` STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of this ____ day of
February, 1998, by, between and among J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., AS
TRUSTEE OF THE J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. REVOCABLE TRUST (_W.
▇▇▇▇▇▇"), ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇. ▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
(_J. Kite_), O. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ (_Dean Higganbotham_) and ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ (_Dale Higganbotham_) (▇. ▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇, ▇.
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ hereinafter
referred to collectively as the _Sellers_ and individually as
_Seller_) and ▇▇▇▇▇▇▇ COMPUTER RESOURCES, INC., a Delaware
corporation (_Purchaser_).
W I T N E S S E T H :
WHEREAS, Sellers own all of the issued and outstanding shares of
Global Combined Technologies, Inc., an Oklahoma corporation,
which is a full-service provider of a variety of computer service
and support solutions to large and medium-sized commercial,
governmental and other professional customers throughout the
State of Oklahoma and the Dallas, Texas area, as follows:
▇. ▇▇▇▇▇▇ - 14,901 shares
▇. ▇▇▇▇▇▇ - 14,099 shares
▇. ▇▇▇▇ - 1,000 shares
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇- 12,000 shares
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇- 6,000
shares
Total - 48,000 shares
WHEREAS, Sellers desire to sell and Purchaser desires to purchase
all the Company Shares owned by Sellers, and Sellers and
Purchaser desire to engage in the other transactions provided for
herein.
NOW, THEREFORE, in and for the consideration of the mutual
promises and undertakings herein contained, and subject to the
terms and conditions hereinafter set forth, the Parties agree as
follows:
ARTICLE I
1.
Definitions. As used herein the following terms shall
have the following meanings, respectively:
1.01
Accounts Receivable: All notes and accounts receivable
held by Company or of which Company is the beneficial
holder and all notes, bonds and other evidences of
indebtedness of and rights to receive payments from any
Person held by Company.
1.02
Acquisition: The purchase and sale of all the Company
Shares upon the terms and provisions, and subject to the
conditions, set forth in this Agreement.
1.03 Affiliate
: Shall have the meaning ascribed to such term
in Rule 405 promulgated under the Securities Act of 1933,
as amended.
1.04
Affiliate Receivables: Any account or note receivable or
other payment obligation owing to Company by any officer,
director, employee or Affiliate of Company.
1.05 Agreement
: This Stock Purchase Agreement.
1.06 Applicable Law
. All applicable provisions of all (i)
constitutions, treaties, statues, laws (including common
law), rules, regulations, ordinances, codes or order of
any Governmental Authority and (ii) orders, decisions,
injunctions, judgments, awards and decrees of or
agreements with any Governmental Authority.
1.07
Book Value: The shareholders' equity of Company as of
the Closing Date as reported in Company's Closing Balance
Sheet, determined in accordance with Section 3.02.
1.08 Book Value Report
: Shall have the meaning defined in
Section 3.02.
1.09 Business
. The operations of Company involving generally
the sale of goods, or the provision of services
(including repair and maintenance services), relating to
personal computers, client services, computer networks,
communication equipment, other equipment related thereto,
such as computer monitors, peripherals and all other
individual components, operating systems and application
software and other software (including software created
for use on the Internet) created for use in tie-in
arrangements, customer service and internal management
systems for sales, delivery and support and any other
business operations of Company.
1.10
Business Day. _Business Day_ shall mean a day other than
a Saturday, Sunday or other day on which commercial banks
in Cincinnati, Ohio are authorized or required to close.
1.11 Closing
: The consummation of the Acquisition on the
Closing Date at the place of Closing hereinafter
specified in accordance with the terms and conditions
hereof.
1.12
Closing Balance Sheet: The balance sheet of Company at
the date of the Closing.
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1.13
Closing Date: The date on which the Closing shall take
place, determined in accordance with Article XIII.
1.14 Code
: The Internal Revenue Code of 1986, as amended.
1.15
Company: Global Combined Technologies, Inc., an Oklahoma
corporation.
1.16 Company Personnel
: Shall mean current or former
employees, officers, directors or consultants of Company.
1.17
Company Shares: All the issued and outstanding common
shares, $1.00 par value, of Company.
1.18
Contracts. Shall have the meaning defined in Section
4.09(a).
1.19 Consent
. Any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license,
exemption or order of, registration, certificate,
declaration or filing with, or report or notice to, any
Person.
1.20 Court
: A Court is any federal, state, municipal,
domestic, foreign or any other governmental tribunal or
an arbitrator or person with similar power or authority.
1.21
Disclosure Schedule: The schedule dated as of the date
hereof, prepared pursuant to Article IV, copies of which
have been signed by Sellers and delivered to Purchaser.
1.22 EBIT
. The earnings of Company before interest and taxes,
and without incorporating any gains or losses realized on
the disposition of assets other than in the ordinary
course of business for Company's fiscal year ending
December 31, 1997. Company's EBIT for such period will
be determined in accordance with GAAP. Sales of
approximately $3,550,000 with a cost net of rebates of
$3,270,000 were invoiced in the year ending December 31,
1997, but had not yet been shipped as of such date.
Earnings from such sales shall be included in EBIT.
Sellers represent that all selling expenses attributable
to such sales have been properly accrued for in the year
ending December 31, 1997.
1.23 Employee Benefit Plans
: Shall mean all pension, annuity,
retirement, stock option, stock purchase, savings, profit
sharing or deferred compensation plans or agreements, any
retainer, consultant, bonus, group insurance, welfare,
health and disability plan, fringe benefit or other
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incentive or benefit contract, plan, or commitment or
arrangement applicable to Company Personnel.
1.24 Employees
: With respect to Company, shall mean all full-
time and part-time employees of Company.
1.25
Employee Contracts: All employment contracts, consulting
agreements, and collective bargaining agreements or
related agreements with respect to Employees of Company.
1.26 Environmental Laws
: Shall mean all federal, state or
local judgments, decrees, orders, laws, licenses,
ordinances, rules or regulations pertaining to
environmental matters, including, without limitation,
those arising under the Resource Conservation and
Recovery Act (42 U.S.C. S1801, et
seq
.) (_RCRA_), the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, (42 U.S.C. S9601, et
seq
.) (_CERCLA_), the Superfund Amendment and
Reauthorization Act of 1986 (_SARA_), the Federal Clean
Water Act (33 U.S.C. S1251,
et seq
.), the Federal Clean
Air Act (33 U.S.C. S7401,
et
seq.), the Toxic Substances
Control Act (15 U.S.C. S7401,
et seq
.) the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
S136,
et
seq.) and the Occupational Safety and Health Act
(29 U.S.C. S651, et
seq
.).
1.27
Environmental Liabilities and Costs: All Losses, whether
direct or indirect, known or unknown, current or
potential, past, present or future, imposed by, under or
pursuant to Environmental Laws, including, without
limitation, all Losses related to Remedial Actions, and
all fees, disbursements and expenses of counsel, experts,
personnel and consultants based on, arising out of or
otherwise in respect of: (i) the ownership or operation
of the Business, the Leased Real Property or any other
real properties, assets, equipment or facilities, by
Company, or any of its predecessors or Affiliates; (ii)
the environmental conditions existing on the Closing Date
on, under, above, or about any Leased Real Property or
any other real properties, assets, equipment or
facilities currently or previously owned, leased or
operated by Company, or any of its predecessors or
Affiliates; and (iii) expenditures necessary to cause any
Leased Real Property or any aspect of the Business to be
in compliance with any and all requirements of
Environmental Laws as of the Closing Date, including,
without limitation, all Environmental Permits issued
under or pursuant to such Environmental Laws, and
reasonably necessary to make full economic use of any
Leased Real Property.
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1.28
Environmental Permits: Any federal, state and local
permit, license, registration, consent, order,
administrative consent order, certificate, approval or
other authorization with respect to Company necessary for
the conduct of the Business as currently conducted or
previously conducted under any Environmental Law.
1.29
ERISA: The Employee Retirement Income Security Act of
1974, as amended.
1.30 GAAP
: Generally accepted accounting principles in effect
in the United States consistently applied throughout the
periods involved.
1.31 Governmental Approval
: Any Consent of, with or from any
Governmental Authority.
1.32
Governmental Authority: Any nation or government, any
state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to
government, including, without limitation, any government
authority, agency, department, board, commission or
instrumentality of the United States, any State of the
United States or any political subdivision thereof, and
any tribunal or arbitrator(s) of competent jurisdiction,
and any self-regulatory organization.
1.33 Hazardous Materials
: Shall mean any hazardous waste, as
defined by 42 U.S.C. S6903(5), any hazardous substances
or wastes as defined by 42 U.S.C. S9601(14), any
pollutant or contaminant as defined by 42 U.S.C.
S9601(33) or any toxic substances or wastes, oil or
hazardous material or other chemicals or substances
regulated by any public or Governmental Authority.
1.34
HSR Act: The ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended and the rules and regulations
thereunder.
1.35 Indemnity Basket
: Shall have the meaning defined in
Section 11.08.
1.36 Indemnifying Party
: Shall have the meaning defined in
Section 11.06(a).
1.37
Intellectual Property: Any and all United States and
foreign: (a) patents (including reexaminations, design
patents, industrial designs and utility models) and
patent applications (including docketed patent
disclosures awaiting filing, provisional applications,
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reissues, divisions, continuations, continuations-in-part
and extensions), patent disclosures awaiting filing
determination, inventions and improvements thereto; (b)
trademarks, service marks, trade names, trade dress,
logos, business and product names, slogans, and
registrations and applications for registration thereof;
(c) copyrights (including software) and registrations
thereof including Company's name; (d) inventions,
processes, designs, formulae, trade secrets, know-how,
industrial models, confidential and technical
information, manufacturing, engineering and technical
drawings, product specifications and confidential
business information; (e) mask work and other
semiconductor chip rights and registrations thereof; (f)
intellectual property rights similar to any of the
foregoing; (g) copies and tangible embodiments thereof
(in whatever form or medium, including electronic media);
and (h) the Internet address and website of Company.
1.38 Inventories
: All inventories of raw materials, work in
process, finished products, goods, spare parts, office
and other supplies, including any of such inventories
held at any location controlled by Company or at any
other location (pursuant to conditional sales agreements,
consignment arrangements or in any bailment or otherwise)
and any such items previously purchased and in transit to
Company at any such locations.
1.39 Leased Real Property
: Shall mean all interests leased
pursuant to the Leases.
1.40 Leases
: Shall mean all real property leases, subleases,
licenses and occupancy agreements pursuant to which
Company is the lessee, sublessee, licensee or occupant
which relate to or are being used in the Business and
which are described on Disclosure Schedule 4.09.
1.41 Lien
: With the exception of Permitted Liens, a mortgage,
pledge, hypothecation, right of others, claim, security
interest, encumbrance, lease, sublease, license,
occupancy agreement, adverse claim or interest, easement,
covenant, encroachment, burden, title defect, title
retention agreement, voting trust agreement, interest,
equity, option, lien, right of first refusal, charge or
other restrictions or limitations of any nature
whatsoever, including, without limitation, such that may
arise under any Contracts.
1.42 Line of Credit Indebtedness
: Includes any indebtedness
incurred, incurrable, or accrued pursuant to any of
Company's financing arrangements, agreements, letters of
credit and lines of credit with IBM Credit Corp.,
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Deutsche Financial Services Corp., Compaq Computer Corp.,
NationsBank, N.A. and BankOne, and any of their
successors and assigns, all as set forth on Disclosure
Schedule 1.42. Disclosure Schedule 1.42 shall set forth
the principal balance and all accrued interest of such
items on the date hereof.
1.43 Losses
. Any and all losses, liabilities, damages,
obligations and expenses arising as a result of the
designated action or inaction, and all actions, suits,
proceedings, demands, assessments, judgments, costs and
expenses (including, without limitation, attorney's fees
and other expenses incurred in investigating or defending
any claim, action, suit or proceeding and any and all
amounts paid in settlement thereof) with respect to the
designated action or inaction.
1.44 Notes
: The two-year subordinated promissory notes
payable to Sellers as more fully described in Section
2.03(b).
1.45
Other Sellers Documents: The agreements and other
documents and instruments described in Sections 6.01,
7.01 and 8.01.
1.46 Party or Parties
: Purchaser or Sellers or any of them.
1.47 Party to Be Indemnified
: as defined in Section 11.06(a).
1.48
Permitted Liens. Shall mean and include any (i) matters
described in detail and by item in Disclosure Schedule
1.48(i) to this Agreement, (ii) liens arising by
operation of Applicable Law for taxes, assessments,
labor, materials, and obligations not yet due or which
are being contested in good faith, which contested items
are set forth in detail in Disclosure Schedule 1.48(ii),
and (iii) all contracts, agreements, instruments,
obligations, encumbrances, defects and irregularities of
title, if any, affecting Company assets which
individually or in the aggregate do not materially
interfere with the present or future operation, value or
use of Company assets or its Business. The phrase
_Permitted Liens_ shall also include (a) liens imposed by
mandatory provisions of Applicable Law such as carriers,
materialmens, mechanics, warehousemens, landlords and
other like liens arising in the ordinary course of
business, securing obligations not yet due or which are
being contested in good faith, which contested items are
set forth in Disclosure Schedule 1.48, (b) liens arising
in the ordinary course of business from pledges or
deposits to secure public or statutory obligations,
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deposits to secure (or in lieu of) surety, stay, appeal
or customs bonds and deposits to secure the payment of
Taxes, and (c) good faith deposits in connection with
bids, tenders, contracts or leases.
1.49 Person
: Any natural person, firm, partnership,
association, corporation, company, limited liability
company, limited partnership, trust, business trust,
Governmental Authority or other entity.
1.50 Post Closing Date
: Shall have the meaning defined in
Section 3.02.
1.51 Purchase Price
: The total consideration paid by
Purchaser to Sellers for the Company Shares as provided
in Section 2.02.
1.52 Pro Forma EBIT
: The EBIT of Company for the period
ending December 31, 1997, adjusted upward by $170,000.00
as previously agreed upon by Sellers and Purchaser for
nonrecurring costs plus any write offs or adjustments
made as a result of the audited financial statements of
Company, subject to review and approval by Purchaser.
Sales of approximately $3,550,000 with a cost net of
rebates of $3,270,000 were invoiced in the year ending
December 31, 1997, but had not yet been shipped as of
such date. Earnings from such sales shall be included in
determining Pro Forma EBIT. Sellers represent that all
selling expenses attributable to such sales have been
properly accrued for in the year ending December 31,
1997.
1.53 Remedial Action
: All actions required to (i) clean up,
remove, treat or in any way remediate any Hazardous
Materials; (ii) prevent the release of Hazardous
Materials so that they do not migrate or endanger or
threaten to endanger public health or welfare or the
environment; or (iii) perform studies, investigations and
care related to (i) and (ii) above.
1.54
Spare Parts: All replacements, components, devices,
equipment and other similar items owned or held by
Company for use in connection with the repair,
replacement, modification, customization or installation
of goods and products applicable to the Business.
1.55
Subsidiary: Each corporation or other Person in which a
Person owns or controls, directly or indirectly, capital
stock or other equity interests representing at least 50%
of the outstanding voting stock or other equity interest
or conferring the power to name the majority of the
members to the board of directors or other governing body
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of the corporation or other Person or otherwise direct
the management or policies thereof.
1.56 Tax or Taxes
: Any federal, state, provincial, local,
foreign or other income, alternative, minimum, any taxes
under Section 1374 of the Code, any taxes under Section
1375 of the Code, accumulated earnings, personal holding
company, franchise, capital stock, net worth, capital,
profits, windfall profits, gross receipts, value added,
sales, use, goods and services, excise, customs duties,
transfer, conveyance, mortgage, registration, stamp,
documentary, recording, premium, severance,
environmental, including taxes under Section 59A of the
Code), real property, personal property, ad valorem,
intangibles, rent, occupancy, license, occupational,
employment, unemployment insurance, social security,
disability, workers' compensation, payroll, health care,
withholding, estimated or other similar tax, duty or
other governmental charge or assessment or deficiencies
thereof (including all interest and penalties thereon and
additions thereto whether disputed or not).
1.57 Tax Return
: Any return, report, declaration, form, claim
for refund or information return or statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
1.58 Vendor Receivables
: Any amounts owing to Company from
vendors of goods and products used in the Business
resulting from discounts for prompt payment, volume
discounts, promotional programs or similar vendor special
pricing and term arrangements.
1.59 Year-End Financials
: The audited financial statements of
Company for the twelve-month periods ending December 31,
1997, December 31, 1996, December 31, 1995 and December
31, 1994.
ARTICLE II
2.
Purchase of Company Shares and Purchase Price.
2.01
Purchase of Company Shares. Sellers agree to sell and
transfer the Company Shares to Purchaser, and Purchaser
agrees to purchase the Company Shares from Sellers, on
the Closing Date.
2.02 Purchase Price
. The Purchase Price for the Company
Shares shall be Eleven Million Dollars ($11,000,000.00),
adjusted as follows:
(a) To the extent Company's Pro Forma EBIT exceeds
$1,875,627.00 (the _Excess EBIT_), the Purchase
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Price shall be increased by the product of such
Excess EBIT multiplied by a factor of 3. In the
event that Company's Pro Forma EBIT is less than
$1,775,627.00 (the _Deficient EBIT_), the Purchase
Price shall be decreased by the product of the
Deficient EBIT multiplied by a factor of 3.
(b) To the extent that the Book Value as reported on the
Closing Balance Sheet is in excess of $2,280,000.00,
the Purchase Price shall be increased on a dollar-
for-dollar basis to the extent of such excess. To
the extent that the Book Value as reported on the
Closing Balance Sheet is less than $2,280,000.00,
the Purchase Price shall be decreased on a dollar-
for-dollar basis to the extent of such deficit.
2.03
Payment of Purchase Price.
(a) Ten Million Dollars ($10,000,000.00) in the
aggregate as may be adjusted in the manner set forth
in Section 3.02 shall be payable at Closing in cash
or by bank or certified checks or wire transfer of
Purchaser which amount shall be prorated among the
Sellers according to the following percentages:
▇. ▇▇▇▇▇▇ - 31.04%
▇. ▇▇▇▇▇▇ - 29.38%
▇. ▇▇▇▇ - 2.08%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ - 25.00%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ - 12.50%
(b) One Million Dollars ($1,000,000.00) in the
aggregate, as may be adjusted upward or downward as
set forth in Sections 3.01 and 3.02 shall be payable
in the form of the Notes of Purchaser, attached
hereto as Exhibit A (the _Notes_) which Notes shall
be prorated among the Sellers according to the
percentages set forth in Section 2.03(a) above.
Such Notes shall bear interest at the prime rate of
Star Bank, N.A., Purchaser's lender. Interest under
said Notes shall be payable quarterly in arrears
with the first interest payment being due and
payable ninety (90) days from the Closing. One-half
(1/2) of the outstanding principal balance of said
Notes shall be payable in full on the first annual
anniversary date of the Closing of the transaction
and the remaining principal balance of such Notes
shall be payable in full on the second annual
anniversary of the Closing of the transaction. A
copy of the Subordination Agreement to be executed
by all Sellers is attached hereto as Exhibit B.
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ARTICLE III
3. Pre-Closing and Post-Closing Adjustments
.
- 12 -
3.01 Upon the issuance of Company audited December 31, 1997
financial statements by Company's accountant, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Company will deliver to Purchaser a
determination of Company's Pro Forma EBIT prepared by
Company's accountant along with any supporting
documentation reasonably requested by Purchaser. Within
ten days following delivery to Purchaser of such report
and prior to Closing, Purchaser shall have the right to
object in writing to the results contained in such
determination. If timely objection is not made by
Purchaser of such determination, such determination shall
become final and binding. If timely objection is made by
Purchaser to Sellers, and Purchaser and Sellers are able
to resolve their differences in writing within five (5)
days following the expiration of the Pro Forma EBIT
objection period, then such determination as resolved
shall become final and binding as it relates to this
Agreement. If timely objection is made by Purchaser to
Sellers, and Sellers and Purchasers are unable to resolve
their differences in writing within five (5) days
following the expiration of the Pro Forma EBIT objection
period, then all disputed matters relating to the report
shall be submitted to and reviewed by an arbitrator (the
_Arbitrator_) which shall be an independent accounting
firm selected by Sellers and Purchaser. If Purchaser and
Sellers are unable to agree promptly on the accounting
firm to serve as the Arbitrator, each shall select, by
not later than the 7th day following expiration of the
Pro Forma EBIT objection period, a nationally recognized
accounting firm, and each selected accounting firm shall
be instructed to jointly select promptly another
nationally recognized accounting firm, such third
accounting firm shall serve as the Arbitrator. The
Arbitrator shall consider only the disputed matters
pertaining to the determination and shall act promptly
and fairly to resolve all disputed matters and their
decision with respect to all disputed matters shall be
final and binding upon Sellers and Purchaser. The
expenses of the arbitration (including reasonable
attorney and accounting fees) shall be borne one-half
(1/2) by Purchaser and one-half (1/2) by Sellers. Any
net increase in the Purchase Price resulting from said
adjustments shall be made in the manner set forth in
Section 2.02(b) and shall be reflected by increasing the
face amount of the Notes set forth in Section 2.03(b) in
proportion to the Sellers' ownership of the Company
Shares. Any net reduction in the Purchase Price as a
result of said adjustments shall be made in the manner
set forth in Section 2.02(a) and shall be reflected by
decreasing the face amount of the Notes set forth in
Section 2.03(b) in proportion to the Sellers' ownership
of the Company Shares and if the decrease is in excess of
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the face amount of the Notes, there shall be a decrease
in the cash to be paid by Purchaser to Sellers at Closing
as set forth in Section 2.03(a).
3.02 Within thirty (30) days after the Closing (the _Post
Closing Date_), the Sellers will deliver to Purchaser a
copy of the Closing Balance Sheet prepared by the Sellers
along with any supporting documentation reasonably
requested by Purchaser reflecting Company's calculation
of Book Value and the determination of any surplus or
deficit in Book Value in accordance with Section 2.02(b)
(the _Book Value Report_). For these purposes, the
calculation of Book Value will include soft dollar
accruals, such as rebates, etc. due to Company, which are
properly accruable under GAAP and are consistent with
Company's prior treatment of such items. Within fifteen
(15) days following delivery to Purchaser of the Book
Value Report, Purchaser shall have the right to object in
writing to the results contained therein. If timely
objection is not made by Purchaser to the Book Value
Report, the Book Value Report shall become final and
binding for purposes of this Agreement. If timely
objection is made by Purchaser to the Book Value Report,
and Sellers and Purchaser are able to resolve their
differences in writing within five (5) days following the
expiration of such fifteen (15) day period, then the Book
Value Report as resolved shall become final and binding
as it relates to this Agreement. If timely objection is
made by Purchaser to the Book Value Report, and Sellers
and Purchasers are unable to resolve their differences in
writing within such period, then all disputed matters
pertaining to the Book Value Report shall be submitted to
and reviewed by an Arbitrator according to the process
and procedure set forth in Section 3.01 above. The
expenses of arbitration (including reasonable attorney's
fees and accounting fees) shall be borne one-half (1/2)
by Purchaser and one-half (1/2) by Sellers. Any net
increase in the Purchase Price resulting from said
adjustment shall be made in the manner set forth in
Section 2.02(b) and shall be reflected by increasing the
face amount of the Notes set forth in Section 2.03(b) in
proportion to Sellers' ownership of the Company Shares.
Any net reduction in the Purchase Price as a result of
said adjustment shall be made in the manner set forth in
Section 2.02(b) and shall be reflected by decreasing the
face amount of the Notes set forth in Section 2.03(b) in
proportion to Sellers' ownership of the Company Shares
and if the decrease is in excess of the face amount of
the Notes, such amount equal to the excess shall be paid
immediately by Sellers to Purchaser by certified or
cashiers check on the date of the resolution of this
determination.
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ARTICLE III A
3A. Matters Relating to Critical Technologies, L.L.C
.
3A.01 Open Orders
. Disclosure Schedule 3A.01 sets forth a list
of open orders (not invoiced and unearned) that were
issued to Company in December, 1997, but will be
fulfilled by Critical Technologies, L.L.C. (_Critical_).
Accordingly, the Parties acknowledge and agree that when
such orders are invoiced and payment is received, the
payment will be paid over by Company to Critical.
Sellers agree that they will cause Critical to reimburse
Company for costs incurred by Company in connection with
the orders described herein, all in accordance with past
practice.
3A.02
Certain Documents. Disclosure Schedule 3A.02 sets forth
a list of certain accounts receivable carried on Company
books which are attributable to work performed by
Critical. Accordingly, the Parties agree that when such
receivables are paid, the payment will be paid over by
Company to Critical. Sellers agree to cause Critical to
reimburse Company for costs incurred by Company in
connection with the accounts described herein, all in
accordance with past practice.
ARTICLE IV
4.
Representations of Sellers. Except as set forth in the
Disclosure Schedule attached hereto, which identifies the
specific sections to which each such disclosure relates,
Sellers, jointly and severally (except for
representations and warranties made by an individual
Seller which only relate to that specific Seller (i.e.
such as ownership of the Company Shares), which are made
severally only), represent, warrant and covenant to
Purchaser that the following statements are materially
true as of the date hereof and shall be materially true
and correct as of the Closing Date as if made again at
and as of that time:
4.01 Organization and Good Standing
. Except as disclosed in
Disclosure Schedule 4.01, Company is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Oklahoma and has all requisite
corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now
being conducted, and is duly licensed, authorized and
qualified to do business and in good standing in the
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States of Texas and California and in all other
jurisdictions in which the conduct of its business or the
ownership or leasing of its properties require it to be
so licensed, authorized or qualified. Copies of
Company's Articles of Incorporation and By-Laws and any
amendments thereto (certified to be correct by the
Secretary of Company) have been delivered to Purchaser
and are complete and correct as of the date hereof.
Disclosure Schedule 4.01 correctly lists, with respect to
Company, each jurisdiction, if any, in which it is
qualified to do business as a foreign corporation.
4.02 Capitalization
. The authorized capital stock of Company
consists solely of 250,000 common shares, $1.00 par
value, of which 48,000 shares are issued and outstanding.
Company has no treasury shares. The issued and out-
standing common shares of Company are held by the
following persons in the following numbers:
Name of Shareholder Number of Shares Held
▇. ▇▇▇▇▇▇ - 14,901 shares
▇. ▇▇▇▇▇▇ - 14,099 shares
▇. ▇▇▇▇ - 1,000 shares
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ - 12,000 shares
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ - 6,000 shares
Company has no authorized or outstanding preferred stock
or any other class of stock. The Company Shares have
been duly authorized and validly issued and are fully
paid and nonassessable. The Company Shares have been
issued in compliance with all applicable federal and
state securities laws and no past or present holder
thereof is entitled to any right of rescission in respect
thereof and no documentary taxes or other taxes were
required with respect to the issuance or transfer of such
Company Shares. There are no existing subscriptions,
options warrants, calls, rights, contracts, commitments,
understandings, restrictions or arrangements relating to
the issuance, sale or transfer of any capital stock of
Company or any securities convertible into or
exchangeable for any such capital stock.
4.03
Title to Shares. Sellers own, respectively, the number
of Company Shares set forth opposite each of their names
in Section 4.02 hereof, free and clear of all Liens. The
transfer of the Company Shares to Purchaser will convey
good and marketable title to the Company Shares, free and
clear of all Liens.
4.04 Subsidiaries
. Company has no subsidiaries.
- 16 -
4.05
Authority. This Agreement is a valid and binding
obligation of each Seller, enforceable in accordance with
its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights
generally, or by the availability of equitable remedies
or the application of general equitable principles.
Except as set forth in Disclosure Schedule 4.05, neither
the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby
will:
(i) violate, or conflict with, or require any Consent
under, or result in a breach of any provisions 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, or
accelerate the performance required by, or result in
the creation of any Lien upon any of the properties
or assets of Company under any of the terms,
conditions or provisions of the Articles of
Incorporation or Bylaws of Company or of any note,
bond, mortgage, indenture, deed of trust, license,
agreement or other instrument or obligation to which
Company, or any Seller is a party, or by which
Company or any Seller or any of their properties or
assets may be bound or affected; or
(ii) violate any order, writ, injunction or decree
applicable to Sellers or Company or any of their
properties or assets or, to the knowledge of
Sellers, violate any statute, rule or regulation
applicable to Sellers or Company or any of their
properties or assets; or
(iii) constitute a default or event that, with notice
or lapse of time, or both, would be a default,
breach, or violation of any lease, license,
promissory note, conditional sales contract,
commitment, indenture, mortgage, deed of trust or
other agreement, instrument or arrangement to which
Company is a party or by which it is bound; or
(iv) constitute an event that would permit any party to
terminate any agreement or to accelerate the
maturity of any indebtedness or other obligation of
Company; or
(v) except for compliance with the HSR Act, no Consent
by, notice to or registration with any Governmental
Authority is required on the part of Sellers or
Company prior or subsequent to the Closing Date in
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connection with the execution, delivery and
performance by Sellers of this Agreement or the
consummation of any of the transactions contemplated
hereby.
4.06 Closing Balance Sheet
. The Closing Balance Sheet, which
shall be attached hereto as Exhibit "C" on the Post-
Closing Date, will reflect only the assets and
liabilities of Company as of the Closing Date and will
not include any assets or liabilities of any corporation
or entity except Company. As of the Closing Date,
Company will not have any liabilities (whether absolute,
accrued, contingent or otherwise and whether due or to
become due), including without limitation, any tax
liabilities of the nature required by GAAP to be
reflected or reserved against in the Closing Balance
Sheet, which are not accurately and fully reflected or
reserved against in the Closing Balance Sheet; provided,
however, that the Closing Balance Sheet shall not be
accompanied by notes and shall not include normal year-
end adjustments (if any) other than depreciation or any
other accrual of the nature set forth on Disclosure
Schedule 4.06, attached hereto, which are not material in
the aggregate.
4.07 Year End Financials
.
(a) The Year End Financials have been provided to
Purchaser, are in accordance with the books and
records of Company, and have been prepared in
accordance with GAAP as applied by Company on a
consistent basis throughout the periods covered by
such statements and fairly represent the financial
condition of Company as of the respective dates and
the results of operations of Company for the period
then ended. Except as stated in the Year End
Financials or as otherwise set forth in Disclosure
Schedule 4.07(a), there have been no unusual
accounting practices engaged in which have affected
the amount or trend of net income of Company, or any
unusual or nonrecurring transactions, during the
periods reflected in the Year End Financials.
(b) Absence of Undisclosed Liability
. Except as to the
extent specifically reflected in the Year End
Financials or otherwise set forth in Disclosure
Schedule 4.07(b), and except for trade payables,
liabilities and contractual obligations arising in
the ordinary course of business since the date of
Company's 1997 audited financial statements, Company
does not have any other liabilities of any nature,
whether accrued, absolute or contingent, or
- 18 -
otherwise, and whether due, or to become due of the
nature required by GAAP to have been reflected or
reserved against in financial statements.
(c)
No Liabilities as Guarantor. Except as set forth
in Disclosure Schedule 4.07(c), Company is not
directly or indirectly obligated to guaranty or
assume any debt, dividend, or other obligation of
any person, corporation, association, partnership,
or other entity, except endorsements made in the
ordinary course of business in connection with the
deposit of items for collection.
(d) Absence of Material Change
. Except as set forth in
Disclosure Schedule 4.07(d) or as otherwise set
forth in this Agreement or the Exhibits hereto,
since December 31, 1997, there has not been:
(i) any change in the condition (financial or
otherwise), properties, business, operations or
prospects of Company which is materially
adverse, singly or in the aggregate;
(ii) any material loss, damage or destruction in the
nature of a casualty loss or otherwise, whether
covered by insurance or not, adversely
affecting any property or asset of Company;
(iii) an actual or any threatened strike or other
material labor trouble or material dispute;
(iv) any loss or any threatened loss of any
governmental permit, license, qualification,
special charter or certificate of authority
held or enjoyed or formerly held or enjoyed by
Company which loss has had or upon occurrence
would have a material effect, singly or in the
aggregate, on the condition (financial or
otherwise), properties, business, operations or
prospects of Company;
(v) to the knowledge of the Sellers, any statute,
regulation, order, ordinance or other law the
adoption, amendment or rescission of which
have a material effect, singly or in the
aggregate, on the condition (financial or
otherwise), properties, business, operations or
prospects of Company;
(vi) any indebtedness, liability or obligation
(whether absolute, accrued, contingent or
otherwise) incurred by Company, or other
- 19 -
transaction entered into by Company, other than
in the ordinary course of business and
consistent with past practice, or any guarantee
of any indebtedness, liability or obligation
made by Company;
(vii) any declaration, setting aside or payment of
any dividend or other distributions in respect
of any capital stock of Company other than
distributions that Company in its good faith
determines should not decrease Book Value below
$2,280,000.00;
(viii) any issuance, sale, combination or
reclassification of any capital stock or other
securities of Company;
(ix) any issuance or grant of any option, warrant or
other right in respect of any capital stock or
other securities of Company;
(x) any direct or indirect redemption, purchase or
other acquisition of any capital stock or other
securities of Company;
(xi) any obligation, liability, Lien or encumbrance
paid, discharged or satisfied by Company other
than in the ordinary course of business;
(xii) any mortgage, Lien, pledge, charge or
encumbrance (except for liens for current taxes
not yet due and payable), created, incurred or
assumed by Company other than in the ordinary
course of business;
(xiii) except in the ordinary course of business,
any sale, transfer or other disposition of any
tangible asset of Company, any cancellation of
any debt or claim of Company or any disposition
of any intangible properties, assets or rights
of Company;
(xiv) any salary or wage increase granted or
committed to be made, other than normal merit
or cost-of-living increases pursuant to
Company's general prevailing practices, with
respect to any officer, director, employee or
agent of Company, or any bonus, incentive or
deferred compensation, profit sharing,
retirement, pension, group insurance, death
benefit or other fringe benefit plan or trust
agreement entered into or amended or any
- 20 -
employment or consulting agreement entered into
or amended or altered;
(xv) any termination (whether by discharge,
retirement or otherwise) of any officer,
director, employee or agent of Company or any
notice to so terminate given or received by any
of the foregoing;
(xvi) any loan made, increased or forgiven to any
officer, director, employee or agent of Company
or to any member of any of their families;
(xvii) any capital expenditure, addition or
improvement made or committed to be made by
Company in excess of $10,000.00 with respect to
any single expenditure, addition or improvement
or in excess of $20,000.00 with respect to all
such expenditures, additions and improvements;
(xviii) any failure on the part of Company to
operate its business in the ordinary course or
to use its best efforts to preserve its
business organization intact, to retain the
services of its employees and to preserve its
goodwill and relationships with suppliers,
creditors and others having business
relationships with it;
(xix) any known material loss of business,
termination or discontinuance of any
relationship or dispute between Company and any
customer or supplier;
(xx) any loss, amendment, termination or waiver of
any material right of Company other than in the
ordinary course of business;
(xxi) any known write-off as uncollectible of any
notes or accounts receivable, or any portions
thereof, in excess of $10,000.00 with respect
to any single note or account or in excess of
$20,000.00 with respect to all such write-offs;
4.08
Assets. Except as provided in Disclosure Schedule 4.08,
Company has good and marketable title to all of its
assets and properties, real, personal or otherwise,
including, but not limited to, those assets and
properties reflected in Company's December 31, 1997
financial statements, except only for assets subsequently
disposed of in the ordinary course of business, free and
clear of all Liens, except (a) as specifically reflected
- 21 -
thereon, (b) the Line of Credit Indebtedness, or (c) for
Permitted Liens. To the best knowledge of Sellers, all
Company's tangible and other operating assets, property
and equipment are in good operating condition and repair,
free of structural or material mechanical defects and
conform with all applicable laws and regulations.
Without limiting the generality of the foregoing,
specific representations are set forth in the following
subparagraphs of this Section 4.08.
4.08.1
Accounts Receivable. All Accounts Receivable of Company
which have arisen in connection with the Business or
otherwise and which are reflected on Company's December
31, 1997 financial statements, and all such receivables
which will have arisen since December 31, 1997 have
arisen only from bona fide transactions in the ordinary
course of business and represent valid and existing
claims. Except as set forth on Disclosure Schedule
4.08.1, and subject to customer credits, the payment of
each Account Receivable will not, as of the Closing Date,
be subject to any known defense, counterclaim or
condition (other than Company's performance in the
ordinary course of business) whatsoever. Disclosure
Schedule 4.08.1 hereto accurately lists, as of a date
within five (5) days of execution of this Agreement, and
will list, as of a date within five (5) days of the
Closing Date, all receivables arising out of or relating
to the Business, the amount owing and the aging of such
Accounts Receivable. Sellers have provided Purchaser the
opportunity to review complete and correct copies of all
instruments, documents and agreements evidencing such
Accounts Receivable and of all instruments, documents or
agreements, if any, creating security therefor.
4.08.2
Vendor Receivables. All Vendor Receivables of Company
which have arisen in connection with the Business or
otherwise and which are reflected on Company's December
31, 1997 financial statements and all such Vendor
Receivables which have arisen since December 31, 1997
have arisen only from bona fide transactions in the
ordinary course of business and represent valid, and
existing claims. Except as set forth in Disclosure
Schedule 4.08.2, the payment of each Vendor Receivable
will not, as of the Closing Date, be subject to any known
defense, counterclaim or condition whatsoever.
Disclosure Schedule 4.08.2 hereto accurately lists, as of
a date within five (5) days of the execution of this
Agreement, and will list, as of a date within five (5)
days of the Closing Date, all Vendor Receivables arising
out of or relating to the Business, the amount owing and
the aging of such Vendor Receivables. Sellers have
provided Purchaser the opportunity to review complete and
- 22 -
correct copies of all instruments, documents and
agreements evidencing such Vendor Receivables and of all
instruments, documents and agreements, if any, creating
security therefor.
4.08.3 Inventory
. Except as specifically described on
Disclosure Schedule 4.08.03, all inventory reflected on
the December 31, 1997 financial statements consists of
items of quality and quantity which are usable or
saleable in the ordinary course of Business of Company in
the conduct of its Business, and items of below standard
quality and items not usable or saleable in the ordinary
course of Company's business have been written-down in
value in accordance with good business practices to
estimated net realizable market value or adequate
reserves have been provided therefor. The values at
which the Inventories are carried on the December 31,
1997 financial statement reflect the normal valuation
policy of Company in setting inventory at the lower of
cost or market, all in accordance with GAAP. In
addition, Sellers represent that the Inventory set forth
in Exhibit D has a value of $241,000.00 as set forth in
said Exhibit and if Sellers and Purchaser mutually agree
that the value of such Inventory on the Closing Date is
less than $241,000.00, then the Purchase Price shall be
reduced dollar for dollar by the amount by which the
agreed value of such Inventory is less than $241,000.00.
In addition, in consideration of Sellers' agreement to
pay for the entire ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act filing fee in
the amount of $45,000.00 pursuant to the provisions of
Article 14.03 of this Agreement, the value of the DEC
inventory set forth on Exhibit E and all other items of
Company's inventory shall be accepted by Purchaser
without any further adjustment hereunder. Except as set
forth on Disclosure Schedule 4.08.3, since December 31,
1997, Inventories have been maintained at normal and
adequate levels for the continuation of the Business in
its normal course. Since December 31, 1997, no change
has occurred in such Inventories which materially
adversely affect or will materially adversely affect the
useability or salability thereof, no material write-downs
or write-ups of the value of such Inventories has
occurred and no additional amounts have been reserved
with respect to such Inventories. Disclosure Schedule
4.08.3 lists the location of all Inventories together
with a brief description of the type and amount at each
location.
4.08.4
Real Property. Company owns no real property.
4.08.5
Dealer Agreements. A list of Company's dealer agreements
is set forth in Disclosure Schedule 4,08.
- 23 -
4.08.6
Intellectual Property.
(a) Title
. Disclosure Schedule 4.08.6(a) contains a
complete and correct list and a brief description of
all Intellectual Property described in Section
1.37(a), 1.37(b) and 1.37(c) that is owned by
Company and primarily related to, used in, held for
use in connection with, or necessary for the conduct
of, or otherwise material to the Business (the
_Owned Intellectual Property_). Company owns or has
the exclusive right to use pursuant to license,
sublicense, agreement or permission all of its
Intellectual Property, free from any Liens (other
than Permitted Lines). No Affiliate of Seller owns
or has any interest in or with respect to any
Company Intellectual Property and Company
Intellectual Property comprises all of the
Intellectual Property necessary for Company to
conduct and operate the Business following the
Closing as now being conducted by Company.
(b)
No Infringement. To the knowledge of Sellers, the
conduct of the Business does not infringe or
otherwise conflict with any rights of any Person in
respect of any Intellectual Property. To the
knowledge of Sellers, none of Company Intellectual
Property is being infringed or otherwise used or
available for use, by any other Person.
(c)
Licensing Arrangements. Disclosure Schedule
4.08.6(c) sets forth all agreements, arrangements or
laws (i) pursuant to which Company has leased or
licensed Intellectual Property, or the use of
Intellectual Property as otherwise permitted
(through non-assertion, settlement or similar
agreements or otherwise) to, any other Person and
(ii) pursuant to which Company has had Intellectual
Property licensed to it, or has otherwise been
permitted to use Intellectual Property (through non-
assertion, settlement or similar agreements or
otherwise), excluding software licensed by Company
for internal purposes, together with a brief
description of the Intellectual Property covered
thereby. All of the agreements or arrangements set
forth in Disclosure Schedule 4.08.6(c), (x) are in
full force and effect in accordance with their terms
and no default exists thereunder by Company, or to
the knowledge of Sellers, or other parties thereto
(y) are free and clear of all Liens other than
Permitted Liens, and (z) except as set forth on
Disclosure Schedule 4.08.6(e), do not contain any
- 24 -
change in control or other terms or conditions that
will become applicable or inapplicable as a result
of the consummation of the transactions contemplated
by this Agreement. Sellers have delivered to
Purchaser true and complete copies of all licenses
and arrangements (including amendments) set forth on
Disclosure Schedule 4.08.6(c).
(d)
No Intellectual Property Litigation. To Sellers'
knowledge, no claim or demand of any Person has been
made nor is there any proceeding that is pending, or
to the knowledge of Sellers, threatened, nor is
there to Sellers' knowledge, a reasonable basis
therefor, which (i) challenges the rights of Company
in respect of any of the Intellectual Property, (ii)
asserts that Company is infringing or otherwise in
conflict with, or is, except as set forth in
Disclosure Schedule 4.08.6(d), required to pay any
royalty, license fee, charge or other amount with
regard to, any Intellectual Property, or (iii)
claims that any default exists under any agreement
or arrangement regarding Intellectual Property.
None of Company's Intellectual Property is subject
to any outstanding order, ruling, decree, judgment
or stipulation by or with any court, arbitrator, or
administrative agency, or has been the subject of
any litigation within the last five years, whether
or not resolved in favor of Company.
(e) Due Registration, etc.
Company has no Intellectual
Property that has been registered with, filed and/or
issued by, as the case may be, the United States
Patent and Trademark Office, United States Copyright
Office or such other filing offices, domestic or
foreign.
(f)
Use of Name and ▇▇▇▇. Except as set forth in
Disclosure Schedule 4.08.6(f), there are no
restrictions or limitations pursuant to any order,
decisions, injunctions, judgements, awards or
decrees of any Governmental Authority on Purchaser's
right to use the names and marks set forth on
Disclosure Schedule 4.08.6(a) in the conduct of the
Business as presently carried on by Company.
4.08.7
Motor Vehicles. Disclosure Schedule 4.08.7 sets forth a
complete list of all motor vehicles owned by Company.
- 25 -
4.09
Contracts.
(a) Disclosure Schedule 4.09 contains a complete and
correct list of all agreements, contracts,
commitments and other instruments and arrangements
(whether written or oral) of the types described
below (x) by which Company or under which Company or
any of its assets, businesses or operations receive
benefits, or (y) to which Company is a party or by
which Company is bound in connection with the
Business (the _Contracts_).
(i) leases, licenses, permits, franchises,
insurance policies, Governmental Approvals and
other contracts concerning or relating to the
Leased Real Property in Sellers' or Company's
possession;
(ii) employment, bonuses, vacations, pensions,
profit sharing, retirement, stock options,
stock purchases, employee discounts or other
employee benefits, consulting, agency,
collective bargaining or other similar
contracts, agreements, and other instruments
and arrangements relating to or for the benefit
of current, future or former employees,
officers, directors, sales representatives,
distributors, dealers, agents, independent
contractors or consultants which involves
aggregate annual payments in excess of $50,000;
(iii) loan agreements, indentures, letters of
credit, mortgages, security agreements, pledge
agreements, deeds of trust, bonds, notes,
guarantees, and other agreements and
instruments relating to the borrowing of money
or obtaining of or extension of credit;
(iv) brokerage or finder's agreements;
(v) joint venture, partnership and similar
contracts involving a sharing of profits or
expenses, including, but not limited to, joint
research and development and joint marketing
contracts;
(vi) asset purchase agreements and other acquisition
or divestiture agreements, including, but not
limited to, any agreements relating to the
sale, lease or disposal of any assets owned by
Company (other than sales of Inventory in the
- 26 -
ordinary course of business) or involving
continuing indemnity or other obligations;
(vii) orders and other contracts for the purchase
or sale of Inventories, materials, supplies,
products or services open or as to which any
liability exists as of the date hereof, each of
which involves aggregate payments in excess of
$50,000;
(viii) contracts with respect to which the
aggregate amount that could reasonably expected
to be paid or received thereunder in the future
exceeds $50,000;
(ix) sales agency, manufacturer's representative,
marketing or distributorship agreements;
(x) contracts, agreements or arrangements with
respect to the representation of the Business
in foreign countries;
(xi) master lease agreements providing for the
leasing of either (a) personal property
primarily used in, or held for use primarily in
connection with, the Business and (b) other
personal property;
(xii) contracts, agreements or commitments with
any director, officer, employee, or Affiliate
of Company or any of the Sellers, or with any
holder of more than five percent (5%) of any
class of capital stock of Company outstanding
other than employment contracts; and
(xiii) any other contracts, agreements or
commitments that are material to the Business.
(b) Sellers have delivered to Purchaser complete and
correct copies of all written Contracts, together
with all amendments thereto, and accurate
descriptions of all material terms of all oral
Contracts, set forth or required to be set forth in
Disclosure Schedule 4.09.
(c) Company has not received notice of any plan or
intention of any party to any Contract to exercise
any right to cancel or terminate any Contract. To
the best knowledge of Sellers, there does not exist
under any Contract any event of default or event or
condition that, after notice or lapse of time or
- 27 -
both, would constitute a violation, breach or event
of default thereunder on the part of Company or, to
the best knowledge of Sellers, any other party
thereto, except as set forth in Disclosure Schedule
4.09 and except for such events or conditions that,
individually and in the aggregate, (i) has not had
or resulted in, and will not have or result in a
material effect on Company or its assets, and (ii)
has not and will not materially impair the ability
of Company to perform its obligations under this
Agreement and under the Other Sellers Documents.
Except as set forth in Disclosure Schedule 4.09, no
consent of any third party is required under any
Contract as a result of or in connection with, and
the enforceability of any Contract will not be
affected in any manner by the execution, delivery
and performance of this Agreement or any of the
Other Sellers Documents or the consummation of the
transactions contemplated thereby.
(d) Company has no outstanding power of attorney
relating to the Business.
4.10 Labor Disagreements
. In connection with the operation of
the Business of Company or any other business previously
operated by Company, (i) Company is not engaged in any
unfair labor practice; (ii) Company has not been notified
of any unfair labor practice charge or complaint against
Company pending and, to the knowledge of Sellers, no such
charge or complaint is threatened before the National
Labor Relations Board, any state labor relations board or
any court or tribunal; (iii) except as set forth on
Disclosure Schedule 4.10, Company has not been notified
of any charge or claim filed at or with the Equal
Employment Opportunity Commission, any state agency
having similar jurisdiction or any court or tribunal,
actually pending and, to the knowledge of Sellers, no
such charge or claim is threatened against Company in
connection with the operation of the Business of Company;
(iv) there is no labor strike, dispute, request for
representation, slowdown or stoppage actually pending
against or affecting Company and, to the knowledge of
Sellers, none is or has been threatened; (v) Company has
not been notified of any grievance which might have a
material effect on the conduct of the operations of the
Business of Company; (vi) Company has no labor contracts
or collective bargaining agreements with respect to any
Company Personnel; (vii) no labor organization or group
of employees of Company has made a demand for recognition
or certification, and, to the Sellers' knowledge, there
are no representation or certification proceedings or
petitions seeking a representation proceeding presently
- 28 -
pending or threatened in writing to be brought or filed
with the National Labor Relations Board or any other
labor relations tribunal or authority, and (viii) Company
has not been notified of any organizing activities
involving Company pending with any labor organization or
group of employees of Company.
4.11 Employee Benefit Information
.
(i) Except as set forth on Disclosure Schedule 4.11(i),
Company does not maintain, is not required to
contribute to and has no liabilities with respect to
any Employee Benefit Plans and no Company Personnel
or dependent of such Company Personnel is entitled
to any benefits except as provided for by the
provisions of such Employee Benefit Plans or by
applicable law.
(ii) Sellers have provided Purchaser with (a) copies of
all Employee Benefit Plans or in the case of any
unwritten plan, a written description thereof, (b)
copies of any annual, financial or actuarial reports
and Internal Revenue Service determination letters
relating to such Employee Benefit Plans and (c)
copies of the most recent summary plan descriptions
(whether or not required to be furnished under
ERISA) and all material employee communications
relating to such Employee Benefit Plans and
distributed to Company Personnel.
(iii) Except as set forth on Disclosure Schedule
4.11(iii), the events contemplated by this Agreement
(either alone or together with any other event) will
not (a) entitle any Company Personnel to severance
pay, unemployment compensation, or other similar
payments under any Employee Benefit Plan or law, (b)
accelerate the time of payment or vesting or
increase the amount of benefits due under any
Employee Benefit Plan or compensation to any Company
Personnel, (c) result in any payments (including
parachute payments) under any Employee Benefit Plan
or law, becoming due to any Company Personnel, or
(d) terminate or modify or give a third party a
right to terminate or modify the provisions or terms
of any Employee Benefit Plan.
(iv) The Global Combined Technologies, Inc. Employee
Savings Plan (the _401(k) Plan_) is qualified under
Sections 401(a) and 401(k) of the Code and the
related trust is exempt from Tax under Section
501(a) of the Code and Company has no other
employees' savings plans qualified under Section
- 29 -
401(a) or any other Section of the Code. The
Internal Revenue Service has issued an opinion
letter that the prototype plan to which the 401(k)
Plan relates is so qualified and nothing, to
Seller's knowledge, has occurred since the date of
such letter to cause the letter to be no longer
valid or effective assuming the plan is amended on a
timely basis to comply with changes to the Code, or
other legislative, regulatory or administrative
requirements subject to the remedial amendment
period applicable to such Act. All contributions
due with respect to the periods ending on or before
the Closing Date to the 401(k) Plan have been timely
made, and a pro rata portion of the contributions
(including matching contributions) for the plan year
in which the Closing Date occurs shall have been
made on or prior to the Closing Date for the period
ending on the Closing Date. The Global Combined
Technologies, Inc. Cafeteria Plan (the _Cafeteria
Plan_) satisfies all the applicable provisions of
Section 125 of the Code.
(v) Neither Company nor any entity that is or was at any
time treated as a single employer with Company under
Section 414(b), (c), (m) or (o) of the Code has at
any time (a) maintained, contributed to or been
required to contribute to any plan under which more
than one employer makes contributions (within the
meaning of Section 4064(a) of ERISA) or any plan
that is a multi-employer plan as defined in Section
3(37) of ERISA, (b) incurred or expects to incur any
liability to the Pension Benefit Guaranty
Corporation or otherwise under Title IV or ERISA
(other than the payment of premiums none of which
are overdue) or (c) incurred or expects to incur
liability in connection with an _accumulated funding
deficiency_ within the meaning of Section 412 of the
Code whether or not waived.
(vi) Company has, in the conduct of the affairs of the
Business of Company, complied in all material
respects with all applicable laws, rules and
regulations relating to the employment of labor,
including those relating to wages, hours, terms and
conditions of employment, collective bargaining and
the payment of social security and similar Taxes.
(vii) Company has not and prior to the Closing Date
will not have suffered a _plant closing_ or _mass
layoff_ within the meaning of the Worker Adjustment
and Retraining Notification Act (_WARN_).
- 30 -
(viii) Company has complied in all material respects
with the Consolidated Omnibus Budget Reconciliation
Act of 1984.
4.12 Burdensome Obligations
. Except for agreements described
in the Disclosure Statement Exhibit 4.12, Company is not
a party to any so-called requirements or similar type of
contract limiting its freedom or latitude in the purchase
of its inventory, equipment or other items. Company is
not subject to or bound by any contract or other
obligation whatsoever which materially adversely affects
its business, properties or prospects, except as
expressly disclosed in this Agreement.
4.13 Lawful Operations
. To the best of Sellers' knowledge,
the businesses conducted and properties owned or leased
by Company conform with all Applicable Laws and all
permits and licenses, if any, that are required to enable
Company to operate its Business have been obtained.
4.14
Legal Proceedings; Claims. Except as set forth in the
Disclosure Schedule 4.14, there are no decrees or order
of any regulatory agency, court or public authority
materially adversely affecting the operations of Company,
and Company is not a party to any litigation or other
judicial or administrative proceedings. Except as set
forth in Disclosure Schedule 4.14, to Sellers' knowledge,
neither Company nor any Seller is a party to any
litigation or other judicial, administrative or other
proceeding pending or known by Sellers to be threatened
which would affect Company's or Sellers' ability to
perform this Agreement or would materially adversely
affect the assets or operations of Company; and, to the
best of Sellers' knowledge there are no claims in
existence or threatened against Company or any of its
properties which may result in litigation. There are no
known existing violations of any Federal, State, local or
foreign laws or regulations which might materially affect
the properties, assets, business, financial condition or
corporate status of Company; and Company is not in
default with respect to any order or decree of any court
or administrative regulatory agency.
4.15 Taxes
.
A. Company has:
(i) Except as set forth in Disclosure Schedule
4.16, prepared in accordance with reasonable
interpretations of all Applicable Laws, and
timely filed all Tax Returns required to be
filed or sent by it with respect to any Taxes;
- 31 -
copies of all Company federal and state income
Tax Returns since the date of Company's
organization have been provided to Purchaser;
(ii) timely paid all Taxes that are shown as due and
payable on said Tax Returns;
(iii) established on its books and records
reserves that are adequate for the payment of
all Taxes not yet due and payable;
(iv) materially complied with all Applicable Laws,
rules and regulations relating to the payment
and withholding of Taxes and have timely and
properly withheld from employee wages and paid
over to the proper Governmental Authorities all
amounts required to be so withheld and paid
over under all Applicable Laws. There are no
liens for Taxes upon the assets of Company
except for Liens for Taxes not yet due.
Company is not a party to any agreement
providing for the allocation, sharing or
indemnification of Taxes.
To Sellers' knowledge, Company is not currently
under audit by any Governmental Authority for any
Taxes and has not extended the statute of
limitations relating to the filing of a Tax Return
or the payment of any Taxes.
▇. ▇▇▇▇▇▇▇ represent that:
(i) Company made a Subchapter S election under the
Code to be treated as an S corporation on
January 1, 1997;
(ii) there has been no consent filed with the
Internal Revenue Service under Section 341(f)
of the Code; and
(iii) Each Seller shall be responsible for his or
its federal, state and local income taxes
relating to or arising from his or its
ownership of Company Shares, (including, but
not limited to, all items of income and gain
passing through the Company to the Seller
pursuant to applicable Sections of the Code)
relating to the Company being treated as an S
corporation.
(iv) Company will cease to be an S corporation upon
the Closing pursuant to Section 1362(d)(2) of
- 32 -
the Code, and Section 1362(e)(3) of Code shall
govern the allocation of items of income, loss,
deduction or credit between the S short year
and C short year of Company.
4.16 Environmental Compliance
.
(i) To Seller's knowledge, Company is not in violation,
or alleged to be in violation, of any Environmental
Laws which would have a material effect on the
Business,
(ii) Company has not received a notice, complaint, order,
directive, claim or citation from any third party,
including without limitation any federal, state or
local governmental authority, (A) that Company has
been identified by the Unites States Environmental
Protection Agency (_EPA_) as a potentially
responsible party under CERCLA with respect to a
site listed on the National Priorities List, 40 CFR
Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇, or the CERCLA Information
System; (B) that any Hazardous Materials which
Company has generated, stored, transported or
disposed of has been released at any site at which a
federal, state or local agency has conducted or has
ordered that any person conduct a remedial
investigation, removal or other response action
pursuant to any Environmental Law or has named
Company as a potentially responsible party; or (C)
that Company is or shall be named party to any
claim, action, cause of action, complaint, or legal
or administrative proceeding (in each case,
contingent or otherwise) arising out of any third
party's incurrence of costs, expenses, losses or
damages of any kind whatsoever in connection with
the release of Hazardous Materials.
(iii) To the knowledge of Sellers, (A) no portion of
the property of Company has been used for the
handling, processing, storage or disposal of
Hazardous Materials except in compliance in all
material respects with applicable Environmental
Laws; and no underground tank or other underground
storage receptacle containing or formerly containing
any Hazardous Materials is located on any portion of
any of the properties currently or formerly owned,
operated or leased by Company or any of its
Affiliates during Company's or any of its
Affiliate's ownership, operation or lease of the
properties; (B) in the course of any activities
conducted by Company or operators of Company's
properties, no Hazardous Materials have been
- 33 -
generated or are being used on the property except
in compliance in all material respects with
applicable Environmental Laws; (C) there have been
no releases (i.e., any past or present releasing,
spilling, leaking, leaching, pumping, pouring,
emitting, emptying, discharging, injecting,
escaping, disposing or dumping) or threatened
releases of Hazardous Materials on, upon, into or
from the property currently or formerly owned,
operated or leased by Company or any of its
Affiliates during or prior to Company's or any of
its Affiliate's ownership, operation or lease, which
releases would have a material effect on the value
of any of the property or adjacent properties or the
environment; and (D) in addition any Hazardous
Materials, that have been generated or stored by
Company or any of its Affiliates on any of the
currently or formerly owned, operated or leased
property of Company have been transported off site
only by carriers having an identification number
issued by the EPA and treated or disposed of only by
treatment or disposal facilities maintaining valid
permits as required under applicable Environmental
Laws, which transporters and facilities have been
and are operating in material compliance with such
permits and applicable Environmental Laws or, if any
transporter or facility has not been or is not in
material compliance, such failure would not have a
material effect on Company or any of its Affiliates.
(iv) Sellers have provided to Purchaser all
environmentally related audits, studies, reports,
analyses (including soil and groundwater analysis),
and results of investigations that have been
performed with respect to the currently or
previously owned, leased, or operated properties of
Company or any of its Affiliates, and that are in
the possession of Company, any of its Affiliates or
Sellers.
(v) There is not now nor, to the knowledge of Sellers,
have there been located at any of the properties of
Company, whether owned or leased asbestos containing
material or equipment containing polychlorinated
biphenyls in violation of any applicable
Environmental Law.
(vi) Company currently holds, and at all times has held,
all required federal, state, and local permits,
licenses, certificates and approvals necessary to
Company's Business (_Environmental Permits_).
- 34 -
Company has not been notified by any relevant
Governmental Authority that any Environmental Permit
will be modified, suspended, cancelled or revoked,
or cannot be renewed in the ordinary course of
business, which modification, suspense,
cancellation, revocation or non-renewal could affect
in any material way the manner in which Company
operates Company's Business.
4.17
Insurance. Company maintains policies of fire, extended
coverage, liability and other forms of insurance covering
its Business, properties and assets in amounts and
against such losses and risks as are generally maintained
for comparable businesses and properties, and valid
policies for such insurance will be outstanding and duly
in force through and on the Closing Date. Attached hereto
as Disclosure Schedule 4.17 is a complete list of all
insurance policies owned by Company, indicating risks
insured against, carrier, policy number, amount of
coverage, premiums and expiration dates.
4.18 Books and Records
. The books of account of Company
substantially reflect all its known material items of
income and expense and all its known material assets,
liabilities and accruals. The corporate minute books of
Company are substantially complete as to the records of
substantially all substantial proceedings of
incorporators, shareholders and directors, and there are
no substantial and material minutes or records of the
proceedings of any of said person not included therein.
The share ledgers and share certificate books contain a
complete and accurate record of all issuances and
transfers of shares in Company.
4.19 Certain Interests
. Except as set forth in Disclosure
Schedule 4.19, Sellers do not directly or indirectly own
any interest in any corporation, firm or enterprise
engaged in a business competitive with Company, except
(i) Company Shares or (ii) any passive investment by
Sellers in the stock of any publicly held corporation
which is not in excess of five percent of the issued and
outstanding capital stock of such corporation.
4.20 Officers and Directors; Certain Payments
. Disclosure
Schedule 4.20 is a true and complete list showing (a) the
names of all officers and directors of Company and the
directorships and officerships in Company held by each;
(b) the names and address of each financial institution
in which Company has an account, safe deposit box or
investment account, the names of all persons authorized
to draw thereon or to have access thereto, and the nature
of such authorization; and (c) the names of all persons
- 35 -
holding tax or other powers of attorney from Company and
a summary statement of the terms thereof.
4.21
Commissions or Brokers Fees. Neither Company nor any
Seller has incurred any liability to any person for
financial advice, finder's fees or brokerage commission
with respect to the transactions contemplated by this
Agreement, which liability may be asserted against
Company, Purchaser or any affiliate of Purchaser.
4.22 Assets Necessary to the Business
. Company owns, leases,
licenses, or has the right to use all assets and
properties (tangible and intangible) necessary to carry
on its Business and operations as presently conducted.
Such assets and properties are all of the assets and
properties necessary to carry on the Business of Company
as presently conducted and, except as set forth in
Disclosure Schedule 4.22, none of the Sellers (other than
through their ownership of stock in Company) nor any
member of their respective families owns or leases or has
any interest in any assets or properties presently being
used to carry on the Business of Company.
4.23 Absence of Certain Business Practices
. Neither Company,
nor any officer, employee or agent of Company, nor any
other Person acting on its behalf, has, directly or
indirectly, within the past five years given or agreed to
give any gift, bribe, rebate or kickback or otherwise
provide any similar benefit to any customer, supplier,
governmental employee or any other Person who is or may
be in a position to help or hinder Company or the
Business (or assist Company in connection with any actual
or proposed transaction relating to the Business or any
other business previously operated by Company) (i) which
subjected or might have subjected Company to any damage
or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) which if not given in the
past, might have had a material effect on Company or its
assets, (iii) which if not continued in the future, might
have a material effect on Company or its assets or
subject Company to suit or penalty in any private or
governmental litigation or proceeding, (iv) for any of
the purposes described in Section 162(c) of the Code or
(v) for the purpose of establishing or maintaining any
concealed fund or concealed bank account.
4.24
Transactions with Affiliates. Except as disclosed on
Disclosure Schedule 4.24, there is no lease, sublease,
contract, agreement or other arrangement of any kind
whatsoever entered into by Company with any Seller or
with any Affiliate of any Seller, except such of the
foregoing which may be terminated at Closing by Purchaser
- 36 -
without further liability. Prior to Closing, all
indebtedness owed by any Seller to Company shall be
repaid.
4.25
Territorial Restrictions. Except as described in
Disclosure Schedule 4.25, Company is not restricted by
any written agreement or understanding with any other
Person (excluding Applicable Laws of Governmental
Authorities) from carrying on the Business anywhere in
the world. Neither Purchaser nor any of its affiliates
will, as a result of its acquisition of Company Shares,
become restricted in carrying on the Business anywhere in
the world as a result of any Contract or other agreement
to which Company is a party or by which it is bound.
4.26 Customers
. Disclosure Schedule 4.26 includes a correct
list of the twenty-five (25) largest customers for
Company for each of the past two (2) fiscal years and the
amount of business done by Company with each such
customer for each year. None of the Sellers have any
knowledge or information, and are aware of any facts
indicating that any of the customers will or intend to
(a) cease doing business with Company; (b) materially
alter the amount of business they are presently doing
with Company; or (c) not do business with Company after
the Closing Date.
4.27 Suppliers
. Disclosure Schedule 4.27 sets forth the
names of and description of contractual arrangements
(whether or not binding or in writing) with the fifteen
(15) largest suppliers of Company and any sole suppliers
of significant goods or services (other than electricity,
gas, telephone or water) to Company with respect to which
practical alternative sources of supply are not readily
available on comparable terms and conditions. None of
the Sellers have any knowledge or information, or are
aware of any facts indicating that any of the suppliers
of Company will or intend to (a) cease doing business
with Company; (b) materially alter the amount of business
they are presently doing with Company; or (c) not do
business with Company after the Closing Date.
4.28
Conversion of Certain Indebtedness to Equity. Sellers
represent and warrant that on the 24th day of February,
1998, certain Sellers that were owed $1,554,206.18 of
principal in the aggregate and accrued interest of
$287,300.22, converted such indebtedness into paid-in
capital of Company. In connection with such conversion,
the Parties that were subject to such conversion
transaction disclosed all material facts to all Sellers
that are Parties to this Agreement.
- 37 -
4.29
Product Liability. Except as set forth in Disclosure
Schedule 4.28 and for warranties under Applicable Law,
(a) there are no warranties, express or implied, written
or oral, with respect to the products of the
Business;
(b) to Seller's knowledge, there are no pending or
threatened claims with respect to any warranty;
and
(c) Company does not have, and to the best knowledge of
Sellers, will not have, any liability, after the
Closing, with respect to any such warranty, whether
known or unknown, absolute, accrued, contingent, or
otherwise and whether due or to become due.
4.30 Disclosure
. No representation or warranty made by any
Seller in this Agreement and no exhibit, certificate or
documents furnished or to be furnished by any Seller
pursuant hereto contains or will contain any known untrue
statement of a material fact or omits or will omit any
known material fact necessary in order to make the
statements contained therein not misleading. The Sellers
have no knowledge of any factors materially and adversely
affecting the future prospects of Company's Business
which have not been disclosed in this Agreement and the
Disclosure Schedule.
ARTICLE V
5.
Representations of Purchaser. Purchaser represents,
warrants and agrees that:
5.01
Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Delaware and has all the requisite corporate
power and authority to own, lease and operate its
properties and to carry on its business as it is now
being conducted.
5.02
Authority. This Agreement is a valid and binding
obligation of Purchaser, enforceable in accordance with
its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights
generally, or by the availability of equitable remedies
or the application of general equitable principles.
Except as set forth in Disclosure Schedule 5.02, neither
the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby
- 38 -
will:
(i) violate, or conflict with, or require any Consent
under, or result in a breach of any provisions 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, or
accelerate the performance required by, or result in
the creation of any Lien upon any of the properties
or assets of Purchaser under any of the terms,
conditions or provisions of the Articles of
Incorporation or Bylaws of Purchaser or of any note,
bond, mortgage, indenture, deed of trust, license,
agreement or other instrument or obligation to which
Purchaser is a party, or by which Purchaser or any
of its properties or assets may be bound or
affected, or
(ii) violate any order, writ, injunction or decree
applicable to Purchaser or any of its properties or
assets or, to the knowledge of Purchaser, violate
any statute, rule or regulation applicable to
Purchaser or any of its properties or assets; or
(iii) constitute a default or event that, with notice
or lapse of time, or both, would be a default,
breach, or violation of any lease, license,
promissory note, conditional sales contract,
commitment, indenture, mortgage, deed of trust or
other agreement, instrument or arrangement to which
Purchaser is a party or by which it is bound; or
(iv) constitute an event that would permit any party to
terminate any agreement or to accelerate the
maturity of any indebtedness or other obligation of
Purchaser.
(v) except for compliance with the HSR Act, no Consent
by, notice to or registration with any Governmental
Authority is required on the part of Purchaser prior
or subsequent to the Closing Date in connection with
the execution, delivery and performance by Purchaser
of this Agreement or the consummation of any of the
transactions contemplated hereby.
5.03
Commissions or Brokers' Fees. Purchaser has not incurred
any liability to any person for financial advice,
finder's fees or brokerage commission with respect to the
transactions contemplated by this Agreement, which
liability may be asserted against any Seller or Company.
- 39 -
5.04
Securities Acts. Purchaser understands and acknowledges
(i) that the purchase and sale of the Company Shares
pursuant to this Agreement is intended to be exempt from
registration under Section 4(1) of the Securities Act of
1933, as amended (the _Securities Act_), and similar
exemptions provided under applicable state securities
laws, (ii) that the Company Shares have not been
registered under the Securities Act or any applicable
state securities laws and, therefore, cannot be resold
unless they are registered under the Securities Act or
applicable state securities laws, or unless an exemption
from registration is available, and (iii) that Purchaser
is acquiring the Company Shares for its own account for
investment and not with a view to, or for resale in
connection with, the distribution thereof.
ARTICLE VI
6.01
Release by Sellers. Each Seller, as of the Closing Date,
shall release and discharge Company from all actions,
claims or demands of every kind and nature which any of
the Sellers have or may have against Company (including,
but not limited to, any claims, if any, arising out of a
conversion of certain indebtedness owed by the Company to
certain Sellers to paid-in capital of Company on February
24, 1998), whether based upon contract or otherwise,
arising before the execution of this Agreement. Nothing
contained herein shall constitute a release of any rights
of the Sellers arising under this Agreement, of any
claims under any Employee Benefit Plans currently
maintained by Company, or with respect to anything which
may occur after the Closing Date.
ARTICLE VII
7.01 Covenants Not to Compete
. As inducement for and in
consideration of Purchaser entering into this Agreement,
the Sellers shall each enter into a non-competition
agreement. Such non-competition agreements are set forth
in Exhibits F, F-1, F-2, F-3, and F-4 attached hereto and
made a part hereof.
ARTICLE VIII
8.01
Employment Agreements. Upon the Closing Date, Company
shall enter into Employment Agreements with ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇. Copies of said
Employment Agreements are attached hereto and made a part
hereof as Exhibits G and G-1.
- 40 -
ARTICLE IX
9.1 Covenants of Sellers
.
9.01.1 Conduct of Business
. From the date hereof to the Closing
Date, except as expressly permitted or required by this
Agreement or as otherwise consented to by Purchaser in
writing, Sellers will cause Company to:
(a) carry on its Business in, and only in, the ordinary
course, in substantially the same manner as
heretofore conducted, and with respect to the
Business, use all reasonable efforts to preserve
intact its present business organization, maintain
its properties in good operating condition and
repair, keep available the services of its present
officers and significant employees, and preserve its
relationship with customers, suppliers and others
having business dealings with it, with the goal and
intent that its goodwill and ongoing business shall
be in all material respects unimpaired following the
Closing;
(b) pay accounts payable and other obligations of the
Business when they become due and payable in the
ordinary course of business consistent with prior
practice;
(c) perform in all material respects all of its
obligations under all Contracts and other agreements
and instruments relating to or affecting the
Business and comply in all material respects with
all Applicable Laws applicable to Company in the
ordinary course of business consistent with prior
practice;
(d) other than sales and purchases of Inventories in the
ordinary course where delivery is contemplated not
later than the calendar month following the Closing
Date, not enter into or assume any material
agreement, contract or instrument relating to the
Business, or enter into or permit any material
amendment, supplement, waiver or other modification
in respect thereof other than in the ordinary course
of business consistent with prior practice;
(e) not grant (or commit to grant) any increase in the
compensation (including incentive or bonus
compensation but excluding incentive or bonus
compensation declared and paid prior to closing) of
- 41 -
any employee employed in the operation of the
Business (other than normal merit pay increases made
in the ordinary course of the Business, consistent
with past practices) or institute, adopt or amend
(or commit to institute, adopt or amend) any
compensation or benefit plan, policy, program or
arrangement or collective bargaining agreement
applicable to any such employee;
(f) continue all policies of insurance relating to the
Business in full force and effect;
(g) not make any change or modification in Company's
accounting practices, policies or procedures which
in any way affect the Business, including any change
or modification with respect to the allocation of
revenues, costs and expenses applicable to the
Business; and
(h) not take any action or knowingly omit to take any
action, which action or omission would result in a
breach of any of the representations and warranties
set forth in Section 4.
9.01.2
Access and Information. From the date hereof until the
Closing Date, Company shall make available or cause to be
made available to the accountants, attorneys or other
representatives of Purchaser, for examination during
normal business hours, upon reasonable request, all
properties, assets, books of accounts, title papers,
insurance policies, contracts, leases, commitments,
records and other documents of every character relating
to Company.
9.01.3
Further Actions.
(a) Sellers agree to use all reasonable good faith
efforts to take all actions and to do all things
necessary, proper or advisable to consummate the
transactions contemplated hereby by the Closing
Date.
(b) Sellers will, as promptly as practicable, file or
supply, or cause to be filed or supplied, all
applications, notifications and information required
to be filed or supplied by them or Company pursuant
to Applicable Law in connection with this Agreement,
the Other Sellers Documents and the consummation of
the other transactions contemplated hereby,
including, but not limited to any necessary filings
pursuant to the HSR Act.
- 42 -
(c) Sellers, as promptly as practicable, will use all
reasonable efforts to obtain, or cause to be
obtained, all Consents necessary to be obtained by
them or Company in order to consummate the sale and
transfer of Company Shares pursuant to this
Agreement and the consummation of the other
transactions contemplated thereby.
(d) At all times prior to the Closing, Sellers shall
promptly notify Purchaser in writing of any fact,
condition, event or occurrence known to it in the
exercise of reasonable business prudence that will
or may result in the failure of any of the
conditions contained in Sections 12.01(1), (2) or
(3) to be satisfied, promptly upon any of them
becoming aware of the same.
9.01.4 Further Assurances
. Following the Closing, Sellers
shall, and shall cause each of their Affiliates and
Company to, from time to time, execute and deliver such
additional instruments, documents, conveyances or
assurances and take such other actions as shall be
necessary, or otherwise reasonably requested by
Purchaser, to confirm and assure the rights and
obligations provided for in this Agreement and in the
Other Sellers Documents and render effective the
consummation of the transactions contemplated thereby.
Without limiting the generality of the foregoing, the
parties specifically contemplate closing the transactions
contemplated herein prior to the time that full
compliance by Sellers with the conditions precedent set
forth in Section 12.01(2) will be practicable. As a
result, notwithstanding the Closing, this Section 9.01.4
shall require prompt delivery thereafter by Sellers of
the consents, instruments and agreements called for
herein, including in Section 12.01(2).
9.01.5 Liability for Transfer Taxes
. Sellers shall be
responsible for the timely payment of, and shall
indemnify and hold harmless Purchaser and their
Affiliates against, all sales, income, use, value added,
documentary, stamp, and any other taxes and fees
attributable or arising out of the sale of the Company
Shares by Sellers to Purchaser. Sellers represent to
Purchaser that there will be no tax liability to Company
arising out of the sale of the Company Shares.
- 43 -
ARTICLE X
10.01 Covenants of Purchaser
.
10.01.1Further Actions
.
(a) Purchaser agrees to use all reasonable good faith
efforts to take all actions and to do all things
necessary, proper or advisable to consummate the
transactions contemplated hereby by the Closing
Date.
(b) Purchaser will, as promptly as practicable, file or
supply, or cause to be filed or supplied, all
applications, notifications and information required
to be filed or supplied by it pursuant to applicable
law in connection with this Agreement, the Other
Sellers Documents and the consummation of the other
transactions contemplated hereby, including, but not
limited to any necessary filings pursuant to the HSR
Act.
(c) Purchaser, as promptly as practicable, will use all
reasonable efforts to obtain, or cause to be
obtained, all Consents necessary to be obtained by
it in order to consummate the acquisition of the
Company Shares pursuant to this Agreement and the
consummation of the other transactions contemplated
hereby.
10.01.2Notice by Purchaser
. Purchaser agrees that should its
employees accountants, attorneys or other representatives
acquire knowledge prior to Closing, as a result of their
investigation of Company pursuant to this Agreement or
otherwise, of any material breach of or inaccuracy in the
representations and warranties contained in Section 4
above, Purchaser will notify the Sellers of such breach
in writing prior to Closing and Sellers shall have the
opportunity to cure such breach prior to Closing.
10.01.3Tax Elections
. Purchaser will not file any election
under Section 338 of the Code with respect to this
Agreement or the transactions contemplated herein.
10.01.4
Further Assurances. Following the Closing, Purchaser
shall, and shall cause each of its Affiliates and Company
to, from time to time, execute and deliver such
additional instruments, documents, conveyances or
assurances and take such other actions as shall be
necessary, or otherwise reasonably requested by Sellers,
to confirm and assure the rights and obligations provided
for in this Agreement and in the Other Sellers Documents
- 44 -
and render effective the consummation of the transactions
contemplated thereby. Without limiting the generality of
the foregoing, the parties specifically contemplate
closing the transactions contemplated herein prior to the
time that compliance by Purchaser with the conditions
precedent set forth in Section 12.02(7) relating to the
releases of any of the Sellers of their guaranties of any
of the Line of Credit Indebtedness will be practicable.
As a result, notwithstanding the Closing, this Section
10.01.4 shall require prompt delivery thereafter by
Purchaser of the instruments and agreements called for
herein, including that contained in Section 12.01(7).
ARTICLE XI
11.01 Survival of Representations and Warranties
. The Parties
acknowledge and agree that all the representations,
covenants, warranties and agreements contained in this
Agreement or in any agreement, instrument, exhibit,
certificate, schedule or other document delivered in
connection herewith, shall survive the Closing and shall
be binding upon the party giving such representation,
covenant, warranty or agreement and shall be fully
enforceable to the extent provided for in Sections 11.04
and 11.05 hereof, at law or in equity, for the period
beginning on the date of Closing and ending two (2) years
thereafter, except for the representations, warranties
and agreements designated and identified in Section 4.01,
4.02, 4.03, 4.05, 4.08 through 4.08.7, 4.15, 4.16, 5.01
and 5.02, which shall survive the Closing and shall
terminate in accordance with the statutes of limitation
governing written contracts and Exhibits F, F-1, F-2, F-
3, F-4, G and G-1, which shall terminate as provided
therein.
11.02
Reliance Upon and Enforcement of Warranties and
Agreements of Sellers
. Each Seller hereby agrees that,
notwithstanding any right of Purchaser to fully
investigate the affairs of Company, and notwithstanding
knowledge of facts determined or determinable by
Purchaser pursuant to such investigation or right of
investigation, Purchaser has the right to rely fully upon
the representations, covenants, warranties and agreements
of each Seller contained in this Agreement and upon the
accuracy of any document, schedule, certificate or
exhibit given or delivered to Purchaser pursuant to the
provisions of this Agreement.
11.03 Reliance Upon and Enforcement of Representations,
Warranties and Agreements of Purchaser
. Purchaser hereby
agrees that, notwithstanding any right of Sellers to
- 45 -
fully investigate the affairs of Purchaser and
notwithstanding knowledge of facts determined or
determinable by Sellers pursuant to such investigation or
right of investigation, Sellers have the right to rely
fully upon the representations, covenants, warranties and
agreements of Purchaser contained in this Agreement and
upon the accuracy of any document, certificate or exhibit
given or delivered to Sellers pursuant to the provisions
of this Agreement.
11.04
Indemnification by Sellers. Each Seller, severally (in
proportion to his stock ownership), not jointly, shall
indemnify Purchaser against and hold it harmless from any
Losses resulting from or arising out of any inaccuracy in
or breach of any representation, warranty, covenant or
obligation made or incurred by any Seller herein or in
any other agreement, instrument or document delivered by
any Seller pursuant to the terms of this Agreement
subject to the provisions of Section 11.08.A. The
maximum liability of each Seller hereunder is set forth
on Disclosure Schedule 11.04. J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
hereby agrees to guaranty all obligations of the J.
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. Revocable Trust hereunder.
11.05
Indemnification by Purchaser. Purchaser agrees to
defend, indemnify and hold harmless the Sellers from,
against and in respect of any and all Losses resulting
from or arising out of an inaccuracy in or other breach
of any representation, warranty, covenant, or obligation
made or incurred by Purchaser herein or in any other
agreement, instrument or document delivered by Purchaser
pursuant to the terms of this Agreement.
- 46 -
11.06
Notification of and Participation in Claims.
(a) No claim for indemnification shall arise until
notice thereof is given to the party from whom
indemnity is sought (the _Indemnifying Party_).
Such notice shall be sent to the Indemnifying Party
within ten (10) days after the party asserting such
right to indemnity (the _Party to be Indemnified_)
has received notification of such claim, but failure
to notify the Indemnifying Party shall in no event
prejudice the rights of the Party to be Indemnified
under this Agreement, unless the Indemnifying Party
shall be prejudiced by such failure and then only to
the extent of such prejudice. In the event that any
legal proceeding shall be instituted or any claim or
demand is asserted by any third party in respect of
which Sellers on the one hand, or Purchaser on the
other hand, may have an obligation to indemnify the
other, the Party to be Indemnified shall give or
cause to be given to the Indemnifying Party written
notice thereof and the Indemnifying Party shall have
the right, at its option and expense, to participate
in the defense of such proceeding, claim or demand,
but not to control the defense, negotiation or
settlement thereof, which control shall at all times
rest with the Party to be Indemnified, unless the
Indemnifying Party irrevocably acknowledges in
writing full and complete responsibility for and
agrees to provide indemnification of the Party to be
Indemnified, in which case such Indemnifying Party
may assume such control through counsel of its
choice and at its expense. In the event the
Indemnifying Party assumes control of the defense,
the Indemnifying Party shall not be responsible for
the legal costs and expenses of the Party to be
Indemnified in the event the Party to be Indemnified
decides to join in such defense. The Parties agree
to cooperate fully with each other in connection
with the mitigation, defense, negotiation or
settlement of any such third party legal proceeding,
claim or demand.
(b) If the Party to be Indemnified is also the party
controlling the defense, negotiation or settlement
of any matter, and if the Party to be Indemnified
determines to compromise the matter, the Party to be
Indemnified shall immediately advise the
Indemnifying Party of the terms and conditions of
the proposed settlement. If the Indemnifying Party
agrees to accept such proposal, the Party to be
Indemnified shall proceed to conclude the settlement
of the matter, and the Indemnifying Party shall
- 47 -
immediately indemnify the Party to be Indemnified
pursuant to the terms of Sections 11.04 and 11.05
hereunder, subject to the limitations set forth
elsewhere in this Section 11. If the Indemnifying
Party does not agree within fourteen (14) days to
accept the settlement (said 14-day period to begin
on the first business day following the date such
party receives a complete copy of the settlement
proposal), the Indemnifying Party shall immediately
assume control of the defense, negotiation or
settlement thereof, at that Indemnifying Party's
expense. Thereafter, the Party to be Indemnified
shall be indemnified in the entirety for any
liability arising out of the ultimate defenses,
negotiation or settlement of such matter.
(c) If the Indemnifying Party is the party controlling
the defense, negotiation or settlement of any
matter, and the Indemnifying Party determines to
compromise the matter, the Indemnifying Party shall
immediately advise the Party to be Indemnified of
the terms and conditions of the proposed settlement
and irrevocably acknowledge in writing full and
complete responsibility for, and agree to provide,
indemnification of the Party to be Indemnified. If
the Party to be Indemnified agrees to accept such
proposal, the Indemnifying Party shall proceed to
conclude the settlement of the matter and
immediately indemnify the Party to be Indemnified
pursuant to the terms of Sections 11.04 or 11.05
hereunder. If the Party to be Indemnified does not
agree within fourteen (14) days to accept the
settlement (said 14-day period to begin on the first
business day following the date such Party receives
a complete copy of the settlement proposal), the
Party to be Indemnified shall immediately assume
control of the defense, negotiation or settlement
thereof, at the Party to be Indemnified's expense.
If the final amount paid to resolve the claim is
less than the amount of the original proposed
settlement made by the Indemnifying Party, then the
Party to be Indemnified shall receive such
indemnification pursuant to Sections 11.04 or 11.05
hereof, including any and all expenses incurred by
the Party to be Indemnified incurred in connection
with the defense, negotiation or settlement of such
matter. If the amount finally paid to resolve the
claim is equal to or greater than the amount of the
original proposed settlement proposed by the
Indemnifying Party, then the Indemnifying Party
shall provide indemnification pursuant to Sections
11.04 and 11.05 for the amount of the original
- 48 -
settlement proposal submitted by the Indemnifying
Party, and the Party to be Indemnified shall be
responsible for all amounts in excess of the
original settlement proposal submitted by the
Indemnifying Party and all costs and expenses
incurred by the Party to be Indemnified in
connection with such defense, negotiation or
settlement.
11.07
Provisions of General Application. With respect to any
right of indemnification arising under this Agreement,
the following provisions shall apply:
(a) Procedures
. The Party to be Indemnified and the
Indemnifying Party agree to cooperate in the defense
of any third party claim or action subject to this
Section 11, to permit the cooperation and
participation of the other parties in any such claim
or action, and to promptly notify the other parties
of the occurrence of any indemnified event or any
material developments or amounts due respecting any
indemnification event.
(b) No Implications
. Neither the rights of any Party
to indemnification from another Party nor the
obligations of any Party to indemnify another Party,
under this Agreement, shall in any way imply or
create, and each Party specifically disclaims, any
responsibility whatsoever by such Party for any
other Party's liabilities to any other person or
entity or Governmental Authority.
(c) Insurance
. Prior to enforcing any claim for
indemnification against the Indemnifying Party under
this Agreement, the Party to be Indemnified shall
administratively file in good faith with any
insurers all forms and submissions required by
applicable policies for the proceeds or other
benefits of insurance coverage, if any, applicable
to the claim or event from which such
indemnification right arose. In the event that
insurance proceeds are paid to the Party to be
Indemnified respecting an event to which an
indemnification right applies hereunder, such
indemnification right shall apply only to the extent
that the amount of damages indemnified against
exceeds such insurance proceeds actually paid to the
Party to be Indemnified; provided however, that: (a)
such insurance proceeds shall not affect or be
applied towards the maximum liability established in
Section 11.08 and (b) collection by judicial or
legal process of such insurance proceeds shall not
- 49 -
be a condition precedent to asserting or collecting
such indemnification claims under this Agreement.
If the Indemnifying Party incurs indemnity costs or
pays indemnity damages under this Agreement, and the
Party to be Indemnified subsequently receives
insurance proceeds for the same claim or event, then
the Party to be Indemnified shall refund such
indemnity costs or damage payments to the
Indemnifying Party from such insurance proceeds to
the extent that the Party to be Indemnified has
received benefits from both sources (i.e., payments
of indemnity damages from the Indemnifying Party and
such insurance proceeds) in excess of the amount of
indemnifiable damages incurred by or asserted
against the Party to be Indemnified.
(d)
Mitigation. The Party to be Indemnified shall use
its good faith efforts to mitigate any claim or loss
by any third party hereunder and the Indemnifying
Party shall be entitled to participate in and
coordinate such mitigation with the Party to be
Indemnified.
11.08 A. Limitations
. Notwithstanding anything herein to
the contrary, no claims for indemnification shall be
made by Purchaser against the Sellers until such
time as all claims hereunder (the _Indemnity
Basket_), net of income tax benefit realized and/or
realizable by Company and/or Purchaser, total more
than Two Hundred Thousand Dollars ($200,000) in the
aggregate and then indemnification shall be made
only to the extent that such claim or claims exceed
Two Hundred Thousand Dollars ($200,000) in the
aggregate. In addition, notwithstanding anything
contained herein to the contrary, the maximum
aggregate liability that Sellers may be collectively
required to pay to Purchaser under this Section 11,
or as a result of any other provision of this
Agreement as a result of any and all breaches, if
any, of the representations and warranties
hereunder, or as a result of any and all defaults of
any covenants hereunder, shall be limited to Three
Million Dollars ($3,000,000).
B. Notwithstanding anything to the contrary in this
Agreement, the maximum aggregate amount that
Purchaser may be required to pay to Sellers
hereunder, or as a result of any other provision of
this Agreement as a result of any and all breaches,
if any, of representations and warranties contained
in Article V hereunder shall be limited to an amount
equal to $3,000,000.
- 50 -
11.09
Assignment and Accounting for Benefits. To the extent
that the Indemnifying Party shall have actually paid
indemnity damages to or on behalf of the Party to be
Indemnified, the Party to be Indemnified shall make a
non-exclusive assignment (to the extent permitted under
applicable law) to the Indemnifying Party (as their
interest may appear) of the remedies, rights and claims,
if any, of the Party to be Indemnified against any and
all third parties for the same liability, including, but
not limited to, remedies, rights and claims against (i)
liability insurers and other insurance companies, and
(ii) any other person which has indemnified the Party to
be Indemnified for such liability. The parties shall
cooperate reasonably in the pursuit of any such remedies,
rights and claims.
For purposes of Section 11.08, the amount of any
indemnification claim shall be reduced by the effect of
any income tax benefit realized and/or realizable by
Company/Purchaser. For purposes hereof, a marginal rate
of forty percent (40%) shall be utilized.
11.10 Exclusive Remedy
. Anything contained in this Agreement
or the Other Seller Documents to the contrary
notwithstanding, the indemnification rights set forth in
this Section 11, all of which are subject to the terms,
limitations, and restrictions of this Section 11, shall
be the exclusive remedy after Closing against the Sellers
and/or Purchaser for monetary damages sustained as a
result of a breach of a representation, warranty,
covenant, or agreement under this Agreement. Such
limitations set forth in this Section 11 shall not impair
the rights of any of the parties: (a) to seek non-
monetary equitable relief, including (without limitation)
specific performance or injunctive relief to redress any
default or breach of this Agreement; or (b) to seek
enforcement, collection, damages, or such non-monetary
equitable relief to redress any subsequent default or
breach of any employment agreement, non-competition
agreement, transfer document, assumption, consent, or
agreement to be delivered at Closing hereunder. In
connection with the seeking of any non-monetary equitable
relief, each of the Parties acknowledges and agrees that
the other Parties hereto would be damaged irreparably in
the event that any of the provisions of this Agreement
are not performed in accordance with their specific terms
or otherwise are breached. Accordingly, each of the
Parties hereto agrees that the other Party hereto shall
be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and
- 51 -
provisions hereof in any competent court having
jurisdiction over the Parties.
ARTICLE XII
12.
Conditions Precedent to the Obligations of Each Party.
The obligations of the Parties to consummate the
transactions contemplated hereby shall be subject to the
fulfillment, on or prior to the Closing Date, of the
following conditions:
1. HSR Act Notification
. In respect of any necessary
notifications of Purchaser and Sellers pursuant to
the HSR Act, the applicable waiting period and any
extensions thereof shall have expired or been
terminated.
2.
No Injunction, Etc. The consummation of the
transaction contemplated hereby shall not have been
restrained, enjoined or otherwise prohibited by any
Applicable Law, including any order, injunction,
decree or judgment of any Court or other
Governmental Authority. No Court or other
Governmental Authority shall have determined any
Applicable Law to make illegal the consummation of
the transactions contemplated hereby or by the other
Sellers Documents, and no proceeding with respect to
the application of any such Applicable Law to such
effect shall be pending.
12.01 Conditions Precedent to Purchaser's Obligations
. The
obligations of Purchaser to consummate the transactions
contemplated hereby shall be subject to the fulfillment
(or waiver by Purchaser, in its sole discretion) on or
prior to the Closing Date of the following additional
conditions, which Sellers agree to use reasonable good
faith efforts to cause to be fulfilled:
1.
Representations, Performance. The representations
and warranties of Sellers contained in this
Agreement and in the Other Sellers Documents (i)
shall be true and correct in all respects (in the
case of any representation or warranty containing
any materiality qualification) or in all material
respects (in the case of any representation or
warranty without any materiality qualification) at
and as of the date hereof, and (ii) shall be
repeated and shall be true and correct in all
respects (in the case of any representation or
warranty containing any materiality qualification)
or in all material respects (in the case of any
- 52 -
representation or warranty without any materiality
qualification) on and as of the Closing Date with
the same effect as though made on and as of the
Closing Date. Sellers shall have duly performed and
complied in all material respects with all
agreements and conditions required by this Agreement
and each of the Other Sellers Documents to be
performed or complied with by them prior to or on
the Closing Date. Sellers shall have delivered to
Purchaser a duly authorized, properly executed
certificate, dated the Closing Date to the foregoing
effect.
2. Consents
. Sellers have obtained all Consents
necessary to consummate the transactions
contemplated hereby, unless the failure to obtain
any such Consent would not materially adversely
affect the Company or its assets.
3. No Material Adverse Effect
. No event, occurrence,
fact, condition, change, development or effect shall
have occurred, exist or come to exist since December
31, 1997 that, individually or in the aggregate,
would have a material adverse effect on the Company
or its assets.
4. Transfer Documents and Other Miscellaneous Matters
.
Sellers have delivered to Purchaser, at or before
the Closing, the following documents, all of which
shall be in form and substance reasonably acceptable
to Purchaser and its counsel:
(i) A certificate or certificates for all of the
Company Shares. Such certificate(s) shall be
in form for transfer, duly endorsed in blank by
Sellers, or with appropriate duly executed
stock transfer powers attached;
(ii) Opinion letter of McAfee & ▇▇▇▇, counsel for
Sellers, addressed to Purchaser and dated the
Closing Date;
Error! iii) All minute books, stock certificates and
transfer books, contracts, policies of
insurance, tax returns, records of every kind
and nature and all other documents and writings
belonging or relating to the Company and its
corporate organization, business and assets;
(iv) Certificates, dated as of the most recent
practicable date, of the Secretary of State of
Oklahoma as to the good standing of Company;
- 53 -
(v) The Disclosure Schedule;
(vi) Copies of the Certificate of Incorporation and
By-Laws of Company, certified as true and
correct by an officer of Company;
(vii) Such resignations of officers and directors
of Company as Purchaser may request; and
(viii) Such other documents which Purchaser
reasonably deems necessary to effectuate this
Agreement.
5. Certain Employment Agreements
. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ shall have entered into the
employment agreements described in Section 8.01.
6.
Covenant Not to Compete Agreements. Sellers shall
have entered into the Covenant Not to Compete
Agreements in the form set forth in ▇▇▇▇▇▇▇▇ ▇, ▇-▇,
▇-▇, F-3 and F-4.
7. Subordination Agreement
. Sellers shall have entered
into the Subordination Agreement set forth in
Exhibit _B_.
8.
Cancellation and Termination of Employment
Agreements. Company and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall enter into
an agreement in form and content satisfactory to
Purchaser's counsel canceling and terminating
certain Employment Agreements between such Parties
and the Company.
9. Lease Between ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Corporation and
Company. Company shall have the right to remain in
the facilities located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ currently leased from ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Corporation, for a period of six (6) months
from the date of the Closing on the same terms and
conditions contained in the leases currently in
effect for such location. Company shall have the
right but not the obligation to negotiate a longer
term for such premises with ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Corporation on terms that are mutually agreeable to
both parties.
10. ▇. ▇▇▇▇▇▇ shall cause Critical Technologies, L.L.C.
to vacate the premises currently shared with Company
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ on the
later of April 1, 1998 or the Closing of the
- 54 -
transaction.
12.02 Conditions and Obligations of Sellers
. The obligation of
Sellers to consummate the transactions contemplated
hereby shall be subject to the fulfillment (or waiver by
the Sellers in their sole discretion), on or prior to the
Closing Date, of the following additional conditions,
which Purchaser agrees to use reasonable good faith
efforts to cause to be fulfilled:
1. Representations, Performance
. The representations
and warranties of Purchaser contained in the
Agreement or in the Other Sellers Documents (i)
shall be true and correct in all respects (in the
case of any representation or warranty containing
any materiality qualification) or in all material
respects (in the case of any representation or
warranty without any materiality qualification) at
and as of the date hereof, and (ii) shall be
repeated and shall be true and correct in all
respects (in the case of any representation or
warranty containing any materiality qualification)
or in all material respects (in the case of any
representation or warranty without any materiality
qualification) on and as of the Closing Date with
the same effect as though made at and as of such
date. Purchaser has duly performed and complied in
all material respects with all agreements and
conditions required by this Agreement and each of
the Other Sellers Documents to be performed or
complied with by it prior to or on the Closing Date.
Purchaser shall have delivered to Sellers a
certificate dated the Closing Date and signed by its
duly authorized officer, to the foregoing effect.
2. Consents and Approvals
. Purchaser have obtained all
Consents necessary to consummate the transactions
contemplated hereby.
3. Consideration and Other Miscellaneous Deliveries
.
Purchaser shall have delivered to Sellers at or
before the Closing, the following documents, all of
which shall be in form and substance acceptable to
Sellers and its counsel:
(i) A certified or cashiers checks or wire transfer
for the aggregate amount to be paid to each
Seller at the Closing pursuant to Section
2.03(a) hereof;
(ii) The Notes as set forth in Section 2.03(b);
- 55 -
(iii) Certified copies of the corporation actions
taken by Purchaser authorizing the execution,
delivery and performance of this Agreement;
(iv) A Certificate of Good Standing for Purchaser
from the Secretary of State of Delaware dated
no earlier than forty-five (45) days prior to
the Closing Date;
(v) Opinion letter of ▇▇▇▇▇▇▇▇▇ & Dreidame Co.,
L.P.A., counsel for Purchaser, addressed to
Sellers and dated the Closing Date.
4. Certain Employment Agreements
. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ shall have entered into the
employment agreements described in Section 8.01.
5.
Covenant Not to Compete Agreements. Sellers have
entered into the Covenant Not to Compete Agreements
set forth in Exhibits F, F-1, F-2, F-3 and F-4.
6.
Subordination Agreement. Sellers shall have entered
into the Subordination Agreement set forth in
Exhibit B.
7.
Pay-off Line of Credit Indebtedness. Simultaneous
with the closing, Company pays off, or Purchaser
assumes, the Line of Credit Indebtedness and
incident thereto procure the releases of any of the
Sellers of their guarantees of any of the Line of
Credit Indebtedness.
8.
Other Seller Documents. Purchaser shall have
entered into each of the Other Seller Documents to
which it is a party.
ARTICLE XIII
13.01
Closing. The Closing of the sale and purchase of the
Company Shares (the _Closing_) shall take place within
five (5) days after the satisfaction of all the
contingencies set forth herein, but no later than March
31, 1998 unless such date is extended in order to satisfy
any governmental request relating to the parties'
compliance with the provisions of the HSR Act at the
offices of ▇▇▇▇▇▇▇▇▇ & Dreidame, Cincinnati, Ohio, or at
such other time and/or place as the parties may mutually
agree upon. The Closing shall be deemed effective as of
the day of Closing. The day on which the Closing
actually occurs is herein sometimes referred to as the
Closing Date.
- 56 -
ARTICLE XIV
14. General Provisions
.
14.01 Further Documents
. The Parties will, upon request at any
time before or after Closing, execute, deliver and/or
furnish all such documents and instruments, and do or
cause to be done all such acts and things, as may be
reasonably necessary to carry out the purpose and intent
of this Agreement.
14.02 Publicity
. Neither the Sellers, nor Company, nor
Purchaser shall make any public announcements concerning
this transaction without the prior written consent of the
other Parties hereto. Nothing herein contained shall
restrict Company or Purchaser from communicating with its
employees concerning this transaction. Each Party shall
keep such communication confidential, and shall use its
best efforts to prevent its respective employees from
disseminating such information to the public. Nothing
herein contained shall prohibit any disclosure that is
required by law or a court of competent jurisdiction.
14.03 Expenses
. Except to the extent otherwise specifically
provided herein, Purchaser will bear and pay all of its
expenses incident to the transactions contemplated by
this Agreement which are incurred by Purchaser or its
representatives and Sellers shall bear and pay all of the
expenses incident to the transactions contemplated by
this Agreement which were incurred by Sellers or their
representatives. Sellers agree to cause Company (either
as an offset to the Purchase Price or by reimbursement)
to pay the cost of filings required of Seller and/or
Purchaser under the HSR Act.
14.04
Notices. All notices and other communications required
by this Agreement shall be in writing and shall be deemed
given if delivered by hand or mailed by registered mail
or certified mail, return receipt requested, to the
appropriate party at the following address (or at such
other address for a party as shall be specified by notice
pursuant hereto):
(a) If to Purchaser, to:
Pomeroy Computer Resources, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇ III, Esq.
▇▇▇▇▇▇▇▇▇ & Dreidame Co., L.P.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(b) If to Sellers, to:
▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
McAfee & ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
14.05 Binding Effect
. Except as may be otherwise provided
herein, this Agreement and all provisions hereof shall be
binding upon and shall inure to the benefit of the
Parties hereto and their respective heirs, legal
representatives, successors and assigns. Except as
otherwise provided in this Agreement, no Party shall
assign its rights or obligations hereunder prior to
Closing without the prior written consent of the other
Party.
14.06 Headings
. The headings in this Agreement are intended
solely for the convenience of reference and shall be
given no effect in the construction or interpretation of
this Agreement.
14.07
Schedules and Exhibits. Schedules and exhibits referred
to in this Agreement constitute and integral part of this
Agreement as if fully rewritten herein. Any disclosure
made on any Schedule or Exhibit delivered pursuant hereto
shall be deemed to have been disclosed for purposes of
any other Schedule or Exhibit required hereby.
14.08
Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original,
but all of which constitute together one and the same
document.
14.09 Governing
Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of
Oklahoma.
14.10 Severability
. If any provision of this Agreement shall
be held unenforceable, invalid or void to any extent for
any reason, such provision shall remain in force and
effect to the maximum extent allowable, if any, and the
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enforceability or validity of the remaining provisions of
this Agreement shall not be affected thereby.
14.11 Waivers, Remedies Accumulated
. No waiver of any right or
option hereunder by any Party shall operate as a waiver
of any other right or option, for the same right or
option with respect to any subsequent occasion for its
exercise, or of any right to damages. No waiver by any
Party or any breach of this Agreement or of any
representation or warranty contained herein shall be held
to constitute a waiver of any other breach or a
continuation of the same breach. All remedies provided
in this Agreement are in addition to all of the remedies
provided by law. No waiver of any of the provisions of
this Agreement shall be valid and enforceable unless such
waiver is in writing and signed by the party granting the
same.
14.12 Entire
Agreement. This Agreement and the agreements,
instruments and other documents to be delivered hereunder
constitute the entire understand and agreement concerning
the subject matter hereof. All negotiations between the
Parties hereto are merged into this Agreement, and there
are no representations, warranties, covenants,
understanding or agreements, oral or otherwise, in
relation thereto between the Parties other than those
incorporated herein and to be delivered hereunder.
Except as otherwise expressed or contemplated by this
Agreement, nothing expressed or implied in this Agreement
is intended or shall be construed so as to grant or refer
on any person, firm or corporation other than the Parties
hereto any rights or privileges hereunder. No
supplement, modification or amendment of this Agreement
shall be binding unless executed in writing by the
Parties hereto.
14.13
Business Records. Sellers shall be permitted to retain
copies of such books and records relating to the business
of Company as related to the accounting and tax matters
of the business, and have access to all original copies
of records so delivered to Purchaser at reasonable times,
for any reasonable business purpose, for a period of six
years after the Closing Date.
14.14 Construction of Agreement
. In the event this Agreement
is interpreted by any court of competent jurisdiction, no
Party shall be deemed the drafter of this Agreement and
such court of law shall not construe this Agreement or
any provision thereof against any Party as the drafter
thereof.
14.15 401(k) Plan
. Subject to the satisfaction of all
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applicable rules under the Code, Purchaser shall cause
Company to maintain its 401(k) Plan for the remainder of
the 1998 fiscal year of Company.
14.16
Knowledge. Whenever in this Agreement the terms
_knowledge_ or _best knowledge_ are used with respect to
any Party, it shall mean the actual knowledge of the
Party, or the officers and directors of the Party or
Company, as applicable.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
PURCHASER:
▇▇▇▇▇▇▇ COMPUTER RESOURCES,
INC.
By:
_______________________________
SELLERS:
___________________________________
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., Trustee
of the J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Revocable Trust
___________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
__________________________________
O. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
__________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
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____________________________________
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. (solely as
to the provisions of Section
11.04)
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