(a) any provision of the Articles of Incorporation or Bylaws of Hardware or (b)
any material agreement or instrument, permit, franchise, license, judgment or
order, applicable to Hardware or its properties or assets.
No consent, approval, order or authorization of, or registration, decla-
ration or filing with, any court, administrative agency or commission or other
governmental authority (a "Governmental Entity"), is required by or with respect
to Hardware in connection with the execution and delivery of this Agreement by
Hardware or the consummation by Hardware of the transactions contemplated hereby
or thereby, except for (i) filings with the State of Colorado to reflect the
removal of the International Business Machine Corporation and Lexmark
International, Inc. liens on the Purchased Assets and (ii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal and state securities laws and the laws
of any foreign country.
3.4 Financial Statements. Hardware has furnished to WMT its audited
--------------------
statement of income and retained earnings and balance sheets for the two (2)
calendar years ended December 31, 1993 and 1994, and its unaudited interim
financial statements for the period ended November 30, 1995. At Closing
Hardware shall deliver to WMT a balance sheet (the "Closing Balance Sheet")
dated as of the Closing Date. The balance sheet at November 30, 1995 is
hereinafter referred to as the "November Balance Sheet," and all such financial
statements are hereinafter referred to collectively as the "Hardware Financial
Statements." The Hardware Financial Statements have been and will be complete,
true and accurate in all material respects and, except for any interim financial
statements as of and for periods not ending on December 31 in any year, have
been
-10-
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved, and are and will be
in accordance with Hardware's books and records, and fairly present the
financial position of Hardware and the results of its operations as of the date
and for the periods indicated thereon, subject in the case of the unaudited
portion of the Hardware Financial Statements to normal year-end audit adjust-
ments, which will not be material and the absence of footnote disclosures. At
the date of the November Balance Sheet and the Closing Balance Sheet, Hardware
had and will have no liabilities or obligations, secured or unsecured (whether
accrued, absolute, contingent or otherwise) not reflected on such Balance Sheets
or the accompanying notes thereto except for liabilities and obligations as may
have arisen in the ordinary course of business prior to the date of said Balance
Sheet and which, under GAAP, would not have been required to be reflected on
such Balance Sheet and except for liabilities incurred in the ordinary course of
business since the date of said Balance Sheet which are usual and normal in
amount.
3.5 Business Changes. Since the November Balance Sheet Date, except as
----------------
otherwise contemplated by this Agreement or disclosed in writing to WMT,
Hardware has conducted its business only in the ordinary and usual course and,
without limiting the generality of the foregoing:
(a) There have been no changes in the condition (financial or
otherwise), business, net worth, assets, properties, employees, operations,
obligations or liabilities of Hardware which, in the aggregate, have had or may
be reasonably expected to have a materially adverse effect on the condition,
business, net worth, assets, prospects, properties or operations of Hardware.
(b) Hardware has not mortgaged, pledged, or otherwise encumbered any
of the Purchased Assets, except for liens for current taxes which are not yet
delinquent and purchase-money liens arising out of the purchase or sale of
services or products made in the ordinary and usual course of business and in
any event not in excess of $5,000 for any
-11-
single item or $50,000 in the aggregate, other than inventory sold in the normal
course of business.
(c) Hardware has not disposed of, or agreed to dispose of, by sale,
lease, license or otherwise, any Purchased Asset except in the ordinary and
usual course of business and for a consideration believed to be at least equal
to the fair value of such asset and in any event not in excess of $5,000 for any
single item or $25,000 in the aggregate other than inventory sold in the normal
course of business.
(d) Hardware has not effected or agreed to effect any change in its
employees, except with respect to those employees hired by WMT.
(e) Hardware has not effected or committed itself to effect any
amendment or modification in its Articles of Incorporation or Bylaws, except as
contemplated in this Agreement.
3.6 Fixed Assets; Properties.
------------------------
(a) The November Balance Sheet reflects all of personal property
owned or leased and used by Hardware in its business or otherwise held by
Hardware, except for (i) property acquired or disposed of in the ordinary and
usual course of the business of Hardware since the date of such Balance Sheet,
and (ii) personal property not required under GAAP to be reflected thereon.
Except as reflected in the notes to the November Balance Sheet and liens on file
with the Colorado Secretary of State reflecting International Business Machines
Corporation and Lexmark International, Inc. as secured parties, Hardware has
good and marketable title to all assets and properties listed on the November
Balance Sheet and thereafter acquired, free and clear of any imperfections of
title, lien, claim, encumbrance, restriction, charge or equity of any nature
whatsoever, except for the lien of current taxes not yet delinquent. The fixed
assets listed in SCHEDULE 3.6 are in good condition and repair for the
requirements of the business as presently conducted by Hardware. WMT shall be
permitted to use such fixed assets so long as WMT shall sublet the existing
facilities of Hardware.
-12-
(b) Hardware has provided WMT with a full and complete list of all
real and personal property leased by Hardware or under option to purchase by
Hardware, to the extent it represents an Assigned Contract. All such property
leased by Hardware is held under valid, subsisting and enforceable leases. To
the best of Hardware's knowledge, the operations of Hardware thereon do not
violate any applicable material building code, zoning requirement or classifica-
tion, or pollution control ordinance or statute relating to the property or to
such operations.
(c) To the knowledge of Hardware, there are no Hazardous Substances
in, under or about the soil, sediment, surface water or groundwater on, under or
around any properties at any time owned, leased or occupied by Hardware. To the
knowledge of Hardware, Hardware has not disposed of any Hazardous Substances on
or about such property or at any site being investigated or remediated for
contamination or possible contamination of the environment. "Hazardous
Substances" shall mean any substance regulated or prohibited by any law or
designated by any governmental agency to be hazardous, toxic, radioactive,
regulated medical waste or otherwise a danger to health or the environment.
(d) To the knowledge of Hardware, Hardware has conducted its business
in accordance with all material applicable laws, regulations, orders and other
requirements of governmental authorities relating to Hazardous Substances and
the use, storage, treatment, disposal, transport, generation, release and
exposure of others to Hazardous Substances. Hardware has not received any
notice of any investigation, claim or proceeding against Hardware relating to
Hazardous Substances and Hardware is not aware of any fact or circumstance which
could involve Hardware in any environmental litigation, proceeding,
investigation or claim or impose any environmental liability upon Hardware.
3.7 Accounts Receivable. SCHEDULE 2.1(c) contains a summary of the
-------------------
accounts receivable of Hardware as of November 30, 1995, together with an
accurate aging of such accounts receivable. The accounts receivable arose out
of the bona fide furnishing of goods and services, each in the operation of the
business of Hardware, and require no
-13-
additional performance by Hardware to render them valid. Except as set forth on
SCHEDULE 2.1(c), the notes receivable are obligations of current customers of
Hardware, whether on an open account or cash on delivery basis, and there are no
material disputes between Hardware and any obligor under any such note
receivable with respect to the amount owing or the payment terms thereunder.
Hardware has provided WMT with accurate information concerning amounts and aging
of accounts receivable and with an accurate customer list of Hardware.
3.8 Taxes. Hardware has completely filed with the appropriate United
-----
States, state, local and foreign governmental agencies all tax returns and
reports required to be filed (subject to permitted extensions applicable to such
filings), which were accurate in all material respects, and has paid or accrued
in full all taxes shown as owing on such tax returns, duties, charges,
withholding obligations and other governmental liabilities as well as any inter-
est, penalties, assessments or deficiencies, if any, due to, or claimed to be
due by, any governmental authority (including taxes on properties, income,
franchises, licenses, sales and payrolls). (All such items are collectively
referred to herein as "Taxes"). The Closing Balance Sheet fully accrues or
reserves all current and deferred Taxes. Hardware is not a party to any pending
action or proceeding, nor to Hardware's knowledge is any such action or
proceeding threatened by any governmental authority for the assessment or
collection of Taxes. No liability for Taxes has been incurred other than in the
ordinary course of business. There are no liens for Taxes except for liens for
property taxes not yet delinquent. Hardware is not a party to any Tax sharing,
Tax allocation, Tax indemnity or statute of limitations extension or waiver
agreement and in the past five (5) years has not been included on any
consolidated combined or unitary return with any entity other than Hardware.
3.9 Compensation. Since November 30, 1995, Hardware has not paid or
------------
committed itself to pay to or for the benefit of any of its directors, officers,
employees or shareholders any compensation of any kind other than wages,
salaries and benefits at times and rates in effect on November 30, 1995, nor has
it effected or agreed to effect any amendment or supplement to any employee
profit sharing, stock option,
-14-
stock purchase, pension, bonus, incentive, retirement, medical reimbursement,
life insurance, deferred compensation or any other employee benefit plan or
arrangement. Hardware does not have any bonus plan or obligations with respect
to any bonus plan, except as set forth in SCHEDULE 3.9. Hardware has provided a
full and complete list of all directors, officers, employees or consultants of
Hardware as of the date hereof, specifying their names and job designations,
their dates of hire, the total amount paid or payable as wages, salaries or
other forms of direct compensation, and the basis of such compensation, whether
fixed or commission or a combination thereof.
3.10 Compliance with Law. To Hardware's knowledge, all material licenses,
-------------------
franchises, permits, clearances, consents, certificates and other evidences of
authority of Hardware which are necessary to the conduct of Hardware's business
("Permits") are in full force and effect and Hardware is not in violation of any
Permit in any material respect. Except for possible exceptions, the curing or
non-curing of which would not have a material adverse effect on the condition
(financial or otherwise), business, net worth, assets, prospects, properties or
operations of Hardware, the business of Hardware has been, to Hardware's
knowledge, conducted in accordance with all applicable laws, regulations, orders
and other requirements of governmental authorities.
3.11 Litigation. There is no claim, dispute, action, proceeding, notice,
----------
order, suit, appeal or investigation, at law or in equity, pending against
Hardware, or involving any of the Purchased Assets or Accounts Payable, before
any court, agency, authority, arbitration panel or other tribunal (other than
those, if any, with respect to which service of process or similar notice has
not yet been made on Hardware), and to the knowledge of Hardware none have been
threatened. Hardware is not aware of any facts which, if known to shareholders,
customers, governmental authorities or other persons, would result in any such
claim, dispute, action, proceeding, suit or appeal or investigation which would
have a material adverse effect on the condition (financial or otherwise),
business, net worth, assets, prospects, properties or operations of Hardware.
Hardware is not subject to any order, writ, injunction or decree of any court,
agency, authority, arbitration panel or other tribunal,
-15-
nor is it in default with respect to any notice, order, writ, injunction or
decree.
3.12 Accounts Payable. Hardware has provided WMT with a complete list in
----------------
SCHEDULE 2.1(g) of the of the trade accounts payable outstanding as of November
30, 1995, together with an accurate aging of such accounts payable. The
Accounts Payable arose in the normal and ordinary course of the business of
Hardware. Except as set forth in SCHEDULE 2.1(g), the Accounts Payable are not
past due and there are no collection actions currently pending with respect to
such Accounts Payable.
3.13 No Default.
----------
(a) Each of the contracts listed on SCHEDULE 3.13 is a legal, binding
and enforceable obligation by or against Hardware, subject to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
federal or state laws affecting the rights of creditors and the effect or
availability of rules of law governing specific performance, injunctive relief
or other equitable remedies (regardless of whether any such remedy is considered
in a proceeding at law or in equity). To Hardware's knowledge, no party with
whom Hardware has an agreement or contract is in material default thereunder or
has breached any terms or provisions thereof which is material to the conduct of
Hardware's business.
(b) Hardware has materially performed, or is now materially
performing, the obligations of, and Hardware is not in material default (or
would by the lapse of time and/or the giving of notice be in material default)
in respect of, any contract, agreement or commitment binding upon the Purchased
Assets or property, which contract, agreement or commitment is material to the
conduct of its business. To Hardware's knowledge, no third party has raised any
claim, dispute or controversy with respect to any of the contracts listed on
SCHEDULE 3.13, nor has Hardware received written notice or warning of alleged
nonperformance, delay in delivery or other noncompliance by Hardware with
respect to its obligations under any of those contracts, nor to Hardware's
knowledge
-16-
are there any facts which exist indicating that any of those contracts may be
totally or partially terminated or suspended by the other parties thereto.
Hardware has no contracts or agreements that are material to Hardware, its
business or properties.
3.14 Business and Customers. SCHEDULE 3.14 is a list of all of Hardware's
----------------------
customers together with summaries of the sales made to each customer during the
most recent fiscal year. Hardware has no information, and is not aware of any
facts, indicating that any of these customers intends to cease doing business
with Hardware, or materially alter the amount of business that they are
presently doing with Hardware.
3.15 Inventories. The inventories of Hardware consist of items of a
-----------
quality and quantity usable and salable in the normal course of the business,
subject to reserves on balance sheet. A summary of inventory on hand as of
November 30, 1995 is set forth in SCHEDULE 2.1(b). All items included in such
inventories are owned by Hardware. No items included in the inventories have
been pledged as collateral or are held by Hardware on consignment from others.
All the inventories reflected on the balance sheets included in the Financial
Statements and on the books of Hardware are based on quantities determined from
month-end physical count, and are valued in the Financial Statements on an
average cost basis, consistent with that of prior periods.
3.16 Right to Use Name. For a period of one (1) year from the date of
-----------------
Closing, WMT has the right to use the name "R&D Hardware/Western Micro," and to
refer to the business as "formerly R&D Hardware Systems Company of Colorado."
3.17 Brokers or Finders. Hardware has not dealt with any broker or finder
------------------
in connection with the transactions contemplated by this Agreement. Hardware
has not incurred, and shall not incur, directly or indirectly, any liability for
any brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
-17-
3.18 Certain Advances. There are no receivables of Hardware owing from
----------------
directors, officers, employees, consultants or shareholders of Hardware, or
owing by any affiliate of any director or officer of Hardware, other than
advances in the ordinary and usual course of business to officers and employees
for reimbursable business expenses which are not in excess of $2,500 for any one
individual.
3.19 Union Activities. None of the employees of Hardware is represented
----------------
by any union or is a party to any collective bargaining arrangement, and to
Hardware's knowledge no attempts are being made to organize or unionize any of
the Hardware employees.
3.20 Underlying Documents. Except for the minute books, copies of any
--------------------
underlying documents listed or described as having been disclosed to WMT
pursuant to this Agreement have been furnished to WMT. All such documents
furnished to WMT are true and correct copies, and there are no amendments or
modifications thereto, that have not been disclosed to WMT. The minute books of
Hardware contain complete and accurate records of all meetings and other
corporate actions taken by the directors and shareholders of Hardware.
3.21 Full Disclosure. Any information furnished by Hardware to WMT in
---------------
writing pursuant to this Agreement (including the Schedules hereto), at any time
prior to the Closing Date, does not and will not contain any untrue statement of
a material fact and does not and will not omit to state any material fact
necessary to make any statement, in light of the circumstances under which such
statement is made, not misleading.
3.22 Compliance with Vendor and Customer Agreements. Each of Hardware
----------------------------------------------
and, to Hardware's knowledge, its Industry Remarketer Affiliates ("IRAs") for
IBM products and customers performing similar functions for Unisys and Uniplex
products (collectively the "Hardware Customers") is in compliance with any and
all agreements with the applicable vendor (i.e., IBM, Unisys or Uniplex
(collectively the "Vendors")) and Hardware and any and all agreements by and
among, Hardware and/or the Vendor and the Hardware Customer, including
-18-
without limitation the XXX Agreements, and has conducted its business at all
times in compliance with such agreements.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF WMT
-------------------------------------
Except as contemplated by this Agreement, WMT represents and warrants to
Hardware as of the date hereof as follows:
4.1 Organization. WMT is a corporation duly incorporated, validly
------------
existing and in good standing under the laws of California. WMT is duly
qualified to do business and is in good standing in its state of incorporation
and in each other jurisdiction in which it owns or leases property or conducts
business, except where the failure to be so qualified would not have a material
adverse effect on the business of WMT. WMT has all requisite power and author-
ity to own, lease and operate its properties and to carry on its business as now
being conducted, and possesses all licenses, franchises, rights and privileges
material to the conduct of its business.
4.2 Authority. WMT has all requisite corporate power and authority to
---------
enter into this Agreement and the related agreements contemplated herein, and,
subject to satisfaction of the conditions set forth herein, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of WMT. This Agreement
has been duly executed and delivered by WMT and constitutes the valid and
binding obligation of WMT enforceable in accordance with its terms, subject to
the effect of applicable bankruptcy, insolvency, reorganization or other similar
federal or state laws affecting the rights of creditors and the effect or
availability of rules of law governing specific performance, injunctive relief
or other equitable remedies. Provided the conditions set forth in Article 7 are
satisfied, the execution and delivery of this Agreement do not, and the consum-
mation of the transactions
-19-
contemplated hereby will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation under
(a) any provision of the Articles of Incorporation or Bylaws of WMT, or (b) any
material agreement or instrument, permit, license, judgment, order, statute,
law, ordinance, rule or regulation applicable to WMT or its properties or
assets, other than any such conflicts, violations, defaults, terminations,
cancelations or accelerations which individually or in the aggregate would not
have a material adverse effect on WMT.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental authority is required by or with
respect to WMT in connection with the execution and delivery of this Agreement
by WMT or the consummation by WMT of the transactions contemplated hereby or
thereby, except for (i) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws, (ii) the approval of the California Department of
Corporations and (iii) the listing of the WMT Common on The Nasdaq Stock Market.
4.3 Capital Structure. The authorized capital stock of WMT consists of
-----------------
10,000,000 shares of Common Stock, no par value, and 10,000,000 shares of
Preferred Stock, no par value. As of November 30, 1995, 4,010,023 shares of WMT
Common were issued and outstanding. No shares of Preferred Stock are
outstanding.
All of the outstanding shares of WMT Common are, and any shares of WMT
Common issuable upon exercise of any WMT option, when issued pursuant to such
exercise, will be duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights created by statute, WMT's Articles of
Incorporation or Bylaws or any agreement to which WMT is a party or is bound.
4.4 Financial Statements. WMT has furnished to Hardware its audited
--------------------
consolidated statement of operations, statement of stockholders' equity and
statement of cash flows for the three (3) fiscal years ended
-20-
December 31, 1994 and WMT's audited consolidated balance sheet at December 31,
1994; and the unaudited consolidated statement of operations and statement of
cash flows for the nine (9) months ended September 30, 1995 and the unaudited
consolidated balance sheet at September 30, 1995. WMT will furnish to Hardware
as soon as available its audited consolidated financial statements for the
fiscal year ended December 31, 1995. The balance sheet at September 30, 1995 is
hereinafter referred to as the "WMT Balance Sheet," and all such financial
statements are hereinafter referred to collectively as the "WMT Financial
Statements." The WMT Financial Statements have been and will be prepared in
accordance with GAAP applied on a consistent basis during the periods involved,
and fairly present and will present the consolidated financial position of WMT
and the results of its operations as of the date and for the periods indicated
thereon. At the date of the WMT Balance Sheet (the "WMT Balance Sheet Date"),
neither WMT nor its consolidated subsidiaries had any liabilities or
obligations, secured or unsecured (whether accrued, absolute, contingent or
otherwise) not reflected on the WMT Balance Sheet or the accompanying notes
thereto except for liabilities and obligations as may have arisen in the
ordinary course of business a result of the sale of the semiconductor business
and resultant reorganization prior to the date of said Balance Sheet and which,
under GAAP, would not have been required to be reflected on such Balance Sheet
and except for liabilities incurred in the ordinary course of business since the
date of said balance sheet which are usual and normal in amount and type.
4.5 SEC Documents. WMT has furnished to Hardware a true and complete copy
-------------
of WMT's Form 10-K for the year ended December 31, 1994, Form 10-Q for each of
the quarters ended March 31, 1995, June 30, 1995 and September 30, 1995, Notice
of Annual Meeting and Proxy Statement for the Company's 1995 Annual Meeting,
Notice of Special Meeting and Proxy Statement for the Company's special meeting
related to the sale of its electronic semiconductor components distribution
business to Reptron Electronics, Inc. and the Form 8-K dated November 18, 1995
relating to WMT's acquisition of International Parts, Inc. (the "WMT SEC
Documents"). As of their respective filing dates, the WMT SEC Documents comply
or will comply in all material respects with the
-21-
requirements of the Securities Exchange Act of 1934 or the Securities Act of
1933, and none of the WMT SEC Documents contain or will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading, except to
the extent corrected by a subsequently filed WMT SEC Document.
4.6 Information Supplied. None of the information supplied or to be
--------------------
supplied by WMT at the date such information is supplied contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading.
4.7 No Conflict. The execution and delivery of this Agreement by WMT and
-----------
the performance of WMT's obligations hereunder, (i) are not in violation or
breach of, and will not conflict with or constitute a default under, any of the
terms of the Articles of Incorporation or Bylaws of WMT or any of its
Subsidiaries, or any material contract, agreement or commitment binding upon WMT
or any of its assets or properties; (ii) will not result in the creation or
imposition of any lien, encumbrance, equity or restriction in favor of any third
party upon any of the assets or properties of WMT; and (iii) will not conflict
with or violate any applicable law, rule, regulation, judgment, order or decree
of any government, governmental instrumentality or court having jurisdiction
over WMT or any of its assets or properties. The consent of WMT's lenders is
required to consummate the transactions contemplated herein pursuant to the
terms of its existing credit agreement.
4.8 Shares of Common Stock. The shares of WMT Common will, when issued
----------------------
and delivered to the shareholders of Hardware in accordance with this Agreement,
be duly authorized, validly issued, fully paid and nonassessable.
4.9 Brokers or Finders. Except for Xxx Xxxx International, WMT has not
------------------
dealt with any broker or finder in connection with the transactions
-22-
contemplated by this Agreement. WMT has not incurred, and shall not incur,
directly or indirectly, any liability for any brokerage or finders' fees or
agents commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
4.10 Business Changes. Since September 30, 1995, there have been no
----------------
changes in the condition (financial or otherwise), business, net worth, assets,
properties, employees, operations, obligations or liabilities of WMT which, in
the aggregate, have had or may be reasonably expected to have a materially
adverse effect on the condition, business, net worth, assets, prospects,
properties or operations of WMT.
4.11 Taxes. WMT has accurately and completely filed with the appropriate
-----
United States, state, local and foreign governmental agencies all tax returns
and reports required to be filed (subject to permitted extensions applicable to
such filings), and has paid or accrued in full all taxes, duties, charges,
withholding obligations and other governmental liabilities as well as any inter-
est, penalties, assessments or deficiencies, if any, due to, or claimed to be
due by, any governmental authority (including taxes on properties, income,
franchises, licenses, sales and payrolls). (All such items are collectively
referred to herein as "Taxes"). WMT is not a party to any pending action or
proceeding, nor is any such action or proceeding threatened by any governmental
authority for the assessment or collection of Taxes (except the pending sales
tax audits). No liability for Taxes has been incurred other than in the
ordinary course of business. There are no liens for Taxes except for liens for
property taxes not yet delinquent. WMT is not a party to any Tax sharing, Tax
allocation, Tax indemnity or statute of limitations extension or waiver
agreement and in the past five (5) years has not been included on any
consolidated combined or unitary return with any entity other than WMT.
4.12 Compliance with Law. All material licenses, franchises, permits,
-------------------
clearances, consents, certificates and other evidences of authority of WMT which
are necessary to the conduct of WMT's business ("Permits") are in full force and
effect and WMT is not in violation of any Permit in any material respect.
Except for possible exceptions, the curing or non-curing of which would not have
a material adverse effect
-23-
on the condition (financial or otherwise), business, net worth, assets,
prospects, properties or operations of WMT, the business of WMT has been
conducted in accordance with all applicable laws, regulations, orders and other
requirements of governmental authorities.
4.13 Full Disclosure. Any information furnished by WMT to Hardware in
---------------
writing pursuant to this Agreement, at any time prior to the Closing Date, does
not and will not contain any untrue statement of a material fact and does not
and will not omit to state any material fact necessary to make any statement, in
light of the circumstances under which such statement is made, not misleading.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
During the period from November 30, 1995, and continuing until the Closing
Date, Hardware (except as expressly contemplated by this Agreement or to the
extent that WMT shall otherwise consent in writing) covenants and agrees with
WMT that:
5.1 Conduct of Business in Normal Course. Hardware shall carry on the
------------------------------------
business and its activities diligently and in the ordinary course and shall not
make or institute any unusual or novel methods of purchase, sale, lease,
management, accounting or operation that will vary materially from the methods
used by Hardware as of November 30, 1995. Hardware shall maintain the nature
and quantities of inventories for the business in a normal and customary manner
consistent with prior practice.
5.2 Preservation of Business and Relationships. Hardware shall use its
------------------------------------------
best efforts to preserve its business organization intact, to keep available its
present employees, to preserve its present relationships with suppliers,
customers and others having business relationships with it, to obtain Unisys'
and IBM's consent to the transaction contemplated by this Agreement and to
obtain hereby executed Documents of Understanding or
-24-
agreements of similar effect from each Hardware Customer listed in SCHEDULE
7.2(J).
5.3 Maintenance of Insurance. Prior to the Closing, Hardware shall
------------------------
maintain in effect all insurance covering the business. If the Closing shall
occur after a renewal date for any such insurance, Hardware shall renew the
insurance on the same or substantially similar terms, limits of liability and
other conditions.
5.4 Employees and Compensation. Except as set forth in SCHEDULE 3.9,
--------------------------
Hardware shall not do, or agree to do, any of the following acts: (a) grant any
increase in salaries payable or to become payable to any employee, sales agent
or representative, except in the ordinary course of business, or (b) increase
benefits payable to any employee, sales agent or representative under any
executive compensation, bonus, pension, profit-sharing, retirement, deferred
compensation, severance, employee stock option or stock purchase, group life,
health and other employee benefit plans, arrangements, practices or commitments,
except in the ordinary course of business. Hardware shall provide WMT with
reasonable access to its employees during normal business hours.
5.5 Distributions; Changes in Stock. Except as set forth in SCHEDULE 5.5,
-------------------------------
Hardware shall not and shall not propose to (a) make any distributions in
respect of any of its capital stock, (b) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of
Hardware, or (c) repurchase or otherwise acquire any shares of its capital stock
or rights to acquire any shares of its capital stock.
5.6 Issuance of Securities. Hardware shall not issue, deliver, or sell or
----------------------
authorize or propose the issuance, delivery or sale of, or purchase or propose
the purchase of, any shares of its capital stock of any class or securities
convertible into, or rights, warrants or options to acquire, any such shares or
other convertible securities.
-25-
5.7 Governing Documents. Hardware shall not amend its Articles of
-------------------
Incorporation or Bylaws.
5.8 No Other Bids. Neither Hardware nor any of its directors, officers or
-------------
agents, will, directly or indirectly, solicit or initiate or encourage any
discussions or negotiations with, or participate in any negotiations with or
provide any information to or otherwise cooperate in any other way with any
corporation, partnership, person or other entity or group (other than WMT)
concerning any merger, sale of substantial assets, sale of shares of capital
stock or any division of Hardware or control thereof (collectively an
"Acquisition Transaction"). WMT shall be promptly notified in writing by
Hardware of any of the events referred to in this Section 5.8 including a
summary of the material terms of any other bid.
5.9 No Dispositions. Hardware shall not lease or otherwise dispose of any
---------------
of its Purchased Assets (other than the sale of inventory in the ordinary course
of business), individually or in the aggregate, except in the ordinary course of
business consistent with prior practice and in any event not in excess of $5,000
for any single item or more than $25,000 in the aggregate.
5.10 Indebtedness. Hardware shall not incur any indebtedness for borrowed
------------
money in an amount exceeding $5,000 or guarantee any such indebtedness or issue
or sell any debt securities of Hardware or guarantee any debt securities of
others except in connection with the purchase of inventory pursuant to the
existing bank line of credit.
ARTICLE 6
ADDITIONAL AGREEMENTS
---------------------
6.1 Access to Information.
---------------------
(a) Hardware shall afford to WMT and shall cause its independent
accountants to afford to WMT, and its accountants, counsel and
-26-
other representatives, reasonable access during normal business hours during the
period prior to the Closing Date to Hardware's properties, books, contracts,
commitments and records and to the independent accountants reasonable access to
the audit work papers and other records of Hardware's accountants, if WMT
executes a standard confidentiality agreement required by Hardware's
accountants. During such period, Hardware shall use reasonable efforts to
furnish promptly to WMT (i) a copy of each report, schedule and other document
filed or received by Hardware during such period pursuant to the requirements of
federal and state securities laws and (ii) all other information concerning the
business, properties and personnel of Hardware as WMT may reasonably request.
WMT will not use such information for purposes other than this Agreement and
will otherwise hold such information in confidence (and WMT will cause its
consultants and advisors also to hold such information in confidence).
(b) For a period of not less than six years following the Closing
Date, WMT will maintain the books and records delivered to it by Hardware and
will permit Hardware, any of its shareholders or any of their authorized agents
to have access to those books and records in order to respond to inquiries from
any taxing authority, to prepare financial reports or for any other similar
purpose.
6.2 Legal Conditions. Each party will take all reasonable actions
----------------
necessary to comply promptly with all legal requirements which may be imposed on
such party with respect to this Agreement and will promptly cooperate with and
furnish information to the other party in connection with any such requirements
imposed upon such other party or any Subsidiary of such other party in
connection with this Agreement. Each party will take, and will cause its
Subsidiaries to take, all reasonable actions to obtain (and to cooperate with
the other party and its Subsidiaries in obtaining) any consent, authorization,
order or approval of, or any exemption by, any governmental authority, or other
third party, required to be obtained or made by such party or its Subsidiaries
(or by the other party or its Subsidiaries) in connection with this Agreement or
the taking of any action contemplated thereby.
-27-
6.3 3(a)(10) Fairness Hearing. As promptly as practicable WMT, with the
-------------------------
cooperation of Hardware, shall prepare and file a permit application under
Section 25113 of the California Corporations Code with the California Department
of Corporations with respect to the transactions contemplated by this Agreement
and WMT shall request a fairness hearing pursuant to Section 25142 of the
California Corporations Code. WMT shall pay all costs and expenses associated
with the fairness hearing, other than the legal expenses and disbursements of
counsel which are discussed at Article 9. WMT shall also take any action
required to be taken to cause the WMT Common to be issued in this transaction to
be listed on The Nasdaq Stock Market. Hardware shall use its best efforts to
furnish to WMT all information concerning Hardware and the holders of its
outstanding securities as may be reasonably requested in connection with any
action contemplated by this Section 6.3.
6.4 Good Faith. Each party shall act in good faith in an attempt to cause
----------
to be satisfied all the conditions precedent to its obligations and those of the
other parties to this Agreement over which it has control or influence. Each
party will act in good faith and take all reasonable action within its
capability necessary to render accurate as of the Closing Date its
representations and warranties contained in this Agreement.
6.5 WMT Governing Documents. WMT agrees that, prior to the Closing, it
-----------------------
will give Hardware prompt notice of any amendment to its Articles of
Incorporation or Bylaws.
6.6 Hardware Corporate Tax Returns. Hardware shall file and pay for
------------------------------
all necessary corporate federal, state, local or foreign tax returns for any
period prior to or following the Closing Date or will make arrangements to
request WMT to prepare such returns and reimburse WMT for all costs associated
therewith.
6.7 Lock-up. Hardware will not sell, transfer, exchange, pledge or
-------
otherwise dispose of, or in any other way reduce its risk of ownership or
investment in, or make any offer or agreement relating to any of the foregoing
with respect to any WMT Common for a period of ninety (90) days from the Closing
Date, except that Hardware may distribute the
-00-
XXX Xxxxxx to its shareholders, provided such shareholders agree to be bound by
the terms of Sections 6.7 and 6.9 hereto.
6.8 Current Available Information. From and after the Closing Date, and
-----------------------------
for so long as is necessary in order to permit Hardware to sell the WMT Common
pursuant to Rules 144 and 145 under the Securities Act of 1933, WMT will use its
best efforts to file on a timely basis all reports required to be filed by it
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended,
referred to in paragraph (c)(1) of Rule 144 under the Securities Act of 1933.
WMT is under no obligation to register the sale, transfer or other disposition
of any WMT Common by or on behalf of Hardware or to take any other action
necessary in order to make compliance with an exemption from registration
available.
6.9 Limited Resales. Subject to Section 6.7, Hardware agrees to sell the
---------------
WMT Common in accordance with the terms and conditions of Rule 145.
6.10 Legend; Stop Transfer Instructions. Hardware understands and
----------------------------------
agrees that:
(1) the WMT Common will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER AS SET FORTH IN THAT ASSET PURCHASE AGREEMENT DATED AS OF
JANUARY 2, 1996 BY AND BETWEEN WESTERN MICRO TECHNOLOGY, INC. AND R&D
HARDWARE SYSTEMS COMPANY OF COLORADO.
; and
(2) stop transfer instructions will be given to WMT's transfer
agent with respect to certificates evidencing the WMT Common. WMT
agrees to remove promptly such stop transfer instructions and legend
upon full compliance with this Agreement by the undersigned, includ-
ing, without limitation, a
-29-
sale or transfer of WMT Common in accordance with Rule 145 following
the expiration of the period set forth in Section 6.7.
ARTICLE 7
CONDITIONS PRECEDENT
--------------------
7.1 Conditions to Obligations of WMT and Hardware. The obligations of WMT
---------------------------------------------
and Hardware to consummate this Agreement shall be subject to the satisfaction
on or prior to the Closing Date of the following conditions unless waived by
both WMT and Hardware:
(a) Government Approvals. All authorizations, consents, orders or
--------------------
approvals of, or declarations or filings with, or expiration of waiting periods
imposed by, any governmental authority necessary for the consummation of the
transactions contemplated by this Agreement including, but not limited to, the
approval of the California Department of Corporations and the requirements of
applicable federal or state securities laws and The Nasdaq Stock Market, shall
have been filed, occurred or been obtained.
(b) Third-Party Approvals. Any and all consents or approvals
---------------------
required from third parties relating to contracts, agreements, licenses, leases
and other instruments, material to the respective businesses of WMT and Hardware
shall have been obtained including, without limitation, IBM's consent and the
XXX Documents of Understanding described in Section 5.2 hereof.
(c) Legal Action. No temporary restraining order, preliminary
------------
injunction or permanent injunction or other order preventing the consummation of
this Agreement shall have been issued by any federal or state court and remain
in effect, and no litigation seeking the issuance of such an order or
injunction, shall be pending which, in the good faith judgment of Hardware or
WMT has a reasonable probability of resulting in such order, injunction or
damages.
-30-
(d) Securities Laws. WMT shall have received any and all permits,
---------------
authorizations, approvals and orders under federal and state securities laws for
the issuance of the WMT Common, including, without limitation, approval of the
California Commissioner of Corporations pursuant to Sections 25110 and 25142 of
the California Corporate Securities Laws without the imposition of any
conditions adverse to WMT or which would require WMT to amend its Articles of
Incorporation, Bylaws or any contract.
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE
OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTIONS 25100, 25102, OR
25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
7.2 Conditions to Obligations of WMT. The obligations of WMT to
--------------------------------
consummate this Agreement are subject to the satisfaction on or prior to the
Closing Date of the following conditions, unless waived by WMT:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Hardware set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as if made at and as
of the Closing Date, except as otherwise contemplated by this Agreement, and WMT
shall have received a certificate or certificates signed by the chief financial
officer of Hardware to such effect.
(b) Performance of Obligations. Hardware shall have performed in all
--------------------------
material respects all obligations required to be performed by it under this
Agreement prior to the Closing Date, and WMT shall
-31-
have received a certificate signed by the chief financial officer of Hardware to
such effect.
(c) Opinion of Hardware's Counsel. WMT shall have received an
-----------------------------
opinion dated the Closing Date of Holland & Xxxx, counsel to Hardware, in
substantially the form attached hereto as EXHIBIT 7.2(c).
(d) Shareholder Approval. All of the shareholders of Hardware shall
--------------------
have approved of this Agreement and the transactions contemplated hereby and by
all of the attached Exhibits.
(e) November 30, 1995 Financial Statements. Until the Closing Date,
--------------------------------------
Hardware's Financial Statements for each month after November 30, 1995, shall be
delivered to WMT as soon as practicable thereafter.
(f) No Material Adverse Change. Since November 30, 1995, there shall
--------------------------
have been no changes in the condition (financial or otherwise), business,
prospects, employees, operations, obligations or liabilities of Hardware which,
in the aggregate, have had or may be reasonably expected to have a materially
adverse effect on the financial condition, business, or operations of Hardware
on a consolidated basis.
(g) Non-Compete Arrangements. WMT shall have entered into covenants
------------------------
not to compete in the form attached hereto as EXHIBIT 7.2(g) with each of Xxx X.
Xxxxxx, Xxxxx X. Xxxx and Xxxxxxx X. Xxxxxx.
(h) Vendor Consent. Hardware shall have received the written
--------------
consent of each its vendors listed on EXHIBIT 7.2(h) to the transaction
contemplated by this Agreement and each such vendor shall have an agreement in
place with WMT.
(i) Dedicated Staff. WMT shall have received reasonable
---------------
assurances from Hardware, in WMT's reasonable discretion, that Hardware is aware
of no circumstances that would prevent WMT from
-32-
employing after Closing Hardware's existing sales staff, including without
limitation Xxxx Xxxxxx.
(j) Hardware Customers. WMT shall have received executed
------------------
Documents of Understanding or documents of similar effect from each of the
Hardware Customers set forth on SCHEDULE 7.2(j), with a minimum term of one (1)
year after the Closing Date.
(k) Escrow Agreement. Hardware shall have executed and delivered the
----------------
Escrow Agreement.
(l) Intentionally left blank.
(m) Indemnity Obligations Agreement. Each of Xxx X. Xxxxxx, Xxxxx X.
-------------------------------
Linn and Xxxxxxx X. Xxxxxx shall have executed and delivered the Indemnity
Obligations Agreement attached hereto as EXHIBIT 7.2(m).
7.3 Conditions to Obligations of Hardware. The obligations of Hardware to
-------------------------------------
consummate the transactions contemplated hereby are subject to the satisfaction
on or prior to the Closing Date of the following additional conditions unless
waived by Hardware:
(a) Representations and Warranties. The representations and
------------------------------
warranties of WMT set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as if made at and as of
the Closing Date, except as otherwise contemplated by this Agreement, and
Hardware shall have received a certificate signed by the chief executive officer
and the chief financial officer of WMT to such effect.
(b) Performance of Obligations of WMT. WMT shall have performed in
---------------------------------
all material respects all obligations required to be performed by it under this
Agreement prior to the Closing Date, and Hardware shall have received a
certificate signed by the chief financial officer of WMT to such effect.
-33-
(c) Opinion of WMT's Counsel. Hardware shall have received an opinion
------------------------
dated the Closing Date of Pillsbury Madison & Sutro, outside counsel to WMT, in
substantially the form attached hereto as EXHIBIT 7.3(c).
(d) No Material Adverse Change. Since September 30, 1995 there shall
--------------------------
have been no changes in the condition (financial or otherwise), business,
prospects, employees, operations, obligations or liabilities of WMT which, in
the aggregate, have had or may be reasonably expected to have a materially
adverse effect on the financial condition, business or operations of WMT.
(e) Nasdaq Listing Application. The additional listing application
--------------------------
filed with The Nasdaq Stock Market with respect to the WMT shares to be issued
at the Closing shall have been approved and such shares listed for trading on
The Nasdaq Stock Market.
(f) Escrow Agreement. WMT shall have signed the Escrow Agreement.
----------------
7.4 Best Efforts. All the parties hereto shall use their respective best
------------
efforts to cause the Closing Date to be not later than January 31, 1996.
ARTICLE 8
INDEMNIFICATION AND ESCROW
--------------------------
8.1 Indemnification by Hardware.
---------------------------
(a) Hardware agrees to defend and indemnify WMT and its affiliates,
directors, officers and shareholders, and their respective successors and
assigns (collectively, the "WMT Indemnitees"), against and hold each of them
harmless from any and all losses, liabilities, taxes, claims, suits,
proceedings, demands, judgments, damages, expenses and costs, including, without
limitation, reasonable counsel fees, costs and
-34-
expenses incurred in the investigation, defense or settlement of any claims
covered by this indemnity (collectively, the "Indemnifiable Damages") which any
such indemnified person may suffer or incur by reason of (i) the inaccuracy or
breach of any of the representations, warranties and covenants of Hardware
contained in this Agreement or any documents, certificate or agreement delivered
pursuant hereto; (ii) any claim by any person relating to assets or liabilities
relating to Hardware not acquired or assumed hereunder; or (iii) any claim by or
relating to an audit by a Hardware vendor, or an alleged breach of a contract
with a vendor by Hardware or any customer for events that occurred prior to
Closing. The total indemnity shall not exceed the aggregate amount of ten
percent (10%) of the cash paid at Closing and ten percent (10%) of the total
shares of WMT Common issued to Hardware at Closing. The indemnity provided in
this Article 8 shall be the sole and exclusive remedy of the WMT Indemnitees for
any breach in or inaccuracy of any representation and warranty of Hardware or
any other matter relating to this Agreement or the transactions contemplated by
this Agreement; provided, however, that nothing herein shall limit in any way
WMT's remedies in the event of breach by Hardware of any of its covenants or
agreements hereunder which are not also a representation or warranty or for
willful fraud or intentionally deceptive material misrepresentation or omission
by Hardware in connection herewith or with the transactions contemplated hereby
(the "Unrestricted Hardware Indemnity").
(b) Without limiting the generality of the foregoing but subject to
the foregoing, with respect to the measurement of Indemnifiable Damages, WMT and
its affiliates shall have the right to be put in the same financial position as
they would have been in had each of the representations, warranties and
covenants of Hardware been true and accurate or the same said parties had not
breached any such covenants or had any of the events, claims or liabilities
referred to in clause (a)(ii) or (a)(iii) of this Section 8.1 not occurred or
been made or incurred. Any dispute as to indemnification shall be resolved by
arbitration in accordance with Section 8.8.
(c) Except for the Unrestricted Hardware Indemnity, the indemnity
referred to in this Section 8.1 shall only apply to Indemnifiable
-35-
Damages claimed prior to the expiration of the Escrow Period defined below under
Section 8.3. Any indemnitee under this Agreement may not seek recovery under
the indemnities set forth herein unless and until the Indemnifiable Damages of
such party are greater than $25,000, in which case such indemnity shall apply to
all Indemnifiable Damages.
8.2 Escrow Fund. As security for the indemnity provided for in Section
-----------
8.1 hereof, a total of ten percent (10%) of the cash delivered at Closing and
ten percent (10%) of the WMT Common to be received by Hardware pursuant to this
Agreement shall be registered in the name of Hardware but be deposited (with an
executed assignment in blank) with First Trust of California, National
Association. (or other institution selected by WMT with the reasonable consent
of Hardware) as escrow agent (the "Escrow Agent"), such deposit to constitute an
escrow fund (the "Escrow Fund") to be governed by the terms set forth herein and
in the Escrow Agreement to be signed by all parties thereto, the form of which
is attached as EXHIBIT 8.2. In the event of any conflict between the terms of
this Agreement and the Escrow Agreement, the terms of the Escrow Agreement shall
govern. WMT shall pay all costs and fees of the Escrow Agent for establishing
and administering the Escrow Fund. Upon compliance with the terms hereof, WMT
shall be entitled to obtain indemnity from the Escrow Fund for all Indemnifiable
Damages covered by the indemnity provided for in Section 8.1 hereof.
8.3 Escrow Period. The Escrow Fund shall remain in existence until May
-------------
15, 1996. The representations and warranties of the parties contained herein
shall survive the Closing and expire at the end of the Escrow Period.
8.4 Protection of Escrow Fund. The Escrow Agent shall hold and safeguard
-------------------------
the Escrow Fund during the Escrow Period, shall treat such fund as a trust fund
in accordance with the terms of this Agreement and not as the property of WMT,
and shall hold and dispose of the Escrow Fund only in accordance with the terms
hereof.
-36-
8.5 Distributions; Voting.
---------------------
(a) Any dividends payable in common stock or securities of WMT
(including any shares received upon a stock split, stock dividend or recapi-
talization) made in respect of any securities in the Escrow Fund shall be held
in the Escrow Fund subject to the rights of WMT; all other distributions shall
be paid to Hardware.
(b) Hardware shall have voting rights with respect to the shares of
stock in the Escrow Fund so long as such stock or other voting securities are
held in the Escrow Fund.
8.6 Claims Upon Escrow Fund.
-----------------------
(a) Upon receipt by the Escrow Agent on or before the last day of the
Escrow Period of a certificate signed by any officer of WMT (an "Officer's
Certificate") stating that WMT has paid or properly accrued Indemnifiable
Damages in an aggregate stated amount to which such party is entitled to
indemnity pursuant to this Agreement, and specifying in reasonable detail the
individual items of Indemnifiable Damages included in the amount so stated, the
date each such item was paid or properly accrued, and the nature of the
misrepresentation, breach of warranty or claim to which such item is related the
Escrow Agent shall, subject to the provisions of Section 8.7 hereof, deliver to
WMT out of the Escrow Fund, as promptly as practicable, the number of WMT Common
or amount of other assets held in the Escrow Fund to indemnify WMT against such
Indemnifiable Damages.
(b) For the purpose of indemnity pursuant to this Agreement, each
share of WMT Common in the Escrow Fund shall be valued at an amount equal to the
closing price per share of WMT Common on The Nasdaq Stock Market on the business
day prior to the date on which the WMT Common is released from the Escrow as a
result of such indemnity.
8.7 Objections to Claims. Upon the time of delivery of an Officer's
--------------------
Certificate to the Escrow Agent, the Escrow Agent shall deliver a duplicate copy
of such certificate to each Hardware Shareholder and for
-37-
a period of thirty (30) days after such delivery, the Escrow Agent shall make no
delivery of WMT Common or other property pursuant to Section 8.6 hereof unless
the Escrow Agent shall have received written authorization from Hardware to make
such delivery. After the expiration of such thirty (30) day period, the Escrow
Agent shall make delivery of the WMT Common or other property in the Escrow Fund
in accordance with Section 8.6 hereof, provided that no such payment or delivery
may be made if Hardware shall object in a written statement to the claim made in
the Officer's Certificate, and such statement shall have been delivered to the
Escrow Agent prior to the expiration of such thirty (30) day period.
8.8 Resolution of Conflicts; Arbitration.
------------------------------------
(a) If Hardware shall object in writing to the indemnity of the WMT
Indemnitees in respect of any claim or claims made in any Officer's Certificate,
Hardware and WMT shall attempt in good faith to agree upon the rights of the
respective parties with respect to each of such claims. If Hardware and WMT
should so agree, a memorandum setting forth such agreement shall be prepared and
signed by both parties and shall be furnished to the Escrow Agent. The Escrow
Agent shall be entitled to rely on any such memorandum and distribute the WMT
Common or other property from the Escrow Fund in accordance with the terms
thereof.
(b) If no such agreement can be reached after good faith negotiation
within sixty (60) days after objection by either Hardware or WMT, either WMT or
Hardware may demand arbitration of the matter and the matter shall be settled by
arbitration conducted by three arbitrators. WMT and Hardware shall each select
one arbitrator, and the two arbitrators so selected shall select a third
arbitrator. The decision of the arbitrators so selected as to the validity and
amount of any claim in such Officer's Certificate or by Hardware shall be final
and binding and conclusive upon the parties to this Agreement, and, notwith-
standing anything in Section 8.7 hereof, the Escrow Agent shall be entitled to
act in accordance with such decision and make or withhold payments out of the
Escrow Fund in accordance therewith, if applicable.
-38-
(c) Judgment upon any award rendered by the arbitrators may be entered
in any court having jurisdiction. Any such arbitration shall be held in the
City of San Jose, California under the rules then in effect of the American
Arbitration Association. A claimant shall be deemed to be the non-prevailing
party in the event that the arbitrators award such claimant less than one-half
(1/2) of the amount claimed by it; otherwise, the other party shall be deemed to
be the non-prevailing party. The non-
prevailing party to an arbitration shall pay its own expenses, the fees of each
arbitrator, the administrative fee of the American Arbitration Association, and
the reasonable attorneys' fees and costs incurred by the other party to the
arbitration as well as the amount of any Indemnifiable Damages awarded and in
addition interest thereon from the date of actual loss or expenditure until the
date paid at ten percent (10%) per annum, or at the maximum rate permitted by
applicable law if less than ten percent (10%) per annum. In addition, if WMT is
the non-prevailing party, it will pay for the reasonable travel and lodging
expenses of Hardware.
8.9 Distribution upon Termination of Escrow Period. Immediately following
----------------------------------------------
termination of the Escrow Period, the Escrow Agent shall deliver to Hardware all
of the WMT Common and cash in the Escrow Fund in excess of any amount of such
WMT Common and cash sufficient, in the reasonable judgment of WMT, to satisfy
any agreed upon claims specified in any Officer's Certificate theretofore
properly delivered to the Escrow Agent.
8.10 Escrow Agent's Duties.
---------------------
(a) The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein or in the Escrow Agreement and
may rely and shall be protected in relying or refraining from acting on any
instrument reasonably believed to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall not be liable
for any act done or omitted hereunder as Escrow Agent while acting in good faith
and in the exercise of reasonable judgment, and any act done or omitted pursuant
to the advice of counsel shall be conclusive evidence of such good faith.
-39-
(b) The Escrow Agent is hereby expressly authorized to disregard any
and all warnings given by any of the parties hereto, Hardware or by any other
person, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree of any court, the Escrow Agent shall not be liable to any of the
parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(c) The Escrow Agent shall not be liable in any respect on account of
the identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver this Agreement or any documents or papers
deposited or called for hereunder.
(d) The Escrow Agent shall not be liable for the outlawing of any
rights under any statute of limitations with respect to this Agreement or any
documents deposited with the Escrow Agent.
8.11 Indemnification by WMT.
----------------------
(a) WMT agrees to defend and indemnify Hardware and its affiliates,
directors, officers and shareholders and their respective successors and assigns
(collectively, the "Hardware Indemnitees") against and hold each of them
harmless from any and all Indemnifiable Damages which any such Indemnified
Person may suffer or incur by reason of (i) the inaccuracy or breach of any of
the representations, warranties and covenants of WMT contained in this Agreement
or any document, certificate or agreement delivered pursuant hereto, or (ii) any
claim arising out of actions or inactions after the Closing Date by any person
relating to assets or liabilities acquired or assumed by WMT hereunder. The
total indemnity shall not exceed the fair market value (as determined pursuant
to Section 8.6) of the WMT Common received by Hardware at Closing and the cash
paid at Closing. The indemnity provided in this Article 8 shall be the sole and
exclusive remedy of the Hardware
-40-
Indemnitees for any breach in or inaccuracy of any representation and warranty
of WMT or any other matter relating to this Agreement or the transactions
contemplated by this Agreement; provided, however, that nothing herein shall
limit in any way Hardware's remedies in the event of breach by WMT of any of its
covenants or agreements hereunder which are not also a representation or
warranty or for willful fraud or intentionally deceptive material
misrepresentation or omission by WMT in connection herewith or with the
transactions contemplated hereby (the "Unrestricted WMT Indemnity").
(b) Without limiting the generality of the foregoing, but subject to
the foregoing, with respect to the measure of Indemnifiable Damages, Hardware
and its affiliates shall have the right to be put in the same financial position
as it would have been in had each of the representations, warranties and
covenants of WMT been true and accurate or had the same said parties not
breached any such covenants or had any of the events, claims or liabilities
referred to in clause (a)(ii) of this Section 8.11 not occurred or been made or
incurred. Any dispute as to indemnification shall be resolved by arbitration in
accordance with Section 8.8.
(c) Except for the Unrestricted WMT Indemnity, the indemnity referred
to in this Section 8.11 shall only apply to Indemnifiable Damages claimed by the
party seeking indemnification prior to the expiration of the Escrow Period
defined above in Section 8.3. Any indemnitee under this Agreement may not seek
recovery under the indemnities set forth herein unless and until the
Indemnifiable Damages of such party are greater than $25,000, in which case
indemnity shall apply to all Indemnifiable Damages.
8.12 Indemnification Procedure. A party seeking indemnification (the
-------------------------
"Indemnitee") shall use its best efforts to minimize any liabilities, damages,
deficiencies, claims, judgments, assessments, costs and expenses in respect of
which indemnity may be sought under this Agreement. The Indemnitee shall give
prompt written notice to the party from whom indemnification is sought (the
"Indemnitor") of the assertion of a claim for indemnification, but in no event
longer than (i) thirty (30) days after
-41-
service of process in the event litigation is commenced against the Indemnitee
by a third party, or (ii) sixty (60) days after the assertion of such claim. No
such notice of assertion of a claim shall satisfy the requirements of this
Section 8.12 unless it describes in reasonable detail and in good faith the
facts and circumstances upon which the asserted claim for indemnification is
based. If any action or proceeding shall be brought in connection with any
liability or claim to be indemnified hereunder, the Indemnitee shall provide the
Indemnitor twenty (20) calendar days to decide whether to defend such liability
or claim. During such period, the Indemnitee shall take all necessary steps to
protect the interests of itself and the Indemnitor, including the filing of any
necessary responsive pleadings, the seeking of emergency relief or other action
necessary to maintain the status quo, subject to reimbursement from the
Indemnitor of its expenses in doing so. The Indemnitor shall (with, if
necessary, reservation of rights) defend such action or proceeding at its
expense, using counsel selected by the insurance company insuring against any
such claim and undertaking to defend such claim, or by other counsel selected by
it and approved by the Indemnitee, which approval shall not be unreasonably
withheld or delayed. The Indemnitor shall keep the Indemnitee fully apprised at
all times of the status of the defense and shall consult with the Indemnitee
prior to the settlement of any indemnified matter. Indemnitee agrees to use
reasonable efforts to cooperate with Indemnitor in connection with its defense
of indemnifiable claims. In the event the Indemnitee has a claim or claims
against any third party growing out of or connected with the indemnified matter,
then upon receipt of indemnification, the Indemnitee shall fully assign to the
Indemnitor the entire claim or claims to the extent of the indemnification
actually paid by the Indemnitor and the Indemnitor shall thereupon be subrogated
with respect to such claim or claims of the Indemnitee.
ARTICLE 9
PAYMENT OF EXPENSES
-------------------
Except as provided in Section 8.2, WMT and Hardware shall pay its own fees
and expenses incurred incident to the preparation and carrying
-42-
out of the transactions herein contemplated (including legal, accounting and
travel).
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
10.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing Date:
(a) by mutual written consent of Hardware and WMT;
(b) by either WMT or Hardware if there has been a material breach of
any representation, warranty, covenant or agreement contained in this Agreement
on the part of any party set forth in this Agreement and, if such breach is
curable, such breach has not been promptly cured after written notice of such
breach;
(c) by either WMT or Hardware if the Closing shall not have occurred
by January 31, 1996;
(d) by either WMT or Hardware if there shall be a final nonappealable
order of a federal or state court in effect preventing consummation of this
Agreement;
(e) by WMT if any condition to WMT's obligation to consummate this
Agreement has not been satisfied or waived by WMT including, without limitation,
IBM's consent and the XXX Documents of Understanding described in Section 5.2
hereto; and
(f) by Hardware if any condition to Hardware's obligation to
consummate this Agreement has not been satisfied or waived by Hardware.
10.2 Effect of Termination. In the event of termination of this Agreement
---------------------
by either Hardware or WMT as provided in Section 10.1, this
-43-
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of the parties hereto or their respective officers or
directors except as set forth in Article 9 and except to the extent that such
termination results from the (a) willful breach by a party hereto of any of its
representations or warranties, or (b) a willful breach by a party hereto of its
covenants or agreements set forth in this Agreement.
10.3 Amendment. This Agreement may not be amended except by an instrument
---------
in writing signed on behalf of each of the parties hereto.
10.4 Extension; Waiver. At any time prior to the Closing, WMT or Hardware
-----------------
may (i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions for the benefit thereof contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE 11
GENERAL
-------
11.1 Notices. Any notice, request, instruction or other document to be
-------
given hereunder by any party to the other shall be in writing and delivered
personally or sent by certified mail, postage prepaid, by telecopy, or by
courier service, as follows:
Western Micro Technology, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxx
Chief Financial Officer
Fax: (000) 000-0000
-44-
with a copy to:
Pillsbury Madison & Sutro
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxx
Fax: (000) 000-0000
R&D Hardware Systems Company of Colorado
0000 X. Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Xxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
Holland & Xxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
or to such other persons as may be designated in writing by the parties, by a
notice given as aforesaid.
11.2 Headings. The headings of the several sections of this Agreement are
--------
inserted for convenience of reference only and are not intended to affect the
meaning or interpretation of this Agreement.
11.3 Counterparts. This Agreement may be executed in counterparts, and
------------
when so executed each counterpart shall be deemed to be an original, and said
counterparts together shall constitute one and the same instrument.
11.4 Announcements. Each party shall provide the other with the
-------------
opportunity to review and comment on the text of any press release a
-45-
reasonable period of time before it is issued to announce the transactions
contemplated hereby. The reviewing party shall provide its reasonable comments,
if any, promptly to the other party.
11.5 Binding Nature. This Agreement shall be binding upon and inure to
--------------
the benefit of the parties hereto. No party may assign or transfer any rights
under this Agreement.
-46-
11.6 Applicable Law. This Agreement shall be governed by, construed and
--------------
enforced in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed,
all as of the date first above written.
WESTERN MICRO TECHNOLOGY, INC., a California
corporation
By /s/ P. XXXXX XXXXX
-----------------------------------------
P. Xxxxx Xxxxx
President and
Chairman of the Board
R&D HARDWARE SYSTEMS COMPANY OF COLORADO, a
Colorado corporation
By /s/ XXX X. XXXXXX
-----------------------------------------
Xxx X. Xxxxxx
Chairman of the Board
-47-
EXHIBIT A
AGREEMENT OF ASSIGNMENT AND ASSUMPTION
--------------------------------------
THIS AGREEMENT OF ASSIGNMENT AND ASSUMPTION is entered into effective as of
January 2, 1996, by and between R&D HARDWARE SYSTEMS COMPANY OF COLORADO, a
----------------------------------------
Colorado corporation ("Assignor"), and WESTERN MICRO TECHNOLOGY, INC., a
------------------------------
California corporation ("Assignee"). Capitalized terms not defined herein shall
have the meanings ascribed to them in that certain Asset Purchase Agreement of
even date herewith by and between Assignor and Assignee (the "Purchase
Agreement").
1. Assignment. For good and valuable consideration, receipt of which is
----------
hereby acknowledged, Assignor hereby assigns, transfers and sets over to
Assignee, effective as of the date hereof, certain trade accounts payable
arising out of the operation of Assignor's business in the ordinary course that
are unpaid as of the Closing Date, as set forth in the Closing Balance Sheet
required by the Purchase Agreement (the "Accounts Payable").
2. Assumption. Assignee hereby expressly assumes, and hereby covenants
----------
and agrees to perform and fulfill, all of the obligations of the Assignor which
are to be performed in connection with such Accounts Payable, as fully as if
Assignee had originally been obligated to make such payments.
3. Indemnity. Assignee agrees to indemnify, defend and hold the Assignor
---------
harmless from and against any and all claims, losses, costs, expenses or
liabilities arising on or after the date hereof from Assignee's failure to
timely pay such Accounts Payable.
4. Consents of Others Obtained. Assignor represents and warrants that it
---------------------------
has obtained the consents required to be obtained to assign the Accounts Payable
to Assignee.
5. No Known Defaults. Assignors represents and warrants that to its
-----------------
knowledge there is no default or breach by Assignor or any other party, and no
event which, with notice and/or the passage of time would constitute a breach or
default by Assignor or any other party, in connection with the Accounts Payable.
6. Miscellaneous. Any waiver by either party of a breach of any term,
-------------
provision or condition of this Agreement shall not operate or be construed as a
waiver of any subsequent breach of the same or any other term, provision or
condition of this Agreement. No waiver of any term, provision or condition of
this Agreement shall be valid unless in writing and signed by the party agreeing
to such waiver. This Agreement shall be governed by and construed in accordance
with the laws of the State of California, provided, however, that this Agreement
-1-
shall be construed as intended by the parties. This Agreement may be executed in
one or more counterparts, each of which shall be an original and all of which
shall together constitute one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement of
Assignment and Assumption as of the date first above written.
ASSIGNOR:
R&D HARDWARE SYSTEMS COMPANY OF COLORADO
By /s/ XXX X. XXXXXX
-------------------------------------
Xxx X. Xxxxxx
Chairman of the Board
ASSIGNEE:
WESTERN MICRO TECHNOLOGY, INC.
By /s/ P. XXXXX XXXXX
-------------------------------------
P. Xxxxx Xxxxx
President and
Chairman of the Board
-2-
EXHIBIT 7.2(c)
HOLLAND & XXXX
ATTORNEYS AT LAW
DENVER - ASPEN SUITE 2900 TELEPHONE (000) 000-0000
BOULDER - COLORADO SPRINGS 000 XXXXXXXXXXX XXXXXX FACSIMILE (000) 000-0000
XXXXXX XXXX XXXXXX XXXXXX, XXXXXXXX 00000-0000 TWX 000-000-0000
XXXXXXXX - BOISE MAILING ADDRESS
CHEYENNE - XXXXXXX HOLE X.X. XXX 0000
XXXX XXXX XXXX XXXXXX, XXXXXXXX 00000-0000
WASHINGTON, D.C.
January 2, 1996
Western Micro Technology, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Re: Acquisition of Substantially All of the Assets
of R & D Hardware Systems Company of Colorado
---------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for R & D Hardware Systems Company of Colorado, a
Colorado corporation ("Hardware"), in connection with the Asset Purchase
Agreement dated as of January 2, 1996 (the "Agreement") between Hardware and
Western Micro Technology, Inc., a Delaware corporation ("Buyer"), providing for
the acquisition by Buyer of substantially all of the assets of Hardware. This
opinion is furnished to you pursuant to Section 7.2(c) of the Agreement. Terms
used in this opinion that are defined in the Agreement are used herein as so
defined.
For purposes of this opinion, we have examined copies of the following
documents:
a. an executed copy of the Agreement and the exhibits attached to the
Agreement;
b. the Articles of Incorporation of Hardware, certified by the Colorado
Secretary of State by certificate dated January 2, 1996 and certified by an
officer of Hardware as being complete and in full force and effect as of the
date of this opinion;
c. the bylaws of Hardware, certified to us by an officer of Hardware as
being complete and in full force and effect as of the date of this opinion; and
d. records certified by an officer of Hardware as constituting all
records of proceedings and actions of the Board of Directors and shareholders of
Hardware (the "Shareholders") relating to the transactions contemplated by the
Agreement.
HOLLAND & XXXX
ATTORNEYS AT LAW
Western Micro Technology, Inc.
January 2, 1996
Page 2
We have also examined and relied upon such other documents, corporate
records, other certificates, instruments and statements of government officials
and corporate officials and other representatives of Hardware as we have deemed
necessary or appropriate for the purpose of this opinion. As to certain
questions of fact material to such opinion, we have relied upon certificates
from officers or other representatives of Hardware.
As used in this opinion, the expression "to our knowledge" with reference
to matters of fact means that, after an examination of documents in our files
and documents made available to us by Hardware and the Shareholders and after
inquiries of officers of Hardware and the Shareholders and based on the actual
present knowledge of Xxxxx Xxxxxx Arkell, Xxxxx Xxxxxxxx, Xxxxx Xxxxx and Xxx
Xxx Xxxx, the Xxxxxxx & Xxxx attorneys who have had significant responsibility
representing Hardware during the course of our representation of Hardware with
respect to this matter, we find no reason to believe that the opinions expressed
herein are factually incorrect; but beyond that we have made no independent
factual investigation for the purpose of rendering this opinion.
We are qualified to practice in the State of Colorado, and we do not
purport to be experts in, and do not express any opinion herein concerning any
law other than the laws of such jurisdiction and federal law of the United
States. With respect to our opinion set forth in paragraph 2 below, we have
assumed, with your consent, that the relevant laws of the State of California
and the judicial interpretation thereof are, in all material respects, identical
to the corresponding laws of the State of Colorado and the judicial
interpretation thereof.
In rendering the opinions expressed herein, we have assumed, without
independent verification, but with your consent, that:
1. the signatures of persons signing all documents in connection with
which this opinion is rendered are genuine (other than those of Hardware, as to
which our opinion is rendered below);
2. all documents submitted to us as originals or duplicate originals are
authentic;
HOLLAND & XXXX
ATTORNEYS AT LAW
Western Micro Technology, Inc.
January 2, 1996
Page 3
3. all documents submitted to us as copies, whether certified or not,
conform to authentic original documents; and
4. all parties to the documents reviewed by us (other than Hardware, as
to which our opinion is rendered below) have full power, authority and legal
capacity to execute and deliver, and to perform their obligations under, such
documents, and all such documents have been duly authorized by all necessary
corporate or other action on the part of such parties, have been duly executed
by such parties and have been duly delivered by such parties.
Based on the foregoing and upon an examination of such questions of law as
we have considered necessary or appropriate, it is our opinion that:
1. Hardware is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Colorado. Hardware has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted.
2. Hardware has the requisite corporate power and authority to enter into
the Agreement and the exhibits to which it is a party (the "Exhibits") and,
subject to satisfaction of the conditions set forth in the Agreement, to
consummate the transactions contemplated thereby. The execution and delivery of
the Agreement and the Exhibits and the consummation of the transactions
contemplated thereby have been duly authorized by all necessary corporate action
on the part of Hardware. The Agreement and each Exhibit, if applicable, has
been duly executed and delivered by Hardware and constitutes that valid and
binding obligation of Hardware, enforceable in accordance with it terms, subject
to the effect of applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting or limiting the
rights of creditors generally and the effect or availability of rules of law
governing specified performance, injunctive relief or other equitable remedies
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); provided that we express no opinion on the enforceability of
(a) Section 11.6 (Applicable Law) of the Agreement and (b) Exhibit 7.2(g) to the
Agreement (Covenant Not to Compete). Provided the conditions set forth in
Article 7 of the Agreement are satisfied, to our knowledge, the execution and
delivery of the Agreement and the Exhibits do not or will not, and the
consummation of the
HOLLAND & XXXX
ATTORNEYS AT LAW
Western Micro Technology, Inc.
January 2, 1996
Page 4
transactions contemplated thereby will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right to termination, cancellation or acceleration of
any obligation under (a) any provision of the Articles of Incorporation or
Bylaws of Hardware or (b) any existing court order of which we have knowledge
arising out of a proceeding to which Hardware was a party. Hardware has
represented to us that it does not have any material agreements, instruments,
permits, franchises or licenses.
3. To our knowledge, no consent, approval, order or authorization of, or
registration, declaration or filing with, any federal or State of Colorado
court, administrative agency or commission or other governmental authority, is
required by or with respect to Hardware in connection with the execution and
delivery of the Agreement or the Exhibits by Hardware or the consummation by
Hardware of the transactions contemplated thereby, except as required by the
Agreement or the Exhibits and except for (a) filings with the State of Colorado
and county authorities to reflect the removal of liens on the Purchased Assets,
(b) such consents, approvals, orders authorizations, registrations, declarations
and filings as may be required under applicable federal and state securities
laws and (c) the laws of any foreign country.
We assume that you know of no agreements, understandings or negotiations
between the parties not set forth in the Agreement that would modify the terms
or rights and obligations of the parties thereunder.
Our opinions set forth herein are as of the date hereof, and we disclaim
any undertaking or obligation to advise you of changes which may hereafter be
brought to our attention.
This opinion is solely for your benefit and may not be relied upon in any
manner by any other person or by you in any other context.
Very truly yours,
/s/ HOLLAND & XXXX
Holland & Xxxx
EXHIBIT 7.2(g)
AGREEMENT NOT TO COMPETE
------------------------
THIS AGREEMENT NOT TO COMPETE (the "Non-Compete"), made and entered into as
of January 2, 1996 by and between WESTERN MICRO TECHNOLOGY, INC., a California
------------------------------
corporation ("WMT"), and each of R&D HARDWARE SYSTEMS COMPANY OF COLORADO, a
----------------------------------------
Colorado corporation ("Hardware"), XXX X. XXXXXX ("Lammle"), XXXXX X. XXXX
------------- -------------
("Linn") and XXXXXXX X. XXXXXX ("Xxxxxx") (the parties to this Agreement are
-----------------
hereinafter collectively referred to as the "Parties"),
W I T N E S S E T H:
WHEREAS, Xxxxxx, Xxxx and Xxxxxx are officers and shareholders of Hardware
(the "Hardware Parties"); and
WHEREAS, pursuant to the terms of that certain Asset Purchase Agreement,
dated as of January 2, 1996 (the "Agreement") by and between WMT and Hardware,
Hardware intends to sell, convey, transfer, assign and deliver substantially all
of Hardware's operating assets, together with the associated goodwill (the
"Assets"), to WMT in exchange for certain consideration:
WHEREAS, this Non-Compete is a condition precedent to the transaction
contemplated in the Agreement and WMT would not enter into the Agreement absent
the execution by Hardware and the Hardware Parties of this Non-Compete:
NOW, THEREFORE, in consideration of the above recitals and the mutual
promises contained in this Non-Compete and for other and further valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto agree as follows:
1. Definitions. Capitalized terms not otherwise defined in this Agreement
-----------
shall have the meanings set forth in the Agreement.
2. Term. WMT, Hardware and each of the Hardware Parties hereby enter
----
into this Non-Compete for a term of two (2) years after Closing or such earlier
time as WMT becomes insolvent or terminates as a going concern.
3. Consideration for Covenant Not to Compete. The sole consideration for
-----------------------------------------
the faithful performance of the obligations specified in Section 4 hereof by
each of the Hardware Parties shall be the consideration received by Hardware
under the Agreement.
-1-
4. Agreement Not to Compete.
------------------------
(a) The Parties hereto agree that for the term of this Non-Compete,
Hardware and each of the Hardware Parties and their affiliates will not, in any
of the jurisdictions set forth in Exhibit A hereto, directly or indirectly: (i)
engage in remarketing or reselling computer hardware and peripheral equipment
products with any value-added resellers, resellers or system integrators (a
"Competing Business"); except that Hardware's affiliate may remarket or resell
peripheral equipment and ancillary products if such peripheral equipment and
ancillary products are not listed on Exhibit B attached hereto (which exhibit
may be amended by mutual agreement of the parties hereto to add products or
product lines) and if WMT adds certain peripheral equipment or ancillary
products to the products it markets, which are not currently included on Exhibit
B and which have not been added thereto by mutual agreement (a "Subsequent
Line"), R&D will use commercially reasonable efforts to, but shall not be
required to, purchase such Subsequent Line from WMT; (ii) acquire an interest
exceeding a five percent (5%) equity interest in any entity which is engaged in
a Competing Business; (iii) assist any other person or entity to be so engaged;
or (iv) approach, contact or solicit any employee of WMT or any affiliate of WMT
to leave the employ of WMT or any of its affiliates except through general
employment advertising.
5. Interpretation.
--------------
(a) Hardware and each of the Hardware Parties recognizes that the
foregoing covenant in Section 4, and the territorial, time and other limitations
with respect thereto, are reasonable and properly required for the adequate
protection of the acquisition of the Assets by WMT, and agrees that such
limitations are reasonable with respect to the business activities of Hardware
and each of the Hardware Parties.
(b) The Parties recognize that the laws and public policies of the various
states of the United States and the District of Columbia may differ as to the
validity and enforceability of covenants similar to those contained in Section
4. It is the intention of the parties that the provisions of Section 4 shall be
enforced to the fullest extent permissible under the laws and public policies of
the States of California and Colorado and of any other jurisdiction in which
enforcement may be sought, but that the unenforceability (or the modification to
conform with such laws or public policies) of any provisions hereof shall not
render unenforceable or impair the remainder of Section 4. To the extent that
Section 4 shall be declared unenforceable in any one or more of such
jurisdictions, such declaration shall not affect Section 4 with respect to each
other jurisdiction, as Section 4 shall be construed to be severable and
independent. If any provision of Section 4 shall be determined to be invalid or
unenforceable, either in whole or in part, Section 4 shall be deemed amended to
-2-
delete or modify, as necessary, the offending provisions and to alter the
balance of Section 4 in order to render the same valid and enforceable to the
fullest extent permissible as aforesaid.
6. Remedies. In the event of a breach or a threatened breach of any of
--------
the covenants contained in Section 4, WMT shall, in addition to the remedies
provided by law, have the right and remedy to have such covenants specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed that any material breach of any of the covenants will cause irreparable
injury to WMT and that money damages will not provide an adequate remedy to WMT.
7. Successors and Assigns. This Non-Compete shall inure to the benefit
----------------------
of the successors and assigns of WMT. Neither Hardware nor any of the Hardware
Parties may assign their individual obligations hereunder, and any such proposed
assignment shall be void. Subject to the foregoing, this Non-Compete shall
inure to the benefit of, and bind the successors and assigns of Hardware and
each of the Hardware Parties.
8. Waiver. The failure of any party to insist, in any instance, upon
------
performance of any of the terms or conditions of this Non-Compete shall not be
construed as a waiver of future performance of any such term or condition, and
the obligations of any party with respect thereto shall continue in full force
and effect.
9. Effectiveness. The effectiveness of this Non-Compete is expressly
-------------
conditioned on the closing of the transaction specified in the Agreement.
10. Entire Agreement. This Non-Compete and the Agreement set forth the
----------------
entire agreement between the Parties with respect to the subject matter hereof
and may be amended only by an agreement in writing signed by the party against
whom enforcement of any amendment is sought.
11. Notices. All notices and demands provided for by this Non-Compete
-------
shall be in writing and (unless otherwise specifically provided herein) shall be
deemed to have been given when mailed by first class mail enclosed in a
registered or certified post-paid envelope addressed to the addresses of the
parties in accordance with Section 11.1 of the Agreement or to such changed
address as any such party may have fixed by notice; provided, however, that any
notice of change of address shall be effective only upon receipt.
12. Governing Law. This Non-Compete and its validity, construction and
-------------
performance shall be governed in all respects by the internal laws of the State
of California without giving effect to principles of conflict of laws.
-3-
13. Attorneys. Pillsbury Madison & Sutro has only represented WMT in
---------
connection with this transaction. Hardware and each of the Hardware Parties has
had an opportunity to consult with its/his counsel regarding the terms of this
Non-Compete.
14. Counterparts. This Non-Compete may be executed in any number of coun-
------------
terparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have hereto executed this Agreement as of
the date first written above.
WESTERN MICRO TECHNOLOGY, INC.
By /s/ P. XXXXX XXXXX
-------------------------------------
P. Xxxxx Xxxxx
President and
Chairman of the Board
R&D HARDWARE SYSTEMS COMPANY OF COLORADO
By /s/ XXX X. XXXXXX
-------------------------------------
Xxx X. Xxxxxx
Chairman of the Board
/s/ XXX X. XXXXXX
----------------------------------------
Xxx X. Xxxxxx
/s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
/s/ XXXXXXX X. XXXXXX
------------------------------------------
Xxxxxxx X. Xxxxxx
-4-
EXHIBIT A
I. California Counties:
-------------------
1. Alameda 22. Riverside
2. Alpine 23. Sacramento
3. Calaveras 24. San Xxxxxx
4. Xxxxxx Xxxxx 00. Xxx Xxxxxxxxxx
0. Xx Xxxxxx 00. San Diego
6. Fresno 27. San Francisco
7. Xxxxx 28. San Xxxxxxx
8. Xxxx 29. San Xxxx Obispo
9. Kings 30. San Mateo
10. Lake 31. Santa Xxxxxxx
11. Los Angeles 32. Santa Xxxxx
12. Madera 33. Santa Xxxx
13. Marin 34. Sierra
14. Mariposa 35. Siskiyou
15. Mendocino 36. Xxxxxx
16. Merced 37. Sonoma
17. Monterey 38. Stanislaus
18. Napa 39. Sutter
19. Nevada 40. Ventura
20. Orange 41. Yolo
21. Placer 42. Yuba
II. United States. All of the States of the United States other than
-------------
California.
III. Canada and Mexico.
-----------------
-5-
EXHIBIT 7.2(m)
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT (this "Agreement"), dated as of January 2,
1996, is by and between (i) Western Micro Technology, Inc., a California
corporation ("Buyer") and (b) Xxx X. Xxxxxx, Xxxxx X. Xxxx and Xxxxxxx X. Xxxxxx
(individually, a "Principal Shareholder" and collectively, the "Principal
Shareholders").
RECITALS
--------
A. Concurrently with the execution and delivery of this Agreement, the
Buyer is purchasing substantially all of the assets of R&D Hardware Systems
Company of Colorado, a Colorado corporation ("Hardware") pursuant to an Asset
Purchase Agreement, dated January 2, 1996 (the "Purchase Agreement") between the
Buyer and Hardware.
B. Article 8 of the Agreement ("Article 8") provides that Hardware shall
indemnify the Buyer against certain losses under the circumstances set forth in
the Agreement.
C. The execution of this Agreement is a condition to the Buyer's
consummation of the closing of the purchase contemplated by the Purchase
Agreement.
AGREEMENT
---------
1. Subject to the limitations set forth in this Agreement, for good and
sufficient consideration which is hereby acknowledged, the Principal
Shareholders, severally, agree to be bound by and perform the indemnification
obligations of Hardware set forth in Article 8 of the Purchase Agreement.
2. The Principal Shareholders shall share severally any claim for
indemnification under Article 8 in the proportions set forth in Schedule A
----------
attached to this Agreement without regard to any knowledge, negligence or fault
on the part of any Principal Shareholder.
3. Notwithstanding anything to the contrary above, the Principal
Shareholders shall have no indemnification obligation under this Agreement if
Hardware is not obligated to perform its indemnification obligations under the
terms of the Purchase Agreement, and the execution of this Agreement shall in no
way expand the liability of any Principal Shareholder beyond his pro rata share
of any amount for which Hardware is liable under the Purchase Agreement.
4. The Buyer agrees that so long as Hardware is in existence, the Buyer
will first request performance under Article 8 from Hardware, and in the event
that Hardware does not perform within 30 days after such request (or such
shorter
period as may be necessary to timely reply or respond to the matter giving rise
to the alleged right to indemnification), then the Buyer may proceed against the
Principal Shareholders.
5. Any notice, request, instruction or other document to be given
hereunder by any party to another shall be in writing and delivered personally
or sent by certified mail, postage prepaid, by telecopy, or by courier service,
as follows:
Western Micro Technology, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxx
Chief Financial Officer
Fax: (000) 000-0000
with a copy to:
Pillsbury Madison & Sutro
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxx
Fax: (000) 000-0000
Xxx X. Xxxxxx
00000 X. Xxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx
0000 Xxx Xxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Xxxxx X. Xxxx
000 Xxxxxxxx
Xxxxxxxxxx, XX 00000
with a copy to:
Holland & Xxxx
000 00xx Xx., Xxxxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxx Arkell
Fax: (000) 000-0000
or to such other persons as may be designated in writing by the parties, by a
notice given as set forth above. Each of the Principal Shareholders hereby
instructs the Buyer that any notice sent to Hardware relating to Hardware's
indemnification obligation under the Agreement shall also be sent to each of the
Principal Shareholders.
6. This Agreement may be executed in counterparts, and when so executed
each counterpart shall be deemed to be an
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original, and said counterparts together shall constitute one and the same
instrument.
7. This Agreement shall be binding upon and inure to the benefit of the
parties hereto. No party may assign or transfer any rights or obligations under
this Agreement without the prior written consent of the other parties hereto.
8. This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed,
all as of the date first written above.
WESTERN MICRO TECHNOLOGY, INC.,
a California corporation
By: /s/ P. Xxxxx Xxxxx
--------------------------------------
Title: President and Chairman of the Board
/s/ Xxx X. Xxxxxx
------------------------------------------
/s/ Xxxxx X. Xxxx
------------------------------------------
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
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EXHIBIT A TO INDEMNIFICATION AGREEMENT
Principal Shareholder Percentage
--------------------- ----------
Xxx Xxxxxx 43.5
Xxxxx Xxxx 43.5
Xxxxxxx Xxxxxx 13.0
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EXHIBIT 7.3(c)
Law Offices Of
PILLSBURY MADISON & SUTRO LLP
0000 Xxxx Xxxx Xxxx
Xxx Xxxxxxxxx XXXXX XXXX, XXXXXXXXXX 00000-0000 San Diego
Los Angeles Telephone (000) 000-0000 Orange County
San Xxxx Telecopier (000) 000-0000 Sacramento
Washington, D.C. Tokyo
-------- Hong Kong
Writer's Office and New York
Direct Dial Number
January 2, 1996
To R&D Hardware Systems Company
of Colorado
Re: Western Micro Technology, Inc. - Acquisition of Certain
Assets of R&D Hardware Systems Company of Colorado
("Hardware")
Ladies and Gentlemen:
We have acted as counsel for Western Micro Technology, Inc., a California
corporation ("WMT"), in connection with the Asset Purchase Agreement of even
date herewith (the "Agreement"), between WMT and Hardware. This letter is
provided to you in satisfaction of the requirement set forth in Section 7.3(c)
of the Agreement. Terms not otherwise defined herein have the meanings given to
them in the Agreement.
In connection with the foregoing, we have examined the Agreement, the
exhibits and schedules to the Agreement, records of proceedings of the directors
and shareholders of WMT, the Articles of Incorporation (the "Articles") and
Bylaws of WMT, certificates of officers of WMT and public officials, and such
other documentation as we have deemed necessary or advisable in order to render
the opinions expressed herein.
Based upon the foregoing, it is our opinion that:
1. WMT is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of California. WMT has all requisite power
and authority to own, lease and operate its properties and to carry on its busi-
ness as now being conducted.
To R&D Hardware Systems Company
of Colorado
January 2, 1996
Page 2
2. WMT has all requisite corporate power and authority to enter into the
Agreement, and, subject to satisfaction of the conditions set forth in the
Agreement, to consummate the transactions contemplated thereby. The execution
and delivery of the Agreement and the consummation of the transactions con-
templated thereby have been duly authorized by all necessary corporate action on
the part of WMT. The Agreement has been duly executed and delivered by WMT and
constitutes the valid and binding obligation of WMT enforceable in accordance
with its terms, subject to the effect of applicable bankruptcy, insolvency,
reorganization or other similar federal or state laws affecting the rights of
creditors and the effect or availability of rules of law governing specific
performance, injunctive relief or other equitable remedies. Provided the
conditions set forth in Article 7 to the Agreement are satisfied, to our
knowledge, the execution and delivery of the Agreement do not, and the consum-
mation of the transactions contemplated thereby will not, conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation under any provision of the Articles of
Incorporation or Bylaws of WMT, or any contract identified as a material
contract in WMT's Form 10-K for the fiscal year ended December 31, 1994.
3. To our knowledge, no consent, approval, order or authorization of, or
registration, declaration or filing with, any federal or State of California
court, administrative agency or commission or other governmental authority is
required by or with respect to WMT in connection with the execution and delivery
of the Agreement by WMT or the consummation by WMT of the transactions
contemplated thereby, except for (a) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required by
the Agreement, (b) such consents, approvals, orders, authorizations, registra-
tions, declarations and filings as may be required under applicable state
securities laws, (c) the approval of the California Department of Corporations,
(d) the listing of the WMT Common Stock on The Nasdaq Stock Market, and (e) the
consent of WMT's lender. The consent of Coast Business Credit, the Company's
lender, has been obtained.
4. The authorized capital stock of WMT consists of 10,000,000 shares of
Common Stock, no par value, and 10,000,000 shares of Preferred Stock, no par
value.
5. The shares of WMT Common delivered to you in connection with the
Agreement are duly authorized, validly issued, and
To R&D Hardware Systems Company
of Colorado
January 2, 1996
Page 3
when paid for in accordance with the Agreement, will be fully paid and
nonassessable.
The foregoing opinion is subject to the following qualifications:
We have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as photostatic or telecopied originals, the legal
capacity of all natural persons, and as to documents executed by entities other
than WMT, that each such entity has complied with any applicable requirement to
file tax returns and pay taxes under California Franchise Tax law and had the
power to enter into and perform its obligations under such documents, and that
such documents have been duly authorized, executed and delivered by, and are
binding upon and enforceable against such entities. This opinion is limited in
all respects to matters governed by the laws of the State of California and the
laws of the United States, and we express no opinion concerning the laws or
regulations of any other jurisdiction or jurisdictions.
We assume that you know of no agreements, understandings or negotiations
between the parties not set forth in the Agreement that would modify the terms
or rights and obligations of the parties thereunder.
Whenever a statement herein is qualified by "to the best of our knowledge,"
"we are not aware" or similar phrase, it indicates that in the course of our
representation of WMT no information that would give us current actual knowledge
of the inaccuracy of such statement has come to the attention of the attorneys
in this firm who have rendered legal services in connection with this
transaction. We have not made any independent investigation to determine the
accuracy of such statement, except as expressly described her
To R&D Hardware Systems Company
of Colorado
January 2, 1996
Page 4
This opinion is being delivered to you by us as counsel to WMT and may not
be delivered to or relied upon by any other person without our express written
approval.
Very truly yours,
/s/ PILLSBURY MADISON & SUTRO LLP
---------------------------------
Pillsbury Madison & Sutro LLP
E-05573
EXHIBIT 8.2
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT, made as of the 2nd day of January, 1996, by and
among WESTERN MICRO TECHNOLOGY, INC., a California corporation ("Purchaser") and
------------------------------
R&D HARDWARE SYSTEMS COMPANY OF COLORADO, a Colorado corporation (the "Seller"),
----------------------------------------
and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, San Francisco, California
-----------------------------------------------
("Escrow Agent");
W I T N E S S E T H:
WHEREAS, Purchaser and Seller have entered into that certain Asset Purchase
Agreement of even date herewith (the "Purchase Agreement"), a copy of which has
been delivered to the Escrow Agent; and
WHEREAS, Section 8.2 of the Purchase Agreement provides that Purchaser will
deposit ten percent (10%) of the shares of Common Stock of Purchaser to be
delivered at Closing and ten percent (10%) of the cash to be delivered at
Closing into an escrow for the purpose of securing Purchaser's claims for
indemnification pursuant to Article 8 of the Purchase Agreement; and
WHEREAS, the Escrow Agent is willing to act as escrow agent for Purchaser
and Seller on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants, agreements and
conditions set forth herein, the parties agree as follows:
1. Definitions. Capitalized terms not otherwise defined in this Agreement
-----------
shall have the meanings set forth in the Purchase Agreement.
2. Establishment of Escrow. On the date of this Agreement Purchaser will
-----------------------
deliver to the Escrow Agent ten percent (10%) of the shares of its Common Stock
to be delivered to Seller at Closing and ten percent (10%) of the cash to be
delivered to Seller at Closing in accordance with Section 8.2 of the Purchase
Agreement ("Escrow Fund"). The Escrow Fund shall be held by the Escrow Agent in
escrow subject to the terms and conditions set forth herein. Purchaser shall
pay all costs and fees of the Escrow Agent in connection with this Agreement, as
set forth on the Depository Escrow Fee Schedule attached hereto (the "Fee
Schedule").
3. Escrow Provisions. The provisions of the escrow shall be as set forth
-----------------
in Sections 8.2 through 8.12 of the Purchase Agreement, the Fee Schedule and the
"General Provisions for
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Corporate Escrow Agreement" attached hereto (the "General Provisions"). In the
event of any conflict between Sections 8.2 through 8.12 of the Purchase
Agreement and the General Provisions or the Fee Schedule, the General Provisions
and the Fee Schedule shall govern, provided that Purchaser shall pay all costs
and fees of the Escrow Agent in connection with this Agreement and the Seller
shall have no liability therefor.
4. Miscellaneous.
-------------
(a) This Agreement shall be governed by the laws of the State of
California without regard to principles of conflicts of laws.
(b) Any notice, request, instruction or other document to be given
hereunder by any party to the other shall be in writing and delivered personally
or sent by certified mail, postage prepaid by telecopy, or by courier service,
as follows:
If to Purchaser:
Western Micro Technology, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Chief Financial Officer
Fax: (000) 000-0000
with a copy to:
Pillsbury Madison & Sutro
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
If to Seller:
R&D Hardware Systems Company of Colorado
0000 X. Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Xxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
Holland & Xxxx
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
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If to Escrow Agent:
First Trust of California, National Association
Global Escrow Depository Services #0000
Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxx
Fax: (000) 000-0000
or to such other persons as may be designated in writing by the parties, by a
notice given as aforesaid.
(c) Attorneys' Fees. If any legal action is brought for the enforcement
---------------
of this Agreement, the successful or prevailing party or parties shall be
entitled to recover reasonable attorneys' fees and other costs incurred in such
action or proceeding, in addition to any other relief to which it may be
entitled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
------------------
date first written above.
WESTERN MICRO TECHNOLOGY, INC., a California
corporation
By /s/ P. XXXXX XXXXX
-----------------------------------------
P. Xxxxx Xxxxx
President and
Chairman of the Board
R&D HARDWARE SYSTEMS COMPANY OF COLORADO, a
Colorado corporation
By /s/ XXX X. XXXXXX
-----------------------------------------
Xxx X. Xxxxxx
Chairman of the Board
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FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION
By /s/ XXXX XXXXX
-----------------------------------------
Xxxx Xxxxx
Trust Officer
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