Exhibit 2.3
AGREEMENT
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This Agreement made as of this 18th day of July, 1997 by and among
Intelligent Electronics, Inc. ("IE"), XLConnect Solutions, Inc. (together
with its wholly-owned subsidiaries, XLConnect Systems, Inc. and XLConnect
Services, Inc., collectively being called "XLConnect"), XLSource, Inc.
("XLSource"), The Future Now, Inc. ("TFN"), E-C Computer Technical
Services, Inc. ("EC") and RCK Computers, Inc. ("RCK" and collectively with
XLSource, TFN and EC being called "Sellers").
BACKGROUND
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IE and Sellers are party to a certain Asset Purchase Agreement dated
July 1, 1997 (the "Purchase Agreement") with GE Capital Information
Technology Solutions Acquisition Corp. ("GE Acquisition"). Terms used
herein with initial capitals and not otherwise defined shall have the
meanings attributed to them in the Purchase Agreement. XLConnect has
executed a joinder to the Purchase Agreement agreeing to accept certain
obligations under specified sections thereof and is transferring to GE
Acquisition certain of XLConnect's Power By The Hour Agreements and related
Purchased Assets, including related Receivables (the "PBTH Receivables").
IE, the Sellers and XLConnect desire to make provision in this
Agreement for certain matters not covered by the Purchase Agreement,
including matters relating to the allocation of the Purchase Price and any
adjustments thereto, to the repurchase of any PBTH Receivables transferred
by XLConnect to GE Acquisition, to allocation of responsibility for
liquidated damages under Section 8.13 of the Purchase Agreement for failure
to use Best Efforts to Transfer All Account Knowledge, and to
indemnification claims asserted by GE Acquisition in connection with
Purchased Assets transferred by XLConnect.
NOW THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and the Purchase Agreement, and intending to be legally
bound, IE, Sellers and XLConnect hereby agree as follows:
1. Purchase Price Allocation And Adjustment. The parties agree that
XLConnect shall be entitled to receive the following portion of the
Purchase Price under the Purchase Agreement: (i) initially, on the Closing
Date, the sum of $4,750,000 plus ($4,533,000 being the amount of the
Estimated Net Assets Acquired from XLConnect) and (ii) ultimately, the sum
of $4,750,000 plus the Net Assets Acquired from XLConnect as adjusted
pursuant to Section 3.01(c) of the Purchase Agreement based on the Closing
Date Balance Sheet to be delivered by Sellers pursuant to said section.
XLConnect shall provide to Sellers information respecting the tangible net
book value of the Purchased Assets (exclusive of any tangible book value
attributable to the Power By The Hour Agreements) purchased by GE
Acquisition from XLConnect as of the Closing Date for inclusion in the
Closing Date Balance Sheet. To the extent that the Net Assets Acquired
(exclusive of any tangible book value attributable to the Power By The Hour
Agreements) from XLConnect at the Closing Date are less than the Estimated
Net Assets Acquired (exclusive of any book value attributable to the Power
By The Hour Agreements) from XLConnect, XLConnect shall pay such difference
to Sellers in cash. To the extent the Estimated Net Assets Acquired
(exclusive of any tangible net book value attributable to the Power By The
House Agreements) from XLConnect are less than the Net Assets Acquired
(exclusive of any net book value attributable to the Power By The Hour
Agreements) from XLConnect at the Closing Date, Sellers shall pay such
difference to XLConnect in cash. The payments from XLConnect to Sellers
or Sellers to XLConnect, as the case may be, shall be made concurrently
with the payment required in conjunction with the Post-Closing
Adjustment pursuant to the first sentence of Section 3.01(c)(iii) of the
Purchase Agreement.
2. Repurchase Of Accounts Receivable.
a. Pursuant to Section 3.10 of the Purchase Agreement, Buyer has
certain rights to require XLSource to repurchase the Receivables, including
the PBTH Receivables, purchased by GE Acquisition that remain uncollected
on a date 120 days following the Closing Date. In the event that any of
the PBTH Receivables are required by GE Acquisition so to be repurchased,
XLConnect agrees, within two business days of notice from XLSource, to
repurchase such receivables from XLSource for a purchase price equal to the
purchase price paid by XLSource to GE Acquisition.
b. Under the terms of the Purchase Agreement, IE and Sellers are
required to reimburse GE Acquisition monthly in advance for GE
Acquisition's cost to carry the uncollected Receivables, including the PBTH
Receivables, acquired by Buyer on the Closing Date at a rate equal to 6.5%
per annum on the average monthly outstanding balance of uncollected
Receivables. XLConnect agrees to reimburse IE and Sellers for any Cost of
Carry incurred by IE and Sellers in connection with any of the PBTH
Receivables. Such amounts are to be reimbursed within two business days of
the receipt by XLConnect of an invoice therefor from IE or Sellers from
time to time during the period that IE and Sellers are required to pay GE
Acquisition such Costs of Carry.
3. Transfer of Account Knowledge. Each of the parties has agreed
pursuant to Section 8.13 of the Purchase Agreement to use its Best Efforts
to Transfer All Account Knowledge to GE Acquisition with respect to certain
identified accounts transferred to GE Acquisition, and IE and Sellers are
jointly and severally liable to pay GE Acquisition $1,000,000 as liquidated
damages with respect to each such account in respect of which such
undertaking shall not have been performed within six months of the Closing
Date. XLConnect agrees to reimburse IE and/or Seller(s) promptly for any
liquidated damages payable to GE Acquisition pursuant to such Section 8.13
in the event and to the extent the non-performance of the obligation to use
Best Efforts to Transfer All Account Knowledge is attributable solely to
XLConnect's breach of its undertakings in Section 8.13. In the event
liquidated damages are payable under Section 8.13 by reason of non-
performance of the Best Efforts to Transfer All Account Knowledge
undertakings attributable to a breach of such undertakings by both
XLConnect and IE and/or any Seller(s), XLConnect agrees to reimburse IE
and/or Sellers promptly for a portion of any liquidated damages under said
Section 8.13 determined based on XLConnect's relative responsibility for
the breach resulting in the liquidated damages payment versus the relative
responsibility of IE and/or such Seller(s).
4. Indemnification. (a) The parties acknowledge and agree that IE
and Sellers have certain obligations to indemnify GE Acquisition under the
terms of Section 8.03 of the Purchase Agreement and that certain of such
indemnification obligations relate to or may arise out of breaches by
XLConnect of representations and warranties made by XLConnect in the
agreement or breaches of covenants or agreements undertaken by XLConnect in
connection with its joinder under the Agreement. XLConnect hereby agrees
to reimburse IE and any Seller for any amounts incurred by IE or any Seller
by reason of the indemnification undertakings under said Section 8.03
arising out of or based upon (i) any incorrectness or incompleteness in the
representations and warranties made by XLConnect in the Purchase Agreement,
(ii) any breach in any material respect by XLConnect of any covenants or
agreement of XLConnect contained in or arising out of its joinder in the
Purchase Agreement and (iii) any and all actions, suits, proceedings,
claims, demands, assessments and judgments incidental to the foregoing or
the enforcement of such indemnification. IE and Sellers agree that in the
case that any claim for indemnification is asserted against any of them
under the Purchase Agreement in respect of which any of them would have a
right to make a claim for reimbursement by XLConnect under the provisions
of this Section 3, IE and/or such Seller(s) shall promptly notify XLConnect
of the assertion of such claim and permit XLConnect to participate in the
defense of any such claim.
(b) IE and Sellers agree to indemnify, defend and hold harmless
XLConnect from any claim asserted against or liability imposed on XLConnect
under the Purchase Agreement arising out of or based upon (i) any
incorrectness or incompleteness in the representations and warranties made
by IE and/or Sellers in the Purchase Agreement, (ii) any breach in any
material respect by IE and/or Sellers of any covenants or agreement of IE
and/or Sellers contained in or arising out of the Purchase Agreement and
(iii) any and all actions, suits, proceedings, claims, demands, assessments
and judgments incidental to the foregoing or the enforcement of such
indemnification.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date and year first above written.
INTELLIGENT ELECTRONICS, INC.
By: /s/ Xxxx Rsneck
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Secretary
XLCONNECT SOLUTIONS, INC.
By: /s/ Xxxx X. Xxxxx, Xx.
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Vice President
XLSOURCE, INC.
By: /s/ Xxxx Xxxxxxx
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Secretary
THE FUTURE NOW, INC.
By: /s/ Xxxx Xxxxxxx
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Secretary
E-C COMPUTER TECHNICAL SERVICES, INC.
By: /s/ Xxxx Xxxxxxx
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Secretary
RCK COMPUTERS, INC.
By: /s/ Xxxx Xxxxxxx
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Secretary
