FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (date of earliest event reported): October 11, 1996
DATAFLEX CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey 0-15551 22-2163376
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
2145 Calumet Avenue, Clearwater, Florida 34625
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code:(813) 562-2200
Not Applicable
(Former name or former address, if changed since last report)
Page 1 of pages
<PAGE>
Item 1. Changes in Control of Registrant
Not Applicable
Item 2. Acquisition or Disposal of Assets
Pursuant to an Asset Purchase Agreement dated August 30,
1996, between Dataflex Corporation and AmeriData of New
Jersey, Inc., the Company sold certain of its assets and
transferred certain of its liabilities relating to its
business operations, primarily located in the states of
New York, New Jersey, Illinois and Wisconsin ("Northeast
Region"). These operations generally involve the sale of
goods and services relating to personal computers,
including hardware, operating systems and software. The
closing occurred on October 11, 1996. The Company
received an initial payment of $43,500,000, $5,000,000 of
which is being held in escrow. The Asset Purchase
Agreement provides that the remaining unpaid portion of
the purchase price will be paid in cash subject to
certain adjustments and other conditions as defined in
the Agreement on April 30, 1997.
Item 3. Bankruptcy or Receivership
Not Applicable
Item 4. Changes in Registrant's Certifying Accountant
Not Applicable
Item 5. Other Events
Not Applicable
Item 6. Resignation of Registrant's Directors
Not Applicable.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
Not Applicable
(b) Pro forma financial information
Unaudited proforma consolidated balance sheet of
Dataflex as of June 30, 1996 reflecting the
disposition of the Northeast Region as if the
transaction had occurred as of June 30, 1996.
Unaudited proforma consolidated statements of
operations for the three months ended June 30, 1996
and for the year ended March 31, 1996 as if the
transaction had occurred at the beginning of the
periods indicated.
(c) Exhibits
- Purchase Agreement dated August 30, 1996.
Item 8. Change in Fiscal Year.
Not Applicable.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
DATAFLEX CORPORATION
BY:/s/ Richard C. Rose
RICHARD C. ROSE,
Chairman
Dated: October 28, 1996
<PAGE>
<TABLE>
<CAPTION>
DATAFLEX CORPORATION
PROFORMA CONSOLIDATED BALANCE SHEET
June 30, 1996
Unaudited
Proforma
Historical Adjustments Proforma
<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 2,064 $ 2,064
Accounts receivable, net 44,341 $ 17,711 26,630
Inventory 29,571 21,515 8,056
Net assets held for sale 4,500 4,500 -
Deferred tax asset 300 300
Income tax receivable 2,206 2,206
Other current assets 11,448 (5,275) 16,723
___________ _________ _______
Total current assets 94,430 38,451 55,979
Property and equipment, net 9,747 5,699 4,048
Deferred tax asset 1,700 (654) 2,354
Goodwill 18,525 3,699 14,826
Other assets 658 106 552
___________ __________ ________
Total Assets $ 125,060 $ 47,301 $ 77,759
Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of long-term
debt $ 7,213 $ 7,003 $ 210
Accounts payable 20,020 5,690 14,330
Accrued expenses and other
payables 7,713 2,263 5,450
____________ _________ ________
Total current liabilities 34,946 14,956 19,990
Long-term debt 58,342 31,072 27,270
Other long-term liabilities 209 5 204
________ _______ ______
Total liabilities 93,497 46,033 47,464
Shareholders' Equity:
Common stock 23,196 23,196
Loans receivable (194) (194)
Retained earnings 9,156 1,268 7,888
Treasury stock (595) (595)
________ ______ _______
Total shareholders' equity 31,563 1,268 30,295
________ ______ _______
Total Liabilities and
Shareholders' Equity $125,060 $ 47,301 $ 77,759
</TABLE>
The accompanying notes are an integral part of these proforma consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
DATAFLEX CORPORATION
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1996
(In thousands, except per share amounts)
Unaudited
Northeast
Region
Proforma
Historical Adjustments Proforma
<S> <C> <C> <C>
Revenue
Equipment $ 75,952 $ 36,125 $ 39,827
Service 10,079 7,045 3,034
__________ __________ __________
Total revenue 86,031 43,170 42,861
Cost of Revenue
Equipment 67,376 32,758 34,618
Service 8,286 5,938 2,348
__________ __________ __________
Total cost of revenue 75,662 38,696 36,966
Gross profit 10,369 4,474 5,895
Selling, general &
administrative 9,430 4,728 4,702
Amortization of goodwill 191 38 153
_________ _________ __________
Operating income 748 (292) 1,040
Interest expense 1,684 1,060 624
_________ ________ _________
(Loss) income before
income taxes (936) (1,352) 416
(Benefit from) provision for
income taxes (402) (581) 179
_________ ________ _________
Net (loss) income ($534) ($771) $ 237
(Loss) earnings per share ($0.10) $ 0.04
</TABLE>
The accompanying notes are an integral part of these proforma consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
DATAFLEX CORPORATION
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1996
(In thousands, except per share amounts)
Unaudited
Western Northeast
Region Region
Proforma Proforma
Historical Adjustments Adjustments Proforma
<S> <C> <C> <C> <C>
Revenue
Equipment $ 422,532 $ 138,466 $ 151,806 $ 132,260
Service 49,569 16,877 23,102 9,590
_________ _________ _________ _________
Total revenue 472,101 155,343 174,908 141,850
_________ _________ _________ _________
Cost of Revenue
Equipment 378,490 122,759 139,096 116,635
Service 41,101 14,946 18,822 7,333
_________ _________ _________ ________
Total cost of revenue 419,591 137,705 157,918 123,968
Gross profit 52,510 17,638 16,990 17,882
Selling, general &
administrative 42,995 15,210 12,716 15,069
Amortization of goodwill 1,265 519 152 594
Restructuring and other charges 5,353 928 4,425 -
__________ ________ ________ _______
Operating income 2,897 981 (303) 2,219
Interest expense 8,063 3,100 3,800 1,163
Loss on disposition of
businesses 4,632 4,632 -
__________ ________ ________ ________
(Loss) income before
income taxes (9,798) (6,751) (4,103) 1,056
(Benefit from) provision for
income taxes (3,463) (2,363) (1,436) 370
__________ ________ ________ ________
Net (loss) income ($6,335) ($4,388) ($2,667) $ 686
(Loss) earnings per share $ (1.22) $ 0.13
</TABLE>
The accompanying notes are an integral part of these proforma consolidated
financial statements.
<PAGE>
Dataflex Corporation
Notes to Unaudited Consolidated Proforma Financial Statements
1. As described in Item 2, on October 11, 1996, Dataflex
completed the sale of certain of its business operations
located in Edison, New Jersey, New York City, New York,
Bensenville, Illinois and Milwaukee, Wisconsin ("Northeast
Region"). In addition, on May 24, 1996, Dataflex completed
the sale of certain of its business operations located in
California and Arizona ("Western Region"). Dataflex's
historical financial results have been restated on a proforma
basis to reflect these transactions. These proforma
consolidated financial statements should be read in
conjunction with the historical consolidated financial
statements and notes thereto of Dataflex. Additionally, the
proforma consolidated financial statements are not necessarily
indicative of the actual results that would have been achieved
had the transaction occurred on those dates, nor are they
necessarily indicative of future results.
2. All summary consolidated balance sheet proforma adjustments
assume the transaction described in Item 2 was consummated on
the balance sheet date. The proforma balance sheet adjustment
gives effect for the disposition of substantially all tangible
assets and certain liabilities of the Northeast Region.
Dataflex currently estimates that any subsequent adjustments
to the sale price of the Northeast Region will not be material
and the proforma consolidated financial statements do not
reflect any subsequent increase or decrease to the sale price.
The net proceeds from the sale of the Northeast Region have
been reflected as a reduction of debt.
3. All summary consolidated statement of operations proforma
adjustments assume the sale of the Northeast Region and the
Western Region giving rise to the adjustments was consummated
immediately prior to the first day of the period presented;
accordingly, the loss from these transactions is not reflected
in the consolidated statements of operations for the periods
presented. Dataflex currently estimates that any subsequent
adjustments to the sales price of each transaction will not be
material and the proforma consolidated financial statements do
not reflect any subsequent increase or decrease to the sale
price.
The proforma consolidated statement of operations gives effect
for the following unaudited proforma adjustments:
(i) Elimination of the results of operations associated with
the Northeast Region operations for the periods
presented. Elimination of the results of operations
associated with the Western Region operations for the
twelve months ended March 31, 1996.
(ii) Elimination of interest expense based on the assumed
reduction in debt.
(iii) Calculation of the proforma tax provision using the
statutory rates for the periods presented in
accordance with generally accepted accounting
principles.
<PAGE>
EXHIBIT
CONFORMED COPY
ASSET PURCHASE AGREEMENT
dated August 30, 1996
between
AMERIDATA OF NEW JERSEY INC.
and
DATAFLEX CORPORATION
<PAGE>
Table of Contents
Page
ARTICLE I Definitions . . . . . . . . . . . . . . . . 1
ARTICLE II Purchase and Sale of Assets . . . . . . . . 1
Section 2.01 Transfer of Assets; Assumption of
Assumed Liabilities. . . . . . . . . . 1
ARTICLE III Purchase Price. . . . . . . . . . . . . . . 2
Section 3.01 Purchase Price . . . . . . . . . . . . 2
Section 3.02 Assumed Liabilities. . . . . . . . . . 4
ARTICLE IV Closing . . . . . . . . . . . . . . . . . . 4
Section 4.01 The Closing Date . . . . . . . . . . . 4
Section 4.02 Certificates, Instruments of
Transfer, Etc. . . . . . . . . . . . . 4
ARTICLE V Representations and Warranties. . . . . . . 5
Section 5.01 Representations and Warranties of
Seller . . . . . . . . . . . . . . . . 5
(a) Organization; Good Standing. . . . . . 5
(b) Corporate Authorization. . . . . . . . 6
(c) Purchased Assets; Business . . . . . . 6
(d) Litigation . . . . . . . . . . . . . . 8
(e) No Conflict. . . . . . . . . . . . . . 8
(f) Financial Statements; Books and
Records; Reserve for Bad Debts; No
Material Adverse Change. . . . . . . . 9
(g) Absence of Undisclosed Liabilities
and Obligations. . . . . . . . . . . . 9
(h) Taxes. . . . . . . . . . . . . . . . . 10
(i) No Brokers . . . . . . . . . . . . . . 10
(j) Environmental Compliance . . . . . . . 10
(k) Employee Benefit Information . . . . . 12
(l) Labor Disagreements. . . . . . . . . . 14
(m) Insurance. . . . . . . . . . . . . . . 14
(n) Intangible Assets; Confidentiality
Agreements . . . . . . . . . . . . . . 14
(o) Employees. . . . . . . . . . . . . . . 15
(p) Client List. . . . . . . . . . . . . . 15
(q) Absence of Certain Changes or
Events . . . . . . . . . . . . . . . . 16
(r) Compliance with Laws . . . . . . . . . 18
(s) Transactions with Certain Persons. . . 18
(t) Disclosure . . . . . . . . . . . . . . 18
(u) Summary of Agreements. . . . . . . . . 18
Section 5.02 Representations and Warranties
of Buyer . . . . . . . . . . . . . . . 19
(a) Organization; Good Standing. . . . . . 19
(b) Corporate Authorization. . . . . . . . 19
(c) No Conflict. . . . . . . . . . . . . . 19
(d) No Brokers . . . . . . . . . . . . . . 19
ARTICLE VI Conditions Precedent to Obligations
of Buyer and Seller . . . . . . . . . . . . 20
Section 6.01 Conditions Precedent to Obligations
of Buyer . . . . . . . . . . . . . . . 20
(a) Representations and Warranties . . . . 20
(b) Delivery of Closing Documents. . . . . 20
(c) Opinion of Counsel for Seller. . . . . 20
(d) Litigation . . . . . . . . . . . . . . 22
(e) No Material Adverse Effect . . . . . . 22
(f) No Change in Law . . . . . . . . . . . 22
(g) No Unexpected Liability. . . . . . . . 22
(h) Approvals and Consents . . . . . . . . 23
(i) Letter of Credit or Escrow
Agreement. . . . . . . . . . . . . . . 23
(j) HSR Act. . . . . . . . . . . . . . . . 23
(k) Release from Confidentiality and
Noncompetition Agreements. . . . . . . 23
(l) Release of ICC Financing Liens . . . . 23
(m) Rose Employment Agreement. . . . . . . 23
(n) Environmental Reviews. . . . . . . . . 24
(o) Letter of Non-applicability. . . . . . 24
Section 6.02 Conditions Precedent to Obligations
of Seller. . . . . . . . . . . . . . . 24
(a) Compliance with Covenants. . . . . . . 24
(b) Representations and Warranties . . . . 24
(c) Delivery of Closing Documents. . . . . 24
(d) Opinion of Counsel for Buyer . . . . . 24
(e) Consideration. . . . . . . . . . . . . 26
(f) Litigation . . . . . . . . . . . . . . 26
(g) No Change in Law . . . . . . . . . . . 26
(h) HSR Act. . . . . . . . . . . . . . . . 26
ARTICLE VII Documents To Be Delivered on Closing
Date. . . . . . . . . . . . . . . . . . . . 26
Section 7.01 Documents To Be Delivered by Seller
on Closing Date. . . . . . . . . . . . 26
(a) Opinion of Counsel . . . . . . . . . . 26
(b) Officer's Certificates . . . . . . . . 26
(c) Bills of Sale. . . . . . . . . . . . . 26
(d) Assumption Agreement . . . . . . . . . 26
(e) Further Instruments. . . . . . . . . . 27
(f) Closing Purchased Inventory,
Purchased Spare Parts and Purchased
Receivables. . . . . . . . . . . . . . 27
(g) Letter of Credit and Escrow
Agreement. . . . . . . . . . . . . . . 27
(h) Letter of Non-applicability. . . . . . 27
Section 7.02 Documents To Be Delivered by Buyer
on Closing Date. . . . . . . . . . . . 27
(a) Conditions Precedent . . . . . . . . . 27
(b) Officer's Certificate. . . . . . . . . 27
(c) Assumption Agreement . . . . . . . . . 27
(d) Escrow Agreement . . . . . . . . . . . 27
(e) Further Instruments. . . . . . . . . . 27
ARTICLE VIII Further Covenants and Agreements
Seller and Buyer. . . . . . . . . . . . . . 28
Section 8.01 Further Covenants and Agreements of
Seller . . . . . . . . . . . . . . . . 28
(a) Conduct of Business Pending Closing. . 28
(b) Competition. . . . . . . . . . . . . . 28
(c) Certain Information; Access to
Businesses . . . . . . . . . . . . . . 29
(d) Non-Solicitation . . . . . . . . . . . 29
(e) Changes in Representations and
Warranties . . . . . . . . . . . . . . 30
(f) Further Assurances . . . . . . . . . . 30
(g) No Mergers, Consolidations, Sales of
Assets, Etc. . . . . . . . . . . . . . 30
(h) Seller's Financial Statements. . . . . 30
(i) Payment of Accrued Vacation Amounts. . 31
(j) Taxes. . . . . . . . . . . . . . . . . 31
(k) Confidentiality and Noncompetition
Agreements . . . . . . . . . . . . . . 31
(l) Telephone and Facsimile Numbers. . . . 31
(m) Audit of the Business of the Sites.. . 31
(n) Backlog Report . . . . . . . . . . . . 31
(p) Use of Dataflex Name . . . . . . . . . 31
Section 8.02 Consents to Assignments; Permits . . . 31
Section 8.03 Further Covenants and Agreements of
Buyer. . . . . . . . . . . . . . . . . 33
(a) Customer List. . . . . . . . . . . . . 33
(b) Non-Solicitation . . . . . . . . . . . 33
(c) Certain Services . . . . . . . . . . . 33
Section 8.04 Mutual Covenants . . . . . . . . . . . 34
(a) Best Efforts To Meet Closing
Conditions . . . . . . . . . . . . . . 34
(b) Announcements; Confidentiality . . . . 34
(c) Employment Procedures. . . . . . . . . 34
(d) Collection of Receivables. . . . . . . 35
(e) HSR Filing . . . . . . . . . . . . . . 36
(f) Further Assurances . . . . . . . . . . 36
Section 8.05 Survival of Representations and
Warranties; Indemnities. . . . . . . . 36
Section 8.06 Allocations of Purchase Price. . . . . 39
Section 8.07 Resolution of Disputes . . . . . . . . 40
Section 8.08 Purchased Spare Parts, Purchased
Inventory Amount and Valuation . . . . 40
ARTICLE IX Miscellaneous . . . . . . . . . . . . . . . 40
Section 9.01 Expenses . . . . . . . . . . . . . . . 40
Section 9.02 Termination. . . . . . . . . . . . . . 41
Section 9.03 Benefit; Assignment. . . . . . . . . . 41
Section 9.04 Governing Law. . . . . . . . . . . . . 41
Section 9.05 Notices. . . . . . . . . . . . . . . . 41
Section 9.06 Headings . . . . . . . . . . . . . . . 42
Section 9.07 Counterparts . . . . . . . . . . . . . 42
Section 9.08 Entire Agreement . . . . . . . . . . . 42
Section 9.09 Waiver; Amendment; Modification. . . . 43
Section 9.10 Severability . . . . . . . . . . . . . 43
Section 9.11 Press Releases . . . . . . . . . . . . 43
APPENDIX A - Definitions
EXHIBIT A-1 - Form of Assumption Agreement
EXHIBIT A-2 - Form of Escrow Agreement
EXHIBIT A-3 - Assumed Trade Payables
EXHIBIT 5.01(c)(1) - Assumed Agreements
EXHIBIT 5.01(c)(2)(i) - Existing Defaults
EXHIBIT 5.01(c)(2)(ii) - Encumbrances
EXHIBIT 5.01(c)(2)(iii) - Backlog Report
EXHIBIT 5.01(c)(5) - Description of Nature and
Operations of Sites and Purchased
Inventory and Receivables for Each
Site
EXHIBIT 5.01(c)(6) - Other Assets Necessary for
Operation of Sites
EXHIBIT 5.01(d) - Litigation
EXHIBIT 5.01(e) - Conflicts
EXHIBIT 5.01(k) - Employee Benefit Information
EXHIBIT 5.01(l)(iii) - Labor Claims
EXHIBIT 5.01(m) - Insurance Policies
EXHIBIT 5.01(n)(1) - Intellectual Properties
EXHIBIT 5.01(n)(2) - Confidentiality Agreements
EXHIBIT 5.01(o) - Employees
EXHIBIT 5.01(p) - List of 10 Largest Clients for
Each Site
EXHIBIT 5.01(q) - Certain Changes and Events
EXHIBIT 5.01(s) - Related Party Transactions
EXHIBIT 6.01(g) - Material Changes; Undisclosed
Liabilities
EXHIBIT 6.01(h) - Required Consents to Assignment of
Assumed Agreements
SCHEDULE A - Accrued Expenses
SCHEDULE B - Prepaid Expenses
SCHEDULE C - Purchased Spare Parts and Values
<PAGE>
ASSET PURCHASE AGREEMENT dated August 30, 1996, by
and between AMERIDATA OF NEW JERSEY INC., a Delaware
corporation ("Buyer"), DATAFLEX CORPORATION, a New Jersey
corporation ("Seller").
WHEREAS, Seller wishes to sell to Buyer and Buyer
wishes to purchase from Seller, certain properties, rights
and assets of Seller and to assume certain liabilities of
Seller, each as described herein.
NOW, THEREFORE, in consideration of the premises
and of the mutual representations, warranties and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
For the purposes hereof, capitalized terms used
herein shall have the respective meanings assigned to them
in Appendix A hereto or elsewhere herein. References in
this Agreement to articles, sections, paragraphs, clauses
and exhibits are to articles, sections, paragraphs, clauses
and exhibits in or to this Agreement unless otherwise
indicated.
ARTICLE II
Purchase and Sale of Assets
Section 2.01 Transfer of Assets; Assumption of
Assumed Liabilities. Subject to the terms and conditions of
this Agreement, on the Closing Date (a) Seller will, subject
to Section 8.02, (i) assign to Buyer all of Seller's rights,
title and interests under the Assumed Agreements, (ii) sell,
convey, assign, deliver and transfer to Buyer the Purchased
Assets, and (iii) deliver to Buyer all Qualified Documents
not theretofore delivered to Buyer, in the case of each of
(i), (ii) and (iii) as the same may exist at the Closing
Date and (b) Buyer will undertake, assume and agree to
perform and otherwise pay, satisfy and discharge, in
accordance with their respective terms, the Assumed
Agreements, the Assumed Trade Payables and the Accrued
Expenses. With respect to any accounts receivable of Seller
which are not Purchased Receivables (the "Non-Purchased
Receivables"), Seller shall, at the Closing, assign the Non-
Purchased Receivables to Buyer. For 120 days following the
Closing Date, if and when Buyer collects any amounts with
respect to any Non-Purchased Receivables, Buyer shall as
promptly as practicable transfer such amounts to Seller to
such account of Seller as Seller shall have previously
notified Buyer in writing. Following the end of such 120-
day period, any Non-Purchased Receivables not collected
shall be reassigned by Buyer to Seller. Buyer and Seller
acknowledge that Buyer shall have no obligation to use any
efforts outside of the ordinary course of business to
collect the Non-Purchased Receivables, including, without
limitation, hiring any collection agency or commencing any
collection lawsuits.
ARTICLE III
Purchase Price
Section 3.01 Purchase Price. (a) In
consideration of the transfer of the Purchased Assets and
subject to the terms and conditions of this Agreement, on
the Closing Date, the Buyer shall pay the Purchase Price to
Seller by delivering to Seller (i) in cash, the Asset Price
plus the amount of Prepaid Expenses, minus the aggregate
amount of the Assumed Trade Payables, minus the aggregate
amount of the Accrued Expenses and minus $5,000,000 and as
further adjusted as provided in Section 3.01(d) below, by
wire transfer(s) to Seller's account(s) at a bank(s)
specified by Seller, and (ii) $5,000,000 by wire transfer to
be held pursuant to the terms of the Escrow Agreement;
provided, however, Seller may, at any time on or after the
Closing Date upon five days written notice to Buyer, by
delivery to Buyer of the Letter of Credit duly executed by
the issuing bank, substitute the Letter of Credit for the
Escrow Agreement and upon such substitution the Escrow
Property shall promptly be returned to Seller.
(b) As promptly as practicable after the Closing Date
(and in any event within 60 days thereafter) Seller shall
deliver to Buyer the Seller's unaudited financial statements
with respect to the Business for the period from June 30,
1996 to the Closing Date ("Closing Date Financials").
Subject to Section 3.01(c), on or before the date that is
thirty days following the date of receipt by Buyer of the
Closing Date Financials, Buyer agrees to pay (or, if such
amount is negative, Seller agrees to pay to Buyer) an amount
equal to the difference between (i) the Asset Price as of
June 30, 1996 plus the amount of Prepaid Expenses, minus the
Assumed Trade Payables and minus the aggregate amount of the
Accrued Expenses and (ii) the Asset Price as of the Closing
Date plus the amount of prepaid expenses of the Business as
of the Closing Date (computed in accordance with GAAP),
minus the Closing Date Payables and minus the aggregate
amount of accrued expenses of the Business as of the Closing
date (computed in accordance with GAAP).
(c) Within thirty days after receipt of the Closing
Date Financials, Buyer shall communicate in writing to
Seller any objection or disagreement that it may have to
such statements and adjustments, which communication shall
state with reasonable specificity the basis for such
objection or disagreement. Seller shall have fifteen (15)
days after receipt of such Buyer's communication in which to
respond in writing to Buyer's objections and disagreements.
If, after five days following such fifteen day period, Buyer
and Seller have not resolved the matter in dispute, such
matter shall be submitted to Coopers & Lybrand L.L.P.
(or any other nationally recognized independent certified
public accountants, as Buyer and Seller may agree) for
determination. Such determination shall be made on or prior
to the date that is ninety days following the date of the
initial receipt by Buyer of the Closing Date Financials and
shall be binding on Buyer and Seller in the absence of clear
and convincing error. The cost of such accountants shall be
paid one-half by Buyer and one-half by Seller.
(d) Seller shall provide to Buyer not more than five
days prior to the Closing Date, a list (the "Spare Parts
List") as of such date of all spare parts at the Specified
Locations. To the extent that (i) any part was on Schedule
C hereto, but is not on the Spare Parts List because it was
used or otherwise disposed of by Seller prior to the date of
the Spare Parts List, the Purchase Price will be reduced by
an amount equal to 80% of the valuation of such part set
forth on Schedule C, and (ii) any part was on the Spare
Parts List but was not on Schedule C, because it was
acquired by Seller following the date hereof, the Purchase
Price will be increased by the lesser of the cost or the
fair market value of such part computed in accordance with
GAAP, but only as to the first $150,000 in value (computed
as provided in clause (ii)) of such parts (with any spare
parts in excess of such $150,000 to result in an increase of
the Purchase Price at Buyer's sole discretion). Any spare
parts which result in an increase in Purchase Price pursuant
to clause (ii) of the immediately preceding sentence shall
be deemed to be Purchased Spare Parts for all purposes of
this Agreement.
(e) Not later than 10 days following the Closing Date,
Seller shall provide to Buyer a list (the "Closing List") of
all spare parts at the Specified Locations as of the Closing
Date. To the extent that (i) any part was on Schedule C but
is not on the Closing List because it was used or otherwise
disposed of by Seller prior to the Closing Date, Seller will
pay to Buyer, within 15 days of the Closing Date, an amount
equal to 80% of the valuation of such spare part set forth
on Schedule C, and (ii) any spare part was on the Closing
List but was not on Schedule C, because it was acquired by
Seller following the date of the Spare Parts List, Buyer
will pay to Seller, within 15 days of the Closing Date, an
amount equal to the lesser of the cost or the fair market
value of such part computed in accordance with GAAP, but
only as to the first $150,000 in value (computed as provided
in clause (ii)) of such parts (with such $150,000 being
inclusive of any spare parts which resulted in a Purchase
Price increase pursuant to Section 3.01(d)), and with any
excess to be paid for by Buyer at Buyer's sole discretion.
Any spare parts for which Buyer makes a payment pursuant to
the immediately preceding sentence shall be deemed to be
Purchased Spare Parts for all purposes of this Agreement.
(f) Seller shall execute and deliver, at its own cost
and expense, such bills of sale and other instruments as
shall be necessary to evidence the transfer to Buyer of the
Purchased Spare Parts contemplated by the last sentences of
each of Section 3.01(d) and (e).
Section 3.02 Assumed Liabilities. Buyer will
assume or become liable to pay, perform or discharge the
Assumed Agreements, the Assumed Trade Payables and the
Accrued Expenses and Buyer will not assume or become liable
to pay, perform or discharge any other obligation or
liability of Seller, whether arising before, on or after the
Closing Date, other than the Assumed Agreements, the Assumed
Trade Payables and the Accrued Expenses.
ARTICLE IV
Closing
Section 4.01 The Closing Date. The purchase and
sale provided for in this Agreement (the "Closing") shall
take place at the offices of Dewey Ballantine, 1301 Avenue
of the Americas, New York, New York 10019 at 10:00 a.m. New
York time, on September 27, 1996 (or, if later, not more
than five business days following the satisfaction of all
conditions to Closing set forth herein), or at such other
time, date or place as Seller and Buyer may mutually agree
(the "Closing Date").
Section 4.02 Certificates, Instruments of
Transfer, Etc. (a) Seller agrees that the sale and trans-
fer of the Purchased Assets shall be made by the bills of
sale, assignments and other instruments of transfer referred
to in Section 7.01.
(b) Buyer and Seller agree to use reasonable
efforts to minimize sales, use, transfer and similar
transaction Taxes, if any, payable in connection with the
transactions contemplated by this Agreement, provided that
such efforts shall not expose any of such parties to any
additional cost or risk. Seller agrees to pay one hundred
percent (100%) of any such Taxes.
(c) Further Assurances. Seller will cooperate
fully with Buyer in connection with the transactions
contemplated by this Agreement. Without limiting the
generality of the foregoing, from and after the Closing
Date, from time to time, at Buyer's request and without
further consideration, Seller will execute and deliver such
other instruments, including powers of attorney, and take
such other action as Buyer may reasonably request to more
effectively put Buyer in possession and operating control of
all or any part of the Purchased Assets.
(d) From and after the Closing Date, Buyer shall
have the right and the authority to collect for its own
account all Purchased Receivables which shall be transferred
to Buyer as provided herein and to endorse with the name of
the Seller any checks received on account of such Purchased
Receivables. From and after the Closing Date, Seller will,
promptly following receipt thereof, transfer and deliver to
Buyer any cash or other property that it may receive in
respect of such Purchased Receivables and until so
transferred and delivered the same shall be deemed to be
held in trust for Buyer. From and after the Closing Date,
Buyer shall also have the right to compromise, settle and
obtain the release of all claims and liabilities related to
the Assumed Agreements and to open all mail and packages and
receive all communications and deliveries addressed to the
Seller at any of the Sites on the Closing Date; provided,
however, Buyer shall forward all mail and packages not
related to the Purchased Assets or Assumed Agreements to the
Seller at the address of the Seller specified in Section 14
hereof.
ARTICLE V
Representations and Warranties
Section 5.01 Representations and Warranties of
Seller. Seller represents and warrants to Buyer as follows:
(a) Organization; Good Standing. Seller is a
corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey and has
the corporate power and authority to own or lease its
properties and to conduct its business as currently
conducted, and Seller is qualified and in good standing as a
foreign corporation authorized to do business in all
jurisdictions where failure to qualify would have a material
adverse effect on Buyer or the conduct by Buyer after the
Closing Date of a business at the Sites substantially
similar to the Business.
(b) Corporate Authorization. The execution,
delivery and performance by Seller of this Agreement, the
Assumption Agreement, and the bills of sale, assignments and
other instruments of transfer referred to in this Agreement
to which it is a party have been authorized and approved by
all requisite corporate action on the part of Seller, and no
other corporate approval or authorization is required on the
part of Seller, any trustee, any party to the ICC Financing
(except as have been obtained) or any other person by law or
otherwise in order to make this Agreement, the Assumption
Agreement, and the bills of sale, assignments and other
instruments of transfer referred to in this Agreement the
valid, binding and enforceable obligations of Seller
(subject to the receipt of required consents to assignments
of the Assumed Agreements). No action or approval by, or
consent or vote of, all or any percentage of the holders of
common stock of Seller is required to authorize Seller to
enter into this Agreement or to consummate the transactions
contemplated hereby.
(c) Purchased Assets; Business. (i) Exhibit
5.01(c)(1) is a full and complete list of the Assumed
Agreements. True and complete copies of the Assumed
Agreements (including any side agreements, letters or other
instruments constituting amendments or modifications
thereof) have been furnished to Buyer.
(ii) Except as set forth on Exhibit
5.01(c)(2)(i), Seller is not in default (and, to Seller's
knowledge, there is as of the date of this Agreement no
other default and no event which, with notice or lapse of
time or both, would constitute a default) in any material
respect under any of the Assumed Agreements. Each Assumed
Agreement is in full force and effect. Seller has the right
to assign the Assumed Agreements to which it is a party,
subject to restrictions on assignment contained in the
Assumed Agreements, and except for the Encumbrances set
forth on Exhibit 5.01(c)(2)(ii) which will be removed by
Seller on or prior to the Closing Date and the lien for
Taxes not yet due, Seller has not otherwise assigned,
pledged or encumbered its interest in the Assumed Agreements
to which it is a party. No obligation of Seller under any
Assumed Agreement is in excess of the normal, ordinary and
usual requirements of Seller or at an excessive price and no
Assumed Agreement with any given customer obligates Seller
to sell or deliver any product or service at a price which
(in the aggregate with all other Assumed Agreements with
such customer) does not cover the cost (including labor,
materials and production overhead) together with the
customary profit margin for such product or service in the
light of the amount of product or service provided and the
type of customer involved. Exhibit 5.01(c)(2)(iii) sets
forth a backlog report for the Business as of the date
hereof. None of the Assumed Agreements contain any
agreement, understanding or relationship arising out of or
relating to Seller's status as a "small business concern", a
"minority-owned business concern" or other similar status.
(iii) Seller's interest in each Site is a
valid and subsisting leasehold interest in such Site pursu-
ant to the Lease thereof, and each such Lease affords the
tenant thereunder the legal right to occupy the Site leased
thereby as of the Closing Date in accordance with the terms
thereof. The Leases are valid and enforceable by Seller.
Seller has performed all the obligations required to be
performed by them under the Leases and possesses and quietly
enjoys the premises under the Leases, and Seller has no
knowledge that such premises are subject to any
Encumbrances, easements, rights of way, building or use
restrictions, exceptions, reservations or limitations that
interfere with or impair the present and continued use
thereof in the usual and normal conduct of the Business of
Seller. Seller has not received notice of violation of any
applicable zoning regulation, ordinance or other law, order,
regulation or requirement relating to the operations of such
leased properties, and Seller knows of no such violation.
Seller has not received notice of any pending or threatened
condemnation proceedings relating to any of the properties
that are the subject of the Leases and, so far as known to
Seller, there are no such pending or threatened proceedings.
The structures, tangible properties and equipment owned,
operated or leased by Seller (as lessor or as lessee) in
connection with the Business of Seller are used and useable
by Seller in the present conduct of Seller's Business and
generate the revenues set forth on Seller's financial
statements. Seller and each other party thereto are in full
compliance with the terms of all agreements listed on
Exhibit 5.01(c)(1) and no defaults exist under such
agreements except as disclosed on Exhibit 5.01(c)(2)(i).
(iv) Seller has good and marketable title to
the Purchased Inventory, Purchased Spare Parts, Purchased
Receivables, Purchased Intangibles, and Other Property, free
and clear of all Encumbrances, subject to the rights of
personal property lessors and software licensors. The
Purchased Receivables constitute valid claims against the
account debtors with respect thereto. The Purchased
Receivables are collectible within 120 days after the dates
of the invoices giving rise to such Purchased Receivables at
the aggregate gross recorded amounts thereof less an
allowance, if any, for uncollectible accounts established in
accordance with GAAP.
(v) Exhibit 5.01(c)(5) sets forth the nature
of the operations at each Site, lists the Purchased
Inventory, Purchased Spare Parts and Purchased Receivables
attributable to the mid-west and east divisions of Seller as
of June 30, 1996 and lists the Fixed Assets and Petty Cash
attributable to the mid-west and east divisions of Seller.
(vi) Except as indicated on Exhibit
5.01(c)(6), the Purchased Assets constitute all of the
assets and business of Seller used by Seller in or necessary
to conduct the Business of each such Seller at each Site
(subject to Section 8.02 and other than the Excluded
Assets).
(d) Litigation. Except as set forth in Exhibit
5.01(d), there is no litigation, action, suit, tax audit,
proceeding or investigation pending or, to Seller's
knowledge, threatened with respect to the Business of
Seller, any of the Purchased Assets or any of the
transactions contemplated hereby, before or by any Federal,
state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, or any
other entity, which, if adversely determined, could
reasonably be expected to have a material adverse impact
upon the Purchased Assets taken as a whole or the conduct by
Buyer after the Closing Date of a business at the Sites
substantially similar to the Business of Seller. Seller is
not in default with respect to any order, writ, injunction
or decree of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency
or instrumentality which, if not cured, could have a
material adverse impact upon the Purchased Assets taken as a
whole or the conduct by Buyer after the Closing Date of a
business at the Sites substantially similar to the Business
of Seller.
(e) No Conflict. Except as set forth in Exhibit
5.01(e), the execution by Seller of this Agreement, the
Assumption Agreement, and the bills of sale, assignments and
other instruments of transfer referred to in this Agreement,
compliance by Seller with the provisions of this Agreement
and the consummation by Seller of the transactions
contemplated hereby (i) will not violate in any material
respect any provision of applicable law to which Seller is
subject, (ii) will not conflict with any provision of the
Certificate of Incorporation or By-laws of Seller or
conflict with or constitute a default (or, to Seller's
knowledge, are not events 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 any of the terms, conditions or provisions of
any contract, agreement or other instrument binding on
Seller, (iii) will not result in the creation of any
Encumbrance upon any of the Purchased Assets, (iv) do not
require the consent or approval of, or registration, decla-
ration or filing with, any court, administrative agency or
commission or other governmental authority or instrumental-
ity, except for compliance with the requirements of the HSR
Act and any filings under state laws required in connection
with the conveyance of the Purchased Receivables and
vehicles, and (v) do not violate any order, writ,
injunction, decree, arbitral award, statute, rule or
regulation applicable to Seller, to any of the Purchased
Assets or to the Business of Seller, violation of which
could have a material adverse impact upon Buyer or the
conduct by Buyer after the Closing Date of a business at the
Sites substantially similar to the Business of Seller.
(f) Financial Statements; Books and Records;
Reserve for Bad Debts; No Material Adverse Change. Seller
has delivered to Buyer copies of (i) Seller's consolidated
financial statements (including statements of income,
stockholders' equity and cash flows and a balance sheet) for
Seller for the fiscal years ended March 31, 1994, 1995 and
1996, audited and certified by an independent certified
public accountant, (ii) the unaudited statements of profits
and losses with respect to the east and mid-west divisions
of Seller for the three-month period ended June 30, 1996 and
the one-month period ended July 31, 1996 and (iii) the
balance sheet with respect to the east and mid-west
divisions of Seller for June 30, 1996 and July 31, 1996.
Such audited financial statements have been prepared in
accordance with GAAP except as set forth in the notes
thereto (subject, in the case of the monthly statements, to
normal year-end adjustments and the absence of footnotes),
and fairly present, in all material respects the financial
condition and results of operations of Seller as at said
dates. The unaudited statements are true and correct in all
material respects and fairly reflect the matters shown
therein. The books of account of Seller fairly reflect in
all material respects all transactions of Seller and other
matters required to be reflected therein consistent with the
financial statements referred to above. Seller's reserve
for bad debts has been established in accordance with GAAP.
(g) Absence of Undisclosed Liabilities and
Obligations. Except as disclosed in the audited financial
statements of Seller as at March 31, 1996, Seller has not
had and does not have any liabilities or obligations
(whether accrued, absolute, contingent or otherwise) of a
nature required to be reflected in a balance sheet of Seller
prepared in accordance with GAAP or disclosed in the notes
thereto, including, without limitation, any Taxes due or to
become due.
(h) Taxes. Seller and its subsidiaries and
affiliates, or an affiliated, combined or unitary group of
which any such corporation is or was a member, as the case
may be (individually a "Tax Affiliate" of Seller and
collectively, Seller's "Tax Affiliates"), has: (i)
correctly prepared and timely filed all returns,
declarations, reports, estimates, information returns and
statements ("Returns") required to be filed or sent by or
with respect to them in respect of any Taxes; (ii) timely
and properly paid all Taxes that are due and payable; (iii)
established on their books and records reserves that are
adequate for the payment of all Taxes not yet due and
payable; and (iv) complied in all respects 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 Seller or any of
its Tax Affiliates except liens for Taxes not yet due.
Neither Seller nor any of its Tax Affiliates is a party to
any agreement providing for the allocation, sharing or
indemnification of Taxes.
(i) No Brokers. Seller has not made contact or
had any dealings with or entered into, and will not enter
into, any agreement, arrangement or understanding with any
broker, leasing agent, finder or similar person or entity
with respect to this Agreement and the transactions contem-
plated hereby which will result in the obligation of Buyer
to pay any finder's fee, brokerage commission or similar
payment in connection with the transactions contemplated
hereby.
(j) Environmental Compliance. (i) Seller has
not been notified and neither knows of nor suspects that it
is in violation, or alleged to be in violation, of any
Environmental Laws which would have a material adverse
effect on the Business.
(ii) Seller 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 Seller has been
identified by the United States Environmental Protection
Agency ("EPA") as a potentially responsible party under
CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B, or the
CERCLA Information System; (B) that any Hazardous Materials
which Seller 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 Seller
as a potentially responsible party; or (C) that Seller is or
shall be a 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 extent such activity would have
a material adverse effect on the Business: (A) to the actual
knowledge of Seller, no portion of the property of Seller
has been used for the handling, processing, storage or
disposal of Hazardous Materials except in accordance with
applicable Environmental Laws; and no underground tank or
other underground storage receptacle for Hazardous Materials
is located on any portion of any of the Sites; (B) in the
course of any activities conducted by Seller or operators of
Seller's properties, no Hazardous Materials have been
generated or are being used on the property except in
accordance with applicable Environmental Laws; (C) to the
actual knowledge of Seller, 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
the Seller or any of its Affiliates, which releases would
have a material adverse 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 on any of the currently or formerly
owned, operated or leased property of Seller or any of its
subsidiaries 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, to the best of Seller's
knowledge, operating in material compliance with such
permits and applicable Environmental Laws.
(iv) The execution, delivery and perform-
ance of the agreements and instruments referred to in
Section 6.01(c)(iii) to which Seller is a party, and the
transfer of the Purchased Assets by Seller to Buyer, are not
subject to any Environmental Laws which condition, restrict
or prohibit the sale, lease or other transfer of property or
operations, including, without limitation, any so-called
"environmental cleanup responsibility acts" or requirements
for the transfer of permits, approvals, or licenses.
(v) Seller has provided to Buyer all
environmentally related audits, studies, reports, analyses
(including soil and groundwater analyses), and results of
investigations that have been performed with respect to the
currently or previously owned, leased, or operated
properties of the Seller or any of its Affiliates.
(vi) There is not now nor, to the knowledge
of the Seller, has there been located at any of the
properties of the Seller asbestos containing material or
equipment containing polychlorinated biphenyls.
(vii) The Seller currently holds, and at all
times has held, all required federal, state, and local
permits, licenses, certificates and approvals necessary to
the Seller's business ("Environmental Permits"). The Seller
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 or that the Company is a potentially
responsible party under CERCLA or any other Environmental
Laws.
(k) Employee Benefit Information. (i) Except as
set forth on Exhibit 5.01(k), Seller does not maintain, is
not required to contribute to and has no liabilities with
respect to any Employee Benefit Plan and no Company
Personnel or dependent of such Company Personnel is entitled
to any benefits except as provided for by the provisions of
such Plans or by applicable law. Except as set forth on
Exhibit 5.01(k), on the date of this Agreement no individual
is a party to an Employment Contract pertaining to the
Business of Seller.
(ii) Seller has provided Buyer with (A)
copies of all Employee Benefit Plans or in the case of an
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 Exhibit
5.01(k), the events contemplated by this Agreement (either
alone or together with any other event) (with respect to any
Employee Benefit Plans which constitute Assumed Liabilities)
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 Dataflex Corporation 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 Seller
has no other employees' savings plans. 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
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 made by the Tax Reform Act of 1986, 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.
(v) Neither Seller nor any entity that is
or was at any time treated as a single employer with Seller
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 multiemployer 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 of 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) Seller has, in the conduct of the
affairs of the Business of Seller, 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) Seller 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").
(l) Labor Disagreements. In connection with the
operation of the Business of Seller, (i) Seller is not
engaged in any unfair labor practice; (ii) Seller has not
been notified of any unfair labor practice charge or
complaint against Seller pending and, to the knowledge of
Seller, 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
Exhibit 5.01(1)(iii), Seller 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 Seller, no such charge or claim is
threatened against Seller in connection with the operation
of the Business of Seller; (iv) there is no labor strike,
dispute, request for representation, slowdown or stoppage
actually pending against or affecting Seller and, to the
knowledge of Seller, none is or has been threatened; (v)
Seller has not been notified of any grievance which might
have a material adverse effect on the conduct of the
operations of the Business of Seller; (vi) Seller has no
labor contracts or collective bargaining agreements with
respect to any Company Personnel; (v) no labor organization
or group of employees of the Seller has made a demand for
recognition or certification, and, to the Seller's
knowledge, there are no representation or certification
proceedings or petitions seeking a representation proceeding
presently 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 (vi) there are no
organizing activities involving the Seller pending with any
labor organization or group of employees of the Seller.
(m) Insurance. Seller maintains and has in full
force and effect the insurance policies covering the
Purchased Assets and the Business that are set forth on
Exhibit 5.01(m). Copies of the insurance policies covering
the Purchased Assets and the Business of Seller have been
provided to Buyer.
(n) Intangible Assets; Confidentiality
Agreements. (1) Exhibit 5.01(n)(1) contains a complete list
of all patents of any description and pending applications
therefore, all registrations of trademarks and of other
marks, all registrations of trade names, assumed names,
service marks, logos, labels or other trade rights, all
pending applications for any such registrations, all
copyright registrations and pending applications therefor,
all other copyrights, trademarks and other marks, trade
names, assumed names, service marks, logos, jingles, program
rights, non-governmental licenses, computer programs and
slogans, and all other inventions and designs, whether or
not patentable, all to the extent that the foregoing items
are owned in whole or in part by Seller and used in the
Business as of the date of this Agreement (collectively, the
"Intellectual Properties"). Except as described on Exhibit
5.01(n)(1), Seller owns the Purchased Intangibles and they
are assignable to Buyer by Seller without the consent of any
third party. To the knowledge of Seller, Seller is not
infringing in any material respect any patent, copyright,
trademark or service mark of any third party or otherwise
violating in any material respect any other property rights
of any third party and no claim has been made or threatened
against Seller alleging any such violation. To the
knowledge of Seller, there are no material violations by
others of any right of Seller in the Purchased Intangibles.
Except as described on Exhibit 5.01(n)(1), Seller pays no
fees or royalties for the use of the Purchased Intangibles.
(2) Exhibit 5.01(n)(2) contains a complete
and correct identification of all confidentiality and non-
competition agreements to which Seller is a party as of the
date of this Agreement other than confidentiality agreements
and non-competition agreements that are (A) not Assumed
Agreements or (B) agreements that will not be binding on the
Buyer after the Closing Date.
(o) Employees. Exhibit 5.01(o) sets forth the
name, location, title, date of employment, salaries, bonuses
(and any changes in salaries or bonuses since March 31,
1996) of each Employee. Except as described on Exhibit
5.01(o), no Employee is a party to a confidentiality
agreement or non-competition agreement with Seller or any of
its Affiliates. No Employee of the Seller has provided
notice to Seller of his or her intention to terminate his or
her relationship with Seller. Seller has no knowledge of
any plan of any Employee to do so.
(p) Client List. Exhibit 5.01(p) sets forth
true, complete and accurate lists of the 10 largest clients
(in terms of net revenues) with respect to the east and mid-
west divisions of Seller during the one year period ending
on March 31, 1996. No client, customer or supplier of
Seller, with respect to any Site, has provided notice to
Seller of its intention to terminate its relationship with
Seller or to substantially reduce the amount of business it
provides to Seller. Seller has no knowledge of any plan of
any client to do so.
(q) Absence of Certain Changes or Events. Except
as disclosed in Exhibit 5.01(q) hereto, since March 31,
1996, there has not been any:
(i) change in the financial condition,
assets, liabilities, earnings or business of Seller with
respect to the Sites except for changes which have been in
the ordinary course of business and which have not,
individually or in the aggregate, been materially adverse to
Seller;
(ii) change in the number of shares of
capital stock of Seller issued and outstanding or any
declaration, setting aside, or payment of any dividend or
other distribution (whether in cash, securities, property or
otherwise) in respect of Seller's capital stock;
(iii) (A) increase in excess of 5% in the
compensation payable or to become payable by Seller to any
of the Company Personnel or increase other than in the
ordinary course of business consistent with past practice
and in connection with the annual review of Company
Personnel, (B) bonus, incentive compensation, service award
or other like benefit granted, made or accrued, contingently
or otherwise, to or to the credit of Company Personnel, or
(C) employee welfare, pension, retirement, profit-sharing or
similar payment or arrangement (whether or not subject to
ERISA) made or agreed to by Seller with respect to Company
Personnel except pursuant to the existing plans and
arrangements described in Exhibit 5.01(k) hereto;
(iv) significant labor trouble, or any
material controversies or material unsettled grievances
threatened between Seller, on the one hand, and any Company
Personnel or a collective bargaining organization
representing or seeking to represent Company Personnel, on
the other hand;
(v) addition to or modification or
amendment of the Employee Benefit Plans other than (A)
contributions made for the fiscal year ended March 31, 1996
in accordance with the normal practices Seller or (B) the
extension of coverage to other Company Personnel who became
eligible after March 31, 1996;
(vi) mortgage, pledge or subjection to any
Encumbrance of any of Seller's assets relating to the Sites,
except the lien for Taxes not yet due and payable;
(vii) sale, assignment or transfer of any
assets of Seller that are material, singly or in the
aggregate, to Seller's Business other than in the ordinary
course;
(viii) waiver of any rights of substantial
value to Seller (with respect to the Sites) whether or not
in the ordinary course of business;
(ix) cancellation or termination by Seller
(with respect to the Sites) of any contract, agreement or
other instrument to which Seller is or was a party;
(x) liability incurred by Seller (with
respect to the Sites) except liabilities incurred in the
ordinary course of business;
(xi) capital expenditures in an amount in
excess of $100,000 in the aggregate or the execution of any
lease with respect to any aspect of the Business of Seller
(with respect to the Sites) or any incurring of liability
therefor;
(xii) borrowing of money or guaranteeing of
any indebtedness of others by Seller except in the ordinary
course consistent with past practice (in respect of or
relating to the Sites);
(xiii) lending of any money or otherwise
pledging the credit of Seller except the extension of credit
in the ordinary course to any customer or other third
parties doing business with the Business consistent with
past practices of the Business;
(xiv) failure to conduct the Business of
Seller in the ordinary course;
(xv) change in the method of accounting or
accounting practice of Seller;
(xvi) loss of services of any Company
Personnel that is or are material, individually or in the
aggregate, to the conduct of the Business of Seller;
(xvii) material cancellation by any supplier,
customer or contractor with respect to the Business of
Seller;
(xviii) extraordinary item of loss (as defined
in Opinion No. 30 of the Accounting Principles Board of the
American Institute of Certified Public Accountants);
(xix) material increase in the proportion of
Purchased Inventory to revenues of the Seller with respect
to the Sites; or
(xx) agreement by Seller to do any of the
foregoing.
(r) Compliance with Laws. Seller has complied in
all material respects with all applicable statutes,
regulations, orders, ordinances and other laws of the United
States of America, all state, local and foreign governments
and other governmental bodies and authorities, and agencies
of any of the foregoing relating to the Business to which it
is subject and any undertakings of Seller to any of the
foregoing. Seller has not received any notice to the effect
that, or otherwise been advised that, it is not in
compliance with any of such statutes, regulations and
orders, ordinances, other laws or undertakings, and Seller
has no reason to anticipate that any presently existing
circumstances are likely to result in violations of any such
regulations which could, in any one case or in the
aggregate, cause a material loss to the Business of Seller
or otherwise have a material adverse effect on the Business
of Seller. To the best of Seller's knowledge, there is not
presently pending any proceeding, hearing or investigation
with respect to the adoption of amendments or modifications
to existing laws or ordinances, regulations or restrictions
which, if adopted, would materially adversely affect the
Business of Seller.
(s) Transactions with Certain Persons. Except as
disclosed in Exhibit 5.01(s) hereto, no stockholder,
officer, director or employee of any Seller or member of his
immediate family is presently a party to any transaction
with Seller relating to the Business of Seller, including,
without limitation, any contract, agreement or other
arrangement (i) providing for the furnishing of services by,
(ii) providing for the rental of real or personal property
from, or (iii) otherwise requiring payments to (other than
services as officers, directors or employees) any such
person or corporation, partnership, trust or other entity in
which any such person has a substantial interest as a
shareholder, officer, director, trustee or partner.
(t) Disclosure. As of the date of this
Agreement, the representations of Seller in this Agreement
or in any schedule, exhibit, or other documents delivered or
made available for inspection pursuant hereto (taken
together) do not include any untrue statement of a material
fact or omit to state a material fact necessary in order to
make the statements included therein or herein, in the light
of the circumstances in which they are made, not misleading.
(u) Summary of Agreements. Seller has delivered
to Buyer true and accurate summaries of the material terms
of each of the Assumed Agreements, including, without
limitation, any and all material financial commitments
therein which are to be performed on or after the Closing
Date.
Section 5.02 Representations and Warranties of
Buyer. Buyer represents and warrants to Seller as follows:
(a) Organization; Good Standing. Buyer is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the
corporate power and authority to own or lease its properties
and to conduct its business as currently conducted.
(b) Corporate Authorization. The execution,
delivery and performance by Buyer of this Agreement and the
Assumption Agreement have been authorized and approved by
all requisite corporate action, and no other corporate
approval or authorization is required on the part of Buyer
or any of its stockholders by law or otherwise in order to
make this Agreement and the Assumption Agreement the valid
and binding obligations of Buyer (subject to the receipt of
required consents to assignments of the Assumed Agreements)
enforceable against Buyer in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy,
insolvency, or other similar laws affecting the enforcement
of creditors' rights in general or by general principles of
equity.
(c) No Conflict. The execution by Buyer of this
Agreement and the Assumption Agreement, compliance by Buyer
with the provisions of this Agreement and the consummation
by Buyer of the transactions contemplated hereby (i) will
not conflict with any provision of the Certificate of
Incorporation or By-laws or conflict with or constitute a
default (or, to its knowledge, 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 any of the terms, conditions or
provisions of any contract, agreement or other instrument
binding on Buyer, which conflict, default, termination or
acceleration would have a material adverse impact upon
Seller, (ii) except for compliance with the requirements of
the HSR Act, does not require the consent or approval of, or
registration, declaration or filing with, any court,
administrative agency or commission or other governmental
authority or instrumentality, and (iii) does not violate any
order, writ, injunction, decree, arbitral award, statute,
rule or regulation applicable to Buyer, violation of which
would have a material adverse impact upon Seller.
(d) No Brokers. Buyer has not made contact or
had any dealings with or entered into, and will not enter
into, any agreement, arrangement or understanding with any
broker, leasing agent, finder or similar person or entity
with respect to this Agreement and the transactions contem-
plated hereby which will result in the obligation of Seller
to pay any finder's fee, brokerage commission or similar
payment in connection with the transactions contemplated
hereby.
ARTICLE VI
Conditions Precedent to Obligations
of Buyer and Seller
Section 6.01 Conditions Precedent to Obligations
of Buyer. The obligations of Buyer to consummate the
transactions contemplated by this Agreement shall be subject
to the fulfillment, or the waiver by Buyer, on or prior to
the Closing Date, of the following conditions:
(a) Representations and Warranties. The
representations and warranties of Seller contained in this
Agreement shall be deemed to have been made again on and as
of the Closing Date and shall then be true and correct, and
on the Closing Date, Seller shall have delivered to Buyer a
certificate to such effect.
(b) Delivery of Closing Documents. Seller shall
have delivered to Buyer on or prior to the Closing Date all
the documents required to be delivered pursuant to Section
7.01.
(c) Opinion of Counsel for Seller. Buyer shall
have received an opinion of Greenbaum, Rowe, Smith, Ravin,
Davis & Himmel, counsel for Seller, dated the Closing Date
and addressed to Buyer, in form and substance satisfactory
to Buyer, to the effect that:
(i) Seller is a corporation duly organized,
validly existing and in good standing under the laws of
the State of New Jersey, and has corporate power to
carry on the Business of Seller, as applicable, as it
is being conducted;
(ii) Seller has full corporate power and
authority to enter into this Agreement, the Assumption
Agreement and the bills of sale, assignments and other
instruments of transfer referred to in this Agreement
to which it is a party and to consummate the
transactions contemplated hereby, and all corporate and
other proceedings required to be taken by or on the
part of Seller to authorize it to enter into this
Agreement, the Assumption Agreement and the bills of
sale, assignments and other instruments of transfer
referred to in this Agreement and to consummate the
transactions contemplated hereby have been duly and
properly taken, and no consent or vote of Seller's
shareholders is required in connection with the
transactions contemplated hereby;
(iii) This Agreement, the Assumption Agreement,
the bills of sale, assignments and other instruments of
transfer delivered by Seller pursuant to Section 7.01
to which Seller is or are a party have been duly
executed and delivered by Seller, as appropriate, and
each constitutes a legal, valid and binding obligation
of Seller, as the case may be, enforceable in
accordance with its respective terms;
(iv) The execution, delivery and performance by
Seller of the agreements and instruments referred to in
paragraph (iii) above to which Seller is a party, (A)
will not conflict with or violate any provision of any
applicable law, rule or regulation or any order, writ,
injunction or decree known to such counsel, (B) will
not conflict with any provision of the Certificate of
Incorporation or By-laws of Seller and, to the knowl-
edge of such counsel, will not conflict with or result
in the breach of any term or provision of, or con-
stitute a default under, or result in the creation of
any lien, charge or encumbrance upon any of the Pur-
chased Assets pursuant to, any indenture, mortgage,
lease, agreement or other instrument to which Seller is
a party or by which it is bound and (C) do not require
the consent or approval of, or registration,
declaration or filing with, any court, administrative
agency or commission or other governmental authority or
instrumentality (except for compliance with the HSR
Act); and
(v) To the knowledge of such counsel, there is no
action, suit or proceeding pending or threatened in any
Federal, state, municipal or other court, agency or
other governmental body seeking to restrain or prohibit
the consummation of the transactions contemplated
hereby, except as described in such opinion;
(vi) The execution, delivery and performance by
Seller of the agreements and instruments referred to in
paragraph (iii) above to which Seller is a party, and
the transfer of the Purchased Assets by Seller to
Buyer, are not subject to any Environmental Laws of the
State of New Jersey or any locality therein (or, to the
best knowledge of such counsel, any other jurisdiction)
which condition, restrict or prohibit the sale, lease
or other transfer of property or operations, including,
without limitation, any so-called "environmental
cleanup responsibility acts" or requirements for the
transfer of permits, approvals, or licenses, except for
those complied with on or prior to the Closing Date;
and as to such other matters as Buyer may reasonably re-
quest. Such opinion may be limited by its terms to the laws
of the United States of America, the State of New Jersey and
may be given subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting
the enforceability of creditors' rights generally and be
limited to the extent that enforcement may be affected by
the availability of equitable remedies or the applicability
of principles of equity.
(d) Litigation. As of the Closing Date, there
shall not be in effect any judgment, order, injunction or
decree of any court of competent jurisdiction, the effect of
which is to prohibit or restrain the consummation of the
transactions contemplated by this Agreement.
(e) No Material Adverse Effect. (i) Except as
disclosed in Seller's filings pursuant to the Securities
Exchange Act of 1934, as amended, there shall not have been
any material adverse change, and Seller shall know of no
fact, circumstance, event, occurrence, contingency or
condition which might reasonably be expected to result in
any such change, in the Purchased Assets or the Business of
Seller or financial condition of Seller from that set forth
in the audited financial statements for the period ended
March 31, 1996, and there has been no material adverse
change in the business or operations of Seller; (ii) other
than in the ordinary course of business and at prices and on
terms consistent with the past practice of Seller, Seller
has made no disposition of, or otherwise removed, any
portion of the Purchased Assets from the Sites; and (iii)
the Business of the Seller has been operated in all material
respects only in the ordinary course of business and
consistent with the past practice of Seller.
(f) No Change in Law. There shall not have been
any action, or any statute enacted, by any government or
agency thereof which would render the parties unable to
consummate the transactions contemplated herein or make the
transactions contemplated herein illegal, prohibit or
restrict the consummation of the transactions contemplated
herein. In the case of failure of the condition set forth
in this 6.01(f), Seller shall deliver to Buyer an opinion of
counsel to such effect.
(g) No Unexpected Liability. Except as set forth
on Exhibit 6.01(g) or as disclosed in Seller's quarterly
financial statements delivered to Buyer in accordance with
Section 5.01(f), neither Seller nor any of the Purchased
Assets has become subject to or bound by, and Seller knows
of no fact, circumstance, event, occurrence, contingency or
condition which could reasonably be expected to result in,
any liability or obligation of any nature whatsoever
(whether absolute, accrued, contingent, asserted, unasserted
or otherwise), other than liabilities and obligations
incurred by Seller or to which Seller has become subject or
bound in the ordinary course of business and on terms
consistent with the past practice of Seller.
(h) Approvals and Consents. Consents to
assignment of the Assumed Agreements listed on Exhibit
6.01(h) shall have been obtained by Seller. Each consent to
assignment with respect to a Lease shall also state (i) that
such Lease has not been amended, modified or supplemented
(except as disclosed on Exhibit 5.01(c)(1)) and is in full
force and effect on the Closing Date, (ii) the date to which
payments under such Lease have been made, (iii) that there
is no default or event which, with notice or the passing of
time, would constitute a default existing under such Lease
and (iv) that there are no setoffs, defenses or
counterclaims against enforcement of the obligations to be
performed under such Lease in favor of the party executing
such consent.
(i) Letter of Credit or Escrow Agreement. In
accordance with Section 3.01(a), Seller shall have either
(i) delivered to Buyer the Letter of Credit duly executed by
the issuing bank; or (ii) executed and delivered to Buyer
the Escrow Agreement and caused the escrow agent to execute
and deliver to Buyer the Escrow Agreement.
(j) HSR Act. Any applicable waiting period under
the HSR Act shall have expired or been terminated.
(k) Release from Confidentiality and
Noncompetition Agreements. Seller shall have either (i)
released all Employees of Seller that are employed at the
Sites and are employed by Buyer from any and all
confidentiality and noncompetition agreements between such
Employees and Seller, or (ii) assigned to Buyer the rights
and obligations under any and all confidentiality and
noncompetition agreements between such Employees and Seller.
(l) Release of ICC Financing Liens. The lien of
the ICC Financing on the Purchased Assets shall have been
released and executed instruments of release and termination
statements satisfactory to Buyer shall have been delivered
to Buyer.
(m) Rose Employment Agreement. Seller shall
either amend or replace the Rose Employment Agreement with
an agreement that permits Richard Rose to provide to Buyer,
(i) consulting services relating to transitional matters
arising from the transactions contemplated by this Agreement
on a full-time basis for at least three months from the
Closing Date at Seller's expense and (ii) additional
consulting services on such transitional matters for an
additional three months after the end of such three-month
period at Buyer's expense.
(n) Environmental Reviews. Buyer shall have
received Phase I environmental reports with respect to the
Sites satisfactory to the Buyer.
(o) Letter of Non-applicability. Seller shall
have obtained from the New Jersey Department of
Environmental Protection and shall have delivered to Buyer a
so-called "letter of non-applicability" pursuant to the New
Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et
seq., and implementing regulations, relating to each Site
located in New Jersey.
Section 6.02 Conditions Precedent to Obligations
of Seller. The obligations of Seller under this Agreement
are, at the option of Seller, subject to the conditions that
at the Closing Date:
(a) Compliance with Covenants. All the terms,
covenants, agreements and conditions of this Agreement to be
complied with and performed by Buyer on or prior to the
Closing Date shall have been duly complied with and per-
formed in all material respects.
(b) Representations and Warranties. The rep-
resentations and warranties made by Buyer herein shall be
true and correct in all material respects on and as of the
Closing Date with the same force and effect as though such
representations and warranties had been made on and as of
the Closing Date; provided that to the extent that any of
such representations and warranties are already qualified by
one or more standards of materiality, such representation or
warranty shall be true and correct in all respects on the
Closing Date.
(c) Delivery of Closing Documents. Buyer shall
have delivered to Seller on or prior to the Closing Date all
the documents required to be delivered pursuant to Section
7.02.
(d) Opinion of Counsel for Buyer. Seller shall
have received an opinion of Dewey Ballantine, special
counsel for Buyer, dated the Closing Date and addressed to
Seller, and in form and substance satisfactory to Seller, to
the effect that:
(i) Buyer is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Delaware;
(ii) Buyer has full corporate power and authority
to enter into each of this Agreement and the Assumption
Agreement and to consummate the transactions
contemplated hereby, and all corporate and other
proceedings required to be taken by or on the part of
Buyer to authorize it to enter into each of this
Agreement and the Assumption Agreement and to
consummate the transactions contemplated hereby have
been duly and properly taken;
(iii) Each of this Agreement and the Assumption
Agreement have been duly executed and delivered by
Buyer and each constitutes a legal, valid and binding
obligation of Buyer, enforceable in accordance with its
respective terms;
(iv) the execution, delivery and performance by
Buyer of the agreements referred to in paragraph (iii)
above, (A) will not conflict with or violate any
provision of any applicable law, rule or regulation or
any order, writ, injunction or decree known to such
counsel, (B) will not conflict with any provision of
the Certificate of Incorporation or By-laws of Buyer
and, to the knowledge of such counsel, will not
conflict with or result in a breach of any term or
provision of, or constitute a default under, any
indenture, mortgage, lease, agreement or other
instrument to which Buyer is a party or by which it is
bound (except as otherwise disclosed), and (C) do not
require the consent or approval of, or registration,
declaration or filing with, any court, administrative
agency or commission or other governmental authority or
instrumentality, and
(v) To the knowledge of such counsel, there is no
action, suit or proceeding pending or threatened in any
Federal, state, municipal or other court, agency or
other governmental body seeking to restrain or prohibit
the consummation of the transactions contemplated
hereby, except as described in such opinion;
and as to such other matters as Seller may reasonably
request. Dewey Ballantine's opinion may be limited by its
terms to the laws of the United States of America and the
State of New York and the General Corporation Law of the
State of Delaware and may be given subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the enforceability of creditors,
rights generally and be limited to the extent that enforce-
ment may be affected by the availability of equitable
remedies or the applicability of principles of equity. Such
opinion may refer to the fact that this Agreement and the
Assumption Agreement shall be construed and enforced in
accordance with the laws of the State of New Jersey.
(e) Consideration. The Purchase Price shall have
been paid to Seller in accordance with Section 3.01.
(f) Litigation. As of the Closing Date, there
shall not be in effect any judgment, order, injunction or
decree of any court of competent jurisdiction, the effect of
which is to prohibit or restrain the consummation of the
transactions contemplated by this Agreement.
(g) No Change in Law. There shall not have been
any action, or any statute enacted, by any government or
agency thereof which would render the parties unable to
consummate the transactions contemplated herein or make the
transactions contemplated herein illegal, prohibit or
restrict the consummation of the transactions contemplated
herein. In the case of failure of the condition set forth
in this 6.02(g), Seller shall deliver to Buyer an opinion of
counsel to such effect.
(h) HSR Act. Any applicable waiting period under
the HSR Act shall have expired or been terminated.
ARTICLE VII
Documents To Be Delivered on Closing Date
Section 7.01 Documents To Be Delivered by Seller
on Closing Date. On the Closing Date, Seller shall deliver
to Buyer, in form and substance satisfactory to Buyer and
its counsel:
(a) Opinion of Counsel. The opinion of counsel
referred to in Section 6.01(c).
(b) Officer's Certificates. Certificates signed
by the Chief Executive Officer, President or any Vice
President of Seller to the effect set forth in Section
6.01(a) and stating that the conditions set forth in Section
6.01(b) have been satisfied, and that Seller has complied
with each of the covenants and agreements contained in this
Agreement.
(c) Bills of Sale. Bills of sale duly executed
by the Seller conveying the Purchased Assets at the Closing
Date.
(d) Assumption Agreement. The Assumption
Agreement duly executed by Seller.
(e) Further Instruments. Such further instru-
ments of assignment, conveyance or transfer or other instru-
ments covering the Purchased Assets or any part thereof, and
such further instruments with respect to the transactions
contemplated hereby, as Buyer may reasonably request.
(f) Closing Purchased Inventory, Purchased Spare
Parts and Purchased Receivables. A schedule of the
Purchased Inventory, Purchased Spare Parts and Purchased
Receivables attributable to each Site together with a
statement of the aggregate amount of the Seller's reserve
for doubtful accounts, in each case, as of the close of
business on the day prior to the Closing Date.
(g) Letter of Credit and Escrow Agreement. The
Letter of Credit duly executed by the issuing bank in the
event Seller substitutes the Letter of Credit for the Escrow
Agreement in accordance with Section 3.01(a), or if not,
then the Escrow Agreement duly executed by Seller and the
escrow agent.
(h) Letter of Non-applicability. The "letter of
non-applicability" referred to in Section 6.01(o).
Section 7.02 Documents To Be Delivered by Buyer
on Closing Date. On the Closing Date, Buyer shall deliver
to Seller, in form and substance satisfactory to Seller:
(a) Conditions Precedent. The payments, docu-
ments, agreements and instruments referred to in Section
6.02 as conditions precedent to the obligations of Seller.
(b) Officer's Certificate. A certificate signed
by the President or a Vice President of Buyer to the effect
set forth in Sections 6.02(a) and (b).
(c) Assumption Agreement. The Assumption
Agreement duly executed by Buyer.
(d) Escrow Agreement. The Escrow Agreement duly
executed by Buyer in the event Seller delivers funds to
Buyer under the terms of the Escrow Agreement in accordance
with Section 3.01(a).
(e) Further Instruments. Such further instru-
ments with respect to the transactions contemplated hereby,
including instruments of assumption, as Seller may
reasonably request.
ARTICLE VIII
Further Covenants and Agreements
Seller and Buyer
Section 8.01 Further Covenants and Agreements of
Seller. Seller agrees that:
(a) Conduct of Business Pending Closing. From
the date of this Agreement to the Closing Date, Seller (i)
will maintain the Other Property and not remove any Other
Property from the Sites except in the ordinary course of
business; (ii) will perform, in all material respects, its
obligations under the Assumed Agreements; (iii) will conduct
the Business of Seller only in the ordinary course; (iv)
will not (A) fail to comply in any material respect with any
laws, ordinances, regulations or other governmental
restrictions applicable in any respect to the Business of
Seller or any of the Purchased Assets, (B) grant any powers
of attorney to act for the Business of Seller after the
Closing Date, (C) mortgage or pledge or otherwise encumber
any of the Purchased Assets, (D) cancel or terminate any
contract, agreement or other instrument material to the
Business, other than contracts, agreements and other
instruments which are not to be assigned to Buyer unless
Seller is otherwise obligated to maintain them in effect,
(E) engage in or enter into any material transaction with
respect to the Business of Seller of any nature not
expressly provided for herein, (F) pay any dividend or make
any other distribution or payment to the shareholders of
Seller or (G) amend, modify or supplement any Employment
Contract listed on Exhibit 5.01(k); and (v) will from and
after the date hereof until the Closing Date (A) take such
action as may reasonably be necessary to preserve the
Purchased Assets, wherever located, which are material to
the Business of Seller, other than in the ordinary course of
business, (B) maintain inventory of the kinds and in the
quantities maintained in the ordinary course of the
Business, (C) maintain its books and records in a manner
consistent with past practices and promptly advise Buyer in
writing of any material adverse change in the condition
(financial or otherwise) of the Purchased Assets or the
Business of Seller and (D) use its reasonable commercial
efforts to preserve the organization of the Business of
Seller intact and continue its operations at its present
levels, to keep available to Buyer the services of Company
Personnel and to preserve the goodwill of Seller' suppliers,
customers, creditors and others having business relations
with Seller in connection with the Business.
(b) Competition. Seller (and any Affiliate or
subsidiary of Seller) will not (i) for a period of one year
commencing on the Closing Date engage in any capacity in a
business within the Non-Compete Area that is substantially
similar to the Business of Seller, (ii) for a period of two
years commencing on the first anniversary of the Closing
Date open an office in the Non-Compete Area, (iii) for a
period of two years commencing on the first anniversary of
the Closing Date solicit or otherwise contact any person
within the Non-Compete Area who is or has been a customer of
AmeriData Technologies, Inc. or any of its Affiliates at any
time during the period from the Closing Date to the first
anniversary of the Closing Date and is identified on the
list prepared in accordance with Section 8.03(a) and (iv)
for a period of three years from the Closing Date not
station any people in any location in the Non-Compete Area.
(c) Certain Information; Access to Businesses.
Seller will make available to Buyer prior to the Closing
Date upon reasonable notice, any Qualified Documents and
such other information as Buyer shall reasonably request,
provided that such information (i) relates to the Business
of Seller and (ii) is available to Seller. Seller shall,
from the date hereof up to and including the Closing Date,
permit Buyer and Buyer's attorneys, accountants, agents and
representatives full access to the books, records, business
and assets of Seller (as such relate to the Business of
Seller) at any reasonable time and in any reasonable manner
on reasonable advance notice and in a manner that does not
interrupt Seller's business. Buyer shall have the right to
meet with customers and suppliers of Seller (with Seller's
approval, which approval shall not be unreasonably withheld)
and Seller will give Buyer full cooperation with respect
thereto.
(d) Non-Solicitation. From and after the Closing
Date for a period ending one year following the Closing
Date, Seller and Seller's Affiliates will not, unless acting
with the express written consent of Buyer and AmeriData
Technologies, Inc., directly or indirectly, solicit or
interfere with, or endeavor to entice away (i) any person
who was employed by Seller, Buyer or AmeriData, (ii) any
person who otherwise performed services on a regular basis
for Buyer, AmeriData or Seller or (iii) with respect to any
business in which AmeriData, Buyer or any Affiliate of
either thereof is or has been engaged after the date of this
Agreement or in any way directly or indirectly involving
computer products or services, any person or entity who was
a customer or client or Buyer, Seller or AmeriData, in the
case of (i) or (ii), during the 12 months immediately
preceding the date of this Agreement, other than (A) Company
Personnel terminated by Buyer without cause, or (B) Company
Personnel not employed by Buyer or AmeriData upon the
consummation of the transactions contemplated by this
Agreement.
(e) Changes in Representations and Warranties.
Between the date of this Agreement and the Closing Date,
Seller shall not enter into any transaction, take any
action, or by inaction, permit an event to occur, which
would result in any of the representations and warranties of
Seller herein contained not being true and correct at and as
of (i) the time immediately following the occurrence of such
transaction or event or (ii) the Closing Date. Seller shall
promptly give written notice to Buyer upon becoming aware of
(A) any fact which, if known on the date hereof, would have
been required to be set forth or disclosed pursuant to this
Agreement, and (B) any impending or threatened breach in any
material respect of any of the representations and
warranties contained in this Agreement and with respect to
the latter shall use all reasonable efforts to remedy same.
(f) Further Assurances. Seller will cooperate
fully with Buyer in connection with the transactions
contemplated by this Agreement. Without limiting the
generality of the foregoing, from and after the Closing
Date, from time to time, at Buyer's request and without
further consideration, Seller will execute and deliver such
other instruments, including powers of attorney, and take
such other action as Buyer may reasonably request to more
effectively put Buyer in possession and operating control of
all or any part of the assets or properties of Seller.
(g) No Mergers, Consolidations, Sales of Assets,
Etc. Until the earlier of the consummation of the
transactions contemplated by the Agreement or the
termination date provided for in Section 9.02 below, Seller
will not, directly or indirectly, solicit any inquiries or
proposals or enter into or continue any discussions,
negotiations or agreements relating to the sale or exchange
of the capital stock of Seller, the merger of any Seller
with or into, or the direct or indirect acquisition or
disposition of any of the Purchased Assets other than in the
ordinary course of the business of the Seller to or from,
any person other than Buyer or its Affiliates or provide any
assistance or any information to or otherwise cooperate with
any person in connection with any such inquiry, proposal or
transaction.
(h) Seller's Financial Statements. Seller will
deliver to Buyer promptly after such statements become
available, copies of its statements of profits and losses
for each Site for each of the months ending after March 31,
1996 and prior to the Closing Date. Such statements shall
be prepared on a basis consistent with the unaudited
statements delivered pursuant to Section 5.01(f), and shall
be true and correct and shall fairly reflect the matters
shown therein in all material respects the financial
condition of Seller as at said dates. All information in
such financial statements shall be separately stated for
each Site.
(i) Payment of Accrued Vacation Amounts. On or
prior to the Closing Date, Seller shall pay, or shall cause
to be paid, all accrued salaries, bonuses, vacation amounts
and other employee benefits to all Employees of Seller at
the Sites.
(j) Taxes. Seller shall take all actions and
shall file all estimates or reports related to the state tax
requirements of any state in which a Site is located to
insure that Buyer (i) shall not be liable under the laws of
such State for the payment of any Taxes as a result of the
consummation of the transactions contemplated by this
Agreement and (ii) to the extent possible, will not be
required to withhold any portion of the Purchase Price.
(k) Confidentiality and Noncompetition
Agreements. Prior to the Closing Date, Seller shall have
taken all actions necessary to release all Employees of
Seller that are employed at the Sites from any and all
confidentiality and noncompetition agreements between such
Employees and Seller.
(l) Telephone and Facsimile Numbers. Seller
shall have delivered to Buyer letters from Seller addressed
to Seller's telephone companies instructing such companies
and providers to transfer to Buyer the telephone and fax
numbers of Seller relating to the Business of Seller.
(m) Audit of the Business of the Sites. Seller
shall, at the prior written request of Buyer, cause Seller's
auditors to make available to Buyer all audit, workpaper and
other information related to Sites and the Purchased Assets
necessary to permit Buyer or Buyer's auditors to audit the
business conducted at the Sites during the years ended March
31, 1995 and 1996.
(n) Backlog Report. Seller shall, five (5) days
prior to the Closing Date, prepare a backlog report for the
Business.
(p) Use of Dataflex Name. From and after the
Closing Date for a period ending 90 days following the
Closing Date, Buyer and AmeriData may use the name Dataflex
Corporation as a tag line following the name AmeriData
Technologies, Inc., provided the name Dataflex Corporation
is followed by "of New Jersey," "of New York," "of
Wisconsin" or "of Illinois."
Section 8.02 Consents to Assignments; Permits.
(a) Anything in this Agreement or the bills of sale
notwithstanding, to the extent that any Assumed Agreement to
be sold, assigned, transferred or conveyed to Buyer, or any
claim, right or benefit arising thereunder or resulting
therefrom (the "Interests"), is not capable of being sold,
assigned, transferred or conveyed without the approval,
consent or waiver of the other party thereto, or any third
person (including a government or governmental unit), or if
such sale, assignment, transfer or conveyance or attempted
assignment, transfer or conveyance would constitute a breach
thereof or a violation of any law, decree, order, regulation
or other governmental edict, except as expressly otherwise
provided herein, this Agreement shall not constitute a sale,
assignment, transfer or conveyance thereof, or an attempted
assignment, transfer or conveyance thereof. After the
Closing, until any Interest has been validly and effectively
assigned to Buyer, (i) Seller shall hold such Interest for
the benefit of Buyer and Buyer shall be entitled to receive
all benefits under such Interest and shall be responsible
for the obligations under such Interest to the extent
relating to the benefits received, and (ii) any such
Interest shall, notwithstanding the failure to receive any
approval, consent or waiver (but so long as the same shall
not constitute a violation of law), be deemed to be
assigned, transferred or conveyed to Buyer if (A) written
notice of such assignment, transfer or conveyance is given
to the other party to such Interest on or before the Closing
Date and (B) the other party to such Interest does not,
within three months after the Closing, object to such
assignment, transfer or conveyance or acts in a manner
inconsistent with such assignment, transfer or conveyance.
(b) Except as provided in Section 8.02(a)(ii),
Seller is not obligated to sell, assign, transfer or convey
to Buyer any of its rights and obligations in and to any of
the Interests without first obtaining all necessary
approvals, consents or waivers. Seller shall use all
reasonable efforts, and Buyer shall cooperate with Seller,
to obtain all necessary approvals, consents or waivers, or
to resolve any impracticalities of transfer referred to in
this Section necessary to convey to Buyer each such Interest
as soon as practicable; provided, however, that neither
Seller nor Buyer shall be obligated to pay any consideration
therefor to the third party from whom such approval, consent
or waiver is requested or waive or compromise any rights
against such third party or commence any litigation or other
proceeding against any third party.
(c) Seller shall cooperate with Buyer, to obtain
as of the Closing Date or as promptly thereafter as
practicable all permits and licenses required to be obtained
on the part of Buyer from any governmental agency with
respect to the operation by Buyer of the Purchased Assets or
the Business of Seller (including, without limitation,
environmental and other operating permits). Seller will
assign, transfer or convey to Buyer at the Closing those
permits and licenses which can be assigned without having to
obtain the consent of any third party with respect thereto,
and Seller will cooperate with Buyer in obtaining any third
party consents necessary to the assignment or transfer of
any other permits and licenses which are not so assignable
or transferable. Subsequent to the Closing, to the extent
permitted by law, Seller shall have the right to cancel any
permits or licenses or any bonds, guarantees or undertakings
by Seller that do not constitute Purchased Assets or Assumed
Liabilities.
Section 8.03 Further Covenants and Agreements of
Buyer. (a) Customer List. On the first anniversary of the
Closing Date, Buyer will prepare and promptly deliver to
Seller a list of certain persons or entities (the "Customer
List") that are or have been during the period from the
Closing Date to the first anniversary of the Closing Date
customers of AmeriData Technologies, Inc or any of its
Affiliates. Buyer may, at its option, exclude any such
customer from the Customer List.
(b) Non-Solicitation. From and after the Closing
Date for a period ending one year following the Closing
Date, Buyer and Buyer's Affiliates will not, unless acting
with the express written consent of Seller, directly or
indirectly, solicit or interfere with, or endeavor to entice
away (i) any person who was employed by Seller, or (ii) any
person who otherwise performed services on a regular basis
for Seller.
(c) Certain Services. From the Closing Date
through December 31, 1996, Buyer shall provide to Seller
help desk support and dispatch services with respect to Ward
THG and Solvay Pharmaceutical. The cost for such services
will be $106.00 per user per year (appropriately prorated
for partial years), payable in advance by Seller at the
Closing based upon the number of users as of the Closing
Date, and adjusted promptly following December 31, 1996
based on the actual number of users as mutually agreed by
Buyer and Seller. If the amount paid at Closing by Seller
pursuant to this Section 8.03(c) exceeds the actual amount
computed in accordance with the immediately preceding
sentence, then Buyer shall reimburse such excess to Seller,
and if the amount paid at Closing is less than such actual
amount, Seller shall pay such shortfall to Buyer, in either
case without interest as promptly as practicable following
the computation of the actual amount. Following December
31, 1996, Buyer and its Affiliates may without any
prohibition market freely to Ward THG and Solvay
Pharmaceutical.
Section 8.04 Mutual Covenants. Seller and Buyer
each agree that:
(a) Best Efforts To Meet Closing Conditions.
Seller and Buyer shall use their best efforts to cause the
conditions precedent set forth in Article VII to be
satisfied; provided, however, that neither Seller nor Buyer
shall be obligated to pay any consideration therefor to the
third party from whom such approval, consent or waiver is
requested or waive or compromise any rights against such
third party or commence any litigation or other proceeding
against any third party.
(b) Announcements; Confidentiality. Except as
otherwise required by law or order or decree of any court of
competent jurisdiction or governmental authority, (i)
neither Seller nor Buyer shall make any announcement to the
public of the transactions contemplated hereby other than
jointly or as otherwise agreed by them in writing and (ii)
Buyer and Seller will keep confidential any information not
otherwise publicly available which is derived from access,
investigation or information furnished by Buyer and Seller
in connection with this Agreement, including the
negotiations conducted in connection herewith and all drafts
and executed copies of this Agreement and the contents
hereof.
(c) Employment Procedures. (i) At the request
of Buyer and with reasonable prior notice, Seller will
adjust Employee work schedules and make other reasonable
accommodations to allow Buyer to address the Employees,
individually or in group meetings, and, at the request of
Buyer and with the consent of each Employee, Seller will
arrange an opportunity for Buyer to conduct job interviews
with each interested Employee. All offers of employment
will be made directly by Buyer. Seller will not be required
to recommend or encourage employment with Buyer, but Seller
will not discourage Employees from accepting offers of
employment from Buyer. The effective date of any employment
offered to an Employee will not be prior to the Closing Date
without the written agreement of Seller. Buyer agrees to
comply with all applicable laws and regulations in
connection with the hiring of Employees, including equal
employment opportunity laws.
(ii) During the period prior to the Closing
Date all Employees, including Employees accepting offers of
employment extended by Buyer pursuant to this Section
8.03(d), will be under the exclusive supervision of Seller
subject to Seller's policies and practices. During the
period prior to the Closing Date, Seller will not be
responsible for the management of Buyer's employees, and,
unless otherwise agreed by Seller in writing, Buyer's
employees will not be permitted to commence work at the
Sites; provided, however, that the foregoing shall not be
construed to restrict Buyer's reasonable access to the Sites
or to information pursuant to Section 8.01(c).
(iii) From the Closing Date to December 31,
1996, Seller will continue to provide the Transferred
Employees with Seller's employee benefit arrangements and
Buyer will reimburse Seller for the direct cost of premiums
and benefits actually paid by Seller for the Transferred
Employees, and any administrative costs incurred by Seller
in connection therewith (such administrative costs not to
exceed $50,000 in the aggregate). The foregoing shall be
subject to the consent of Seller's insurance carrier
providing the benefit arrangements, which consent Seller
will use its best efforts to obtain. Seller will provide
Buyer with reasonable documentation supporting such costs,
and Buyer will reimburse such costs as promptly as
practicable following receipt of such documentation.
Following December 31, 1996, the Buyer shall provide
Employees employed by Buyer immediately after the Closing
("Transferred Employees") with benefit arrangements that are
substantially equivalent in total to the employee benefit
arrangements generally provided from time to time to
employees of the Buyer (the "Buyer's Benefit Plans").
Transferred Employees (and their covered dependents) shall
be given credit under the Buyer's Benefit Plans for service
with the Seller (to the extent such service would be
recognized under the Buyer's Benefit Plans) for purposes of
any eligibility, vesting or waiting periods (but for no
other purpose) applicable under any of the Buyer's Benefit
Plans.
(iv) Seller shall, at its own cost and
expense, provide severance pay (if any becomes payable) in
the amount calculated in accordance with Seller's severance
policy existing on the date hereof to (A) any Employee who
is not a Transferred Employee, and (B) up to and including a
maximum of 20 Transferred Employees whose employment is
terminated, without cause, by Buyer or its Affiliates on or
prior to the six-month anniversary of the Closing Date.
Such amount shall be paid promptly following any such
termination in a lump-sum.
(d) Collection of Receivables. Buyer shall use
reasonable commercial efforts to collect the Receivables.
Buyer shall apply amounts received in respect of such
Receivables to the oldest amounts due from any client or
customer unless otherwise specifically directed by such
client or customer. For 120 days following the Closing
Date, Buyer will remit to Seller amounts received in respect
of all Receivables that are not Purchased Receivables (such
remittance to occur within 15 days following the last
business day of each month) and all amounts received in
respect of Purchased Receivables shall be retained by Buyer.
Following the end of such 120-day period, any Non-Purchased
Receivables not collected shall be reassigned by Buyer to
Seller. Buyer agrees to provide to Seller by the 15th day
of each month a report reflecting the amount of Purchased
Receivables outstanding as of the last day of the preceding
month. Seller agrees to purchase any Purchased Receivable
that has not been collected by Buyer within 120 days after
the date of the invoice giving rise to such Purchased
Receivable at the aggregate gross recorded amount thereof
less an allowance (the "Allowance"), if any, for uncollected
Purchased Receivables reflected in the financial statements
of Seller dated June 30, 1996 or thereafter acquired on or
prior to the Closing Date in the ordinary course of
business. The purchase price for any such Purchased
Receivable shall be paid by check payable to Buyer. Such
purchase shall be made on the 125th day following the
Closing Date. If such purchase is not made by Seller on or
prior to such 125th day, Buyer shall be entitled to recover
from the amount deposited pursuant to the Escrow Agreement
or draw upon the Letter of Credit, as the case may be, in
the amount of such purchase price, and Seller will execute
such instruments and take such actions, at no cost to Buyer,
to facilitate the recovery under the Escrow Agreement or the
drawing upon the Letter of Credit, as the case may be, by
Buyer.
(e) HSR Filing. As promptly as practicable, and
in any event no later than five business days following the
date hereof, Buyer and Seller shall make any filing required
pursuant to the HSR Act. Buyer and Seller shall promptly
and diligently provide any additional information required
or reasonably requested in order to comply with the
requirements of the HSR Act. All filing fees applicable to
compliance with the HSR Act in connection with this
Agreement shall be shared equally by Buyer and Seller.
(f) Further Assurances. Seller will cooperate
fully with Buyer in connection with the transactions
contemplated by this Agreement. Without limiting the
generality of the foregoing, from and after the Closing
Date, from time to time, at Buyer's request and without
further consideration, Seller will execute and deliver such
other instruments, including powers of attorney, and take
such other action as Buyer may reasonably request to more
effectively put Buyer in possession and operating control of
all or any part of the assets or properties of Seller.
Section 8.05 Survival of Representations and
Warranties; Indemnities. (a) All covenants and agreements
of the parties made in this Agreement or provided herein
shall survive the Closing Date without limit, unless
otherwise specifically provided herein. All representations
and warranties of the parties made in this Agreement or as
provided herein shall survive the Closing Date and for a
period ending June 30, 1998 thereafter notwithstanding any
investigation at any time made by or on behalf of the other
party; provided, however, that the representations and
warranties relating to any Tax matter and any matter arising
under or related to Environmental Laws shall survive until
six months after the applicable statute of limitations (or
any extension thereof) has expired (as the case may be, the
applicable "Survival Period"); and provided, further, that,
any representation or warranty which is the subject of a
claim or dispute asserted prior to the expiration of the
Survival Period shall survive with respect to such claim or
dispute until final resolution thereof. All claims for
indemnity hereunder shall be made in writing, and shall
state with reasonable specificity the matter for which
indemnification is sought.
(b) Seller hereby agrees to indemnify and hold
Buyer, its Affiliates and its shareholders and their
respective officers and directors harmless from and against
any and all claims, liabilities, losses, damages or
injuries, together with costs and expenses, including
reasonable legal fees ("Losses"), arising out of or
resulting from (i) any incorrectness or incompleteness in
the representations and warranties made by Seller in this
Agreement, (ii) any breach in any material respect by
Seller, unless waived, of any covenant or agreement of
Seller contained in or arising out of this Agreement, (iii)
the Business conducted by Seller, or otherwise in connection
with the Purchased Assets or the Assumed Liabilities, prior
to the Closing Date, (iv) any failure by Buyer or Seller to
comply with the bulk sales laws of any jurisdiction, (v) any
claim by Message Center Beeper or Sandra Cruise against
Buyer or related to the Business or (vi) any and all
actions, suits, proceedings, claims, demands, assessments
and judgments incidental to the foregoing or the enforcement
of such indemnification; provided, however, that Seller
shall not have any liability pursuant to this Section
8.05(b) (but subject to the next succeeding sentence) unless
the aggregate amount of Losses pursuant to clauses (i) -
(iv), and (vi) insofar as it relates to (i) - (iv) of this
Section 8.05(b) equals or exceeds $50,000, but once such
$50,000 amount is equalled or exceeded, Seller shall be
liable pursuant to this Section 8.05(b) for all Losses from
the first dollar of such Losses, inclusive of the $50,000.
Notwithstanding anything to the contrary in the proviso to
the immediately preceding sentence, the $50,000 amount
contemplated by that proviso shall be inapplicable to any
Losses arising out of or resulting from (A) the
incorrectness or incompleteness in Seller's representations
contained in Section 5.01(c)(iv), and (B) the matters set
forth in clause 8.05(b)(v) above, and any such Losses shall
be subject to this Section 8.05(b) from the first dollar,
without regard to the $50,000 limitation.
In addition to the foregoing provisions of this
Section 8.05(b) and without limiting the generality of such
provisions, Seller agrees to fully indemnify and hold
harmless Buyer and its Affiliates against and in respect of
and, on demand, will reimburse Buyer and its Affiliates for
(a) any and all liability whatsoever, and however imposed
(including any claim asserted against or deficiency assessed
against or collected from or paid by Buyer or Seller or any
Affiliates thereof), in respect of any Taxes of Seller (or
any predecessors of Seller) for any and all periods through
the period ending on the Closing Date, without regard to
whether or not the existence of such liability would
constitute a breach of a representation or warranty made by
Seller hereunder, (b) all or such portion of the Purchased
Receivables of Seller existing on the Closing Date (in
excess of the allowance, if any, for uncollectible accounts
reflected in the financial statements of Seller as of the
Closing Date) which, after reasonable commercial efforts on
the part of Buyer to so collect, shall prove uncollectible
for more than 120 days after the dates of the invoices
giving rise to such Purchased Receivables at the aggregate
gross recorded amounts thereof and (c) any and all
liabilities of Seller existing on, or arising under or
relating to activities or transactions of Seller other than
the Assumed Liabilities.
(c) Buyer hereby agrees to indemnify and hold
Seller, its shareholders and its officers and directors
harmless from and against any and all claims, liabilities,
losses, damages or injuries, together with costs and
expenses, including reasonable legal fees, arising out of or
resulting from (i) any incorrectness or incompleteness in
the representations and warranties made by Buyer in this
Agreement, (ii) any breach in any material respect by Buyer,
unless waived, of any covenant or agreement of Buyer con-
tained in or arising out of this Agreement and (iii) the
business conducted by Buyer at the Sites, or otherwise in
connection with the Purchased Assets on and after the
Closing Date.
(d) Each party shall retain its own counsel and
defend itself, subject to being reimbursed by the indemnify-
ing party for reasonable attorneys' fees and expenses
pursuant to this Section 8.05. The indemnified party agrees
to give the indemnifying party written notice of any claim,
demand, action, suit, proceeding or discovery of fact upon
which the indemnified party intends to base a claim for
indemnification ("Claim") under this Section 8.05. The
indemnifying party shall have the right to participate
jointly with the indemnified party in the indemnified
party's defense of any Claim. With respect to any issue
involved in any such Claim, as to which the indemnifying
party shall have acknowledged in writing the obligation to
indemnify the indemnified party hereunder, the indemnifying
party shall have the sole right to defend, settle or other-
wise dispose of such Claim, on such terms as the indemnify-
ing party, in its sole discretion, shall deem appropriate;
provided that such terms do not result in any expense to the
indemnified party. In addition, the parties agree to
cooperate in any defense or settlement and to give each
other full access to all information relevant thereto.
(e) Remedies. (i) Any claim by Buyer hereunder
may be satisfied by either a disbursement of funds held by
the Escrow Agent under the Escrow Agreement or a drawing by
Buyer pursuant to the Letter of Credit, as the case may be
in accordance with Section 3.01(a). Such claims shall
either be made in accordance with Section 7 of the Escrow
Agreement or under the terms of the Letter of Credit, as the
case may be. Nothing herein shall preclude the assertion by
Buyer or Seller, as applicable, of any rights or remedies
available to them at law or equity (including, but not
limited to, any right of set-off) in respect of the
foregoing agreements of indemnity. Seller acknowledges that
irreparable damage would result if the provisions of
sections 8.01(b) and (c) were not complied with in
accordance with their respective specific terms.
Accordingly, Seller agrees that Buyer shall have the right,
in addition to any other rights or remedies it may have, to
injunctive relief, in respect of any failure on the part of
Seller to comply with provisions of Sections 8.01(b) or (c).
Section 8.06 Allocations of Purchase Price.
Following the Closing, Buyer shall provide to Seller copies
of Internal Revenue Service Form 8594 and any required
exhibits thereto with Buyer's proposed allocation of the
purchase price among the Purchased Assets. Such allocation
shall be based on the fair market value of each Purchased
Asset at Closing and otherwise in a manner consistent with
Section 1060 of the Code and the regulations thereunder.
Within 30 days after the receipt of such Form 8594, Seller
shall propose to Buyer any changes to such Form 8594 or
shall indicate its concurrence therewith. The failure by
Seller to propose any changes within such 30 days shall be
deemed to be an indication of Seller's concurrence with such
form as proposed by Buyer. Buyer and Seller shall endeavor
in good faith to resolve any differences with respect to the
items on Form 8594. Notwithstanding the foregoing, if Buyer
and Seller are unable to resolve such differences, then such
differences shall be resolved in accordance with Section
8.07. Seller and Buyer hereby covenant and agree that it
will not take, and will cause each of its Affiliates not to
take, a position on any foreign, federal, state or local tax
return that is in any way inconsistent with the allocation
made pursuant to this Section 8.06, unless advised by
counsel that it must take such position in accordance with
applicable law or in order to avoid incurring penalties.
Section 8.07 Resolution of Disputes. Buyer and
Seller shall promptly seek to resolve any dispute arising
under Section 8.06 of this Agreement. If Buyer and Seller
are unable to resolve any such dispute, Buyer and Seller
will select an accounting firm (if the dispute is financial
in nature) and/or an independent appraisal firm (if the
dispute is one of valuation) mutually acceptable to them to
resolve any remaining disputes. If Buyer and Seller are
unable to agree on the choice of an accounting firm and/or
an appraisal firm, they will select a nationally recognized
accounting firm or appraisal firm by lot (after excluding
their respective regular outside accounting firms and/or
appraisal firms). Buyer and Seller will share equally the
fees and expenses of the accounting firm and/or appraisal
firm designated to resolve outstanding disputes. Buyer and
Seller shall be bound by the determinations of such
accounting firm and/or appraisal firm in the absence of
clear and convincing error.
Section 8.08 Purchased Spare Parts, Purchased
Inventory Amount and Valuation. On the weekend prior to the
Closing Date, Buyer and Seller will conduct a physical
inventory of Seller's Purchased Inventory and Seller's
Purchased Spare Parts in a manner reasonably satisfactory to
Buyer. Such physical inventory shall include a sampling of
Purchased Inventory and Purchased Spare Parts located at
each Site. All inventory and spare parts which are not
Purchased Inventory or Purchased Spare Parts, as the case
may be, will be identified and isolated during such physical
inventory. The amount and valuation of Seller's Purchased
Inventory and Seller's Purchased Spare Parts as of the
Closing Date shall be determined based upon such audit.
Seller shall, at its own cost and expense, remove all
inventory and spare parts which are not Purchased Inventory
or Purchased Spare Parts, as the case may be, from all Sites
within five business days of the Closing Date.
ARTICLE IX
Miscellaneous
Section 9.01 Expenses. Regardless of whether the
transactions contemplated hereby are consummated, each of
the several parties hereto shall bear the fees and expenses
relating to its compliance with the various provisions of
this Agreement and its covenants to be performed hereunder,
and each of such parties shall pay all expenses (including
legal fees and expenses) incurred by it in connection with
this Agreement and the transactions contemplated hereby.
Section 9.02 Termination. If the Closing pur-
suant to Section 4.01 shall not have occurred on or prior to
October 31, 1996, this Agreement and all obligations of
Seller and Buyer hereunder, except obligations under Sec-
tions 8.04(b) and 9.01, shall terminate at 11:59 p.m. New
York time on such date, unless extended by mutual agreement
of the parties.
Section 9.03 Benefit; Assignment. This Agreement
shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns
and not to any other person. This Agreement shall not be
assigned by any party hereto without the written consent of
each of the other parties hereto, except that (a) the rights
and obligations of Buyer may be assigned to any wholly owned
subsidiary of Buyer or any entity under common control with
Buyer, but no such transfer shall relieve Buyer of its
obligations hereunder, and (b) the rights and obligations of
Seller or Buyer may be assigned in connection with the
dissolution of Seller or Buyer or the merger of any Seller
or Buyer into or sale by Seller or Buyer of substantially
all its assets and business to a third party if the
successor shall have assumed all the obligations of the
dissolving, merging or selling entity (but, in the case of a
sale of substantially all the assets, without relieving such
Seller or Buyer of its obligations hereunder).
Section 9.04 Governing Law. This Agreement shall
be construed and enforced in accordance with and governed by
the laws of the State of New Jersey.
Section 9.05 Notices. Except as otherwise
specifically provided in this Agreement, all notices and
other communications hereunder shall be in writing and
deemed to have been duly given when delivered by hand, when
mailed by registered or certified mail, postage prepaid,
return receipt requested, or when given by prepaid courier
delivery services such as Federal Express, DHL or other
similar services upon receipt, as follows:
(a) if to Buyer, at
AmeriData of New Jersey Inc.
700 Canal Street
Stamford, CT 06902
Attention: President
with a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, N.Y. 100019
Attention: E. Ann Gill, Esq.
(b) if to Seller, within 90 days of the Closing
Date at
AmeriData of New Jersey Inc.
3920 Park Avenue
Edison, New Jersey 08820
Attention: Richard Rose
PERSONAL AND CONFIDENTIAL
or if to Seller, 90 days or more after the
Closing Date at
Dataflex Corporation
2151 Calumet Street
Clearwater, Florida 34625
Attention: Richard Rose
PERSONAL AND CONFIDENTIAL
in either event, with a copy to:
Greenbaum, Rowe, Smith, Ravin, Davis & Himmel
P.O. Box 5600
Metro Corporate Campus I
Woodbridge, N.J.
Attention: W. Raymond Felton, Esq.
or at such other address as either such party shall request
in writing.
Section 9.06 Headings. The headings of the
articles, sections and paragraphs contained in this Agree-
ment are for convenience of reference only and do not form a
part hereof and in no way modify the meanings of such
articles, sections and paragraphs.
Section 9.07 Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which together shall
constitute one and the same instrument. This Agreement
shall become effective when one or more counterparts have
been signed by each of the parties hereto and delivered to
the other parties.
Section 9.08 Entire Agreement. This Agreement
including the Exhibits hereto and the documents referred to
herein contains all the terms agreed upon by the parties
hereto with respect to the subject matter hereof and
supersedes all prior agreements, arrangements or
understandings between such parties as to the subject matter
hereof.
Section 9.09 Waiver; Amendment; Modification.
The parties may, by written agreement (a) extend the time
for the performance of any of the obligations or other acts
of the parties hereto or (b) waive any inaccuracies or
breaches in the representations and warranties contained in
this Agreement or in any document delivered pursuant to this
Agreement. This Agreement may be amended or modified only
by a written agreement executed by the parties hereto or by
their successors and assigns.
Section 9.10 Severability. To the extent that
any provision of this Agreement shall be invalid or
unenforceable, it shall be considered deleted herefrom and
the remainder of such provision and of this Agreement shall
be unaffected and shall continue in full force and effect.
In furtherance and not in limitation of the foregoing, if
the duration or geographic extent of, or business activity
covered by, any provision of this Agreement shall be in
excess of that which is enforceable under applicable law,
then such provision shall be construed to cover only that
duration, extent or activities which may be validly and
enforceable covered.
Section 9.11 Press Releases. Neither Seller nor
Buyer shall issue any press releases or make any public
announcements of any of the transactions contemplated by
this Agreement except as may be mutually agreed to in
writing by Seller and Buyer; provided, however, that
notwithstanding the foregoing, Seller and Buyer shall be
permitted to make such disclosures to the public or
governmental authorities as their respective counsel shall
deem necessary to maintain compliance with, or to prevent
violation of, applicable laws, rules and regulations.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed, all as of the day and
year first above written.
DATAFLEX CORPORATION
by: /s/ Richard C. Rose
Name: Richard C. Rose
Title: Chief Executive
Officer
AMERIDATA OF NEW JERSEY INC.
by: /s/ Gerald A. Poch
Name: Gerald A. Poch
Title: President
<PAGE>
APPENDIX A
DEFINITIONS
The following terms shall have the following
meanings for all purposes of this Agreement and such mean-
ings are equally applicable both to the singular and plural
forms of the terms defined.
"Accrued Expenses" shall mean the accrued expenses
identified on Schedule A.
"Affiliate" shall have the meaning ascribed to
such term in Rule 405 promulgated under the Securities Act
of 1933, as amended.
"Allowance" shall have the meaning specified in
Section 8.04(d).
"AmeriData" shall mean AmeriData Technologies,
Inc. or any of its subsidiaries.
"Asset Price" as of any date shall mean the sum of
the aggregate of (i) the book value of the Purchased
Receivables less the Allowance as of such date, (ii) the
lesser of cost or Seller's current replacement value of the
Purchased Inventory as of such date, (iii) $4,000,0000, (iv)
$1,909,000 with respect to the Purchased Spare Parts, and
(v) $5,000,000 plus the value of the Fixed Asset
acquisitions less the value of the Fixed Asset dispositions
between March 31, 1996 and the Closing Date (in the case of
(i), (ii) and (v) as set forth in the financial statements
for each Site) as of such date.
"Assumed Agreements" shall mean the agreements
described in Exhibit 5.01(c)(1).
"Assumed Liabilities" shall be limited to the
claims, liabilities and obligations of Seller with respect
to (i) the Assumed Agreements becoming due or arising after
the Closing Date other than Taxes relating to transactions
arising prior to the Closing Date that become due after the
Closing Date, (ii) the Assumed Trade Payables and (iii) the
Accrued Expenses.
"Assumed Trade Payables" shall mean (i) as of the
date of this Agreement those trade payables of Seller's
eastern and midwestern divisions incurred in the ordinary
course of business as of June 30, 1996 which are set forth
on Exhibit A-3, excluding any Vendor Credits, and (ii) as of
and following the Closing Date, the Closing Payables,
excluding any Vendor Credits.
"Assumption Agreement" shall mean an agreement
substantially in the form of Exhibit A-1.
"Business" with respect to Seller, shall mean the
business conducted by Seller at the Sites prior to the
Closing Date.
"Closing" shall have the meaning specified in
Section 4.01.
"Closing Date" shall have the meaning specified in
Section 4.01.
"Code" shall mean the Internal Revenue Code of
1986, as amended.
"Closing List" shall have the meaning specified in
3.01(e).
"Closing Payables" shall mean those trade payables
of Seller's eastern and midwestern divisions incurred in the
ordinary course of business as of the Closing Date excluding
any Vendor Credits.
"Company Personnel" shall mean current or former
employees, officers, directors or consultants of Seller with
respect to the Business of Seller.
"Customer Data" shall mean (a) lists of customers
of all the Sites and (b) other records regarding such
customers.
"Employee Benefit Plans" shall mean all pension,
annuity, retirement, stock option, stock purchase, savings,
profit sharing or deferred compensation plans or agreements,
and any retainer, consultant, bonus, group insurance,
welfare, health and disability plan, fringe benefit or other
incentive or benefit contract, plan, or commitment or
arrangement applicable to Company Personnel.
"Employees", with respect to any Seller, shall
mean all full and part-time employees of such Seller working
in the Business of Seller, as more fully described in
Exhibit 5.01(o).
"Employment Contracts" shall mean all employment
contracts, consulting agreements, and collective bargaining
agreements or labor agreements with respect to employees of
the Business.
"Encumbrance" shall mean any mortgage, claim,
lien, pledge, option, charge, security interest or other
similar interest.
"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. Section 1801
et seq.) ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.) ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986, the Federal Clean Water Act
(33 U.S.C. Section 1251 et seq.) ("SARA"), the Federal Clean Air
Act (33 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 7401 et seq.), the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. Section 136 et seq.), and
the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.).
"EPA" shall have the meaning provided in Section
5.01(j).
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"Escrow Agreement" shall mean the Escrow Agreement
substantially in the form set forth as Exhibit A-2.
"Escrow Property" shall mean the cash amount
deposited pursuant to Subsection 2(a) of the Escrow
Agreement together with accruals thereon pursuant to Section
3 of the Escrow Agreement.
"Excluded Assets" shall mean:
(i) Seller's rights under this Agreement or
any other agreement or document delivered to or
received by Seller in connection herewith;
(ii) All corporate records of Seller,
including all minute books and other records of
corporate proceedings and ownership of Seller;
(iii) All income tax returns and related
worksheets and supporting materials of Seller;
(iv) Cash and cash equivalents (other than
Petty Cash);
(v) any Interests not sold, assigned,
transferred or conveyed or deemed to have been
sold, assigned, transferred or conveyed pursuant
to Section 8.02;
(vi) the internet address and web site of the
Seller;
(vii) receivables relating to contra-payable
balances in the payable accounts of Seller and
receivables attributable to manufacturers' and
other vendors' reimbursement policies; and
(viii) any and all assets of the southeast
division of the Seller.
"Fixed Assets" shall mean the vehicles, fixtures,
equipment, leasehold improvements, security systems,
telephone systems, display stands, furniture and similar
furnishings located at the Sites or at holding areas for the
Sites.
"GAAP" shall mean generally accepted accounting
principles in effect in the United States consistently
applied throughout the periods involved.
"Hazardous Material" shall mean any hazardous
waste, as defined by 42 U.S.C. Section 6903(5), any hazardous
substances or wastes as defined by 42 U.S.C. Section 9601(14), any
pollutant or contaminant as defined by 42 U.S.C. Section 9601(33)
or any toxic substances or wastes, oil or hazardous
materials or other chemicals or substances regulated by any
public or governmental authority.
"HSR Act" shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder.
"ICC Financing" shall mean the Inventory and
Working Capital Financing Agreement, dated as of December
28, 1994 between Seller and IBM Credit Corporation, as
amended by April 14, 1995 and September 29, 1995.
"Intangibles" shall mean the Intellectual
Properties, and all good will and all other general
intangibles of Seller used in the Business of Seller at the
Sites and listed on Exhibit 5.01(n)(1).
"Intellectual Properties" shall have the meaning
provided in Section 5.01(n).
"Interests" shall have the meaning provided in
Section 8.02.
"IRS" shall mean the Internal Revenue Service.
"Letter of Credit" shall mean an irrevocable
letter of credit obtained by Seller, at Seller's sole cost
and expense, in form and substance reasonably satisfactory
to Buyer, issued by a commercial bank with at least
$50,000,000 in capital and surplus and otherwise reasonably
satisfactory to Buyer, in a face amount of not less than
$5,000,000 and which expires not earlier than the close of
business on April 30, 1997.
"Leases" shall mean the leases described in
Exhibit 5.01(c)(1), as in effect on the date of execution of
this Agreement, pursuant to which Seller, as lessee, leases
the Sites.
"Losses" shall have the meaning specified in
Section 8.05(b).
"Non-Compete Area" shall mean the geographic area
within a 100 mile radius of any Site.
"Non-Purchased Receivables" shall have the meaning
specified in Section 2.01.
"Other Property" shall mean the Customer Data,
Fixed Assets and Petty Cash.
"Petty Cash" shall mean all cash on hand at the
Sites at the opening of business on the Closing Date.
"Prepaid Expenses" shall mean the prepaid expenses
identified on Schedule B.
"Purchase Price" shall mean the aggregate amount
required to be paid by Buyer to Seller as provided in
Section 3.01.
"Purchased Assets" shall mean the Purchased
Inventory, Purchased Receivables, Purchased Spare Parts,
Purchased Intangibles, Prepaid Expenses and Other Property
and the rights under the Assumed Agreements to be assigned,
transferred or conveyed and the Qualified Documents to be
delivered, by Seller to Buyer on the Closing Date but
excluding in all cases Excluded Assets.
"Purchased Intangibles" shall mean the Intangibles
purchased by the Buyer which are identified with an asterisk
(*) on Exhibit 5.01(n)(1).
"Purchased Inventory" shall mean products held for
sale in the ordinary course of business in Seller's
inventory located at the Sites, at customer sites, at
holding areas or in transit and allocable to the Sites, or
the customer sites, in each case such products must be new,
in their initial packaging and returnable to their
respective vendors. Purchased Inventory at any time shall
be determined on the basis of the Purchased Inventory
physically located at the Sites at such time and not on the
basis of accounting records. Purchased Inventory shall not
include products, fixtures and equipment used in the day-to-
day operation of the Business or any of the Other Property
or the Purchased Spare Parts.
"Purchased Receivables" shall mean trade
Receivables outstanding not more than 120 days from the date
of the invoice giving rise thereto.
"Purchased Spare Parts" shall mean products held
in the ordinary course of business in Seller's spare parts
inventory located at the Sites, at customer sites, at
holding areas or in transit and allocable to the Sites or
the customer sites (the "Specified Locations"), and, in each
case, as set forth on Schedule C hereto. Schedule C also
contains a valuation for each part listed.
"Qualified Documents" shall mean all documents
pertaining to Purchased Assets, including financial and
operating records, manuals, certificates of occupancy,
surveys and construction drawings.
"Receivables" shall mean all of Seller's
outstanding accounts receivable arising from the sale of
products in the Business but not including receivables
relating to contra-payable balances in the payable accounts
of Seller and receivables attributable to manufacturers' and
other vendors' reimbursement policies.
"Returns" shall have the meaning provided in
Section 5.01(h).
"Rose Employment Agreement" shall mean the
employment agreement dated April 1, 1993, as amended,
between Seller and Richard Rose.
"SARA" shall have the meaning provided in Section
5.01(j).
"Sites" shall mean the leased locations identified
in Exhibit 5.01(c)(5).
"Spare Parts List" shall have the meaning
specified in 3.01(d).
"Specified Locations" shall have the meaning
provided in the definition of Purchased Spare Parts.
"Survival Period" shall have the meaning provided
in Section 8.05.
"Tax" or "Taxes" shall mean all taxes, charges,
fees, levies or other assessments, including without
limitation all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise,
severance, stamp, occupation, property or other taxes,
customs, duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign) upon Seller or any
subsidiary.
"Tax Affiliate" shall have the meaning specified
in Section 5.01(h).
"Transferred Employees" shall have the meaning
specified in 8.04(c).
"Vendor Credits" shall mean any credits to vendors
resulting from returned merchandise and other receivables to
vendors.
