ASSET PURCHASE AGREEMENT
------------------------
by and among
Westcon Group, Inc.,
Vodaone Corp.
Inacom Corp.,
and
Inacom Communications, Inc..
dated as of June 12, 2000
TABLE OF CONTENTS
PAGE
ARTICLE I Definitions.......................................................1
ARTICLE II Purchase and Sale of Assets; Assignment and Assumption of
Liabilities.......................................................4
2.1 Purchase and Sale of Assets..............................4
2.2 Excluded Assets..........................................5
2.3 Assignment and Assumption of Liabilities.................6
ARTICLE III Purchase Price....................................................6
3.1 Payment of Purchase Price................................6
ARTICLE IV Closing...........................................................7
4.1 The Closing..............................................7
4.2 Further Assurances.......................................7
ARTICLE V Representations and Warranties of Parent and Seller...............7
5.1 Organization; Good Standing..............................7
5.2 Corporate Authorization and Necessary Permits, etc.......7
5.3 All Business Assets, Lists of Properties,
Contracts, etc...........................................8
5.4 Status of Documents......................................9
5.5 Title; Properties........................................9
5.6 Intellectual Property....................................9
5.7 Legal Compliance........................................10
5.8 Litigation..............................................10
5.9 No Conflict.............................................10
5.10 Financial Statements; No Material Adverse Change........11
5.11 Taxes...................................................12
5.12 No Brokers..............................................12
5.13 Environmental Compliance................................12
5.14 Employee Benefit Information............................12
5.15 Labor Disagreements.....................................13
5.16 Employees...............................................13
5.17 No Other Agreements to Sell Assets or Business..........13
5.18 Product Warranties......................................13
5.19 Improper Payments.......................................13
5.20 Adverse Contracts.......................................13
5.21 Inventory...............................................14
5.22 Customers, Suppliers and Distributors...................14
5.23 Accounts Receivable.....................................14
ARTICLE VI Representations and Warranties of Buyer and Westcon..............14
6.1 Organization; Good Standing.............................14
6.2 Corporate Authorization, etc............................14
6.3 Litigation..............................................15
6.4 No Conflict.............................................15
1
6.5 No Brokers..............................................15
6.6 Investigation by Buyer..................................15
ARTICLE VII Conditions Precedent to Obligations of Buyer and Seller..........15
7.1 Conditions Precedent to Obligations of Buyer............15
7.2 Bankruptcy Approvals....................................16
7.3 Conditions Precedent to Obligations of Seller...........16
7.4 Conditions Precedent to Obligations of Both Buyer
and Seller..............................................17
ARTICLE VIII Documents to Be Delivered at the Closing.........................17
8.1 Items to Be Delivered by Seller at the Closing..........17
8.2 Items to Be Delivered by Buyer at the Closing...........18
ARTICLE IX Further Covenants and Agreements of Seller and Buyer.............18
9.1 Conduct of the Business; Access.........................18
9.2 Confidentiality/Announcements...........................19
9.3 Survival of Representations and Warranties;
Indemnities.............................................19
9.4 Conditions..............................................21
9.5 Cooperation.............................................21
9.6 Employee and Employee Benefit Matters...................22
9.7 Corporate Records.......................................22
9.8 Collection of Receivables...............................22
9.9 Taxes...................................................22
9.10 Required Filings........................................23
9.11 Business Name...........................................23
9.12 No Solicitation.........................................23
ARTICLE X Dispute Resolution...............................................24
10.1 Dispute Resolution......................................24
ARTICLE XI Termination and Cost-Reimbursement Fee...........................25
11.1 Termination.............................................25
11.2 Effect of Termination...................................25
11.3 Cost-Reimbursement Fee..................................26
ARTICLE XII Miscellaneous....................................................26
12.1 Expenses................................................26
12.2 Benefit; Assignment.....................................26
12.3 Governing Law...........................................26
12.4 Breach; Failure of Condition............................26
12.5 Notices.................................................26
12.6 Headings................................................27
12.7 Facsimile/Counterparts..................................27
12.8 Entire Agreement; Third Party Beneficiaries.............27
12.9 Waiver; Modification....................................27
12.10 Updating of Schedules...................................27
12.11 Severability............................................28
2
Exhibits and Schedules
----------------------
SCHEDULES
---------
Schedule 2 1 Assets
Schedule 2 1(e) Lockbox Account
Schedule 2 2(a) Excluded Assets
Schedule 2 3(c) Excluded Liabilities
Schedule 5 1(a)(ii) Capital Stock
Schedule 5 2(a) Corporate Authorization
Schedule 5 3(a) Real Property and Leases
Schedule 5 3(b) Personal Property
Schedule 5 3(c) Contracts
Schedule 5 5 Title; Properties
Schedule 5 6(a) Owned Intellectual Property
Schedule 5 6(b) Infringements
Schedule 5 6(c) License Agreements
Schedule 5 6(f) Web Sites
Schedule 5 8 Litigation
Schedule 5 9 No Conflict
Schedule 5 10(b) Material Adverse Change
Schedule 5 13 Environmental Compliance
Schedule 5 14 Employee Benefits
Schedule 5 16 Employee List
Schedule 5 20 Adverse Contracts
Schedule 5 21 Inventory
Schedule 5 22 Customers, Suppliers and Distributors
Schedule 8 1(f) Lucent-VAR Contracts
Schedule 9 1 Access to Customers
Schedule 9 6(a) Key Employees
Schedule 11 1 Funding of Business
EXHIBIT
-------
Exhibit 2 1 Xxxx of Sale
Exhibit 2 3(b) Assignment and Assumption Agreement
Exhibit 8 1(g) Custom Edge Agreement
Exhibit 8 1(i) Transition Services Agreement
Exhibit 9 6(a) Employment Agreement
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), dated as of June 12, 2000
(the "Effective Date"), is made and entered into by and among Westcon Group,
Inc., a New York corporation ("Westcon"), Vodaone Corp., a New York Corporation
("Buyer"), Inacom Corp. ("Parent"), a Delaware corporation and Inacom
Communications, Inc., a Nebraska corporation, ("Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from
Seller, the assets identified herein, all on the terms and subject to the
conditions provided herein;
WHEREAS, Buyer wishes to assume certain of the liabilities and obligations
of Seller relating to the Business as defined below, all on the terms and
subject to the conditions provided herein; and
WHEREAS, Buyer is a subsidiary of Westcon, and Seller is a subsidiary of
Parent;
WHEREAS, Parent and Subsidiary are considering filing voluntary petitions
for relief under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code").
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
---------
Definitions
-----------
DEFINITIONS
The following terms shall have the following meanings for all purposes of
this Agreement and such meanings are equally applicable both to the singular and
plural forms of the terms defined.
1.1 "Acquisition Transaction" shall mean (x) with respect to Parent, (a)
less than a majority of the members of the Parents's board of directors shall be
persons who either (i) were serving as directors on the Effective Date or (ii)
were nominated as directors and approved by the vote of the majority of the
directors who are directors referred to in clause (i) above or this clause (ii);
or (b) the stockholders of the Parent shall approve any plan or proposal for the
liquidation or dissolution of the Parent; or (c) a person or group of persons
acting in concert (other than the direct or indirect beneficial owners of the
capital stock of the Seller as of the Effective Date) shall, as a result of a
tender or exchange offer, open market purchases, privately negotiated purchases
or otherwise, have become the direct or indirect beneficial owner (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended from
time to time) of securities of the Parent representing 50% or more of the
combined voting power of the outstanding voting securities for the election of
directors or shall have the right to elect a majority of the board of directors
of Parent; or (d) if all or substantially all of the assets of the Parent are
sold in a transaction or series of transactions other than sales of inventory in
the Ordinary Course of Business, or (y) with respect to the Seller, if the
Parent shall cease to own at least 50% of the capital
stock of the Seller or if all or substantially all of the assets of the Seller
are sold in a transaction or series of transactions other than sales of
inventory in the Ordinary Course of Business.
1.2 "Affiliate" has the meaning set forth in Rule l2b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
1.3 "Assignment and Assumption Agreement" shall have the meaning specified
in Section 2.3(b).
1.4 "Bankruptcy Court" shall mean the United States Bankruptcy Court for
the District of Delaware, or any other United States Bankruptcy Court or
District Court having jurisdiction over any case or cases under the Bankruptcy
Code commenced by or against the Parent or the Seller.
1.5 "Xxxx of Sale" shall have the meaning specified in Section 2.1 hereof.
1.6 "Business" shall mean the business of the Seller of distributing
telecommunications systems and related products and services to computer
resellers and end-users as conducted by Seller immediately prior to the Closing
Date; provided that the Business shall not include the Seller's (i) structured
cable business, (ii) long distance reseller business (iii) the repair and
warranty business located in New Jersey; and (iv) Kure Associates, Inc. cabling
business.
1.7 "Closing" shall have the meaning specified in Section 4.1 hereof.
1.8 "Closing Balance Sheet" shall have the meaning specified in Section
3.1(c) hereof.
1.9 "Closing Date" shall have the meaning specified in Section 4.1 hereof.
1.10 "Code" shall mean the Internal Revenue Code of 1986, as amended. ----
1.11 "Contract" shall mean any contract, agreement, distribution agreement,
franchise agreement, mortgage, indenture, license, lease, equipment lease,
commitment or other similar instrument or arrangement.
1.12 "Confidential Information" means all confidential information and
trade secrets that are unique to Buyer, Westcon, Seller or Parent (as
applicable) including, without limitation, the identity, lists or descriptions
of any customers, referral sources or organizations; contract proposals, or
bidding information; business plans; and fee structure.
1.13 [Intentionally Omitted]
1.14 [Intentionally Omitted]
1.15 "Custom Edge Agreement" shall have the meaning set forth in Section
8.1(g) hereof.
1.16 "Custom Edge Facility" shall mean the facility operated by Custom
Edge, Inc., under the Custom Edge Agreement.
2
1.17 "Definitive Net Assets Value" shall have the meaning specified in
Section 3.1(c) hereof.
1.18 "DIP Facility" shall have the meaning specified in Section 11.1(e).
1.19 "Employee Benefit Plan" shall mean each (i) employee benefit plan
within the meaning of Section 3(3) of ERISA (notwithstanding that such plan may
be exempt from some or all of ERISA by virtue of its status as a "top hat" plan
or other exempt plan); and (ii) personnel policy; stock option plan or
agreement; collective bargaining agreement; bonus plan or arrangement; incentive
award plan or arrangement; vacation policy; severance pay plan, policy, or
agreement; deferred compensation agreement or arrangement; executive
compensation., or supplemental income arrangement; consulting agreement;
employment agreement; and other employee benefit plan, agreement, arrangement,
program, practice, or understanding, which is sponsored, maintained, or
contributed to by Seller or its Affiliate for the benefit of the Company
Personnel.
1.20 "Employees" shall have the meaning set forth in Section 5.16.
1.21 "ERISA" means the Employee Retirement Security Act of 1974, as
amended.
1.22 "Excluded Assets" shall have the meaning specified in Section 2.2
hereof.
1.23 "Excluded Liabilities" shall have the meaning specified in Section
2.3(c) hereof.
1.24 "Furnishings" shall mean the vehicles, fixtures, equipment, leasehold
improvements, security systems, telephone systems, display stands, furniture and
similar furnishings used in the Business.
1.25 "GAAP" shall mean generally accepted accounting principles in effect
in the United States.
1.26 [Intentionally Omitted]
1.27 "Governmental Authority" shall mean any governmental,
quasi-governmental, state, county, city, or other political subdivision of the
United States or any other country, or any agency, court or instrumentality,
foreign or domestic, or statutory or regulatory body thereof.
1.28 [Intentionally Omitted]
1.29 "HSR Act" shall have the meaning set forth in Section 9.10.
1.30 "Intellectual Property" shall have the meaning set forth in Section
5.6 hereof.
1.31 "Inventory" shall mean all products physically held or in transit for
sale or lease and service parts components (in each case without regard to
physical location) in the Ordinary Course of Business of the Seller.
1.32 "Knowledge" means that which is actually known and that which would be
known or understood after due and diligent inquiry by Xxxx Xxxxxxxxx, Xxxxxx
Xxxxxxxx, Xxxxxx XxXxxxx, Xxxx Xxxxxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx Xxxxxx and
Xxxxx Xxxxx.
3
1.33 "Liability" means any liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due or
to become due), including any liability for Taxes.
1.34 "Material Adverse Effect" and "Material Adverse Change " shall mean
any effect or change that is or, as far as can reasonably be determined, is
reasonably likely to be materially adverse to the results of operations or
Assets of the Business.
1.35 "Ordinary Course of Business" shall mean the ordinary course of
business consistent with past custom and practice with due regard however, to
the possibility that the Parent will seek protection under the federal
bankruptcy law and as a result thereof, that the Seller's employees and
customers may terminate their relationships with the Seller, provided that such
employees and customers are not, in Buyer's judgment, material to the continued
conduct of the Business.
1.36 "Person" shall mean a natural person, a corporation, a limited
liability company, a partnership, or other entity or association, as the context
requires.
1.37 "Personnel" shall mean each current employee, former employee,
officer, director or independent contractor of Seller whose employment
responsibilities relate to the Business.
1.38 "Petition Date" shall mean the date on which the cases with respect to
the Parent or the Seller are commenced pursuant to the filing of petitions for
relief under the Bankruptcy Code by or against the Parent or the Seller.
1.39 "Plans" shall have the meaning specified in Section 5.14(a) hereof.
1.40 "Purchase Price" shall have the meaning specified in Section 3.1(a)
hereof.
1.41 "Tax" or "Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, property
or other taxes, customs, duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority (domestic or foreign).
1.42 "Threshold" shall have the meaning specified in Section 5.23 hereof.
1.43 "Transaction Documents" shall mean this Agreement, the Transition
Services Agreement and all agreements referred to therein, the Xxxx of Sale and
any and all other transfer documents referred to in this Agreement.
1.44 "Transferred Employee" shall have the meaning specified in Section
9.6(b) hereof.
1.45 "Transition Services Agreement" shall have the meaning specified in
Section 8.1(i) hereof.
References in this Agreement to articles, sections, appendices, paragraphs,
clauses, attachments, exhibits and schedules are to articles, sections,
appendices, paragraphs, clauses, attachment, exhibits and schedules in or to
this Agreement, unless otherwise indicated.
4
ARTICLE II
----------
Purchase and Sale of Assets; Assignment and Assumption of Liabilities
---------------------------------------------------------------------
2.1 Purchase and Sale of Assets. Subject to the terms and conditions of
this Agreement and in reliance upon the representations, warranties and
agreements of Parent and Seller and Buyer and Westcon contained herein, Buyer
agrees to purchase from Seller and Seller agrees to sell, transfer, assign,
convey and deliver to Buyer at the Closing all of Seller's right, title and
interest in and to all assets, properties and the business of Seller, tangible
and intangible, and wherever located as of the Closing Date used in connection
with the operation of the Business, all of which assets shall be listed on
Schedule 2.1, together with all other assets principally used in connection with
the operation of the Business (the "Assets"), including without limitation the
following assets:
(a) All personal property owned by Seller as of the Closing Date
(including, without limitation, Inventories, machinery, Furnishings, and
supplies) used in connection with the operation of the Business and all
intangible property owned by Seller as of the Closing Date used in connection
with the operation of the Business;
(b) All Intellectual Property Assets and any and all other
intellectual property owned by or licensed to Seller in connection with the
operation of the Business;
(c) All Contracts of Seller which are listed in Schedule 5.3(c) and
all other written Contracts of Seller related to the Business and entered into
or incurred prior to the Closing in the Ordinary Course of Business;
(d) All of the accounts receivable of Seller generated by the
operation of the Business as of the Closing Date;
(e) All of Seller's rights in and to the lockbox account owned by the
Seller at the bank and account number(s) set forth on Schedule 2.1(e), into
which all proceeds of accounts receivable generated by the operation of the
Business are deposited; (f) Seller's customer list, supplier list and related
information used in connection with the operation of the Business;
(g) All databases, software, data files and any and all other
materials and assets used in connection with the operation of the Business;
(h) All subscriber rights in and to the telephone and telecopier
numbers of Seller which are set forth in Schedule 2.1 hereto;
(i) All post office boxes and post office box numbers of Seller used
in connection with the operation of the Business;
(j) Each permit, license, approval or other authorization from or with
any Governmental Authority for the operation of the Business which can be
transferred unilaterally by Seller pursuant to the Xxxx of Sale without any
consent or any other action by the issuing Governmental Authority (each, a
"Permit");
5
(k) All domain names listed on Schedule 2.1 and any and all other
domain names and assets and properties, tangible or intangible, used or intended
for use with such domain names; and
(l) All other assets and properties of Seller used in connection with
the operation of the Business, tangible and intangible, wherever located and
whether or not carried on Seller's books and records, including, without
limitation, all goodwill, know-how and trade secrets of Seller, and Seller's
books and records which are not Excluded Assets.
Seller's sale, transfer, assignment, conveyance and delivery of the Assets to
Buyer shall be further evidenced by delivery from Seller to Buyer at the Closing
of a duly executed xxxx of sale substantially in the form attached hereto as
Exhibit 2.1 (the "Xxxx of Sale").
2.2 Excluded Assets. The Assets shall not include any of the following
items or properties of Seller (the "Excluded Assets"), all of which shall be
retained by Seller at the Closing:
(a) All of Seller's tangible and intangible assets and properties as
of the Closing Date used principally in connection with Seller's (i) structured
cable business, (ii) long distance reseller business (iii) the repair and
warranty business located in New Jersey; and (iv) Kure Associates, Inc. cabling
business.
(b) Cash and cash equivalents, and interests in bank accounts and
securities excluding cash received after the date of the Closing Balance Sheet
in respect of accounts receivable included in the Definitive Net Assets Value,
which shall be paid to Buyer;
(c) Such of Seller's tangible and intangible assets and properties as
of the Closing which are set forth on Schedule 2.2(a); ---------------
(d) The Omaha, Nebraska facility leased by Parent and partially used
by Seller, located at 00000 Xxxxxx Xxxxx, Xxxxx, Xxxxxxxx 00000 and the Sioux
City, Iowa facility currently leased by Seller, located at Xxx 0, Xxxxxxxxxx,
Xxxxx Xxxxxxx 00, Xxxxx Xxxx, Xxxx;
(e) Subject to Section 9.7 hereof all books and records of Seller
other than books and records relating to the conduct of the Business (it being
understood that, without limitation, Seller's federal and state tax
documentation and work papers, corporate minute books, stock ledger, general
books of account and books of original entry that comprise Seller's permanent
accounting or tax records constitute Excluded Assets); and, for avoidance of
doubt, it is hereby agreed that those books and records possession of which is
transferred to Buyer at the Closing are Assets, and those books and records
possession of which is not transferred to Buyer at the Closing are Excluded
Assets;
(f) The intercompany accounts receivable of Seller;
(g) Any interest of the Seller in Boston Computer Exchange
Corporation; and
(h) Any rights to information contained in the Web sites registered
with the domain names listed on Schedule 2.1, other than information related to
the Business.
2.3 Assignment and Assumption of Liabilities.
6
(a) Subject to the terms and conditions of this Agreement and in
reliance upon the representations, warranties and agreements of Parent and
Seller and Buyer and Westcon contained herein, Seller shall assign to Buyer (at
the Closing), and Buyer shall assume (at the Closing) and agrees to perform and
discharge, the following "Assumed Liabilities": (i) all liabilities, obligations
and commitments incurred or arising on or after the Closing Date under the
Contracts listed in Schedule 5.3(c) and under all other Contracts of Seller
relating to the Business entered into or incurred prior to the Closing in the
Ordinary Course of Business and (ii) all Liabilities, debts, obligations,
indebtedness and commitments of the Seller incurred in connection with the
Business and provided for in the Closing Balance Sheet, provided however that,
all Excluded Liabilities shall be excluded therefrom.
(b) Seller's assignment and Buyer's assumption of the Assumed
Liabilities shall be further evidenced by Buyer and Seller delivering to one
another, at the Closing, a duly executed Assignment and Assumption Agreement
substantially in the form attached hereto as Exhibit 2.3(b) ("Assignment and
Assumption Agreement"), and by any other appropriate documentation (including,
as to certain leases to be transferred to Buyer, separate assignment documents
for each such lease) reasonably satisfactory to the parties at the Closing.
(c) Buyer expressly does not assume, and shall not be deemed to have
assumed, under this Agreement or otherwise by reason of the transactions
contemplated hereby, any Liabilities, debts, obligations, indebtedness and
commitments of Seller which do not constitute Assumed Liabilities ("Excluded
Liabilities"). Without limiting the foregoing, "Excluded Liabilities" shall
include: (i) all Taxes of Seller, including without limitation any Taxes arising
from the transfer of the Assets, (ii) all Liabilities, debts, obligations,
indebtedness and commitments of Seller incurred or arising under any Contract
which was entered into by Seller prior to the Closing which (A) arises out of or
results from acts of Seller prior to the Closing, other than the obligation to
pay accounts payable; (B) is performed in total or is required to be performed
in total prior to the Closing, (iii) all liabilities and obligations
(contractual or otherwise) arising out of or relating to the Excluded Assets,
(iv) liabilities set forth on Schedule 2.3(c) and (v) to the extent not excluded
above, all obligations of Seller arising on or after the Petition Date under the
DIP Facility.
ARTICLE III
Purchase Price
--------------
3.1 Payment of Purchase Price.
(a) In consideration of the sale and transfer of the Assets to Buyer,
subject to the terms and conditions of this Agreement and on the basis of the
representations and warranties of Parent and Seller contained herein on the
Closing Date, Buyer shall pay to Seller a purchase price (the "Purchase Price")
equal to the Definitive Net Assets Value plus $ 14,000,000, and Buyer shall
assume the Assumed Liabilities.
(b) The Purchase Price shall be paid on the Closing Date in cash (in
United States Dollars) by wire transfer in immediately available funds to such
bank account in the United States as Seller shall have designated in writing to
Buyer two (2) days prior to Closing.
7
(c) For purposes of this Agreement, the term "Definitive Net Assets
Value" shall mean the difference between the total book value of the Assets and
the total Assumed Liabilities, each determined as of the Closing Date in
accordance with past practices, consistently applied, provided that all
intercompany accounts payable, intercompany debts and other obligations and
intercompany accounts receivable shall be excluded therefrom. The Definitive Net
Assets Value shall be reflected on the balance sheet dated as of the date as of
which the Definitive Net Assets Value is determined (the "Closing Balance
Sheet").
(d) Seller may, by written notice given to Buyer not less than two (2)
days prior to Closing, direct that any payments due to Seller hereunder at the
Closing be reduced and paid (i) to any investment banker to whom Seller owes a
fee in connection with the transaction contemplated hereby as such fees and
corresponding wire instructions shall be set forth on Schedule 3.1(d), and (ii)
to Seller's employees in payment of bonuses due from Seller to any employees of
Seller as such bonuses shall be set forth on Schedule 3.1(d).
ARTICLE IV
----------
Closing
4.1 The Closing. The purchase and sale and other related transactions
provided for in this Agreement (the "Closing") shall take place at the offices
of Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP at 10:00 a.m. eastern standard time,
unless the parties make other closing arrangements, on the date hereof that is
two (2) business days after satisfaction of the conditions set forth in Article
VII (the"Closing Date"). The parties shall use their best efforts to cause the
Closing to occur on or before July 7, 2000. Failure of the Seller to fulfill all
its conditions to Closing on or before July 7, 2000 shall relieve the Buyer and
Westcon of any further obligations under this Agreement.
4.2 Further Assurances. Each of the parties agrees that, at any time and
from time to time after the Closing Date, it will, upon the reasonable request
of the other party, execute, acknowledge and deliver, or cause to be executed,
acknowledged or delivered, all such further assignments, transfers, conveyances,
powers of attorney, instruments, documents and assurances as may be reasonably
required for the better carrying out of the transactions contemplated by this
Agreement.
ARTICLE V
---------
Representations and Warranties of Parent and Seller
Parent and Seller jointly and severally represent and warrant to Buyer and
Westcon that the statements contained in this Article V are correct and complete
as of the date of this Agreement, and will be correct and complete in all
material respects as of the Closing Date as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Article V (except for representations and warranties made as of a specific
date), and except as such may be updated as provided in this Agreement.
5.1 Organization; Good Standing.
(a) (i) Seller is a corporation duly organized, validly existing
8
and in good standing under the laws of the State of Nebraska and Parent is
a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and each of Parent and Seller has the
full corporate power and authority to own or lease properties and to
conduct business as currently conducted, and Parent and Seller is qualified
and in good standing as foreign corporations authorized to do business in
each jurisdiction in which the nature of business or the ownership or
leasing of properties requires such qualification, except in such
jurisdictions where failure to be so qualified or in good standing
collectively could not be reasonably expected to have a Material Adverse
Effect.
(ii) Except as set forth on Schedule 5.1(a)(ii), Seller does not
own any shares of capital stock, partnership interest or any other direct
or indirect equity interest in any corporation, partnership or other
entity.
5.2 Corporate Authorization and Necessary Permits, etc.
(a) The execution, delivery and performance by Parent and Seller of
this Agreement, the other Transaction Documents and the other documents and
instruments referred to in this Agreement and the other Transaction Documents to
which Parent and Seller is a party have been authorized and approved by all
requisite corporate and other action on the part of Parent and Seller (including
approval of Parent's board of directors and shareholders, if necessary and
required, and Seller's board of directors and Parent, as shareholder of Seller),
and except as set forth on Schedule 5.2(a), no other corporate or other approval
or authorization is required on the part of Parent and Seller or any other
Person by law or otherwise in order to make this Agreement, the other
Transaction Documents and the other documents and instruments referred to in
this Agreement and the other Transaction Documents to which Parent and Seller
are a party the valid, binding and enforceable obligations of Parent and Seller
subject to bankruptcy, fraudulent conveyance, insolvency, moratorium or similar
laws affecting the rights of creditors generally or general equitable
principles. Each of this Agreement, and such other documents and instruments
delivered at the Closing to which Parent and Seller are a party is or shall be a
valid and legally binding obligation of Seller, enforceable against Parent and
Seller in accordance with its respective terms, subject to bankruptcy,
fraudulent conveyance, insolvency, moratorium or similar laws affecting the
rights of creditors generally or general equitable principles. Parent and Seller
have full power and authority to comply with their respective covenants under
this Agreement, the other Transaction Documents, and such other documents and
instruments referred to in this Agreement and the other Transaction Documents to
which Parent and Seller are a party, including without limitation to authorize
the sale, transfer, assignment and delivery of the Assets as provided in this
Agreement, and such delivery will convey to Buyer good and marketable title to
the Assets, free and clear of any and all liens, pledges, encumbrances, charges,
agreements or claims of any kind whatsoever.
(b) No action of any Affiliate of Parent is required in order for
Parent and Seller to consummate the transactions and take the actions
contemplated by this Agreement.
(c) Seller has operated the Business with all necessary permits,
licenses, approvals and other authorizations from or with federal, state or
foreign regulatory authorities, except where the failure to do so would not have
had a Material Adverse Effect.
5.3 All Business Assets, Lists of Properties, Contracts, etc. Except for
(i) the Assets, (ii) the services and facilities described in the Transition
Services Agreement, and (iii) the services described in the Custom Edge
Agreement, no other assets, properties or rights of any kind are required in
order for Buyer to conduct the Business as presently conducted. Schedules 5.3(a)
through 5.3(c) hereto contain complete and accurate lists of the following
assets, excluding, in each case Excluded Assets:
9
(a) Schedule 5.3(a) Real Property and Leases. All real property owned
of record or beneficially by Seller and a brief description of all structures
and buildings located thereon; all material leases of real property or office
space to which Seller is a party as lessor or lessee; all premises occupied by
Seller under rental arrangements without leases; and all contracts to which
Seller is a party for the sale or purchase of real property;
(b) Schedule 5.3(b) Personal Property. All machinery, equipment,
computer hardware, motor vehicles, office furniture, fixtures and similar
personal property and Furnishings owned or leased by Seller having a book value
in excess of $5,000;
(c) Schedule 5.3(c) Contracts. The following Contracts to which Seller
is a party:
(i) any arrangement (or group of related written arrangements)
for the lease of personal property from or to third parties providing
for lease payments in excess of $5,000 per annum;
(ii) any arrangement (or group of related written arrangements)
which either calls for performance over a period of more than one year
(other than continuing maintenance arrangements) or involves more than
the sum of $10,000;
(iii) any partnership or joint venture agreement;
(iv) any arrangement with any of Seller's directors, officers or
employees in the nature of a collective bargaining agreement,
employment agreement, or severance agreement;
(v) any arrangement involving a Governmental Authority (other
than sales contracts entered into in the Ordinary Course of Business);
and
(vi) all distribution agreements, vendor agreements, VAR
agreements, and other agreements in each case providing for payments
from or to Seller in excess of $100,000 per annum.
5.4 Status of Documents. Except as set forth on a Schedule called for by
Section 5.3 hereof, with respect to each lease, agreement, contract,
undertaking, commitment and arrangement described in Section 5.3: (A) the
arrangement is legal, valid, binding, enforceable, and in full force and effect
subject to bankruptcy, fraudulent conveyance, insolvency, moratorium or similar
laws affecting the rights of creditors generally or general equitable
principles; and (B) neither Seller nor, to the Knowledge of Seller, any other
party is in breach or default and no event has occurred with respect to Seller
or, to the Knowledge of Seller, any other party which, with notice or lapse of
time, would constitute a breach or default or permit termination, modification,
or acceleration, under the arrangement.
5.5 Title; Properties. Except as otherwise disclosed in Schedule 5.5
hereto, (i) Seller has good and marketable title to all of the Assets, free and
clear of all liens and encumbrances of any character whatsoever, except for the
lien of Taxes not yet due and payable; (ii) Seller has legal, valid, binding and
enforceable leases with respect to the leased premises described in Schedule
5.3(a) hereto with respect to which Seller is the lessee, has performed in all
respects all the material obligations required to be performed by it under said
leases, and
10
possesses and quietly enjoys said premises under said leases, and such premises
are not subject to any liens, encumbrances, easements, rights of way, building
or use restrictions, exceptions, reservations or limitations that interfere with
or impair the present and continued use thereof in the usual and normal conduct
of the Business; (iii) Seller has not received notice of violation of any
applicable material zoning regulation, ordinance or other law, order, regulation
or requirement relating to the operations of such owned or leased properties,
and Seller knows of no such violation; and (iv) Seller has not received notice
of and there is not any pending or, to Seller's Knowledge, threatened
condemnation proceedings relating to any of such owned or leased properties. The
plants, structures, tangible properties and equipment owned, operated or leased
by Seller are free from material defects and in good operating condition,
ordinary wear and tear excepted, and are in conformity in all material respects
with all applicable laws, ordinances, orders, regulations and other requirements
(including applicable zoning, environmental, occupational safety and health laws
and regulations) presently in effect.
5.6 Intellectual Property. "Intellectual Property" shall mean all of
Seller's patents, patent applications, inventions, invention reports, trademarks
(registered and unregistered), service marks (registered and unregistered),
trade names (registered and unregistered), copyrights (registered and
unregistered) and "Trade Secrets" (which term shall mean all of Seller's
processes, designs, technical reports, technical documentation, technical
know-how, trade secrets, formulae, customer lists, marketing and customer
information, confidential and proprietary information, methods of doing
business, databases, data files and compilations of information). Based on such
definition:
(a) Title. Schedule 5.6(a) contains a complete and correct list of all
Intellectual Property (other than Trade Secrets) that is owned by Seller (the
"Owned Intellectual Property"). Except as set forth on Schedule 5.6(a), Seller
owns all Owned Intellectual Property and all of the Trade Secrets, free from any
liens and free from any requirement of any past, present or future royalty
payments, license fees, charges or other payments, or conditions or
restrictions. The Owned Intellectual Property, the Trade Secrets and the
Licensed Intellectual Property (defined below in Section 5.6(c)) comprise all of
the Intellectual Property used by Seller in the conduct of the Business as now
being conducted. The Owned Intellectual Property, the Trade Secrets and the
Licensed Intellectual Property are collectively referred to as the "Intellectual
Property Assets."
(b) No Infringement. Except as set forth in Schedule 5.6(b), (A) the
conduct of the Business does not infringe, misappropriate or otherwise conflict
with the intellectual property rights of any third party and (B) no part of the
Intellectual Property Assets, nor the use thereof for their intended purposes,
infringes or misappropriates any patent, trade secret, copyright, trademark,
service xxxx, or right of publicity or other intellectual property right of any
third party.
(c) Licensing Arrangements. Schedule 5.6(a) sets forth (A) all
agreements, licenses or other arrangements pursuant to which Seller has Licensed
Intellectual Property to, or otherwise permits use by, any third party (other
than third party software licensed in the Ordinary Course of Business), and (B)
all agreements, licenses or other arrangements pursuant to which Seller has
intellectual property licensed to it or has otherwise been permitted to use
intellectual property (other than commercially available off-the-shelf software
products). Schedule 5.6(a) also contains a complete list of software libraries,
compilers and other third-party software used in the development of any software
for which Seller has obtained the right to use by way of license (other than
commercially available off-the-shelf software products). Except as set forth on
Schedule 5.6(c), all of the agreements or arrangements set forth in the portion
of Schedule 5.6(a) which relates to this Section 5.6(c): (1) are in full force
and effect in accordance with their terms and no default exists thereunder by
Seller or, to the Knowledge of Seller, by any other party thereto, and (2) are
free and clear of
11
all liens. Seller has delivered to Buyer true and complete copies of all
agreements, licenses and arrangements (including amendments) set forth in the
portion of Schedule 5.6(a) which relates to this Section 5.6(c). All
Intellectual Property rights listed in the portion of Schedule 5.6(a) which
relates to this Section 5.6(c) that Seller has obtained from third parties are
referred to herein as "Licensed Intellectual Property."
(d) No Intellectual Property Litigation. Except as set forth in
Schedule 5.6(a), no claim or demand of any third party has been made nor is
there any proceeding that is pending or, to the Knowledge of Seller, threatened,
which (A) challenges the rights of Seller with respect to the sole ownership or
use of any Intellectual Property Assets, (B) asserts that Seller has infringed
or is infringing, misappropriated or is misappropriating, or otherwise in
conflict with, or is required to pay any royalty, license fee, charge or other
amount with regard to, any intellectual property of a third party, or (C) claims
that any default exists under any agreement or arrangement listed on Schedule
5.6(a). None of the Intellectual Property Assets is subject to any outstanding
order, ruling, decree, judgment or stipulation by or with any Governmental
Authority.
(e) Registrations, etc. Schedule 5.6(a) sets forth, with respect to
the Intellectual Property and Trade Secrets owned by Seller, all registrations,
filings or issuances with the United States Patent and Trademark Office, United
States Copyright Office or other federal filing offices.
(f) Web Site. Schedule 5.6(f) sets forth all relevant information
necessary for Buyer to own and use the domain name and Web site
"xxxxxxxxxxxxxxxxxxxx.xxx" and any other domain names and Web sites used in
connection with the operation of the Business.
5.7 Legal Compliance. In operating the Business, Seller has complied in all
material respects with all laws (including rules and regulations thereunder) of
all Governmental Authorities, and no charge, complaint, action, suit,
proceeding, hearing, investigation, claim, demand, or notice has been filed or
commenced against Seller alleging any failure to comply with any such law or
regulation, and to Seller's Knowledge none of the foregoing is threatened.
5.8 Litigation. Except for the proposed cases under the Bankruptcy Code or
as set forth on Schedule 5.8, there is no litigation, action, suit, proceeding
or investigation pending or, to the Knowledge of Seller, threatened, to which
Seller is a party with respect to the Business or any of the transactions
contemplated hereby. Seller is not in default with respect to any order, writ,
injunction or decree of any Governmental Authority.
5.9 No Conflict. Except as set forth in Schedule 5.9, the execution by
Parent and Seller of this Agreement and the other documents and instruments
referred to in this Agreement to which it is a party, compliance by Parent and
Seller with the provisions of this Agreement and the consummation of the
transactions contemplated hereby and thereby (i) will not, in any material
respect, violate any provision of applicable law, (ii) will not conflict with
any provision of the Articles of Incorporation or By-laws of Parent and Seller
or conflict with, result in a breach of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, accelerate the performance required by, or
create in any party the right to accelerate, terminate, modify, or cancel or
require any notice under any of the terms, conditions or provisions of, any
Contract described in Section 5.3(c) or 5.6(c) hereof (except for the failure to
obtain a third-party consent under such instrument before Closing), (iii) will
not result in the creation of any lien, charge or encumbrance upon any of the
Assets pursuant to any Contract, described in Section 5.3(c) or 5.6(c) hereof,
to which Parent or Seller are a party or by which Parent or Seller are bound or
to which the Assets are subject, (iv) except for clearance under the HSR Act,
and approval of the
00
Xxxxxxxxxx Xxxxx if the Petition Date occurs prior to the Closing, do not
require the consent or approval of, or registration, declaration or filing with,
any Governmental Authority and (v) do not violate any order, writ, injunction,
decree, arbitration award, statute, rule or regulation applicable to Parent and
Seller, to any of the Assets or to the Business.
5.10 Financial Statements; No Material Adverse Change.
(a) Parent and Seller have delivered to Buyer and Westcon copies of
Seller's unaudited balance sheet, and Seller's unaudited income statement, as of
the end of, and for, the fiscal years ended December 31, 1998 and 1999 and as of
the end of and for the 4-month period ended April 30, 2000 (the "Financial
Statements"). The Financial Statements are, and the Closing Balance Sheet will
be when issued, complete and correct in all material respects. The Closing
Balance Sheet will be prepared in accordance with past practices, consistently
applied, provided that all intercompany accounts payable, intercompany debts and
other intercompany obligations and intercompany accounts receivable shall be
excluded therefrom and the other Financial Statements have been prepared in
accordance with past practices, consistently applied. The Financial Statements,
present fairly, and the Closing Balance Sheet will when issued present fairly,
the financial condition and results of operations of Seller as at the dates of
such statements and for the periods then ended.
(b) Except as disclosed on Schedule 5.10(b) or elsewhere in this
Agreement or in the Financial Statements delivered pursuant to Section 5.10(a),
there has not been any:
(i) Material Adverse Change, and Seller has Knowledge of no fact,
circumstance, event, occurrence, contingency or condition which could
reasonably be expected to result in any Material Adverse Change;
(ii) except in the Ordinary Course of Business, (A) entering into
by Seller of any employment contract or collective bargaining
agreement; (B) increase in the compensation or benefits payable or to
become payable by Seller to any Company Personnel; or (C) any bonus,
incentive compensation, service award or other like benefit, granted,
made or accrued, contingent or otherwise, to the credit of any Company
Personnel;
(iii) repurchase or redemption of any shares of Seller's stock;
(iv) mortgage, pledge or subjection to any lien or encumbrance of
any character whatsoever of any of the Assets, except the lien of
current real and personal property Taxes incurred but not yet due and
payable;
(v) sale, assignment or transfer of any assets used in the
Business that are material, either singly or in the aggregate;
(vi) settling, canceling, compromising, waiving or releasing any
right, claim, action or proceeding of substantial value to Seller, not
in the Ordinary Course of Business, involving (either singly or in the
aggregate) more than $10,000;
(vii) modification, cancellation or termination by Seller of any
material contract, agreement or other instrument to which Seller is or
was a party;
13
(viii) Liability or obligation (whether accrued, absolute,
contingent, asserted, unasserted or otherwise) incurred by Seller of a
nature required to be reflected in a balance sheet of Seller prepared
in accordance with past practices, consistently applied, or disclosed
in the notes thereto; except Liabilities or obligations incurred in
Seller's Ordinary Course of Business;
(ix) except in the Ordinary Course of Business, capital
expenditure or execution of any lease with respect to any aspect of
the Business;
(x) change in the method of accounting or accounting practice of
Seller;
(xi) cancellation by any supplier, customer or contractor which
is material individually or in the aggregate to the Business;
(xii) delay or postponement in the payment of accounts payable
and other Liabilities by Seller except in the Ordinary Course of
Business;
(xiii) material damage, destruction or loss (whether or not
covered by insurance) to Seller's property;
(xiv) declaration or payment of any dividends or any distribution
in cash or property on and with respect to Seller's capital stock or
other corporate securities; or
(xv) agreement by Seller to do any of the foregoing.
(c) Except as included in the Closing Balance Sheet or in the notes
thereto, Seller does not have outstanding on the date hereof any obligation,
indebtedness or liability, and Seller has no Knowledge of any basis for the
assertion of any such obligation, indebtedness or liability, whether accrued,
absolute, contingent or otherwise, none of which in the aggregate, would have a
Material Adverse Effect.
5.11 Taxes. There are no liens on any of the assets of the Seller that
arose in connection with any failure (or alleged failure) to pay any Tax and
Buyer will not have any liability or obligation of any kind or nature with
respect to any Taxes of Seller or Parent or in connection with Taxes arising as
a result of the consummation of the transaction contemplated hereby.
5.12 No Brokers. Seller has made no contact and had no dealings with and
has not entered into, and will not enter into, any agreement, arrangement or
understanding with any investment banker, broker, leasing agent, finder or
similar Person or entity with respect to this Agreement and the transactions
contemplated hereby which (except as provided in Section 3.1(d)(i), will result
in the obligation of Buyer to pay any finder's fee, brokerage commission or
similar payment in connection with the transactions contemplated hereby.
5.13 Environmental Compliance. Except as disclosed in Schedule 5.13, (i)
there is not and has not been any Environmental Condition at any premises or
property currently owned, leased, operated, controlled or used by Seller which
would have a Material Adverse Effect, and (ii) Seller has not received any
notice alleging that it is liable for any Environmental Condition at any
location which would have a Material Adverse Effect. For the purposes of this
paragraph, (A) "Environmental Condition" means any action, omission,
14
event, condition or circumstance, including, without limitation, the presence of
any Hazardous Substances, which does or reasonably could (1) require assessment,
investigation, abatement, correction, removal or remediation, (2) give rise to
any obligation or liability of any nature (whether civil or criminal, arising
under a theory of negligence or strict liability, or otherwise) under any
Environmental Law, (3) create or constitute a public or private nuisance or
trespass, or (4) constitute a violation of or non-compliance with any
Environmental Law, (B) "Environmental Law" means all national, provincial,
regional, federal, state, local or municipal statutes, laws (including, without
limitation, principles of common law and decisional law), regulations, rules,
orders, decrees, judgments, ordinances, permits, licenses, registrations,
approvals, or requirements or authorizations of any Governmental Authority
relating to the environment, natural resources, safety, or health of humans or
other organisms, including the manufacture, distribution in commerce, and use
of, or release to the natural environment of Hazardous Substances, and (C)
"Hazardous Substances" means any pollutant, contaminant, hazardous substance,
hazardous waste, toxic substance, petroleum or petroleum-derived substance,
waste, or additive, asbestos, PCBs, radioactive material, or other compound,
element, material or substance in any form whatsoever (including, without
limitation, products), in each case which is regulated, restricted or addressed
by or under any Environmental Law.
5.14 Employee Benefit Information. Except as set forth on Schedule 5.14,
Seller has, in the conduct of the affairs of the Business, complied in all
material respects with all applicable laws, rules, and regulations relating to
the employment of labor, including those relating to wages, hours, collective
bargaining, immigration and the payment of social security and similar Taxes.
There are no pending claims by any Employee against Seller under any of the
applicable laws, rules, and regulations relating to the employment of labor,
including those relating to wages, hours, collective bargaining, immigration,
and the payment of social security and similar Taxes, and Seller has no
Knowledge of any plan of any Employee, organization or Governmental Authority to
do so.
(a) Complete List. - Schedule 5.14 lists each Employee Benefit Plan or
welfare plan that provides benefits for employees or former employees of the
Seller, or for which the Seller could have any direct or indirect, actual or
contingent liability (collectively, the "Plans")
(b) No Liability - The Seller has no direct or indirect, actual or
contingent liability with respect to any Plan other than to make payments to the
Plans in accordance with the terms of such Plans.
(c) Required Contributions Made - The Seller has made or shall make
all contributions required to be made by it under each Plan for all periods
through and including the Closing Date, or adequate accruals therefor have been
or shall be provided therefor in the Closing Balance Sheet.
(d) Claims - There are no pending or threatened claims, suits, or
other proceedings involving any Employees, plan fiduciaries or the U.S.
Department of Labor with respect to any Plan other than the ordinary usual
claims by participants or beneficiaries which have been made for benefits called
for under the terms of such Plans and which will be paid under such Plans in the
ordinary course.
5.15 Labor Disagreements. In connection with the operation of the Business,
(i) there is no material labor strike, controversy, unsettled grievance,
dispute, request for representation, slowdown or stoppage actually pending
against or affecting Seller, and, to the Knowledge of Seller, none is or has
been threatened; and (ii) Seller has no collective bargaining agreements with
respect to any Company Personnel and none of the Company Personnel are
represented by any bargaining agent.
15
5.16 Employees. A list which sets forth the name, location, title, date of
employment, and salaries of each regular employee, including last raise date and
amount of such raise, of Seller (collectively, the "Employees") as of the date
set forth therein is attached as Schedule 5.16. Seller shall update such list as
of the Closing Date, and deliver same to Buyer on or prior to the Closing.
5.17 No Other Agreements to Sell Assets or Business. Seller has no
obligation, absolute or contingent, to any other Person to sell the Assets
(other than sales in the Ordinary Course of Business), to effect any merger,
consolidation or other reorganization of Seller, or to enter into any agreement
with respect thereto.
5.18 Product Warranties. Seller has not provided any warranty with respect
to any equipment, goods, materials or systems sold or leased by Seller, other
than passing along to the purchaser or lessee the warranty on such equipment,
goods, materials or systems provided by the applicable manufacturer.
5.19 Improper Payments. No officer, agent or employee of Seller has made or
agreed to make any contributions, payment or gifts to any governmental official,
employee or agent in violation of the Foreign Corrupt Practices Act.
5.20 Adverse Contracts. Except as set forth in Schedule 5.20, Seller is not
a party or subject to any agreement, transaction, obligation, commitment,
understanding, arrangement or liability which (i) is incapable of complete
performance in accordance with the terms thereof within six months after the
date on which it was entered into or undertaken save for maintenance contracts
entered into in the Ordinary Course of Business; (ii) to the Knowledge of the
Seller is likely to result in a loss to Seller on completion of performance,
which losses together with all other such losses, exceed in the aggregate Twenty
Five Thousand Dollars ($25,000); (iii) to the Knowledge of the Seller cannot
readily be fulfilled or performed by Seller on time and without undue or unusual
expenditure of money and effort; (iv) involves or is likely to involve
obligations, restrictions, expenditures or receipts of an unusual, onerous or
exceptional nature and not in the Ordinary Course of Business; (v) is a lease or
contract for purchase, or an agreement for purchase by way of credit sale or
periodic payment; (vi) involves or is likely to involve the supply of goods by
or to Seller (other than in the Ordinary Course of Business) the aggregate sales
value of which will represent in excess of ten percent (10%) of the net sales of
Seller based on sales for its prior fiscal year; (vii) to the Knowledge of the
Seller, in any way restricts Seller's freedom to carry on, the whole or any part
of the Business as heretofore conducted by the Seller; (viii) involves
liabilities which may fluctuate in accordance with an index or rate of currency
exchange; or (ix) is in any way otherwise than in the Ordinary Course of
Business.
5.21 Inventory. The inventory of the Seller (the "Inventory") classified as
such on the Closing Balance Sheet consists of (i) raw materials and supplies,
manufactured and purchased parts, goods in process and finished goods, all of
which is merchantable and fit for the purpose for which it was procured or
manufactured, and none of which is obsolete, discontinued, damaged, or defective
(except to the extent of reserves disclosed in the Closing Balance Sheet), and
(ii) except as set forth in Schedule 5.21, items of a quantity and quality
usable or salable in the Ordinary Course of Business which Seller has continued
to replenish in a normal and customary manner consistent with Seller's past
practices. Seller has not received written or oral notice that it will
experience in the foreseeable future any difficulty, other than in the Ordinary
Course of Business, in obtaining in the desired quantity and quality and at a
reasonable price and upon reasonable terms and conditions, the raw materials,
supplies or component products required for the manufacture, assembly or
production of its products. The values at which inventories are carried is
consistent with Seller's past practices, consistently applied.
16
5.22 Customers, Suppliers and Distributors. Schedule 5.22 sets forth (i)
the ten customers with the highest dollar volume of purchases from Seller during
the one year period ending December 31, 1999, indicating opposite each customers
name, the approximate total sales for that customer; and (ii) the five largest
suppliers and the ten largest distributors of Seller during the one year period
ending December 31, 1999. Except as set forth in this Schedule 5.22, there has
not been any known adverse change in the business relationship of Seller and
such customer, supplier or distributor, and Seller is not aware of any
threatened loss of any such customer, supplier or distributor since May 15,
1999.
5.23 Accounts Receivable. All accounts and notes receivable of the Seller
reflected on the Financial Statements and as will be reflected on the Closing
Balance Sheet represent and will represent sales actually made in the Ordinary
Course of Business and do not result from any fraudulent actions by Seller or
Parent and, except to the extent of $500 per invoice (the "Threshold") (which
Threshold shall not apply to claims or defenses arising as a result of
fraudulent actions by Seller or Parent) are and will be valid obligations of the
respective debtors without any claims or defenses, provided however that if, as
to any invoice, the respective debtor asserts claims or defenses arising as a
result of actions or inactions of Seller prior to the Closing Date in excess of
the Threshold, which claims or defenses are granted or accepted by the Buyer, in
its reasonable judgment consistent with Westcon's collection practices, then for
purposes of this Agreement the exception created by the Threshold limitation
shall be deemed deleted and of no force or effect as to any such invoice.
ARTICLE VI
----------
Representations and Warranties of Buyer and Westcon
Representations and Warranties of Buyer. Buyer and Westcon jointly and
severally represent and warrant to Seller and Parent that the statements
contained in this Article VI are correct and complete as of the date of this
Agreement, and will be correct and complete as of the Closing Date as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article VI (except for representations and warranties
made as of a specific date), and except as such may be updated as provided in
this Agreement.
6.1 Organization; Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York
and has full corporate power and authority to own or lease its properties and to
conduct its business as currently conducted, and is qualified and in good
standing as a foreign corporation authorized to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties requires such qualification, except in such jurisdictions where
failure to be so qualified or in good standing collectively could not be
reasonably expected to have a material adverse effect on its business, results
of operations, financial condition or prospects.
6.2 Corporate Authorization, etc. The execution, delivery and performance
by Westcon and Buyer of this Agreement and the other Transaction Documents
referred to in this Agreement to which Westcon and Buyer are a party have been
authorized and approved by all requisite corporate and other action on the part
of Westcon and Buyer, and no other corporate or other approval or authorization
is required on the part of Westcon and Buyer or any other Person by law or
otherwise in order to make this Agreement and the other Transaction Documents
and instruments of transfer referred to in this Agreement to which Westcon and
Buyer are a party the valid, binding and enforceable obligations of Westcon and
Buyer subject to bankruptcy, fraudulent conveyance, insolvency, moratorium or
similar laws affecting the rights of creditors generally or
17
general equitable principles. Each of this Agreement and the other Transaction
Documents and instruments delivered at the Closing to which Westcon and Buyer
are a party is or shall be a valid and legally binding obligation of Westcon and
Buyer, enforceable against Westcon and Buyer in accordance with their respective
terms, subject to bankruptcy, fraudulent conveyance, insolvency, moratorium or
similar laws affecting the rights of creditors generally or general equitable
principles. Westcon and Buyer have full power and authority to comply with its
covenants under this Agreement and the other Transaction Documents and
instruments to which Westcon and Buyer are a party.
6.3 Litigation. There is no litigation, action, suit, proceeding or
investigation pending or, to the knowledge of Buyer, threatened, to which Buyer
is a party with respect to any of the transactions contemplated hereby, before
or by any Governmental Authority. Buyer is not in default with respect to any
order, writ, injunction or decree of any Governmental Authority.
6.4 No Conflict. The execution by Buyer and Westcon of this Agreement and
the other documents and instruments referred to in this Agreement to which it is
a party, compliance by Buyer and Westcon with the provisions of this Agreement
and the consummation by Buyer of the transactions contemplated hereby and
thereby (i) will not, in any material respect, violate any provision of
applicable law, (ii) will not conflict with any provision of the Certificate of
Incorporation or By-laws of Buyer or Westcon or conflict with, result in a
breach of, or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the termination
of, accelerate the performance required by, or create in any party the right to
accelerate, terminate, modify, or cancel or require any notice under any of the
terms, conditions or provisions of, any material contract, agreement, permit or
other instrument to which Buyer or Westcon is a party or by which Buyer or
Westcon is bound or to which any of its assets are subject, (iii) except for
clearance under the HSR Act, do not require the consent or approval of, or
registration, declaration or filing with, any Governmental Authority, and (iv)
do not violate any order, writ, injunction, decree, arbitration award, statute,
rule or regulation applicable to Buyer or Westcon, or to any of the assets of
Buyer or Westcon.
6.5 No Brokers. Buyer has made no contact and had no dealings with and has
not entered into, and will not enter into, any agreement, arrangement or
understanding with any investment banker, broker, leasing agent, finder or
similar Person or entity with respect to this Agreement and the transactions
contemplated hereby which will result in the obligation of Seller or Parent to
pay any finder's fee, brokerage commission or similar payment in connection with
the transactions contemplated hereby.
6.6 Investigation by Buyer. Westcon and the Buyer (a) acknowledge that
neither the Seller nor the Parent nor any of their respective directors,
officers, employees, Affiliates, controlling persons, agents or representatives
makes or has made any representation or warranty, either express or implied, to
the Buyer or its directors, officers, employees, Affiliates, controlling
persons, agents or representatives, except as and only to the extent expressly
set forth herein and subject to the limitations and restrictions contained in
this Agreement; and (b) agree that, other than as a result of fraudulent action
of the Seller, none of the Parent or the Seller, nor any of their directors,
officers, employees, Affiliates, controlling persons, agents or representatives
shall have any liability or responsibility whatsoever on any basis, other than
for such liability and responsibility as is provided for in this Agreement, to
Westcon or the Buyer or their respective directors, officers, employees,
Affiliates, controlling persons, agents or representatives, subject to the
limitations and restrictions contained in this Agreement.
18
ARTICLE VII
-----------
Conditions Precedent to Obligations of Buyer and Seller
-------------------------------------------------------
7.1 Conditions Precedent to Obligations of Buyer. The obligations of Buyer
under this Agreement are subject to the conditions (unless waived by Buyer at or
before the Closing, in Buyer's sole discretion) that at the Closing:
(a) Compliance with Covenants. All the terms, covenants, agreements
and conditions of this Agreement to be complied with and performed by Parent and
Seller, on or prior to the Closing Date shall have been duly complied with and
performed in all material respects.
(b) Representations and Warranties. The representations and warranties
made by Parent and Seller herein shall be true and correct in all material
respects as of the Closing with the same force and effect as though made as of
the Closing (except for representations and warranties which expressly speak as
of a particular date, which representations and warranties shall be true and
correct in all material respects as of such date), it being understood that any
materiality qualifications contained in such representations and warranties
shall be disregarded for this purpose.
(c) Delivery of Closing Documents. Seller shall have delivered to
Buyer on or prior to the Closing Date all of the documents required to be
delivered pursuant to Section 8.1.
(d) The conditions set forth in section 7.2 hereof shall have been
satisfied.
7.2 Bankruptcy Approvals. The obligations of Buyer under this Agreement are
subject to the further condition (unless waived by Buyer at or before the
Closing, in Buyers' sole discretion) that:
(a) Cost Reimbursement Fee Approval. On or before July 6, 2000 but
prior to the hearing referred to in Section 7.2(b), the Bankruptcy Court shall
have entered an order or orders approving the Cost Reimbursement Fee (the "Cost
Reimbursement Fee Order").
(b) Approval of Agreement. On or before July 6, 2000, the Bankruptcy
Court shall have entered an order or orders: (i) approving the Agreement and
authorizing Seller and Parent to take the actions necessary at the Closing,
which Closing shall occur by July 7, 2000; (ii) authorizing the Assumption and
Assignment of any leases or executory contracts to be assigned to Buyer under
the Agreement, effective as of the Closing; and (iii) granting the Buyer the
protections afforded under section 363(m) of the Bankruptcy Code (the "Sale
Order").
(c) No Stay. The Cost Reimbursement Fee Order and the Sale Order shall
not have been stayed pursuant to an order or orders of a court of competent
jurisdiction prior to the Closing.
7.3 Conditions Precedent to Obligations of Seller. The obligations of
Seller under this Agreement are subject to the conditions (unless waived by
Seller at or before the Closing, in Seller's sole discretion) that at the
Closing:
19
(a) Compliance with Covenants. All the terms, covenants, agreements
and conditions of this Agreement to be complied with and performed by Buyer on
or prior to the Closing Date shall have been duly complied with and performed in
all material respects.
(b) Representations and Warranties. The representations and warranties
made by Buyer and Westcon herein shall be true and correct in all material
respects as of the Closing with the same force and effect as though such
representations and warranties had been made as of the Closing (except for
representations and warranties which expressly speak as of a particular date,
which representations and warranties shall be true and correct in all material
respects as of such date), it being understood that any materiality
qualifications contained in such representations and warranties shall be
disregarded for this purpose.
(c) Delivery of Closing Documents. Buyer and Westcon shall have
delivered to Seller on or prior to the Closing Date all the documents required
to be delivered pursuant to Section 8.2.
(d) Deutsche Bank Approval. Seller's lenders under their revolving
credit line with Deutsche Bank, AG, New York Branch, as collateral agent, and
the bank group shall have consented to the consummation of transactions
contemplated hereby.
7.4 Conditions Precedent to Obligations of Both Buyer and Seller.
The obligations of Buyer and Seller under this Agreement are subject
to the condition (unless waived by both Buyer and Seller at or before the
Closing, in each party's sole discretion) that at the time of the Closing:
(a) Absence of Litigation. No action or proceeding before a
Governmental Authority shall have been instituted or threatened by a
Governmental Authority, or instituted by any other party if in the opinion of
counsel for Buyer or Seller there shall be a substantial likelihood that such
other party will prevail on the merits, in either case to restrain or prohibit
the consummation of the transactions contemplated hereby.
(b) HSR Act. All applicable waiting periods (and any exceptions
thereof) under the HSR Act shall have expired or otherwise been terminated as
provided in Section 9.10.
(c) Third Party Consents. To the extent that any third-party consent,
approval or other action would be required under the terms of any Permit or
Contract in connection with the assignment of such Permit or Contract to Buyer,
it is expressly understood and agreed that, Seller shall take any and all action
necessary to obtain any and all such third-party consents prior to the Closing.
The first $5,000 of the cost of obtaining such consent shall be borne by Seller
and all costs in excess thereof shall be divided equally between Buyer and
Seller, unless Buyer waives the requirement of obtaining such third-party
consent. If such third-party consents are not obtained and Buyer waives the
obtaining of such third-party consents as a condition precedent hereunder, then
Seller shall cooperate with Buyer in any arrangement (such as subcontracting,
sublicensing or subleasing) requested by Buyer intended to provide for Buyer all
of the benefits of Seller or its Affiliates under any such documents and the
Buyer shall cooperate in such efforts as required under Section 9.5 hereof.
(d) Court Approval. If, prior to the Closing Date, Parent and/or
Seller shall have filed a petition for relief under the federal bankruptcy laws,
or if a petition shall have been filed against Parent and/or
20
Seller, then the bankruptcy court in which such petition shall have been filed
shall enter an order approving this agreement and the transactions contemplated
hereunder in form and manner acceptable to Buyer.
ARTICLE VIII
------------
Documents to Be Delivered at the Closing
----------------------------------------
8.1 Items to Be Delivered by Seller at the Closing. At the Closing, Seller
shall deliver to Buyer, in form and substance reasonably satisfactory to Buyer
and its counsel the following duly executed instruments and items:
(a) Opinions of Counsel. An opinion of XxXxxxx, North, Xxxxxx & Xxxxx,
P.C. counsel to Seller, reasonably satisfactory to the Buyer with respect to
matters set forth in Sections 5.1, 5.2(a), 5.2(b) and 5.9 and from Xxx Xxxxxxx,
Esq., Seller's in-house counsel, with respect to matters set forth in Section
5.8.
(b) Officer's Certificate. A certificate signed by Parent and Seller
to the effect set forth in Section 7.1(b) and stating that the conditions set
forth in Section 7.1 have been satisfied and that Seller, as applicable, has
complied with each of the covenants and agreements of Seller, as applicable,
contained in this Agreement.
(c) Xxxx of Sale and Assignment and Assumption Agreement. The Xxxx of
Sale and the Assignment and Assumption Agreement.
(d) Secretary's Certificate. A certificate of the Secretary of Seller
certifying as to the taking of all required corporate and shareholder action and
a certificate of good standing in the jurisdiction in which Seller is
incorporated.
(e) Assignment of Lucent Contract. An assignment of the Agreement
between Seller and Lucent Technologies, Inc. ("Lucent") together with the
consent of Lucent thereto.
(f) Assignment of Lucent-VAR Contracts. An assignment of the Lucent -
VAR contracts set forth on Schedule 8.1(f), together with the consent of Lucent
Technologies, Inc. thereto.
(g) Custom Edge, Inc. Agreement. An agreement (the "Custom Edge
Agreement") in form and substance reasonably acceptable to Buyer, containing the
terms and conditions set forth on the term sheet attached hereto as Exhibit
8.1(g), which agreement shall be executed by Custom Edge, Inc. and Buyer.
(h) Employment Contracts. Executed employment contracts pursuant to
Section 9.6.
(i) Transition Services Agreement. An agreement in the form attached
hereto as Exhibit 8.1(i), together with use and occupancy for the corporate
office facility located in Omaha, Nebraska and for the use and occupancy of the
warehouse facility located in Sioux City, Iowa and consents of the respective
landlords, all as referred to therein (the "Transition Services Agreement").
21
8.2 Items to Be Delivered by Buyer at the Closing. At the Closing, Buyer
shall deliver to Seller in form and substance reasonably satisfactory to Seller
the following duly executed instruments and items:
(a) Opinion of Counsel. An Opinion of Xxxxxxxx Xxxxx Singer &
Xxxxxxxxx, LLP, counsel to Buyer, reasonably satisfactory to the Buyer with
respect to matters set forth in Section 6.1, 6.2 and 6.4.
(b) Officer's Certificate. A certificate signed by each of Westcon and
Buyer to the effect set forth in Section 7.3(b) and stating that the conditions
set forth in Section 7.3 have been satisfied and that Buyer or Westcon, as
applicable, has complied with each of the covenants and agreements of Buyer or
Westcon, as applicable, contained in this Agreement.
(c) Secretary's Certificate. A certificate of the Secretary of Buyer
and certificate of good standing in the jurisdiction in which Buyer is
incorporated.
(d) Purchase Price. The Purchase Price payable on the Closing Date, in
accordance with Section 3.1.
(e) Resale Certificate. A resale exemption certificate (related to
state sales taxes) in form satisfactory to Seller.
ARTICLE IX
----------
Further Covenants and Agreements of Seller and Buyer
----------------------------------------------------
9.1 Conduct of the Business; Access. Seller agrees with Buyer as follows:
(a) Conduct of Business Pending Closing. From the date of this
Agreement to the Closing Date, Seller (i) will maintain the Assets and not
remove any such Asset from its present location (except for transfers in the
Ordinary Course of Business and except for replacement of Assets with reasonably
similar assets); (ii) will perform in all material respects its obligations
under the contracts and agreements to which Seller is a party which relate to
the Business; (iii) will maintain in full force and effect through the Closing
Date all of its presently existing insurance coverage, or insurance comparable
to such existing coverage; and (iv) except as contemplated in this Agreement,
will conduct the Business only in the Ordinary Course of Business. Without
limiting the generality of the foregoing, Seller shall not engage in any
practice, take any action, embark on any course of inaction or enter into any
transaction of the sort described in Section 5.10(b).
(b) Full Access. From the date of the announcement of this Agreement
to the Closing Date, Seller shall permit representatives of Buyer to have access
at all reasonable times, and in a manner so as not to interfere with the normal
operation of the Business by Seller, to the headquarters office of Seller and to
all books, records, contracts and documents of or pertaining to the Business,
and, subject to scheduling with Seller so that a representative of Seller may be
present, to contact or speak or correspond with any customer, employee or other
Person associated in business with Seller, who or which is (i) set forth on
Schedule 9.1 or (ii) reasonably requested by Buyer.
22
9.2 Confidentiality/Announcements.
(a) Seller and Buyer each agree that, except as otherwise required by
law neither Seller nor Buyer nor any of their Affiliates shall make any
announcement of the transactions contemplated hereby, other than jointly or as
otherwise agreed by them in writing, it being the intention of the parties that
an announcement shall be made contemporaneously with the execution hereof. On
and prior to the Closing Date, each party will keep confidential any information
not otherwise publicly available which is derived from access, investigation or
information furnished by the other party in connection with this Agreement,
including but not limited to the negotiations conducted in connection herewith
and information learned during due diligence reviews, and if the transactions
contemplated hereby are not fully consummated by July 7, 2000, or this Agreement
is terminated prior to such time, each party shall promptly return to the other
party all information provided by the other party, and copies and extracts
therefrom, and will not thereafter use such information for any purpose. Buyer
and Seller shall keep confidential all drafts and executed copies of this
Agreement and the contents hereof, except to the extent necessary to comply with
any applicable law or regulation or any request or order of any Governmental
Authority or court of competent jurisdiction and except as otherwise agreed
pursuant to the first sentence of this paragraph. Notwithstanding the foregoing
provisions of this Section 9.2(a), Buyer and Seller may disclose any such
information to their respective attorneys, accountants and investment advisers.
(b) In the event that either party (the "Disclosing Party") is
requested or required (by oral question or request for information or documents
in any legal proceeding interrogatory. subpoena, civil investigative demand, or
similar process, or otherwise) to disclose any Confidential Information, the
Disclosing Party shall notify the other party promptly of the request or
requirement so that the other party may seek an appropriate protective order or
waive compliance with the provisions of this Section 9.2. If, in the absence of
a protective order or the receipt of a waiver hereunder, the Disclosing Party
is, on the advice of counsel, compelled to disclose any Confidential Information
to any tribunal, the Disclosing Party may disclose the Confidential Information
to the tribunal; provided, however, that the Disclosing Party shall use its
reasonable efforts to obtain, at the reasonable request of the other party, an
order or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as such other
party shall designate.
(c) The foregoing provisions of this Section 9.2 shall not apply to
any Confidential Information which a party wishing to make disclosure can
demonstrate: (i) was, at the time of disclosure to such party, in the public
domain; (ii) after disclosure to such party, is published or otherwise becomes
part of the public domain through no fault of such party; (iii) was received
after disclosure to such party from a third party who had a lawful right to
disclose such information to such party; or (iv) was independently developed by
such party without reference to the Confidential Information of the other party.
9.3 Survival of Representations and Warranties; Indemnities.
(a) The several covenants, representations and warranties of the
parties herein contained shall survive the Closing Date; provided that any
claims for indemnification with respect to any representation or warranty in
accordance with Section 9.3(b)(i) and 9.3(c)(i) below shall be null and void
unless made on or before the second anniversary of the Closing Date provided,
however, that such 2 year period shall be extended to the expiration date of the
applicable statute of limitations with respect to claims for indemnification in
connection with the representations and warranties contained in Sections 5.1,
5.2, 5.5, 5.11, 5.13, 5.14, 6.1 and 6.2.
23
(b) Each of Seller and Parent, jointly and severally, hereby agrees to
indemnify and hold Buyer and Westcon (and their Affiliates and each of their
shareholders, directors, officers, employees, consultants, agents, successors
and assigns) harmless from and against any and all claims, liabilities, losses,
damages or injuries, together with costs and expenses, including reasonable
legal fees (collectively, "Buyer's Losses") arising out of or resulting from (i)
any inaccuracy in any representation or warranty made by Seller or Parent in
this Agreement, (ii) any breach by Seller or Parent, unless waived by Buyer, of
any covenant or agreement of Seller or Parent contained in this Agreement, (iii)
the Business or operation of the Business prior to the Closing or any act, or
failure to act, relating to the Business prior to the Closing, (iv) any of the
Excluded Liabilities or Excluded Assets, and (v) any Taxes of Seller (or Taxes
of any other Person for which Seller may have liability) with respect to (A) any
Tax described in Section 9.9(c) hereof, or (B) any Tax period ending on or
before the Closing Date (or for any Tax period ending after the Closing Date to
the extent allocable (determined in a manner consistent with Section 9.9 hereof)
to the portion of such period beginning before and ending on the Closing Date).
(c) Each of Buyer and Westcon, jointly and severally, hereby agrees to
indemnify and hold Seller and Parent (and their Affiliates and each of their
shareholders, directors, officers, employees, consultants, agents, successors
and assigns) harmless from and against any and all claims, liabilities, losses,
damages or injuries, together with costs and expenses, including reasonable
legal fees, (collectively, "Seller's Losses") arising out of or resulting from
(i) any inaccuracy in any representation or warranty made by Buyer or Westcon in
this Agreement, (ii) any breach by Buyer or Westcon, unless waived by Seller, of
any covenant or agreement of Buyer or Westcon contained in this Agreement, (iii)
the Business or operation of the Business after the Closing or any act, or
failure to act, relating to the Business after the Closing, (or) (iv) any of the
Assumed Liabilities.
(d) If any third party shall notify any party hereto (the "Indemnified
Party", which term shall be deemed to include such party's Affiliates and each
of their shareholders, directors, officers, employees, consultants, agents,
successors and assigns, to the extent applicable) with respect to any matter
which may give rise to a claim for indemnification against any other party
hereto (the "Indemnifying Party") under this Agreement, then the Indemnified
Party shall notify each Indemnifying Party thereof promptly, provided, however,
that no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Party thereby
is materially prejudiced as a result of such delay. In the event any
Indemnifying Party notifies the Indemnified Party within thirty (30) days after
the Indemnified Party has given notice of the matter that the Indemnifying Party
is assuming the defense thereof, (A) the Indemnifying Party will defend the
Indemnified Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party, (B) the Indemnified Party may retain
separate co-counsel at its sole cost and expense (except that the Indemnifying
Party will be responsible for the fees and expenses of the separate co-counsel
to the extent the Indemnified Party reasonably concludes that the counsel the
Indemnifying Party has selected has a conflict of interest), (C) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the matter without of the written consent of the Indemnifying
Party (not to be unreasonably withheld or delayed), and (D) the Indemnifying
Party will not consent to the entry of any judgment with respect to the matter,
or enter into any settlement which does not include a provision whereby the
plaintiff or claimant in the matter releases the Indemnified Party from all
Liability with respect thereto, without the written consent of the Indemnified
Party (not to be unreasonably withheld or delayed). In the event that the
Indemnifying Party does not notify the Indemnified Party within thirty (30) days
after the Indemnified Party has given notice of the matter that the Indemnifying
Party is assuming the defense thereof, however, the Indemnified Party may defend
against, or enter into any settlement with respect to, the matter in any manner
it reasonably may deem
24
appropriate. At any time after commencement of any such action, any Indemnifying
Party may request an Indemnified Party to accept a bona fide offer from the
other parties to the action for a monetary settlement payable solely by such
Indemnifying Party (which does not burden or restrict the Indemnified Party nor
otherwise prejudice it) whereupon such action shall be taken unless the
Indemnified Party determines that the dispute should be continued, in which case
the Indemnifying Party shall be liable for indemnity hereunder only to the
extent of the lesser of (i) the amount of the settlement offer or (ii) the
amount for which the Indemnified Party may be liable with respect to such
action. In addition, the party controlling the defense of any third party claim
shall deliver, or cause to be delivered, to the other party, appeals or other
written statements copies of all correspondence, pleadings, motions, brief
relating to or submitted in connection with the defense of the third party
claim, and timely notices of, and the right to participate in (as an observer)
any hearing or other court proceeding relating to the third party claim.
(e) The amount to which an Indemnified Party may become entitled
hereunder shall be net of any recovery (whether by way of payment, discount,
credit, set off, tax benefit, counterclaim or otherwise received from a third
party (including any insurer or taxation authority) in respect of such claim.
Any such recovery shall be promptly repaid by the Indemnified Party to the
Indemnifying Party, less all reasonable costs, charges and expenses incurred by
the Indemnified Party in obtaining such recovery from the third party.
(f) Notwithstanding any other provision of this Agreement,
(i) Seller and Parent shall have indemnification obligations with
respect to indemnification under this Section 9.3 arising out of
Buyer's Losses incurred pursuant to Section 9.3(b) (except as provided
in Section 9.3(f)(v)) only if the aggregate of all Buyer's Losses
exceeds $100,000 (the "Basket") whereupon, Seller and Parent shall pay
Buyer's Losses only in excess of the Basket (it being agreed however,
that such Basket shall not apply to Buyer's Losses incurred pursuant
to any provision of Section 9.3(b)(iv) and 9.3(b)(v) or any Buyer's
Losses incurred as a result of fraudulent actions by Seller or the
Parent);
(ii) Buyer and Westcon shall have indemnification obligations
with respect to indemnification under this Section 9.3 arising out of
Seller's Losses incurred pursuant to Section 9.3(c)(i) only if the
aggregate of all Seller's Losses shall exceed the Basket, whereupon,
Buyer and Westcon shall pay Buyer's Losses only in excess of the
Basket;
(iii) The indemnification obligation of Buyer and Westcon for
Seller's Losses hereunder shall not exceed the Purchase Price (the "
Buyer Limit"); provided that, the Buyer Limit shall not apply to
Seller's Losses resulting from a breach of the representations and
warranties set forth in Section 6.2; and
(iv) The indemnification obligation of Seller and Parent for
Buyer's Losses hereunder shall not exceed the Purchase Price (the
"Seller Limit"); provided that, the Seller Limit shall not apply to
Buyer's Losses resulting from a breach of the representations and
warranties set forth in Sections 5.2, 5.5, 5.11 and 5.13.
(g) Buyer and Westcon agree that their sole remedy (other than as a
result of fraudulent actions by Seller or Parent) in respect to any breach of
warranty, representation or covenant by the Parent or the Seller hereunder shall
be limited to indemnification pursuant to this Section 9.3.
25
9.4 Conditions. Each of the parties shall use commercially reasonable
efforts to cause all conditions to the Closing over which it has control to be
satisfied as soon as reasonably practicable.
9.5 Cooperation. Buyer and Seller shall cooperate with each other, and
shall cause their officers, employees, agents, Affiliates, auditors and
representatives to cooperate with each other, after the Closing to ensure the
orderly transition of the Business from Seller to Buyer and to minimize any
disruption to the Business that might result from the transactions contemplated
hereby, including without limitation (i) in connection with obtaining
third-party consents following the Closing, and (ii) taking all reasonable
efforts to, and causing each of their Affiliates to, hold in trust for, and
delivering as soon as practicable to, the other party all mail, communications,
payments, checks and other materials received for the benefit of the other party
or its Affiliates (except in the case of payments as to which an appropriate
adjustment has then already been made). After the Closing, upon reasonable
written notice, (a) Buyer and Seller shall furnish or cause to be furnished to
each other and their employees, counsel, auditors and representatives access,
during normal business hours, such information and assistance relating to the
Business as is reasonably necessary for financial reporting and accounting
matters, the preparation and filing of any tax returns, reports or forms or the
defense of any tax claim or assessment, and (b) without limiting the generality
of the foregoing, Buyer shall co-operate and render assistance to Seller and its
Affiliates (and shall cause Buyer's officers, employees, agents, Affiliates,
auditors and representatives to cooperate and render assistance to Seller and
its Affiliates) in connection with any third-party litigation relating to the
Business including without limitation, the litigation described in Schedule 9.5.
Each party shall reimburse the other for reasonable out-of-pocket costs and
expenses incurred in assisting of the other pursuant to this Section 9.5,
provided however that all out-of-pocket costs for travel, lodging, etc., shall
be directly paid by the parties requesting such cooperation. Neither party shall
be required by this Section 9.5 to take any action that would unreasonably
interfere with the conduct of its business or unseasonably disrupt its normal
operations. or that would require such party to pay any amounts to any Person.
9.6 Employee and Employee Benefit Matters.
(a) Employees. Buyer shall prepare a list of employees of Seller to be
attached to this Agreement as Schedule 9.6(a) ("Key Employees") to whom Buyer or
its Affiliates shall offer employment effective as of the Closing. Seller shall
not solicit, prevent, discourage or in any other way interfere with Buyer's
efforts to cause each of the Key Employees to execute and deliver the employment
agreement substantially in the form attached hereto as Exhibit 9.6(a). Seller
shall remain responsible and liable for (A) payment of any and all wages,
bereavement pay, jury duty pay, disability income, supplemental unemployment
benefits, fringe benefits or other perquisites of employment, or similar
benefits (whether arising under any plan, program, policy or arrangement of
Seller or under applicable local law), payroll taxes and other payroll related
expenses, (B) payments to or under employee benefit plans (within the meaning of
Section 3(3) of ERISA) maintained or contributed to by Seller, in either case
arising out of or relating to the employment of any of the Person by Seller
prior to the Closing, and (C) all workers' compensation claims of the any Person
to the extent relating to events, conditions or circumstances that occur or
exist prior to the Closing.
(b) Severance Plans. With respect to any termination costs or
severance pay arising from employment of any Person, if such Employee becomes an
employee of Buyer or its Affiliate on or about the Closing Date (a "Transferred
Employee"), Buyer or Westcon (or their respective Affiliate) shall provide
severance benefits, if any, (including both cash compensation and other
benefits, such as insurance continuation and retraining) to such Transferred
Employees in accordance with their severance policies and neither Parent not
Seller shall have any obligation in respect thereof. All termination costs or
severance pay arising from
26
termination of employees of the Seller who do not become employees of the Buyer
or its Affiliates on or about the Closing Date, shall be provided by Seller and
Parent in accordance with their severance policies (including both cash
compensation and other benefits, such as insurance continuation and retraining)
and neither Buyer nor Westcon shall have any obligation in respect thereof.
9.7 Corporate Records. Each of Seller and Buyer shall have the right to
inspect and make copies of the books and records, as they existed on the Closing
Date during normal business hours at any time upon reasonable notice to the
other party, within 6 years after the Closing Date. Any exercise of any such
right of inspection shall (a) be at the inspecting party's expense, (b) not
unreasonably interfere with the other party's business or operations, (c) be
conducted at a location or locations reasonably specified by the other party,
and (d) be subject to the confidentiality obligations of the inspecting party
contained in Section 9.2 hereof (which shall survive the Closing for purposes of
this paragraph).
9.8 Collection of Receivables. Parent and Seller covenant and agree that
if, following the Closing Date, they shall receive any payments in respect of
any accounts receivables included in the Definitive Net Assets Value, they shall
deliver same to Buyer and if such payment is made by check payable to the order
of Seller or Parent, same shall be endorsed without recourse and delivered to
Buyer. Buyer covenants and agrees that if, following the Closing Date, it
receives any payments in respect of accounts receivable of Seller, Parent or
Custom Edge, Inc. which are not included in the Definitive Net Assets Value then
they shall deliver same to Parent. All payments and deliveries described in this
Section 9.8 shall be made within three (3) days following receipt thereof.
9.9 Taxes.
(a) Seller agrees to retain responsibility for, and agrees to pay (or
cause the appropriate Affiliate to pay) when due (except while and to the extent
being contested in good faith), any and all Taxes of every nature and
description of Seller or otherwise relating to the Business or the Assets for
any taxable period or portion of a taxable period which period or portion ends
on or prior to the Closing Date. Buyer agrees to retain responsibility for, and
agrees to pay (or cause the appropriate Affiliate to pay) when due (except while
and to the extent being contested in good faith), any and all Taxes of every
nature and description of Buyer or otherwise relating to the Business or the
Assets for any taxable period or portion of a taxable period which period or
portion begins after the Closing Date. Any Taxes which are imposed on the Assets
(including personal property taxes) or which are otherwise imposed on a periodic
basis relating to any tax period which begins before and ends after the Closing
Date shall be allocated between the parties on a pro rata basis over the period
for which such Taxes are levied, or if it cannot be determined over what period
such Taxes are being levied, over the fiscal period of the relevant taxing
authority, in each case irrespective of the lien or assessment date of such
Taxes. As promptly as practicable after the Closing, each party shall present to
the other a calculation as to the amount of any such Taxes paid by such party
(or its Affiliates) and the pro-rata portion owed by the other, which shall be
paid within 10 days.
(b) The Purchase Price (as determined in accordance with Article III)
shall be allocated by the Buyer among the Assets in accordance with the
requirements of applicable law for tax reporting purposes, which allocation
shall be conclusive unless Seller establishes that Buyer has acted unreasonably
in doing so. The parties shall file all Tax returns (including amended returns
and claims for refund) and information reports in a manner consistent with such
allocation, and shall use their reasonable best efforts to sustain such
allocations in any subsequent tax audit or tax dispute.
27
(c) All transfer, real property transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by Seller when due, and Seller
will, at its own expense, file all necessary Tax returns and other documentation
with respect to all such transfer, real property transfer, documentary, sales,
use, stamp, registration and other Taxes and fees. If required by applicable
law, Buyer will join in the execution of any such Tax return and other
documentation.
9.10 Required Filings. Buyer and Seller acknowledge that the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, 15 U.S.C. ss. 18(a) et.
Seq. ("HSR Act") is applicable to the transaction sought to be consummated by
this Agreement. Buyer and Seller shall use their best efforts to, as soon as
practicable after the Effective Date, but no later than three (3) business days
from the Effective Date, make or cause to be made their respective filings under
the HSR Act. Buyer shall pay the filing fee in connection with the filings under
the HSR Act. Buyer and Seller also agree that this transaction is subject to,
conditioned upon and cannot be consummated until the Buyer has received
notification (the "Notification") from the Federal Trade Commission approving
the acquisition contemplated by the terms of this Agreement. The Seller shall
not tender and the Buyer shall not accept the consideration to be eventually
exchanged to consummate this transaction until the Buyer shall have received
such Notification. Both the Seller and the Buyer acknowledge that there has not
been a tender or an acceptance of consideration nor will there be until the
Buyer shall have received the Notification.
9.11 Business Name
(a) Effective as of the Closing, and for a period of thirty (30) days
thereafter, Parent and Seller hereby grant to Buyer a United States,
royalty-free, non-exclusive license to use, display, copy, reproduce, transmit,
communicate and distribute, on any media now known or hereafter created, the
name and any identifying logos of the name "Inacom Communications" and any name
and identifying logos employing the words "Inacom Communications"or variation
thereof.
(b) Seller, Parent and their Affiliates (or any successor thereto)
shall not for a period of seven (7) years from the Effective Date use the name
"Inacom" in connection with the word "Communications" or any variation thereof
as a business name, trade name, trademark, service xxxx, domain name or for any
other similar purpose. In addition, promptly following the Closing Date, Seller
shall amend its Certificate of Incorporation with the office of the Nebraska
Secretary of State, to change its corporate name to a name not similar thereto.
9.12 No Solicitation. Parent, Seller and their respective Affiliates
(including any successor thereto as a result of an Acquisition Transaction)
shall not, for a period of three (3) years from the Closing Date, directly or
indirectly, employ, engage, hire, solicit or retain any Transferred Employee
provided that: (i) any Transferred Employee may be hired by Parent or Seller
after six (6) months following the Closing Date if such Transferred Employee was
not specifically solicited by Parent or Seller, and (ii) prior to expiration of
the such six (6) months, a Transferred Employee may be hired by Parent or Seller
provided that Buyer consents thereto, which consent shall not be unreasonably
withheld .
9.13 Bankruptcy Court Approvals. Prior to the Petition Date, Seller and
Parent shall provide Buyer with a proposed motion seeking (i) approval of the
Cost Reimbursement Fee, (ii) scheduling a hearing to approve this Agreement and
obtain the other orders set forth in Section 7.2 hereof and (iii) establishing
notice and other procedures with respect to such hearing (the "Motion"). The
Motion and any proposed order filed
28
in connection with the Motion shall be in a form that is satisfactory to Buyer.
On the Petition Date or the next Business Day after the Petition Date, the
Seller and the Parent shall file the Motion.
ARTICLE X
---------
Dispute Resolution
10.1 Dispute Resolution.
(a) Any dispute, controversy or claim arising out of or relating to
the Agreement. or the validity, interpretation, breach or termination thereof,
including claims seeking redress or asserting rights under applicable law (a
"Dispute"), shall be resolved in accordance with the procedures set forth in
this Section 10.1. After completion of any prior procedures required hereby,
either party may submit the Dispute for resolution by arbitration pursuant to
the Rules of the Center for Public Resources ("CPR") for Non-Administered
Arbitration of Business Disputes as in effect at the time of the arbitration.
The parties consent to a single, consolidated arbitration for all Disputes for
which arbitration is permitted.
(b) The neutral organization for purposes of the CPR rules will be the
CPR. The arbitral tribunal shall be composed of three arbitrators selected by
agreement of the parties or, in the absence of such agreement within 60 days
after either party first proposes such arbitrators, by the CPR. If the
arbitration involves any issue relating to the determination of the Purchase
Price, the panel of arbitrators shall include at least one certified public
accountant. The arbitration shall be conducted in New York City if commenced by
Seller or Parent or in Omaha, NE if commenced by Buyer or Westcon. Each party
shall be permitted to present its case, witnesses and evidence, if any, in the
presence of the other party. A written transcript of the proceedings shall be
made and furnished to the parties. The arbitrators shall determine the Dispute
in accordance with the law of New York, without giving effect to any conflict of
law rules or other rules that might render such law inapplicable or unavailable,
and shall apply this Agreement according to its terms.
(c) The parties agree to be bound, by any award or order resulting
from any arbitration conducted hereunder and further agree that:
(i) any monetary award, shall include pre-award interest, to the
extent appropriate, shall not include incidental or consequential
damages and shall be made and payable in U.S. dollars through a bank
selected by the recipient of such award, free of any, withholding tax
or other deduction, together with interest thereon at the rate of 7%
from the date the award is granted to the date it is paid in full;
(ii) in the context of an attempt by either party to enforce an
arbitral award or order, any defenses relating to the parties'
capacity or the validity of this Agreement or any related agreement
under any law are hereby waived; and
(iii) judgment on any award or order resulting from an
arbitration conducted under this Section 10.1 may be entered and
enforced in any court, in any country having jurisdiction thereof or
having jurisdiction over any of the parties or any of their assets.
29
(d) Except as expressly permitted by this Agreement, no party will
commence or voluntarily participate in any court action or proceeding concerning
a Dispute, except (i) for enforcement as contemplated by Section 10.1(c)(iii)
above, (ii) to restrict or vacate an arbitral decision based on the grounds
specified under applicable law and not waived in Section 10.1(c)(ii) above, or
(iii) for interim relief as provided in Section10.1(e) below. For purposes of
the foregoing or enforcement of any undisputed obligation, the parties hereto
submit to the non-exclusive jurisdiction of the courts of New York.
(e) The parties mutually acknowledge that an award of damages may be
inadequate to remedy any breach of this Agreement and that injunctive relief may
be required. Therefore, (i) a party may request a court of competent
jurisdiction to provide interim injunctive relief in aid of arbitration or to
prevent a violation of this Agreement pending arbitration, and any such request
shall not be deemed a waiver or breach of the obligations to arbitrate set forth
herein, and (ii) the arbitrators may order equitable relief where they deem it
appropriate and the parties agree that any interim relief ordered by the
arbitrators may be immediately and specifically enforced by a court otherwise
having jurisdiction over the parties.
ARTICLE XI
----------
Termination and Cost-Reimbursement Fee
--------------------------------------
11.1 Termination. This Agreement may be terminated at any time by:
(a) the mutual consent of Buyer and Seller.
(b) Buyer, if:
(i) the conditions set forth in Article VII hereof shall not have
been met by July 7, 2000, except if such conditions have not been met
solely as a result of the action or inaction of the Buyer; or
(ii) Seller has materially breached a representation and
warranty, covenant or agreement set forth herein and such breach is
not cured (if curable) within 15 days following written notice thereof
from the non-breaching party;
(c) Buyer, if Buyer shall have determined in its sole discretion,
exercised in good faith, that the transaction contemplated by this Agreement has
become impracticable by reason of the institution of any litigation, proceeding
or investigation to restrain or prohibit the consummation of the transaction so
long as such litigation, proceeding or investigation has been instituted,
initiated, commenced or undertaken without the approval of the Buyer.
(d) Buyer, if there is a Material Adverse Change, provided that, the
filing by Parent and/or Seller of a petition for relief under the federal
bankruptcy laws, or if a petition shall have been filed against Parent and/or
Seller does not constitute a Material Adverse Change.
(e) Buyer, (i) unless within three (3) days of the occurrence of the
Petition Date, Parent or Seller obtains interim approval for funding or
debtor-in-possession financing (the "DIP Facility"), allocated to the Seller and
for the Business, on terms and in the amounts set forth on Schedule 11.1 or (ii)
if the Petition
30
Date does not occur, within seven (7) days of the Effective Date and Buyer
determines that the Business has been materially damaged while operated by
Seller, due to inadequate funding, loss of employees, customers, suppliers or
otherwise;
(f) Buyer, if any provisions for notice or bidding with respect to the
hearing on the Motion are altered in any material way from those that are
proposed in the Motion either pursuant to an order of the Bankruptcy Court or
otherwise.
(g) Buyer, on or after ten (10) business days from the Effective Date,
if Seller has not confirmed that the condition set forth in Section 7.3(d) have
been satisfied and that all lenders which have a security interest in or lien on
any of the Assets, or whose consent is otherwise needed to transfer the Assets,
have agreed to terminate such security interest or lien and to grant such
consent upon the Closing.
Any termination pursuant to this Article XI shall be effected by written notice
from the party or parties so terminating to the other parties hereto.
11.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 11.1, this Agreement shall be of no further
force or effect and no party hereto, nor its shareholders, directors, officers
or affiliates, shall have any liability in connection herewith; provided,
however, that Section 9.2, 9.3, 11.3, and Article XII shall survive the
termination of this Agreement. Notwithstanding the foregoing, this Section 11.2
shall not relieve any party from liability in connection with an intentional or
willful material breach of this Agreement prior to its termination.
11.3 Cost-Reimbursement Fee. If (i) this Agreement is terminated for any
reason other than by a material breach by the Buyer or Westcon or (ii) if by
order of the Bankruptcy Court the assets of the Seller are sold or transferred
to any parties other than Buyer or Westcon, then the Seller and Parent, jointly
and severally agree to immediately pay the Buyer and/or Westcon an amount equal
to its fees, cost and expenses including, without limitation, attorneys' fees,
accountants fees, investment banking fees, governmental filing and other
governmental fees) incurred by the Buyer or Westcon or its Affiliates in
connection with the transactions contemplated by this Agreement, such amount not
to exceed $350,000 (the "Cost Reimbursement Fee") and as reimbursement for the
lost profit opportunity of Buyer and the time and expense of Buyer's executives.
ARTICLE XII
-----------
Miscellaneous
-------------
12.1 Expenses. Subject to section 11.3 hereof, regardless of whether the
transactions contemplated hereby are consummated, each of the parties hereto
shall bear the fees and expenses relating to its compliance with the various
provisions of this Agreement and its covenants to be performed hereunder, and
each of the parties hereto shall pay all expenses (including legal fees and
expenses) incurred by it in connection with this Agreement and the transactions
contemplated hereby; provided, however, that, to the extent that Seller's
payment of any such fees and expenses would affect the calculation of Definitive
Net Assets, then such fees and expenses which Seller would otherwise be
obligated to pay as provided for above shall instead be paid by Parent on
Seller's behalf.
31
12.2 Benefit; Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
and not to the benefit of any other Person. Neither this Agreement nor any
rights or obligations hereunder shall be assigned by either party hereto without
the written consent of the other.
12.3 Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of New York without regard
to its conflicts of law principles.
12.4 Breach; Failure of Condition. If either party shall believe at any
time prior to the Closing that the other party has breached any representation,
warranty, covenant or agreement contained in this Agreement, or that any
condition to the Closing is not reasonably likely to be satisfied, such party
shall promptly so inform such other party, specifying the breach or condition
concerned, and such other party shall have a reasonable opportunity to correct
such breach or cause such condition to be satisfied, but failure to so notify
shall not release the other party from its obligations hereunder.
12.5 Notices. All notices, requests, consents, payments, demands and other
communications required or contemplated under this Agreement ("Notices") shall
be in writing and (a) personally delivered, (b) sent by telefacsimile, or (c)
sent by Federal Express or Airborne Courier (for next business day delivery),
shipping prepaid, as follows:
If to Parent or Seller, addressed to:
00000 Xxxxxx Xxxxx
Xxxxx, XX 00000
Attn: Xxx Xxxxxxx
Facsimile No.: 000-000-0000
With a copy to:
XxXxxxx, North, Xxxxxx & Xxxxx, P.C.
Xxx Xxxxxxx Xxxx Xxxxx, Xxxxx 0000
Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxx
Facsimile No.: 402-341-0216
If to Buyer or Westcon, addressed to:
c/o Westcon Group, Inc.
000 Xxxxx Xxxxxx Xx.
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxx Xxxxx
Facsimile No: (000) 0 00-0000
or to such other persons or address as any person may request by notice given as
aforesaid. Notices shall be deemed given and received at the time of personal
delivery, receipt of telecopy, or, if sent by Federal Express or Airborne
Courier, one business day after such sending.
32
12.6 Headings. The headings of the articles, sections and paragraphs
contained in this Agreement are for convenience of reference only and do not
form a part hereof, and in no way modify the meanings of such articles, sections
and paragraphs.
12.7 Facsimile/Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. A facsimile, telecopy or
other reproduction of this Agreement may be executed by one or more parties
hereto, and an executed copy of this Agreement may be delivered by one or more
parties hereto by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all parties
hereto agree to execute an original of this Agreement and provide such
requesting party with a full set of original signature pages for each of the
parties hereto other than the requesting party within two (2) business days of
the original execution date hereof.
12.8 Entire Agreement; Third Party Beneficiaries. This Agreement contains
all the terms agreed upon by the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements, arrangements or
understandings between such parties as to the subject matter hereof and neither
this document nor any document delivered in connection with this Agreement
confers upon any Person not a party hereto any rights or remedies hereunder.
12.9 Waiver; Modification. Each of the parties may, by written instrument,
(a) extend the time for the performance of any of the obligations or other acts
of other parties hereto, (b) waive any inaccuracies or breaches in the
representations and warranties of other parties contained in this Agreement or
in any document delivered pursuant to this Agreement, and (c) waive compliance
by other parties with or modify any of the other parties' covenants contained in
this Agreement. Any waiver of any provision hereof (or in any related document
or instrument) shall not be effective unless made expressly and in a writing
executed in the name of the party sought to be charged. The failure of any party
to insist, in any one or more instances, on performance of any of the terms or
conditions of this Agreement shall not be construed as a waiver or
relinquishment of any rights granted hereunder or of the future performance of
any such term, covenant or condition, but the obligations of the parties with
respect thereto shall continue in full force and effect.
12.10 Updating of Schedules.
(a) Seller's Schedules may be updated one or more times prior to the
Closing Date. Any updated Schedule shall be delivered as soon as practicable,
and in any event at or before the Closing. An updated Schedule shall be deemed
to modify a representation and/or warranty made prior to such updating only in
the event that Seller acted in good faith and used commercially reasonable
efforts when preparing the original Schedule delivered to Buyer as of the date
of this Agreement and such updated Schedule. In the event any such updated
Schedule indicates a change from the information previously provided, to Buyer,
and such change represents a Material Adverse Change, Buyer may choose, by
giving notice to Seller (by the earlier of (i) five days after receipt of the
applicable updated Schedule and (ii) the Closing Date), to terminate this
Agreement and in such event not to effect the Closing. If Buyer does not choose
to so terminate this Agreement, then any objection which Buyer would otherwise
have to the updated information shall be deemed to have been waived.
(b) So long as information constituting any exception to a
representation and warranty of a party is set forth in the Schedules applicable
to that representation and warranty, such information need not
33
be repeated in other Schedules, even if such information could apply to more
than one representation or warranty of that party hereunder.
12.11 Severability. The provisions of this Agreement shall be deemed
severable, and if any part of any provision is held to be illegal, void,
voidable, invalid, nonbinding or unenforceable in its entirety or partially or
as to any party, for any reason, such provision may be changed, consistent with
the intent of the parties hereto, to the extent reasonably necessary to make the
provision, as so changed, legal, valid, binding and enforceable. If any
provision of this Agreement is held to be illegal, void, voidable, invalid,
nonbinding or unenforceable in its entirety or partially or as to any party, for
any reason, and if such provision cannot be changed consistent with the intent
of the parties hereto to make it fully legal, valid, binding and enforceable,
then such provision shall be stricken from this Agreement and the remaining
provisions of this Agreement shall not in any way be affected or impaired, but
shall remain in full force and effect.
[The remainder of this page intentionally left blank
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
WESTCON GROUP, INC.
By: /s/ Xxxx Xxxx Xxxxx
--------------------------------------
Xxxx Xxxx Xxxxx
Vice President
VODAONE CORP.
By: /s/ Xxxx Xxxx Xxxxx
--------------------------------------
Xxxx Xxxx Xxxxx
Vice President
INACOM CORP.
By: /s/ Xxxx Xxxxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
INACOM COMMUNICATIONS, INC.
By: /s/ Xxxx Xxxxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxxxx
Title: President
35
