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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: June 19, 1997
AMERIQUEST TECHNOLOGIES, INC.
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(Exact name of registrant as specified in charter)
Delaware
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(State of other jurisdiction of incorporation)
1-10397 33-0244136
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(Commission File Number) (IRS Employer Identification No.)
6100 Hollywood Blvd., Ste. 700, Hollywood, Florida 33024
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(Address of principal executive offices) (Zip Code)
(954) 967-2397
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 19, 1997, CMS Enhancements, Inc., a wholly-owned subsidiary of
AmeriQuest Technologies, Inc. ("AQS") sold substantially all of the assets then
being utilized in the business conducted by CMS Enhancements, Inc. to CMS
Peripherals, Inc., a California corporation formed by Mr. Kenneth V. Burke. Mr.
Burke served as the General Manager of CMS Enhancements, Inc. prior to the
consummation of the transaction. The purchase price was $3,550,000, plus the
release of CMS Enhancements, Inc. and AQS from their obligations under a Lease
for the premises occupied by CMS Enhancements, Inc. at the time of the
transaction.
Although the sale was made to a corporation controlled by Mr. Burke, in
the opinion of management the terms of the transaction were on terms as
favorable to AQS as could have been obtained from unaffiliated third party
purchasers. In fact, every effort had been taken by management to sell the
business to the highest bidder, including the retention of a qualified
investment banking firm and the offering of CMS Enhancements, Inc. to several
possible purchasers by such investment banking firm.
CMS Enhancements, Inc. was engaged in the business of providing mass
storage solutions, sub-assembly storage upgrade products and developing a broad
line of storage products for servers, workstations and portable computers.
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) No financial statements of AQS are required to be filed.
(b) The pro forma financial information for AQS required to be filed
pursuant to Item 7(b) of Form 8-K and Rule 601 of Regulation S-K and included in
this report are as follows:
(1) Pro Forma Consolidated Condensed Balance Sheet as of
March 31, 1997.
(2) Pro Forma Consolidated Condensed Statement of Operations for
the six months ended March 31, 1997.
(3) Pro Forma Consolidated Condensed Statement of Operations for
the fiscal year ended September 30, 1996.
Exhibit No. Description of Exhibit
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2 Asset Purchase Agreement dated as of June 9, 1997 by and
between CMS Peripherals, Inc. and CMS Enhancements, Inc.
4 Pro Forma Financial Information for the disposition of
the assets of CMS Enhancements, Inc.
SIGNATURES
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.
AMERIQUEST TECHNOLOGIES, INC.
/s/ Holger Heims
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Holger Heims
Executive Vice President, Chief Financial
Officer and Secretary
Dated: July 3, 1997
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EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of June 9, 1997 by and between CMS Peripherals, Inc., a California
corporation (the "Purchaser"), and CMS Enhancements, Inc., a California
corporation (the "Seller").
RECITALS
A. Seller is engaged in the business of providing mass storage
solutions, sub-assembling storage upgrade products, and developing a broad line
of storage products for servers, workstations and portable computers
(collectively referred to herein as the "Business").
B. Seller owns all of the Transferred Assets (as defined in Section
1.1 below), which Transferred Assets are used in the conduct of the Business.
C. Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, the Transferred Assets on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth and other good and valuable consideration, and upon the
terms and subject to the conditions contained herein, the parties hereto hereby
agree as follows:
AGREEMENT
ARTICLE I
SALE AND TRANSFER OF ASSETS
1.1 TRANSFERRED ASSETS. Subject to the terms and conditions set forth
herein, at the Closing (as defined below), Seller shall sell, convey, transfer,
assign and deliver to Purchaser, and Purchaser shall purchase, assume and
acquire from Seller the assets described on the "Transferred Assets Schedule"
attached hereto as SCHEDULE 1.1.
1.2 EXCLUDED ASSETS. Notwithstanding anything contained in SECTION 1.1
hereof to the contrary, Seller is not selling, and Purchaser is not purchasing,
any of the assets set forth in the "Excluded Assets Schedule" attached hereto as
SCHEDULE 1.2 (the "Excluded Assets"), all of which shall be retained by Seller.
1.3 ASSUMED OBLIGATIONS. Purchaser hereby assumes and shall hereafter
pay, discharge or perform in the ordinary course those contracts and other
obligations (the "Assumed Obligations") listed in the "Assumed Obligations
Schedule" attached hereto as SCHEDULE 1.3. Other than as set forth in Schedule
1.3, Purchaser shall not assume or be obligated to pay discharge or perform any
liability or obligation of Seller, whether direct or indirect, known or unknown,
absolute or contingent.
1.4 NO OTHER DEBTS, OBLIGATIONS OR LIABILITIES ASSUMED. Purchaser does
not assume and shall not be liable for, and Seller shall indemnify Purchaser
against, any debts, obligations or liabilities of Seller of any nature
whatsoever, including, without limitation, any liability of Seller for taxes or
any liability of Seller relating to, arising from or connected with
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service and/or equipment provided by Seller, other than the assumed obligations
specifically listed in the Assumed Obligations Schedule.
ARTICLE II
PURCHASE PRICE AND PAYMENT; CLOSING
2.1 PURCHASE PRICE. The aggregate cash purchase price to be paid by
Purchaser in exchange and as consideration for the Transferred Assets will equal
Three Million Five Hundred Fifty Thousand Dollars ($3,550,000) (the "Purchase
Price).
2.2 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid by
Purchaser to Seller by delivery of certified or bank check or by wire transfer
of immediately available funds the amount of Three Million Four Hundred Fifteen
Thousand Dollars ($3,415,000) (the Purchase Price less Purchaser's $135,000
deposit).
2.3 ALLOCATION OF PURCHASE PRICE. The parties hereby agree that the
following amounts shall be allocated in accordance with the Form 8594 to be
prepared by Arthur Andersen LLP following the Closing.
Purchaser and Seller hereby agree to report this transaction for all
tax purposes in accordance with the Form 8594 as prepared by Arthur Andersen
LLP.
2.4 PAYMENT OF SALES AND RELATED TAXES. Purchaser shall be obligated
for and shall pay all sales, use, transfer, excise and related taxes payable to
the State of California, if any, when and as validly assessed as a result of the
transactions contemplated by this Agreement. From and after the Closing,
Purchaser will be responsible for state and local personal property or ad
valorem taxes relating to periods subsequent to the Closing. Purchaser and
Seller agree to reimburse and indemnify each other as provided in Article V
hereof with respect to any payments of such taxes that the other may be required
to make on behalf of the other. Purchaser shall not be responsible for any
business, income, occupation, withholding or similar tax, or for any taxes of
any kind related to any period prior to the Closing Date.
2.5 CLOSING. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place on June 19, 1997 (the "Closing
Date"), at the offices of Gibson, Dunn & Crutcher LLP, Jamboree Center, 4 Park
Plaza, Suite 1700, Irvine, California 92614 or at such other date, time and
place as may be mutually agreed upon in writing by the parties. All proceedings
to take place at the Closing shall take place simultaneously, and no delivery
shall be considered to have been made until all such proceedings have been
completed. The transfer of the Transferred Assets shall be deemed to have taken
place at 11:59 p.m. on the Closing Date. At the Closing:
(a) Purchaser shall (i) pay to Seller the Purchase Price as set
forth in SECTION 2.2 and (ii) execute and deliver to Seller (A) the Assignment
and Assumption Agreement in substantially the form attached hereto as Exhibit B,
(B) a certificate of an executive officer of Purchaser that the conditions set
forth in Sections 7.2(a) and (b) have been satisfied as of the Closing and (C)
all such other instruments and documents of conveyance and assignment as are
reasonably requested by Seller to evidence the transfer of the Transferred
Assets and the assumption of the Assumed Obligations (collectively, the
"Purchaser Closing Documents and Deliveries").
(b) Seller shall execute and deliver to Purchaser (i) a Bill of
Sale in substantially the form attached hereto as Exhibit C, (ii) a General
Instrument of Conveyance, Transfer and Assignment in substantially the form
attached hereto as Exhibit D, (iii) a
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Noncompetition Agreement in substantially the form attached hereto as Exhibit E,
(iv) all such other instruments and documents of conveyance and assignment as
are reasonably requested by Purchaser to vest in Purchaser title to the
Transferred Assets, (v) evidence that Seller has changed its name to a name
other than "CMS Enhancements, Inc." that does not include the abbreviation "CMS"
and (vi) a certificate of an executive officer of Seller that the conditions set
forth in Sections 7.3(a) and (b) have been satisfied as of the Closing
(collectively, the "Seller Closing Documents and Deliveries").
(c) Seller shall terminate each of its employees (other than
Holger Heims and Michael Dressen) and Buyer shall immediately rehire each such
employee on terms and conditions substantially equivalent to the terms and
conditions (including position, salary and benefits, but excluding severance
payments set forth in written employment agreements not assumed by Buyer) on
which such employee was employed by Seller immediately prior to the Closing.
Buyer shall assume all accrued vacation, personal leave and sick leave and shall
grant to the rehired employees seniority based upon such employee's service with
Seller.
(d) Seller shall coordinate with Buyer the filing of Seller's name
change with the California Secretary of State in order to afford Buyer the
opportunity to reserve the name "CMS Enhancements, Inc."
(e) Buyer shall enter into a phone service agreement with AT&T for
not less than the term of AmeriQuest Technology, Inc.'s agreement with AT&T
provided that AT&T offers such service to Buyer on competitive terms and
conditions.
(f) Buyer's sole shareholder shall provide to ICM Investments,
Ltd. (the "Lessor") a personal guaranty and shall use commercially reasonable
efforts to cause Lessor to release the guaranty of AmeriQuest Technologies, Inc.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that, except as set forth
in the Seller's Disclosure Schedule:
3.1 ORGANIZATION AND QUALIFICATION. Seller is a corporation duly
organized, validly existing and in good standing in the State of California, is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of its properties or the nature of
its business makes such qualification necessary, except in jurisdictions, if
any, where the failure to be so qualified (a) would not result in a Material
Adverse Change (as defined below) or (b) would not result in a breach of any of
the other representations, warranties or covenants set forth in this Agreement.
Seller has the requisite corporate power and authority to own, use or lease its
properties and to carry on its business as it is now being conducted and as it
is now proposed to be conducted. Seller has made available to Purchaser a
complete and correct copy of its Articles of Incorporation and Bylaws, each as
amended to date, and such Articles of Incorporation and Bylaws as so delivered
are in full force and effect. Seller is not in default in any material respect
in the performance, observation or fulfillment of any provision of its Articles
of Incorporation or Bylaws. For purposes of this Agreement, a "Material Adverse
Change" shall mean any event, circumstance, condition, development or occurrence
causing, resulting in or having a material adverse effect on the financial
condition, business, properties, prospects or results of operations of either
Seller, the Business or the Transferred Assets.
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3.2 CAPITALIZATION. AmeriQuest Technologies, Inc. is the sole record
and beneficial owner of all of the issued and outstanding shares of capital
stock of Seller, free and clear of any claims, liens, pledges, options, security
interests, trusts, encumbrances or other rights or interests of any person. No
agreement or other document grants or imposes on any such shares of Seller any
right, preference, privilege or restriction with respect to the transaction
contemplated hereby (including, without limitation, any rights of first
refusal). There are no options, warrants or other rights, commitments or
agreements of any character which call for the issuance of shares of capital
stock or other securities of Seller or any securities, instruments or rights
convertible into or exchangeable for shares of capital stock or other securities
of Seller. Seller has the absolute and unrestricted right, power, authority and
capacity to transfer the Transferred Assets to Purchaser and upon the Closing,
without exception, Purchaser will acquire from Seller's legal and beneficial
ownership of, good and valid title to, the Transferred Assets, free from any
charge, lien, encumbrance or adverse claim of any kind whatsoever.
3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Seller has all requisite
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby on the part of
Seller has been duly and validly authorized and no other proceedings on the part
of Seller are necessary, as a matter of law or otherwise, to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Seller and, assuming this
Agreement constitutes a valid and binding obligation of Purchaser, this
Agreement constitutes a valid and binding agreement of Seller, enforceable
against it in accordance with its terms.
3.4 BROKER'S COMMISSION OR FINDER'S FEES. No person or entity has acted
for Seller in connection with the transactions provided for in this Agreement in
a way which would entitle such person to, and no person or entity is entitled
to, any broker's commissions or finder's fees (or other similar fees or
commissions) in connection with this Agreement. AmeriQuest Technologies, Inc. is
solely responsible for the payment of any commissions and/or finder's fees due
to Chase Securities, Inc. in connection with this Agreement.
3.5 TAXES.
(a) Seller has timely filed all returns, declarations, reports,
claims for refund, or information returns or statements relating to Taxes (as
defined below) with respect to the Business, including any schedule or
attachment thereto and including any amendment thereof ("Tax Returns") that are
required to be filed under federal, state, local or foreign law. All such Tax
Returns were correct and complete in all material respects. All Taxes owed by
Seller or its affiliates with respect to the Business (whether or not shown on
any of said Tax Returns) have been paid for all periods for which returns have
been filed. Seller is not currently the beneficiary of any extension of time
within which to file any Tax Return. No outstanding claim has been made by any
authority in a jurisdiction where Seller does not file Tax Returns that Seller
may be subject to taxation by that jurisdiction.
(b) Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party.
(c) There is no dispute or claim concerning any Taxes of Seller
either (i) claimed or raised by any authority or (ii) as to which Seller or
employees or accountants responsible for Tax matters of Seller have knowledge
based upon personal contact or correspondence with any agent of such authority.
Seller has disclosed and provided to Purchaser all federal, state, local and
foreign Tax Returns filed with respect to Seller or the
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Business for taxable periods ended on or after December 31, 1994, and has
disclosed and provided to Purchaser those Tax Returns, if any, that have been
audited, and those Tax Returns, if any, that currently are the subject of audit.
Seller has delivered to Purchaser correct and complete copies of all Tax
Returns, examination reports, and statements of deficiencies assessed against or
agreed to by Seller with respect to Seller or the Business since December 31,
1994.
(d) Seller has not waived in writing any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency pertaining to Seller or the Business.
(e) Seller has not made any payments, nor is it obligated to make
any payments, nor is it a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be deductible
under the Internal Revenue Code of 1986, as amended (the "Code") Section 280G.
Seller has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to any accuracy related understatement penalty
pursuant to Code Section 6662. Seller is not a party to any Tax allocation or
sharing agreement.
(f) No Taxes will be incurred by Seller as a result of any Tax
Returns that are required to be filed under federal, state, local or foreign law
prior to the Closing Date, which would result in a Material Adverse Change.
(g) For purposes of this Agreement, "Tax" or "Taxes" means any
federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code Section 59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
3.6 TITLE TO ASSETS. Seller has good and marketable title to all of the
Transferred Assets, whether tangible or intangible, and such Transferred Assets
constitute all of the assets and interests in assets that are used or useful in
the conduct of the Business as currently being conducted, other than the
Excluded Assets. Except for statutory mechanics and materialmens' liens and
liens for current taxes not yet delinquent, all of the Transferred Assets
conveyed to Purchaser are free and clear of restrictions on or conditions to
transfer or assignment, and free and clear of mortgages, liens, pledges,
charges, encumbrance, equities, claims, easements, rights of way, covenants,
conditions or restrictions or any other adverse claims or rights whatsoever,
Seller is in possession of all personal property leased to it by others. No
partner, agent or employee of Seller, nor any spouse, child or other relative of
any of these persons, owns or has any interest, directly or indirectly, in any
of the personal property used in the Business owned by or leased to Seller.
3.7 REAL PROPERTY. Seller does not own or lease any real property
necessary for the conduct of the Business.
3.8 INVENTORY. The inventory of Seller consists of supplies that are
merchantable and fit for the purpose for which they were procured, and none of
which are damaged or defective in any manner. No inventory of Seller has been
pledged as collateral.
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3.9 CONSENT AND APPROVALS; NO VIOLATION. The execution and delivery of
this Agreement by Seller, the consummation of the transactions contemplated
hereby or the performance by Seller of its obligations hereunder, will not:
(a) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority;
(b) conflict with, result in the breach of or constitute a default
(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any material note, lease,
mortgage, license, agreement or other instrument or obligation to which Seller
is a party or by which Seller or any of its assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained or which, in the aggregate,
would not have a material adverse effect on the financial condition, business,
properties, or results of operations of Seller; or
(c) conflict with or violate the provisions of any order, writ,
injunction, judgment, decree, statute, rule or regulation applicable to Seller,
in such a manner as to result in a material adverse effect on the financial
condition, business, properties or results of operations of Seller.
3.10 FULL DISCLOSURE. To Seller's knowledge, all instruments,
agreements and other documents delivered or to be delivered, or made available,
to Purchaser by Seller pursuant to this Agreement are complete and correct in
all material respects. To Seller's knowledge no representation or warranty made
by Seller in this Article III or the Schedules to this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated herein or therein necessary to make
the statements on behalf of Seller in this Article III and the Schedules to this
Agreement, in light of the circumstances in which they are made, not misleading.
In accordance with Section 6104 of the California Uniform Commercial Code,
Seller has provided Buyer with a true and complete list of all business names
and business addresses utilized by Seller during the three (3) years preceding
June 2, 1997.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser represents and warrants to Seller that, except as set forth
in the Purchaser's Disclosure Schedule:
4.1 AUTHORITY RELATIVE TO THIS AGREEMENT. Purchaser has all requisite
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Purchaser and, assuming this Agreement constitutes a
valid and binding obligation of Seller, this Agreement constitutes a valid and
binding agreement of Purchaser, enforceable against it in accordance with its
terms.
4.2 CONSENT AND APPROVALS; NO VIOLATION. The execution and delivery of
this Agreement by Purchaser, the consummation of the transactions contemplated
hereby or the performance by Purchaser of its obligations hereunder, will not:
(a) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority;
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(b) conflict with, result in the breach of or constitute a default
(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any material note, lease,
mortgage, license, agreement or other instrument or obligation to which
Purchaser is a party or by which Purchaser or any of its assets may be bound,
except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
which, in the aggregate, would not have a material adverse effect on the
financial condition, business, properties, or results of operations of
Purchaser; or
(c) conflict with or violate the provisions of any order, writ,
injunction, judgment, decree, statute, rule or regulation applicable to
Purchaser, in such a manner as to result in a material adverse effect on the
financial condition, business, properties or results of operations of Purchaser.
4.3 BROKER'S COMMISSION OR FINDER'S FEES. No person or entity has acted
for Purchaser in connection with the transactions provided for in this Agreement
in a way which would entitle such person to, and no person or entity is entitled
to, any broker's commissions or finder's fees (or other similar fees or
commissions) in connection with this Agreement or the transactions contemplated
hereby.
4.4 PURCHASER'S KNOWLEDGE. Neither Purchaser nor its sole stockholder
is aware of (a) any information that would make any representation or warranty
of Seller hereunder materially untrue or (b) any liability or obligation of
Seller (contingent or otherwise) that is being retained by Seller pursuant to
the terms hereof that has not been fully disclosed to AmeriQuest Technologies,
Inc.
ARTICLE V
INDEMNIFICATION
5.1 INDEMNIFICATION.
(a) INDEMNIFICATION BY SELLER. Seller shall indemnify and hold
harmless Purchaser and its affiliates from and against any and all "Losses" (as
defined below) incurred by, imposed on, borne by or asserted against any of such
indemnified parties in any way relating to, arising out of or resulting from:
(i) The breach of any of the representations or
warranties made by Seller in this Agreement;
(ii) The breach or the failure of performance by Seller
of any of the covenants, promises or agreements that it is to perform under this
Agreement;
(iii) Except as otherwise set forth herein, the payment
of any Taxes (including interest and penalties) of any kind or nature imposed,
whether before or after the Closing, by any government or subdivision thereof
upon the business, assets or employees or independent contractors of Seller or
otherwise resulting from or relating to the Business or the Transferred Assets
prior to the Closing;
(iv) The death of or injury to any person or damage to
property that occurred prior to the Closing and arose out of or in connection
with the conduct of the Business or the use or omission to use the Transferred
Assets (whether asserted, discovered or established before or after the Closing,
and whether or not such claim or action is disclosed in the Schedules to this
Agreement); and
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(v) All employment-related claims and causes of action,
and all other claims and causes of action, that have arisen or arise out of or
in connection with the conduct of the Business or the use or omission to use the
Transferred Assets prior to the Closing (whether asserted, discovered or
established before or after the Closing, and whether or not such claim or action
is disclosed in the Schedules to this Agreement).
Notwithstanding the foregoing, Seller shall not indemnify or hold
Purchaser harmless with respect to the first Fifty Thousand Dollars ($50,000) of
aggregated Losses suffered by the Purchaser, which amount shall be a
non-recoverable deductible.
(b) INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify and
hold harmless Seller and its affiliates from and against any and all "Losses"
(as defined below) incurred by, imposed on, borne by or asserted against any of
such indemnified parties in any way relating to, arising out of or resulting
from:
(i) The breach of any of the representations or
warranties made by Purchaser in this Agreement;
(ii) The breach or the failure of performance by
Purchaser of any of the covenants, promises or agreements that it is to perform
under this Agreement;
(iii) Except as otherwise set forth herein, the payment
of any Taxes (including interest and penalties) of any kind or nature imposed,
whether at the time of or after the Closing, by any government or subdivision
thereof upon the business, assets or employees or independent contractors of
Purchaser or otherwise resulting from or relating to the Business or the
Transferred Assets after the Closing;
(iv) The death of or injury to any person or damage to
property that occurs after the Closing and arises out of or in connection with
the conduct of the Business or the use or omission to use the Transferred
Assets; and
(v) All employment-related claims and causes of action,
and all other claims and causes of action, that arise out of or in connection
with the conduct of the Business or the use or omission to use the Transferred
Assets after the Closing.
(c) DEFINITION OF LOSSES. For purposes of this Agreement, "Losses"
shall mean any and all liabilities, obligations, losses, damages, claims,
deficiencies, penalties, taxes, levies, actions, judgments, settlements, suits,
costs, legal fees, accountants' fees, disbursements or expenses. Losses shall
exclude any amount which any party actually receives under any insurance policy
which provides coverage for the liability in question.
5.2 THIRD PARTY CLAIMS, NOTICE AND OPPORTUNITY TO SETTLE.
(a) Within thirty (30) days after the receipt by the party
entitled to indemnity hereunder (the "Indemnified Party") of any claim or demand
(including but not limited to, notice of any action, suit or proceeding) by any
third party against an Indemnified Party which gives rise to a right to
indemnification for a Loss hereunder, the affected Indemnified Party shall give
each party who may be obligated to provide indemnity hereunder (the
"Indemnifying Party") written notice of such claim or demand; provided, however,
that the failure to give such notice shall not relieve the Indemnifying Party of
its obligations hereunder except to the extent that such failure is materially
prejudicial to the Indemnifying Party.
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(b) The Indemnifying Party shall have the right (without prejudice
to the right of any Indemnified Party to participate at its own expense through
counsel of its own choosing), to defend against such claim or demand at its
expense and through counsel of its own choosing (the choice of such counsel to
be subject to the reasonable consent of the affected Indemnified Parties) and to
control such defense if it gives written notice of its intention to do so within
fifteen (15) days after the receipt of the notice referred to in SECTION 5.2(a)
above. If the Indemnifying Party shall decline to assume the defense of such
claim or demand, the affected Indemnified Parties shall have the right to assume
control of such defense at the expense of the Indemnifying Party. The
Indemnified Parties shall cooperate fully in the defense of such claim or demand
and shall make available to the Indemnifying Party or its counsel all pertinent
information under their control relating thereto. The Indemnifying Party agrees
to cooperate with the Indemnified Parties in order to enable their counsel to
participate in the defense and to deliver to the Indemnified Parties copies of
all pleadings and other information within the Indemnifying Party's knowledge or
possession reasonably requested by the Indemnified Parties that is relevant to
the defense of any such claim or demand. The Indemnified Parties and their
counsel shall maintain confidentiality with respect to all such information
consistent with the conduct of a defense hereunder.
(c) The Indemnifying Party shall have the right to elect to settle
any such claim or demand, for monetary damages only and including an
unconditional release, subject to the consent of the affected Indemnified
Parties; provided, however, if the affected Indemnified Parties fail to give
such consent within twenty (20) days of being requested to do so, the affected
Indemnified Parties shall, at their expense, assume the defense of such claim or
demand and regardless of the outcome of such matter, the Indemnifying Party's
liability hereunder shall be limited to the amount of any such proposed
settlement.
(d) In the event the Indemnifying Party assumes the defense of a
claim or demand, the Indemnified Parties shall have the right to assume control
of the defense of any claim or demand from the Indemnifying Party at any time
and to elect to settle such claim or demand; provided, however, the Indemnifying
Party shall have no indemnification obligations with respect to such claim,
demand or settlement except for the costs and expenses of such Indemnifying
Party incurred prior to the assumption of the defense of the claim or demand by
the Indemnified Parties.
5.3 NON-THIRD PARTY CLAIMS. In the event any Indemnified Party should
have a claim against any Indemnifying Party hereunder which does not involve a
Third party Claim, the Indemnified Party shall transmit to the Indemnifying
Party a written notice (the "Indemnity Notice") describing in reasonable detail
the nature of the claim, an estimate of the amount of damages attributable to
such claim and the basis of the Indemnified Party's request for indemnification
under this Agreement. If the Indemnifying Party does not notify the Indemnified
Party within thirty (30) days from the Indemnifying Party's receipt of the
Indemnity Notice that the Indemnifying Party disputes such claim, the claim
specified by the Indemnified Party in the Indemnity Notice shall be deemed a
liability of the Indemnifying Party hereunder.
5.4 PAYMENTS. Payments of all amounts owing by an Indemnifying Party
pursuant to this Article V relating to a Third Party Claim shall be made within
fifteen (15) days after the latest of (a) the settlement of such Third Party
Claim, (b) the expiration of the period for appeal of a final adjudication of
such Third Party Claim or (c) the expiration of the period for appeal of a final
adjudication of the Indemnifying Party's liability to the Indemnified Party
under this Agreement. Subject to SECTION 5.3, payments of all amounts owing by
an Indemnifying Party pursuant to this SECTION 5.4 shall be made within fifteen
(15) days after the later of (x) the expiration of the 30-day Indemnity Notice
period or (y) the
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<PAGE> 10
expiration of the period for appeal of a final adjudication of the Indemnifying
Party's liability to the Indemnified Party under this Agreement.
ARTICLE VI
DISPUTE RESOLUTION
6.1 NEGOTIATION. The parties will attempt in good faith to resolve any
claim or controversy arising out of or relating to the execution, interpretation
and performance of this Agreement (including the validity, scope and
enforceability of this mediation and arbitration provision) promptly by
negotiations between the parties.
6.2 MEDIATION. If any claim or controversy is not fully resolved
through negotiation within fifteen (15) business days after a party first
notifies the other party of a claim or controversy, the parties will attempt in
good faith to resolve the controversy or claim in accordance with the Center for
Public Resources ("CPR") Model Procedure for Mediation of Business Disputes. Any
such mediation shall be held in Orange County, California unless the parties
otherwise agree to another location.
6.3 ARBITRATION.
(a) Any controversy or claim arising out of or relating to the
execution, interpretation and performance of this Agreement that is not fully
resolved pursuant to SECTIONS 6.1 or 6.2 within thirty (30) business days after
a party first notifies the other party of a claim or controversy shall be solely
and finally settled by arbitration in accordance with the CPR Non-Administered
Arbitration Rules as then in effect ("CPR Rules"). The arbitration shall be
conducted by one independent and impartial arbitrator, appointed by CPR (the
"Arbitrator"). The arbitration shall be governed by the provisions of the
Arbitration Act, 9 U.S.C. section 1, et seq., and judgment upon the award
rendered by the Arbitrator may be entered by any court having jurisdiction
thereof. The arbitration proceedings shall be held in Orange County,
California unless the parties otherwise agree to another location.
(b) If a party hereto determines to submit a dispute for
arbitration pursuant to this SECTION 6.3, such party ("Claimant") shall furnish
the party with whom it has the dispute ("Respondent") with a notice of
arbitration as provided in the CPR Rules ("Arbitration Notice") which, in
addition to the items required by the CPR Rules, shall include a statement of
the nature, with reasonable detail, of the dispute. A copy of the Arbitration
Notice shall be concurrently provided to CPR, along with a copy of this
Agreement and a request to appoint the Arbitrator. The commencement date of the
arbitration shall be established as provided in the CPR Rules ("Commencement
Date").
(c) Not less than thirty (30) business days after the Commencement
Date and no later than sixty (60) business days after the Commencement Date,
each party may present discovery requests to the other party in any form
permitted under the CPR Rules or by the Arbitrator. The recipient of a discovery
request shall have thirty (30) business days after the receipt of such request
to object to any or all portions of such request, and shall respond to any
portions of such request not so objected to within thirty (30) business days of
the receipt of such request. All objections shall be in writing and shall
indicate the reasons for such objections. The objecting party shall ensure that
all objections and responses are received by other parties within the above time
periods. Any party seeking to compel discovery following receipt of an objection
shall file with the other parties and the Arbitrator a motion to compel,
including a copy of the initial request and the objection. The Arbitrator shall
allow fifteen (15) business days for responses to the motion to compel before
ruling. Claims of privilege and other objections shall be determined as they
would be in United States federal court in a
10
<PAGE> 11
case applying California law. The Arbitrator may grant or deny the motion to
compel, in whole or in part, for any reason permitted by the CPR Rules,
including that the discovery request is or is not appropriate under the
circumstances, taking into account the needs of the parties and the desirability
of making discovery expeditious and cost-effective.
(d) Hearings must commence no later than one hundred twenty (120)
business days after the Commencement Date and hearings shall be conducted for no
more than thirty (30) business days, unless otherwise agreed by the parties or
ordered by the Arbitrator.
(e) Each of the Claimant and Respondent shall submit a brief,
outlining such party's claim for relief or defense to any claim, to the other
and to the Arbitrator on or before the 15th business day following the last day
of the hearing. Reply briefs must be exchanged and submitted to the Arbitrator
on or before the 30th business day following the last day of the hearing. The
final decision of the Arbitrator shall reflect a final decision that, in the
Arbitrator's judgment, is most consistent with the terms of this Agreement and
applicable law.
(f) The foregoing time periods and procedural steps may be
modified or extended by agreement of the parties or by the Arbitrator in the
Arbitrator's discretion to the extent the Arbitrator deems necessary to prevent
fundamental unfairness; provided, that at all times the Arbitrator shall be
mindful of the parties' desire for the most expeditious possible resolution of
their disputes; and provided, further, that a final decision of the Arbitrator
shall be rendered within two hundred ten (210) business days after the
Commencement Date.
(g) To the extent permissible under applicable law, the parties
agree that the award of the Arbitrator shall be final and shall be subject only
to the judicial review permitted by the Arbitration Act. It is the intent of the
parties that the arbitration provisions hereof be enforced to the fullest extent
permitted by applicable law.
(h) The Arbitrator may not award multiplied, consequential or
punitive damages, and the parties hereby irrevocably waive any right to
multiplied, punitive or consequential damages.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
7.1 CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES. The respective
obligations of the parties to effect the transactions contemplated hereby shall
be subject to the satisfaction on or prior to the Closing of the following
conditions:
(a) NO ACTION OR PROCEEDING. No claim, action, suit investigation
or other proceeding shall be pending or threatened before any court or
governmental body that presents a substantial risk of the restraint or
prohibition of the transaction contemplated by this Agreement or the obtaining
of material damages or other relief in connection therewith.
(b) STATUTES. No federal, state, local or foreign statute, rule or
regulation shall have been enacted which would make the consummation of the
transactions contemplated hereby illegal.
(c) LESSOR'S CONSENT. Lessor shall have delivered to the parties
its consent to the assignment of the lease with regard to Seller's headquarters
at 3095 Redhill, Costa Mesa, CA.
11
<PAGE> 12
7.2 FURTHER CONDITIONS TO THE OBLIGATIONS OF THE SELLER. The
obligations of the Seller to effect the transactions contemplated hereby are
subject to the satisfaction on or prior to the Closing of the following
conditions, unless waived in writing by the Seller:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser set forth in this Agreement shall be true and correct as
of the date of this Agreement and as of the Closing as though made at and as of
the Closing.
(b) PERFORMANCE OF OBLIGATIONS OF PURCHASER. Purchaser shall have
performed in all material respects all obligations required to be performed by
Purchaser under this Agreement prior to the Closing.
(c) RECEIPT OF PURCHASER CLOSING DOCUMENTS AND DELIVERIES. Seller
shall have received executed originals, dated the Closing Date, of the Purchaser
Closing Documents and Deliveries, as applicable, and shall have received payment
of the Purchase Price.
7.3 FURTHER CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The obligations
of the Purchaser to effect the transactions contemplated hereby are subject to
the satisfaction on or prior to the Closing of the following conditions, unless
waived in writing by the Purchaser:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller set forth in this Agreement shall be true and correct as of
the date of this Agreement and as of the Closing as though made at and as of the
Closing.
(b) PERFORMANCE OF OBLIGATIONS OF SELLER. Seller shall have
performed in all material respects all obligations required to be performed by
Seller under this Agreement prior to the Closing.
(c) RECEIPT OF SELLER CLOSING DOCUMENTS AND DELIVERIES. Purchaser
shall have received executed originals, dated the Closing Date, of the Seller
Closing Documents and Deliveries, as applicable.
ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) BY MUTUAL CONSENT. By mutual consent of Seller and Purchaser;
(b) BY SELLER OR PURCHASER. By either Seller, on the one hand, or
Purchaser, on the other hand:
(i) if the transactions contemplated hereby shall not
have been consummated on or before June 30, 1997; provided the failure of the
transactions to be consummated by the applicable date is not caused by any
breach of this Agreement by the party seeking such termination;
(ii) if a court of competent jurisdiction or other
competent governmental or regulatory authority shall have issued an order,
decree or ruling or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby and such order, decree, ruling or other action
shall have become final and not appealable; or
12
<PAGE> 13
(iii) if any statute, rule or regulation is enacted,
promulgated or deemed applicable to the consummation of the transactions
contemplated hereby by any competent governmental or regulatory authority which
makes the consummation of such transactions illegal.
(c) BY SELLER. By Seller, if a material default under or a
material breach of this Agreement by Purchaser shall have occurred and be
continuing ten (10) business days after receipt of notice thereof from Seller;
(d) BY PURCHASER. By Purchaser if a material default under or a
material breach of this Agreement by Seller shall have occurred and be
continuing ten (10) business days after receipt of notice thereof from
Purchaser.
8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.1 above, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of any
party hereto or their respective officers, directors, employees or agents;
except that (a) nothing set forth herein shall relieve a party hereto from
liability for its willful breach of this Agreement and (b) in the event this
Agreement is terminated by Seller pursuant to Section 8.1(c) above. Seller shall
be entitled to retain Purchaser's $135,000 deposit.
ARTICLE IX
GENERAL PROVISIONS
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Regardless of the
investigations, if any, any party shall have made prior to the Closing, the
representations and warranties contained herein shall survive the Closing and
will expire on the first (1st) anniversary of the Closing Date; unless prior to
the stated time of expiration, a claim specifying a breach of any of the
representations or warranties described above is submitted in writing to the
indemnifying party and identified as a claim for indemnification pursuant to
this Agreement. Notwithstanding the foregoing, the representation and warranty
with respect to Taxes set forth in Section 3.5 hereof shall survive until the
expiration of the applicable statute of limitations with respect to claims by
taxing authorities and the representations and warranties set forth in Sections
3.1 through 3.3 and 3.6 hereof shall expire on the second (2nd) anniversary of
the Closing Date.
9.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given upon personal delivery, facsimile transmission
(with written or facsimile confirmation of receipt), telex or delivery by a
reputable overnight commercial delivery service (delivery, postage or freight
charges prepaid), or on the fourth day following deposit in the United States
mail (if sent by registered or certified mail, return receipt requested,
delivery, postage or freight charges prepaid), addressed to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Purchaser, to: with a copy to:
CMS Peripherals, Inc. Stephens & Kray
3095 Redhill Ave. 5000 Birch Street, Suite 410
Costa Mesa, CA 92626 Newport Beach, CA 92660
Attention: Ken Burke Attention: Lon T. Stephens, Esq.
FAX: (714) 435-9406 FAX: (714) 476-9320
13
<PAGE> 14
(b) if to Seller, to: with a copy to:
CMS Enhancements, Inc. Gibson, Dunn & Crutcher
c/o AmeriQuest Technologies, Jamboree Center
Inc. 4 Park Plaza
6100 Hollywood Blvd. Irvine, CA 92714
Suite 700 Attention: Thomas D. Magill, Esq.
Hollywood, FL 33024 FAX: (714) 451-4220
FAX: (954) 989-9206
9.3 INTERPRETATION. When a reference is made in this Agreement to an
Article, Section, Exhibit or Schedule, such reference shall be to an Article,
Section, Exhibit or Schedule to this Agreement unless otherwise indicated. The
words "include," "includes" and "including" when used herein shall be deemed in
each case to be followed by the words "without limitation." The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
9.4 COUNTERPARTS. This Agreement may be executed by one or more of the
parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
agreement and shall become effective when all counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
9.5 INTEGRATION. This Agreement and the Exhibits, Schedules, documents,
instruments and other agreements among the parties hereto that are referred to
herein constitute the entire agreement among the parties with respect to the
subject matter set forth herein or therein and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof or thereof.
9.6 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
9.7 GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of California, excluding its
rules of conflicts of law; provided, however, that the provisions of the United
States Arbitration Act, 9 U.S.C. section 1, et. seq., shall govern the
procedural aspects of any arbitration to be conducted pursuant to the
provisions of SECTION 6.3 hereof.
9.8 ASSIGNMENT. No party hereto shall assign or transfer or permit the
assignment or transfer of this Agreement without the prior written consent of
the other parties; provided, however, that Purchaser may assign any of its
rights and obligations hereunder to any entity that, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with Purchaser.
9.9 SEVERABILITY. Any portion or provision of the Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining portions or
provisions hereof in such jurisdiction or, to the extent permitted by law,
rendering that or any other portion or provision of the Agreement invalid,
illegal or unenforceable in any other jurisdiction.
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<PAGE> 15
9.10 ATTORNEYS' FEES. If any party to this Agreement shall bring any
action, suit, counterclaim or appeal for any relief against any other party,
declaratory or otherwise, to enforce the terms hereof or to declare rights
hereunder (collectively, an "Action"), the prevailing party shall be entitled to
recover as part of any such Action its reasonable attorneys' fees and costs,
including any fees and costs incurred in bringing and prosecuting such Action
and/or enforcing any order, judgment, ruling or award granted as part of such
Action. "Prevailing party" within the meaning of this section includes, without
limitation, a party who agrees to dismiss an Action upon the other party's
payment of all or a portion of the sums allegedly due or performance of the
covenants allegedly breached, or who obtains substantially the relief sought by
it.
9.11 SELLER'S FURTHER ASSURANCES. From time to time after the date of
this Agreement, Seller will execute and deliver to Purchaser such instruments of
sale, transfer, conveyance, assignment and delivery, consent, assurance, powers
of attorney and other instruments as may be reasonably requested by Purchaser in
order to vest in Purchaser good and marketable title in and to the Transferred
Assets and otherwise in order to carry out the purpose and intent of this
Agreement.
9.12 PURCHASER'S FURTHER ASSURANCES. From time to time after the date
of this Agreement, Purchaser will execute and deliver to Seller such instruments
of sale, transfer, conveyance, assignment and delivery, consent, assurance,
powers of attorney and other instruments as may be reasonably requested by
Seller in order to carry out the purpose and intent of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CMS PERIPHERALS, INC.
BY: /s/ Ken Burke
-------------------------------
NAME: Ken Burke
-------------------------------
ITS: President
-------------------------------
CMS ENHANCEMENTS, INC.
BY: /s/ Holger Heims
-------------------------------
NAME: Holger Heims
-------------------------------
ITS:
-------------------------------
15
<PAGE> 16
SCHEDULES
- ---------
1.1 Transferred Assets Schedule
1.2 Excluded Assets Schedule
1.3 Assumed Obligations Schedule
Seller's Disclosure Schedule
Purchaser's Disclosure Schedule
EXHIBITS
- --------
A. Intentionally Omitted
B. Assignment and Assumption Agreement
C. Bill of Sale
D. General Instrument of Conveyance, Transfer and Assignment
E. Noncompetition Agreement
<PAGE> 17
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this "Agreement") is made as
of the __ day of June, l997 by and between CMS Enhancements, Inc., a California
corporation ("Seller"), and CMS Peripherals, Inc., a California corporation
("Buyer").
BACKGROUND
WHEREAS, Buyer and Seller have entered into that certain Asset Purchase
Agreement effective as of the date hereof (the "Purchase Agreement"), which
provides, among other matters, for the assumption by Buyer of certain rights and
obligations of Seller.
NOW, THEREFORE, in consideration of the foregoing, the covenants and
agreements contained herein and in the Purchase Agreement, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
1. From and after the date hereof, Buyer hereby agrees to observe,
perform and discharge, and hereby assumes and agrees to be bound by, (a) the
terms, restrictions, obligations and duties of Seller under the contracts and
agreements listed on the Assumed Obligations Schedule attached hereto as Exhibit
A to the extent such obligations or duties are applicable to, or are to be
performed in, periods on or after May 4, 1997 and (b) those obligations
reflected on Seller's May 4, 1997 balance sheet (collectively, the "Assumed
Obligations").
2. Seller hereby sells, conveys, transfers and assigns to Buyer the
Assumed Obligations.
3. The Assumed Obligations shall not include, and Buyer shall not
assume or be liable for, any debts, obligations or liabilities of Seller of any
kind and nature whatsoever except for the Assumed Obligations.
4. Buyer and Seller shall execute, acknowledge (if appropriate) and
deliver, or cause the execution, acknowledgment and delivery to others of such
further documents and instruments as may reasonably be requested by another
party hereto in order to implement the purposes of this Agreement.
5. This Agreement shall be deemed to have been executed and delivered
within the State of California, and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with, and governed by,
the laws of the State of California; provided, however, that to the extent that
California law on the choice of law would dictate application of another state's
law, the expressed intent of the parties to apply substantive California law to
the determination of the dispute shall prevail. Any disputes under this
Agreement shall be settled in accordance with the Dispute Resolution provisions
contained in Article VI of the Purchase Agreement, which are incorporated herein
by this reference as though set forth in full herein.
<PAGE> 18
6. Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Purchase Agreement.
7. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
but one and the same instrument.
8. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or mailed
by certified or registered mail, postage prepaid, return receipt requested, or
upon delivery by means of a nationally recognized overnight air courier service,
or upon transmission pursuant to facsimile, to the parties at the address last
furnished in writing to the sender for the purpose of receiving notices,
requests, demands, and other communications hereunder or unless and until such
notice shall have been so furnished, addressed as follows:
A. To Buyer:
CMS Peripherals, Inc.
3095 Redhill Ave.
Costa Mesa, CA 92626
Attention: Ken Burke
FAX: (714) 435-9406
With copies to:
Stephens & Kray
5000 Birch Street, Suite 410
Newport Beach, CA 92660
Attention: Lon T. Stephens, Esq.
FAX: (714) 476-9320
B. To Seller:
CMS Enhancements, Inc.
c/o AmeriQuest Technologies, Inc.
6100 Hollywood Blvd.
Suite 700
Hollywood, FL 33024
FAX: (954) 989-9206
With copies to:
Gibson, Dunn & Crutcher
Jamboree Center
4 Park Plaza
Irvine, CA 92714
Attention: Thomas D. Magill, Esq.
FAX: (714) 451-4220
[Next page is signature page]
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above-written.
CMS ENHANCEMENTS, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
CMS PERIPHERALS, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
<PAGE> 20
EXHIBIT C
BILL OF SALE
------------
Pursuant to that certain Agreement for Purchase and Sale of Assets
dated of even date herewith (the "Asset Purchase Agreement") by and between CMS
Peripherals, Inc., a California corporation ("Buyer"), and CMS Enhancements,
Inc., a California corporation ("Seller"), and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Seller does hereby sell, convey, transfer, assign and deliver to Buyer all of
Seller's right, title and interest in and to the assets owned by or used in the
Business (as defined in the Asset Purchase Agreement) that are located at
Seller's Costa Mesa headquarters, including without limitation the specific
assets of Seller set forth on the Acquired Asset Schedule attached hereto as
Exhibit A (the "Acquired Assets"). Notwithstanding the foregoing, Seller does
not hereby sell, assign, transfer or deliver to Buyer any of Seller's right,
title or interest in and to any of the Excluded Assets set forth on the Excluded
Assets Schedule attached hereto as Exhibit B.
Seller hereby constitutes and appoints Buyer Seller's true and lawful
attorney with full power of substitution in Seller's name and stead, on behalf
of and for the benefit of Buyer, its successors and assigns, to demand and
receive any and all of the Acquired Assets transferred hereunder and to give
receipts and releases for and in respect of the same, and any part thereof, and
from time to time to institute and prosecute in Seller's name, or otherwise, at
the expense of Buyer (subject to Buyer's right to indemnification pursuant to
Article V of the Asset Purchase Agreement) and for the benefit of Buyer, its
successors and assigns, any and all proceedings at law, in equity or otherwise,
which Buyer, its successors or assigns, may deem proper for the collection or
reduction to possession of any of the Acquired Assets transferred hereunder or
for the collection and enforcement of any claim or right of any kind hereby
sold, conveyed, transferred, assigned or delivered, or intended so to be, and to
do all other acts and things in relation to the Acquired Assets that Buyer, its
successors or assigns, shall deem desirable, Seller hereby declaring that the
foregoing powers are coupled with an interest and are and shall be irrevocable
by Seller in any manner or for any reason whatsoever.
IN WITNESS WHEREOF, Seller has executed and delivered this Bill of Sale
as of the ____ day of June, 1997.
CMS ENHANCEMENTS, INC.
By:
--------------------------------------
Its:
--------------------------------------
<PAGE> 21
EXHIBIT D
GENERAL INSTRUMENT OF CONVEYANCE,
TRANSFER AND ASSIGNMENT
Pursuant to that certain Agreement for Purchase and Sale of
Assets dated of even date herewith (the "Asset Purchase Agreement") by and
between CMS Peripherals, Inc., a California corporation ("Buyer"), and CMS
Enhancements, Inc., a California corporation ("Seller"), and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Seller does hereby sell, convey, transfer, assign and deliver to
Buyer all of Seller's right, title and interest in and to the assets owned by or
used in the Business (as defined in the Asset Purchase Agreement) that are
located at Seller's Costa Mesa headquarters, including without limitation the
specific assets of Seller set forth on the Acquired Asset Schedule attached
hereto as Exhibit A (the "Acquired Assets"). Notwithstanding the foregoing,
Seller does not hereby sell, assign, transfer or deliver to Buyer any of
Seller's right, title or interest in and to any of the Excluded Assets set forth
on the Excluded Assets Schedule attached hereto as Exhibit B.
Seller hereby constitutes and appoints Buyer Seller's true and lawful
attorney with full power of substitution in Seller's name and stead, on behalf
of and for the benefit of Buyer, its successors and assigns, to demand and
receive any and all of the Acquired Assets transferred hereunder and to give
receipts and releases for and in respect of the same, and any part thereof, and
from time to time to institute and prosecute in Seller's name, or otherwise, at
the expense of Buyer (subject to Buyer's right to indemnification pursuant to
Article V of the Asset Purchase Agreement) and for the benefit of Buyer, its
successors and assigns, any and all proceedings at law, in equity or otherwise,
which Buyer, its successors or assigns, may deem proper for the collection or
reduction to possession of any of the Acquired Assets transferred hereunder or
for the collection and enforcement of any claim or right of any kind hereby
sold, conveyed, transferred, assigned or delivered, or intended so to be, and to
do all other acts and things in relation to the Acquired Assets that Buyer, its
successors or assigns, shall deem desirable, Seller hereby declaring that the
foregoing powers are coupled with an interest and are and shall be irrevocable
by Seller in any manner or for any reason whatsoever.
IN WITNESS WHEREOF, Seller has executed and delivered this General
Instrument of Conveyance, Transfer and Assignment as of the ____ day of June,
1997.
CMS ENHANCEMENTS, INC.
By:
--------------------------------------
Its:
--------------------------------------
<PAGE> 22
EXHIBIT E
NONCOMPETITION AND NONDISCLOSURE AGREEMENT
------------------------------------------
THIS NONCOMPETITION AGREEMENT (this "Agreement") is made and entered
into as of this __ day of June, 1997, by and among CMS Enhancements, Inc., a
California corporation ("Seller"), AmeriQuest Technologies, Inc., a Delaware
corporation and the sole shareholder of Seller ("Parent"), and CMS Peripherals,
Inc., a California corporation ("Buyer").
RECITALS
WHEREAS, Buyer and Seller have entered into an Agreement for
the Purchase and Sale of Assets dated as of the date hereof (the "Purchase
Agreement"), pursuant to which Buyer will purchase substantially all of the
assets of Seller, including Seller's name and the associated goodwill; and
WHEREAS, the execution and delivery of this Agreement by
Seller and Parent is a material inducement to Buyer entering into the Purchase
Agreement and consummating the transactions contemplated therein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Purchase Agreement, the parties hereto agree as
follows:
1. DEFINITIONS.
For the purposes of this Agreement, the following terms shall have the
meanings ascribed to them below:
(a) "Covenant Term" shall mean a period beginning on the date hereof
and ending on the earlier of (i) five (5) years thereafter or (ii) on the date
that Buyer ceases to own or actively operate the Peripherals Business.
(b) "Covenant Territory" shall mean each of the fifty (50) states in
the United States of America, Puerto Rico and the U.S. Virgin Islands.
(b) "Control" shall mean ownership of 5% or more of the equity
securities of any corporation, partnership or joint venture, or such other
instances when control in fact exists.
(c) "Peripherals Business" shall mean the business of providing mass
storage solutions, sub-assembling storage upgrade products and developing a
broad line of storage products for servers, workstations and portable computers.
(d) "Peripherals Business Employees" shall mean persons employed by
Seller on the date hereof or in the prior 180-day period (excluding clerical and
secretarial employees).
2. NONCOMPETITION.
(a) As partial inducement to Buyer to enter into the Purchase
Agreement, each of Seller and Parent hereby covenants during the Covenant Term
it will not, directly or
<PAGE> 23
indirectly, nor will any person, corporation, firm, partnership or other entity
over which it exercises Control (whether as an officer, director, individual
proprietor, control shareholder, consultant, partner or otherwise), compete with
Buyer by engaging in, entering into or operating in the Peripherals Business in
the Covenant Territory.
(b) Each of Seller and Parent hereby covenants that, during the
Covenant Term, it will not, directly or indirectly, nor will any person,
corporation, firm, partnership or other entity over which it exercises Control
(whether as an officer, director, individual proprietor, control shareholder,
consultant, partner or otherwise), knowingly solicit, recruit or hire away any
Peripherals Business Employee for any trade or business, or as a consultant to
any trade or business.
3. REASONABLENESS OF COVENANTS. Each of Seller and Parent recognizes
and acknowledges that Seller's businesses and markets are national in scope,
that Buyer is spending millions of dollars to acquire ownership of substantially
all of the assets of Seller and that Buyer would not be doing so but for this
covenant not to compete and the covenant not to solicit employees contained
herein. Each of Seller and Parent further recognizes and acknowledges that such
covenants are necessary in order to protect and maintain the proprietary
interests and other legitimate business interests of the Peripherals Business
and are reasonable in all respects.
4. SEPARATE COVENANTS. The parties intend for the covenants contained
in this Agreement to comply with the provisions of California Business and
Professions Code Section 16601, and to be construed as a series of separate
covenants, one for each county, state, market area or business area in the
Covenant Territory, for each year, and for each person or entity. Except for
geographic coverage, each such covenant shall be deemed identical in terms to
the covenants contained in Section 2.
5. PARTIAL INVALIDITY. The parties hereto recognize that the laws and
public policies of the various jurisdictions differ as to the validity and
enforceability of agreements similar to those contained in this Agreement. The
parties intend that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies of the State of
California or any other jurisdiction in which enforcement may be sought. If, in
any judicial proceeding, a court shall refuse to enforce or shall declare void
or invalid any of the provisions or covenants in this Agreement, as applied to
any party or to any circumstances, such invalid or unenforceable provision or
covenant shall in no way affect any other provision or covenant of this
Agreement, the application of such provision or covenant in other circumstances,
or the validity or enforceability of this Agreement. If any provision or
covenant, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby or for any other reason,
the parties agree that the court making such determination shall have the power
to reduce the duration and/or area of such provision, and/or to delete specific
words or phrases, in order to render this Agreement valid and enforceable to the
fullest extent permitted by law.
6. JURISDICTION FOR ENFORCEMENT. The parties intend to and do hereby
confer jurisdiction to enforce the covenants contained in this Agreement upon
the courts of any state of the United States and any other governmental
jurisdiction within the geographical scope of such covenants. If the courts of
any one or more of such states or jurisdictions shall hold such covenants
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of the parties hereto that such determination shall not bar or in any
way affect Buyer's right to the relief provided above in the courts of any other
state or jurisdiction within the geographical scope of such covenants, as to
breaches of such covenants in such other respective states or jurisdictions, the
above covenants as they relate to each state or jurisdiction being, for this
purpose, severable into diverse and independent covenants.
<PAGE> 24
7. EQUITABLE RELIEF. The parties hereto agree that the obligations of
each of Seller and Parent contained in this Agreement are of a special and
unique character which gives them a peculiar value, and that Buyer may not be
reasonably or adequately compensated in damages in an action at law in the event
that Seller or Parent breaches such obligations. Each of Seller and Parent
therefore expressly agrees that Buyer shall be entitled to injunctive and other
equitable relief to prevent a breach of said obligations, in addition to any
other remedies such parties may have.
8. ENTIRE AGREEMENT. This Agreement and the Purchase Agreement
constitute the entire agreement of the parties and supersedes all prior written
or oral and all contemporaneous oral arguments, understandings and negotiations
between the parties with respect to the subject matter of this Agreement.
9. MODIFICATIONS AND AMENDMENTS. This Agreement may not be modified,
changed or supplemented, nor may any obligations hereunder be waived, except by
written instrument signed by the party to be charged or by its agent duly
authorized in writing or as otherwise expressly permitted herein.
10. NON-WAIVER OF RIGHTS. No failure or delay of any party in the
exercise of any right given to such party hereunder shall constitute a waiver
thereof unless the time specified herein for exercise of such right has expired,
nor shall any single or partial exercise of any right preclude other or further
exercise thereof or of any other right.
11. TITLES AND HEADINGS. Titles and headings of sections of this
Agreement are for convenience of reference only and shall not affect the
construction of any provision of this Agreement.
12. SUCCESSOR AND ASSIGNS. Except as provided herein, this Agreement
and the provisions hereof shall be binding upon and inure to the benefit of the
respective parties and the heirs, successors, assigns and personal
representatives of each of them.
13. ATTORNEYS' FEES. Should any party institute any action or
proceeding to enforce this Agreement or any provision hereof, or for damages by
reason of any alleged breach of this Agreement or of any provision hereof, or
for a declaration of rights
<PAGE> 25
hereunder, the prevailing party in any such action or proceeding shall be
entitled to receive from the other party all reasonable costs and expenses,
including attorneys' fees, incurred by the prevailing party in connection with
such action or proceeding.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first hereinabove written.
AMERIQUEST TECHNOLOGIES, INC. CMS PERIPHERALS, INC.
By: By:
------------------------ ------------------------
Name: Name:
------------------------ ------------------------
Its: Its:
------------------------ ------------------------
CMS ENHANCEMENTS, INC.
By:
------------------------
Name:
------------------------
Its:
------------------------
<PAGE> 26
SCHEDULE 1.1
TRANSFERRED ASSETS
The Transferred Assets shall include all of Seller's right, title and
interest in and to the assets owned by or used in the Business that are located
at Seller's Costa Mesa headquarters located at 3095 Redhill Ave., including
without limitation the following assets of Seller (with such changes thereto as
may have occurred in the ordinary course of business since May 4, 1997):
(a) The fixed assets described on Attachment 1.1(a);
(b) The inventory described on Attachment 1.1(b);
(c) The accounts receivable described on Attachment 1.1(c)(i) and the
other current assets described on Attachment 1.1(c)(ii);
(d) The trade name "CMS Enhancements" and all phone numbers associated
therewith;
(e) The prepaid expenses described on Attachment 1.1(e);
(f) Copies of all of Seller's books, records, accounts, correspondence,
production records, employment, payroll, personnel and workers' compensation
records, environmental control records and any other documents relating to the
Transferred Assets or the Business;
(g) All rights of Seller under any and all express or implied
warranties from Seller's suppliers with respect to the Transferred Assets;
(h) All of Seller's right, title and interest in and to computer
programs to the extent assignable, and other intangibles owned or used by
Seller relating to the Transferred Assets or the Business;
(i) To the extent assignable, all of Seller's licenses, permits and
governmental authorizations relating to the Transferred Assets or the Business;
and
(j) All of Seller's right, title and interest in and to those
contracts, agreements, purchase or sales orders, indentures, quotes, or
commitments related to the Transferred Assets described in Paragraphs (a)
through (i) above or otherwise related to the Business, whether written or oral.
<PAGE> 27
SCHEDULE 1.2
EXCLUDED ASSETS
a. All of Seller's contracts with Vendors, including without limitation
associated extensions of credit and credit lines.
b. Any deposits, prepaids or other current assets not specifically
included in Attachments 1.1(c)(i), 1.1(c)(ii) and 1.1(e) to Schedule
1.1 (with such changes thereto as may have occurred in the ordinary
course of business since May 4, 1997).
<PAGE> 28
SCHEDULE 1.3
ASSUMED OBLIGATIONS
a. Rights or claims for refunds or rebates or other obligations pursuant to
all "price protection" or cooperative advertising/marketing agreements,
credit notes and warranties.
b. All contracts or other obligations not entered into in the ordinary
course of the Business of which the Purchaser or any of its stockholders
had knowledge prior to the date hereof.
c. All accruals/provisions described on Attachment 1.3(c)(i) and all
accounts payable described on Attachment 1.3(c)(ii) (together with the
obligations underlying any such accruals/provisions and payables if not
otherwise described on Attachment 1.3(d)).
d. The contracts and agreements listed on Attachment 1.3(d).
<PAGE> 29
SELLER'S DISCLOSURE SCHEDULE
The representations and warranties of Seller in Article 3 of the
Agreement are made and given subject to the disclosures in this Seller's
Disclosure Schedule. Terms defined in the Agreement are used with the same
meaning in this Seller's Disclosure Schedule.
1. Seller has been unable to locate its corporate books and records and
such records may need to be recreated prior to the Closing.
2. Seller has not filed its tax returns for the period ended September 30,
1996.
3. In the ordinary course of its business, Seller receives from time to
time from its vendors defective products. Seller's representation or
warranty with respect to inventory is hereby qualified in its entirety
with respect to such defects and with respect to defects covered by
manufacturer's warranties.
4. Chase Securities will be entitled to a commission with respect to the
sale of the Business, but such commission is the sole responsibility of
AmeriQuest Technologies, Inc.
5. Seller has a lease with ICM Investments, Ltd. for the property at 3095
Redhill, which lease is being assigned to Buyer in connection with this
transaction.
<PAGE> 30
PURCHASER'S DISCLOSURE SCHEDULE
The representations and warranties of Purchaser in Article 4 of the
Agreement are made and given subject to the disclosures in this Purchaser's
Disclosure Schedule. The disclosures in this Purchaser's Disclosure Schedule are
to be taken as relating to the representations and warranties in the section of
the Agreement to which they expressly relate and to no other representation or
warranty in the Agreement. Terms defined in the Agreement are used with the same
meaning in this Purchaser's Disclosure Schedule. By reference to Section 4 of
the Agreement (using the numbering in such section), the following matters are
disclosed:
4.1 Purchaser is a recently formed California corporation with a sole
shareholder, Ken Burke. Purchaser intends to admit additional shareholders
concurrent with the Closing.
4.4 Purchaser has reason to believe that certain employees of Seller
that have written employment agreements containing a severance benefit provision
intend to make a claim for severance benefits and it is Purchaser's
understanding that Seller has assumed all responsibilities for any liability for
severance benefits and/or termination liability to such employees of Seller.
<PAGE> 1
Exhibit 4
AMERIQUEST TECHNOLOGIES, INC.
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
March 31, 1997
(Dollars in thousands, except shares)
<TABLE>
<CAPTION>
AmeriQuest CMS Pro Forma Pro Forma
Technologies Division Adjustments Combined
------------ -------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents..................... $ 1,920 $ 1,920
Accounts receivables, less allowance for
doubtful accounts........................... 36,594 (3,332) 33,262
Inventories, net of valuation allowance....... 25,640 (1,341) 24,299
Prepaid and other current assets.............. 1,302 (21) 1,281
--------- ------- ---- ---------
Total current assets.................... 65,456 (4,694) 0 60,762
--------- ------- ---- ---------
Property and equipment, net................... 1,493 (322) 1,171
Intangible assets, net of accumulated
amortization............................... 0 0 0
Other assets.................................. 1,076 (101) 975
--------- ------- ---- ---------
Total assets............................ $ 68,025 $(5,117) $ 0 $ 62,908
========= ======= ==== =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Lines of Credit............................... 69,096 69,096
Accounts payable.............................. 29,666 (1,490) 28,176
Other current liabilities..................... 16,034 (1,227) 14,807
--------- ------- ---- ---------
Total current liabilities............... 114,796 (2,717) 0 112,079
--------- ------- ---- ---------
Long term obligations........................... 1,257 -- 1,257
--------- ------- ---- ---------
Total liabilities....................... 116,053 (2,717) 0 113,336
--------- ------- ---- ---------
STOCKHOLDERS' DEFICIT
Common stock, $.01 par value, authorized
200,000,000 shares; issued and
outstanding 66,881,906 as of
March 31, 1997.............................. 669 669
Additional paid-in capital.................... 111,145 111,145
Accumulated deficit........................... (159,842) (2,400) (162,242)
--------- ------- ---- ---------
Total stockholders' deficit............ (48,028) (2,400) 0 (50,428)
--------- ------- ---- ---------
Total liabilities and stockholders'
deficit.............................. $ 68,025 $(5,117) $ 0 $ 62,908
========= ======= ==== =========
</TABLE>
<PAGE> 2
AMERIQUEST TECHNOLOGIES, INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
SIX MONTHS ENDED MARCH 31, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
AmeriQuest CMS Pro Forma Pro Forma
Technologies Division Adjustments Combined
------------ -------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales....................................... $ 164,624 $(14,064) 150,560
Cost of sales................................... 155,112 (9,618) 145,494
----------- -------- ----- -----------
Gross profit............................... 9,512 (4,446) 0 5,066
Operating Expenses:
Selling, general and administrative........... 21,916 (3,966) 17,950
Depreciation and amortization................. 1,640 (28) 1,612
Restructuring, asset impairment and
relocation costs........................... 20,437 0 20,437
----------- -------- ----- -----------
Loss from operations....................... (34,481) (452) 0 (34,933)
Interest expense................................ 2,341 (141) 2,200
----------- -------- ----- -----------
Net loss................................... $ (36,822) $ (452) $ 141 $ (37,133)
=========== ======== ===== ===========
Net loss per common share and common stock
equivalent.................................... $ (0.55) $ 0.01 $ (0.56)
=========== ======== ===========
Common and common equivalent shares
outstanding:
Weighted average shares outstanding........... 66,881,906 66,881,906
=========== ===========
</TABLE>
<PAGE> 3
AMERIQUEST TECHNOLOGIES, INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
YEAR ENDED SEPTEMBER 30, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
AmeriQuest CMS Pro Forma Pro Forma
Technologies Division Adjustments Combined
------------ -------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales........................................ $ 424,708 $(22,911) 401,797
Cost of sales.................................... 401,165 (16,739) 384,426
----------- -------- ----- -----------
Gross profit................................ 23,543 (6,172) 0 17,371
Operating Expenses:
Selling, general and administrative............ 45,998 (5,196) 40,802
Intangible Writeoff............................ 0
Restructuring costs............................ 6,400 0 6,400
----------- -------- ----- -----------
Loss from operations........................ (28,855) (976) 0 (29,831)
Interest expense................................. 4,754 (229) 4,525
----------- ----- -----------
Net loss.................................... $ (33,609) $ (976) $ 229 $ (34,356)
=========== ======== ===== ===========
Net loss per common share and common stock
equivalent..................................... $ (0.76) $ (0.02) $0.00 $ (0.78)
=========== ======== ===== ===========
Common and common equivalent shares
outstanding:
Weighted average shares outstanding............ 44,208,983 44,208,983
=========== ===========
</TABLE>
