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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 (DATE OF EARLIEST EVENT REPORTED): JULY 2, 1998
AMERIQUEST TECHNOLOGIES, INC.
(Exact name of registrant specified in Charter)
DELAWARE 1-10397 33-0244136
(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
425 PRIVET ROAD
HORSHAM, PENNSYLVANIA 19044
(Address of principal executive offices) Zip Code
REGISTRANT'S TELEPHONE, INCLUDING AREA CODE: (215) 675-9300
Not Applicable
(Former name and former address, if changed since last report)
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Item 5. Other Events.
On July 2, 1998, AmeriQuest Technologies, Inc. (the "Company"), Listen Group
Partners, LLC ("Listen Group"), and Computer 2000 AG and Computer 2000, Inc., a
wholly-owned subsidiary of Computer 2000 AG (collectively, "Computer 2000"),
executed a Disposition and Reorganization Agreement (the "Agreement"). The
Agreement is attached hereto as Exhibit 10.1 and incorporated herein by
reference.
Listen Group is an entity headed by the Company's senior management: Alexander
C. Kramer, the Company's President and Chief Executive Officer, and Jon Jensen,
the Company's Chief Financial Officer and Chief Operating Officer. The Agreement
and the transactions contemplated by the Agreement (collectively, the
"Transaction") were approved by a Special Committee of disinterested directors
of the Company and by the Board of Directors of the Company. L.H. Friend,
Weinress, Frankson & Presson, Inc., financial advisor to the Company, has issued
an opinion to the Company and Computer 2000 that, based upon certain assumptions
set forth in its opinion letter, the Company is a viable business entity from a
financial point of view upon effectiveness of the Transaction.
Pursuant to the Agreement, among other things:
- - Listen Group will acquire the 36,349,878 shares of the Company's common
stock, par value $0.01 per share ("Common Stock"), owned by Computer
2000;
- - Computer 2000 will contribute to the capital of the Company
approximately $28 million in intercompany debt and an additional $3
million in cash;
- - the Company will redeem and cancel 300,000 shares of Series H
Cumulative Convertible Preferred Stock (the "Preferred Stock"), which
is convertible into 41,958,042 shares of Common Stock, held by Computer
2000;
- - the Company will cancel the achievement warrants equivalent to
7,035,280 shares of Common Stock and a maintenance option equivalent to
2,357,235 shares of Common Stock, held by Computer 2000;
- - as a result of the Transaction, the number of outstanding shares of
Common Stock, on a fully diluted basis, will be reduced from
approximately 118 million to approximately 67 million;
- - a total of 6.7 million shares of Common Stock will be reserved for
issuance to AmeriQuest employees as incentive compensation;
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- - Listen Group and the Company will obtain the release of Computer 2000
from all guarantees of the Company's obligations;
- - Computer 2000's representatives on the Company's Board of Directors,
Harry Krischik, Manfred H. Guenzel, Richard Obermaier and Anton Roedl,
will resign upon the closing of the Transaction;
- - Listen Group and the Company will jointly and severally indemnify
Computer 2000 and its director designees against any damages arising
following the closing of the Transaction due to actions taken with
respect to AmeriQuest prior to the closing;
- - Listen Group will pay for a D&O insurance tail policy covering Computer
2000 and the current directors of AmeriQuest;
- - Messrs. Kramer and Jensen will waive the change of control provisions
in their respective employment agreements with the Company with respect
to the Transaction; and
- - Listen Group and the Company have arranged for a $10 million
asset-backed bank line of credit to be put in place at the closing of
the transaction.
This summary description of the Agreement and the Transaction does not purport
to be complete and is qualified in its entirety by reference to the Agreement.
Consummation of the Transaction is subject to customary conditions to closing.
The Transaction is expected to be completed by the end of July.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Exhibit
----------- -------
<S> <C> <C>
10.1 Disposition and Reorganization
Agreement, dated as of July 2, 1998,
between AmeriQuest Technologies,
Inc., Computer 2000 AG, Computer
2000, Inc., and Listen Group
Partners LLC.
99.1 Press Release dated July 2, 1998.
</TABLE>
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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 thereunto duly authorized.
AMERIQUEST TECHNOLOGIES, INC.
By: /s/ Alexander C. Kramer
--------------------------------------
Name: Alexander C. Kramer
Title: President
Dated: July 6, 1998
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<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
----------- ------- ----
<S> <C> <C> <C>
10.1 Disposition and Reorganization Agreement,
dated as of July 2, 1998, between AmeriQuest
Technologies, Inc., Computer 2000 AG,
Computer 2000, Inc., and Listen Group
Partners LLC.
99.1 Press Release dated July 2, 1998.
</TABLE>
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Exhibit 10.1
DISPOSITION AND REORGANIZATION AGREEMENT
THIS DISPOSITION AND REORGANIZATION AGREEMENT ("Agreement"),
dated the 2nd day of July, 1998, by and among AMERIQUEST TECHNOLOGIES, INC., a
Delaware corporation (the "Company"); COMPUTER 2000 AG, a German corporation
("Computer 2000"); COMPUTER 2000, INC., a Delaware corporation and wholly owned
subsidiary of Computer 2000 ("Seller"); and THE LISTEN GROUP PARTNERS LLC, a
Delaware limited liability company ("Purchaser"),
W I T N E S S E T H :
WHEREAS, Seller is the record and beneficial owner of (a)
36,349,878 shares of the issued and outstanding shares of common stock, par
value $0.01 per share of the Company (the "Common Stock") representing
approximately 54% of the issued and outstanding shares of Common Stock; (b)
300,000 shares of Series H Cumulative Convertible Preferred Stock, par value
$0.01 per share, convertible into 41,958,042 shares of Common Stock (the
"Preferred Stock") representing 100% of the issued and outstanding shares of
Preferred Stock; (c) achievement warrants equivalent to 7,035,280 shares of
Common Stock (the "Achievement Warrants"); and (d) a maintenance option
equivalent to 2,357,235 shares of Common Stock; and
WHEREAS, Computer 2000 has agreed to forgive certain
intercompany indebtedness by means of a contribution of such indebtedness to the
capital of the Company, subject to the terms and conditions set forth herein;
WHEREAS, Computer 2000 has agreed to make a cash contribution
to the capital of the Company in the amount of Three Million U.S. Dollars
($3,000,000), subject to the terms and conditions set forth herein;
WHEREAS, Seller has agreed to contribute all of its shares of
Preferred Stock to the capital of the Company, subject to the terms and
conditions set forth herein;
WHEREAS, Seller has agreed to waive all rights to receive any
dividends payable or accrued as of the Closing Date with respect to the
Preferred Stock, subject to the terms and conditions set forth herein;;
WHEREAS, Seller has agreed, as of the Closing Date, to
contribute all of its Achievement Warrants and the Maintenance Option to the
capital of the Company, and the Company has agreed to cause the Achievement
Warrants and the Maintenance Option to be cancelled as of the Closing Date,
subject to the terms and conditions set forth herein;
WHEREAS, Seller desires to sell to Purchaser 36,349,878 shares
of Common Stock, constituting 54% of the issued and outstanding Common Stock of
the Company (the "Shares") and Purchaser desires to purchase the Shares, subject
to the terms and conditions set forth herein;
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WHEREAS, in partial consideration for the purchase of the
Shares, Purchaser shall purchase a Six-Year Run-Off Insurance Policy (as defined
below) with a premium amount of approximately Two Hundred Thousand Dollars
($200,000) (the "Insurance Payment");
WHEREAS, the Company and Purchaser have agreed to cause
Computer 2000 to be released from certain guarantees as of the Closing Date,
subject to the terms and conditions set forth herein; and
WHEREAS, the Company has retained L.H. Friend, Weinress,
Frankson & Presson, Inc. as its financial advisor (the "Financial Adviser") to
deliver an opinion as to the viability of the Company subsequent to the
consummation of the transactions contemplated herein (the "Comfort Letter"),
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the Company, Computer 2000, Seller and
Purchaser, intending to be legally bound, hereby agree as follows:
SECTION 1. SALE OF THE SHARES.
Subject to the terms and conditions hereof, at the Closing (as
hereafter defined), Seller shall sell, convey and assign to Purchaser, and
Purchaser shall purchase from Seller, good and marketable title to all of the
Shares.
SECTION 2. THE CLOSING.
2.1. Closing; Closing Date. The closing of the transactions
contemplated hereby (the "Closing") shall be held at 10:00 a.m. on July 16, 1998
at the offices of Rogers & Wells LLP, 200 Park Avenue, New York, New York 10166,
or at such other time and date as the parties may mutually agree in writing (the
"Closing Date").
2.2. Payment for Shares. At the Closing, Purchaser shall (i)
pay to Seller the aggregate purchase price of One U.S. Dollar ($1.00) and (ii)
make, on behalf of Seller, the Insurance Payment to the insurance company
providing such insurance coverage, which payments together shall constitute
Purchaser's aggregate purchase price for the Shares.
2.3. Delivery of Shares. At the Closing, Seller shall deliver
to Purchaser a certificate or certificates evidencing the Shares, with stock
powers duly executed and attested, sufficient to vest in Purchaser good and
marketable title to the Shares, free and clear of any and all liens and
encumbrances.
2.4. Preferred Stock; Warrants; Option. At the Closing, Seller
shall deliver to the Company certificates or other proper documentation
evidencing the Preferred Stock, Achievement Warrants and the Maintenance Option,
in each case, free and clear of any and all liens and encumbrances, to be deemed
a contribution to the capital of the Company.
2.5. Seller's Contribution to Capital. At the Closing,
Computer 2000 shall pay to the Company or for the benefit of the Company Three
Million U.S. Dollars ($3,000,000)
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by wire transfer of immediately available funds to such account or accounts as
the Company shall specify, such payment to be deemed a contribution to the
capital of the Company.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents, warrants and covenants to Computer 2000, Seller and
Purchaser as follows:
3.1. Organization. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. The Company has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby.
3.2. Authority. The execution and delivery by the Company of
this Agreement, and the performance by the Company of its obligations hereunder,
have been duly and validly authorized by the Board of Directors of the Company,
no other corporate action on the part of the Company or its stockholders being
necessary. This Agreement has been duly and validly executed and delivered by
the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws relating to or affecting the enforcement
of creditors' rights generally.
3.3. No Conflicts. The execution and delivery by the Company
of this Agreement do not, and the performance by the Company of its obligations
under this Agreement and the consummation of the transactions contemplated
hereby will not:
(a) conflict with or result in a violation or breach
of any of the terms, conditions or provisions of the certificate of
incorporation or by-laws or other comparable corporate charter document of the
Company;
(b) conflict with or result in a violation or breach
of any term or provision of any Law or Order applicable to the Company or any of
its assets; or
(c) conflict with or result in a violation or breach
of, constitute (with or without notice or lapse of time or both) a default
under, any Contracts or Other Agreements to which the Company is a party or by
which any of its assets are bound.
3.4. Legal Proceedings. There are no Actions or Proceedings
pending or, to the Knowledge of the Company, threatened relating to or affecting
the Company or any of its assets which question the legality or validity of this
Agreement or the transactions contemplated herein, or any action taken or to be
taken in connection herewith, or which seeks to prevent the consummation of any
transaction contemplated hereby by restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated herein.
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3.5. Corporate Approval. This Agreement and the transactions
contemplated hereby have been approved by the disinterested Directors of the
Company in accordance with Section 144(a) of the Delaware General Corporation
Law.
3.6. Representations and Warranties. The representations and
warranties of the Company contained in this Section 3 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.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF COMPUTER 2000.
Computer 2000 hereby represents, warrants and covenants to the Company and
Purchaser as follows:
4.1. Organization. Computer 2000 is a corporation duly
organized, validly existing and in good standing under the Laws of the Federal
Republic of Germany. Computer 2000 has full corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
4.2. Authority. The execution and delivery by Computer 2000 of
this Agreement, and the performance by Computer 2000 of its obligations
hereunder, have been duly and validly authorized by the Vorstand and
Aufsichtsrat of Computer 2000, no other corporate action on the part of Computer
2000 or its stockholders being necessary. This Agreement has been duly and
validly executed and delivered by Computer 2000, and constitutes a legal, valid
and binding obligation of Computer 2000, enforceable against Computer 2000 in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium, reorganization and other similar laws
relating to or affecting the enforcement of creditors' rights generally.
4.3. No Conflicts. The execution and delivery by Computer 2000
of this Agreement do not, and the performance by Computer 2000 of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not:
(a) conflict with or result in a violation or breach
of any of the terms, conditions or provisions of the Satzung or other corporate
charter documents of Computer 2000;
(b) conflict with or result in a violation or breach
of any term or provision of any Law or Order applicable to Computer 2000 or any
of its assets; or
(c) conflict with or result in a violation or breach
of, constitute (with or without notice or lapse of time or both) a default
under, any Contracts or Other Agreements to which Computer 2000 is a party or by
which any of its assets are bound.
4.4. Legal Proceedings. There are no Actions or Proceedings
pending or, to the Knowledge of Computer 2000, threatened relating to or
affecting Computer 2000 or any of its assets which question the legality or
validity of this Agreement or the transactions contemplated herein, or any
action taken or to be taken in connection herewith, or which seeks
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to prevent the consummation of any transaction contemplated hereby by
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated herein.
4.5. Title. The endorsement and delivery by Seller in
accordance with the provisions of this Agreement of a certificate or
certificates evidencing the Shares will vest in Purchaser good title to the
Shares, free and clear of all liens and encumbrances.
4.6. No Other Company Securities. Following the consummation
of the transactions contemplated under this Agreement, neither Computer 2000 nor
any Affiliate of Computer 2000 will own any debt or equity securities of the
Company or any options, warrants or other rights to acquire equity securities of
the Company.
4.7. Representations and Warranties. The representations and
warranties of Computer 2000 contained in this Section 4 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 and
as of the Closing Date.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLER.
5.1. Organization. Seller is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware.
Seller has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
5.2. Authority. The execution and delivery by Seller of this
Agreement, and the performance by Seller of its obligations hereunder, have been
duly and validly authorized by the board of directors of Seller, no other
corporate action on the part of Seller or its stockholders being necessary. This
Agreement has been duly and validly executed and delivered by Seller and
constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, moratorium, reorganization and other similar laws
relating to or affecting the enforcement of creditors' rights generally.
5.3. No Conflicts. The execution and delivery by Seller of
this Agreement do not, and the performance by Seller of its obligations under
this Agreement and the consummation of the transactions contemplated hereby will
not:
(a) conflict with or result in a violation or breach
of any of the terms, conditions or provisions of the certificate of
incorporation or by-laws or other comparable corporate charter document of
Seller;
(b) conflict with or result in a violation or breach
of any term or provision of any Law or Order applicable to Seller or any of its
assets; or
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(c) conflict with or result in a violation or breach
of, constitute (with or without notice or lapse of time or both) a default
under, any Contracts or Other Agreements to which Seller is a party or by which
any of its assets are bound.
5.4. Legal Proceedings. There are no Actions or Proceedings
pending or, to the Knowledge of Seller, threatened relating to or affecting
Seller or any of its assets which question the legality or validity of this
Agreement or the transactions contemplated herein, or any action taken or to be
taken in connection herewith, or which seeks to prevent the consummation of any
transaction contemplated hereby by restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated herein.
5.5. Title. The endorsement and delivery by Seller in
accordance with the provisions of this Agreement of a certificate or
certificates evidencing the Shares will vest in Purchaser good title to the
Shares, free and clear of all liens and encumbrances.
5.6. No Other Company Securities. Following the consummation
of the transactions contemplated under this Agreement, neither Seller nor any
Affiliate of Seller will own any debt or equity securities of the Company or any
options, warrants or other rights to acquire equity securities of the Company.
5.7. Representations and Warranties. The representations and
warranties of Seller contained in this Section 5 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 and as of the
Closing Date.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents, warrants and covenants to the Company, Computer 2000 and
Seller as follows:
6.1. Organization. Purchaser is a limited liability company
duly organized, validly existing and in good standing under the Delaware Limited
Liability Company Act. Purchaser has full power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby.
6.2. Authority. The execution and delivery by Purchaser of
this Agreement, and the performance by Purchaser of its obligations hereunder,
have been duly and validly authorized by the Purchaser, no other action on the
part of Purchaser being necessary. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes a legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
moratorium, reorganization and other similar laws relating to or affecting the
enforcement of creditors' rights generally.
6.3. No Conflicts. The execution and delivery by Purchaser of
this Agreement do not, and the performance by Purchaser of its obligations under
this Agreement and the consummation of the transactions contemplated hereby will
not:
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(a) conflict with or result in a violation or breach
of any of the terms, conditions or provisions of the certificate of formation,
limited liability agreement or other comparable documents of Purchaser;
(b) conflict with or result in a violation or breach
of any term or provision of any Law or Order applicable to Purchaser or any of
its assets; or
(c) conflict with or result in a violation or breach
of, constitute (with or without notice or lapse of time or both) a default
under, any Contracts or Other Agreements to which Seller is a party or by which
any of its assets are bound.
6.4. Legal Proceedings. There are no Actions or Proceedings
pending or, to the Knowledge of Purchaser, threatened relating to or affecting
Purchaser or any of its assets which question the legality or validity of this
Agreement or the transactions contemplated herein, or any action taken or to be
taken in connection herewith, or which seeks to prevent the consummation of any
transaction contemplated hereby by restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated herein.
6.5. Purchaser's Knowledge and Experience. Purchaser
represents that its knowledge and experience in financial and business matters
are such that it is capable of evaluating the merits and risks of its purchase
of the Shares, as contemplated by this Agreement.
6.6. Representations and Warranties. The representations and
warranties of Purchaser contained in this Section 6 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 and as of the
Closing Date.
SECTION 7. COVENANTS OF THE COMPANY AND PURCHASER.
7.1. Cooperation. From the date hereof through the Closing
Date, the Company agrees that it will:
(a) do or cause to be done all things necessary to
ensure that the Company's representations and warranties will be true and
correct at and as of the Closing Date as though made on and as of the Closing
Date; and
(b) promptly advise Computer 2000 and Purchaser in
writing of any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a violation or breach of this
Agreement, or constitute the failure of any condition to the obligations of the
Company.
7.2. Governmental Permits and Approvals. The Company shall use
its best efforts to obtain all permits and approvals from any Governmental
Authority or Regulatory Body required to be obtained by the Company for the
lawful consummation of the Closing.
7.3. Comfort Letter. At the Company's sole expense, the
Company shall retain the Financial Adviser, which shall be a reputable
investment bank satisfactory to
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Computer 2000 and Purchaser. The Company shall use its best efforts to cause the
Financial Adviser to deliver the Comfort Letter, which shall set forth the
opinion of the Financial Advisor that the Company is reasonably likely to remain
a viable business for at least one year subsequent to the consummation of the
transactions contemplated herein. The Comfort Letter shall be satisfactory in
form and substance to Computer 2000 and it shall be expressly stated therein
that the Company's Board of Directors, Computer 2000 and Seller may rely upon
such Comfort Letter.
7.4. Releases. The Company and Purchaser agree to use their
best efforts to obtain, prior to the Closing, the release of Computer 2000
and/or Seller from any and all liabilities, debts and obligations, guarantees
and suretyships, including but not limited to those relating to the $5,000,000
guarantee from Computer 2000 in support of the Company's line of credit with
IBMCC and Computer 2000's guarantee of certain amounts to the Company's vendors,
in each case as more fully described in Schedule 7.4 (collectively, the
"Releases"). The Company's obtaining of all Releases, and the delivery to
Computer 2000 prior to the Closing of evidence of such Releases, in form and
substance satisfactory to Computer 2000, shall be a condition precedent to the
obligation of Computer 2000 and Seller to proceed to Closing.
7.5. Indemnification of Computer 2000 Designees.
(a) At all times after the Closing, the Company and
Purchaser agree, jointly and severally, to the fullest extent permitted by Law,
to indemnify, defend and hold harmless Computer 2000 and Seller (and their
respective Affiliates and their respective shareholders, directors, officers,
employees, counsel, consultants, agents and representatives) and each of Dr.
Harry Krischik, Manfred Gunzel, Richard Obermaier or Anton Rodl (collectively,
the "Computer 2000 Designees"), from and against all Losses that arise out of or
are based upon any action taken, or any omission to take action, prior to the
Closing Date, by any of the Computer 2000 Designees in his capacity as a
Director of the Company.
(b) The Company shall not, and Purchaser shall not
cause the Company to, amend or repeal any provision of the Company's articles of
incorporation or bylaws, as in the effect as of the date of this Agreement, that
purports to indemnify or otherwise provide legal protection to the Company's
Directors, including but not limited to the Computer 2000 Designees.
7.6. Indemnification of Computer 2000 and Seller.
(a) At all times after the Closing, the Company and
Purchaser agree, jointly and severally, to the fullest extent permitted by Law,
to indemnify, defend and hold harmless Computer 2000 and Seller (and their
respective Affiliates and their respective shareholders, directors, officers,
employees, counsel, consultants, agents and representatives) from and against
all Losses that arise out of or are based upon any action taken, or any omission
to take action, after the Closing by the Company, by any officer or Director of
the Company, or by Purchaser (or any of their respective Affiliates and their
respective shareholders, directors, officers, employees, counsel, consultants,
agents and representatives).
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(b) For a period of no less than six years after the
Closing, the Purchaser shall cause the Company to maintain in effect a liability
run-off policy, as described in Schedule 7.6, or equivalent insurance with
substitute insurers (the "Six-Year Run-Off Policy").
7.7. Cancellation. The Company shall cause all of the
Achievement Warrants and the Maintenance Option to be cancelled upon delivery
thereof by Computer 2000, effective as of the Closing.
7.8. No Common Stock Repurchase. For a period of 18 months
after the Closing Date, the Company shall not, by means of open-market
transactions or private purchases or in any other manner, repurchase or
otherwise acquire any shares of Common Stock from any stockholder of the Company
unless all of the Unaffiliated Directors, by resolution, determine in advance of
such repurchase or acquisition that the transaction would be entirely and
intrinsically fair to the Company and to the minority stockholders, taken as a
whole.
7.9. Preferred Stock. Upon Seller's contribution to the
Company of the shares of Preferred Stock pursuant to this Agreement, the Company
shall reserve the equivalent of 6,700,000 shares of Common Stock issuable upon
the conversion of of such Preferred Stock for reissuance to employees pursuant
to stock or stock-based benefit plans to be established by the Company after the
Closing.
SECTION 8. COVENANTS OF COMPUTER 2000 AND SELLER.
8.1. Cooperation. From the date hereof through the Closing
Date, each of Computer 2000 and Seller agrees that it will:
(a) do or cause to be done all things necessary to
ensure that the respective representations and warranties of Computer 2000 and
Seller will be true and correct at and as of the Closing Date as though made on
and as of the Closing Date; and
(b) promptly advise Purchaser and the Company in
writing of any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a violation or breach of this
Agreement, or constitute the failure of any condition precedent to the
respective obligations of Computer 2000 or Seller
8.2. Governmental Permits and Approvals. Each of Computer 2000
and Seller shall use its best efforts to obtain all permits and approvals from
any Governmental Authority or Regulatory Body required to be obtained by
Computer 2000 or Seller for the lawful consummation of the Closing.
8.3. Resignation of Computer 2000 Designees. Computer 2000
shall cause each of the Computer 2000 Designees to resign from the Company's
Board of Directors, effective as of the Closing.
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8.4. Forgiveness of Intercompany Debt. Computer 2000 and
Seller shall cause all intercompany loans and receivables against the Company,
including accrued interest, to be forgiven, effective as of the Closing.
8.5. Waiver of Accrued Dividends. Computer 2000 shall cause
all of the Preferred Stock, Achievement Warrants and the Maintenance Option to
be delivered at the Closing to the Company. Computer 2000 and Seller shall waive
all rights to receive any dividends payable or accrued as of the Closing Date
with respect to the Preferred Stock.
8.6. Capital Contribution. The $3,000,000 capital contribution
by Computer 2000 shall promptly be wire transferred to a United States bank
account for contribution to the Company on the Closing Date.
SECTION 9. ADDITIONAL COVENANTS OF PURCHASER.
9.1. Cooperation. From the date hereof through the Closing
Date, Purchaser agrees that it will:
(a) do or cause to be done all things necessary to
ensure that Purchaser's representations and warranties will be true and correct
at and as of the Closing Date as though made on and as of the Closing Date; and
(b) promptly advise Computer 2000 and the Company in
writing of any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a violation or breach of this
Agreement, or constitute the failure of any condition to the obligations of
Purchaser.
9.2. Governmental Permits and Approvals. Purchaser shall use
its best efforts to obtain all permits and approvals from any Governmental
Authority or Regulatory Body required to be obtained by Purchaser for the lawful
consummation of the Closing.
9.3. Unaffiliated Directors. For a period of two years after
the Closing, Purchaser shall use its best efforts to cause no fewer than two
persons who are not Affiliates of Purchaser or the Company or their respective
Affiliates or any officer or employee of any of them to be nominated and elected
to the Board of Directors of the Company (each, an "Unaffiliated Director").
9.4. Voting Arrangements. For a period of two years after the
Closing Date, in all director elections, Purchaser and its Affiliates shall vote
all of their Common Stock and any other voting securities in all Board elections
in such a way as to cause no fewer than two Unaffiliated Directors to be serving
on the Company's Board at all times.
9.5. Standstill Provisions.
(a) Except as otherwise expressly permitted by this
Section 9.5, Purchaser and its Affiliates shall not for a period of two years
after the Closing Date, acquire, directly or indirectly, any additional Common
Stock or other voting securities of the Company
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beyond the Permitted Percentage. As used in this Agreement, the "Permitted
Percentage" at any given time shall be equal to the percentage of all voting
securities of the Company that were held by Purchaser as of the Closing;
provided, however, that notwithstanding this Section 9.5(a), Preferred Stock may
be reissued to employees pursuant to stock or stock-based benefit plans of the
Company, as provided in Section 7.9 of this Agreement.
(b) Notwithstanding any other provision of this
Agreement, Purchaser and its Affiliates may acquire additional shares of Common
Stock or other voting securities of the Company at any time if, and only if, all
of the Unaffiliated Directors, by resolution, determine in advance of such
acquisition that the transaction would be entirely and intrinsically fair to the
Company and to the minority stockholders, taken as a whole.
9.6. Concerning the Shares. After the Closing Date, Purchaser
will hold the Shares indefinitely unless they are subsequently registered under
the Securities Act of 1933, as amended, or an exemption from registration is
available.
SECTION 10. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company hereunder are, at the option of the Company,
subject to the satisfaction on or prior to the Closing Date of the following
conditions:
10.1. Representations and Warranties on Closing Date. All
representations and warranties of the other parties contained in this Agreement
or in any document or certificate delivered by any party to the Company pursuant
to this Agreement 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 and as of the Closing Date.
10.2. Terms, Covenants and Conditions. All the terms,
covenants and conditions of this Agreement to be complied with and performed by
each of the other parties on or prior to the Closing Date shall have been
complied with and performed in all material respects.
10.3. Consents, Approvals, Etc. All consents, permits,
approvals, authorizations or orders of any court or Governmental Authority or
Regulatory Body necessary for the lawful consummation of the transactions
contemplated hereby shall have been obtained.
10.4. Officer's Certificates. Each of the other parties to
this Agreement shall have delivered to the Company certificates, dated the
Closing Date, executed by its respective authorized executive officer, stating
that as of the Closing Date all of the respective representations and warranties
of such party contained in this Agreement are true and correct in all material
respects, that such party has performed all of its respective obligations and
covenants to be performed by it hereunder, and that all of the conditions
precedent to the obligations of such party hereunder have been satisfied or
waived by such party in writing.
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10.5. Litigation. No action, suit or proceeding shall have
been instituted by or before any court or Governmental Authority or Regulatory
Body, or instituted or threatened by any Governmental Authority or Regulatory
Body, to restrain, or to modify in any material respect, or to prevent the
carrying out of the transactions contemplated by this Agreement, or to seek
damages or a discovery order in connection with such transactions.
10.6. Opinions of Counsel.
(a) The Company shall have received an opinion of J.
Britton Gourley, Jr., counsel to the Purchaser, dated the Closing Date,
substantially in the form appended hereto as Exhibit A.
(b) The Company shall have received an opinion of
Rogers & Wells LLP, counsel to Computer 2000 and Seller, dated the Closing Date,
substantially in the form appended hereto as Exhibit B.
10.7. Comfort Letter. The Financial Advisor shall have
delivered the Comfort Letter, dated as of the Closing Date, in form and
substance satisfactory to the Company.
10.8. Computer 2000 Contribution to Capital. Computer 2000
shall have paid to or for the benefit of the Company Three Million U.S. Dollars
($3,000,000) by wire transfer of immediately available funds to an account or
accounts specified by the Company.
10.9. Insurance Payment. Purchaser shall have made the
Insurance Payment.
10.10. Forgiveness of Indebtedness. Computer 2000 and Seller
shall have caused all intercompany loans and receivables against the Company,
including accrued interest, to be forgiven, effective as of the Closing Date,
and Computer 2000 and Seller shall have delivered to the Company evidence of all
such forgiveness, in form and substance satisfactory to the Company. Seller
shall have waived all rights to receive any dividends payable or accrued as of
the Closing Date with respect to the Preferred Stock.
10.11. Delivery of Certificates. Seller shall have delivered
to the Company a certificate or certificates or other proper documentation
evidencing the Preferred Stock, Achievement Warrants and the Maintenance Option,
in each case, free and clear of any and all liens and encumbrances, to be deemed
a contribution to the capital of the Company.
10.12. Employment Agreements. Alexander C. Kramer and Jon D.
Jensen shall have waived the change-of-control provisions of their respective
Employment Agreements with respect to the transactions contemplated by this
Agreement.
SECTION 11. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPUTER
2000 AND SELLER
The obligations of Computer 2000 and Seller hereunder are, at the option of
Computer 2000 and Seller, respectively, subject to the satisfaction on or prior
to the Closing Date of the following conditions:
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11.1. Representations and Warranties on Closing Date. All
representations and warranties of the other parties contained in this Agreement
or in any document or certificate delivered by any party to Computer 2000 or
Seller pursuant to this Agreement 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 and as of the Closing Date.
11.2. Terms, Covenants and Conditions. All the terms,
covenants and conditions of this Agreement to be complied with and performed by
each of the other parties on or prior to the Closing Date shall have been
complied with and performed in all material respects.
11.3. Consents, Approvals, Etc. All consents, permits,
approvals, authorizations or orders of any court or Governmental Authority or
Regulatory Body necessary for the lawful consummation of the transactions
contemplated hereby shall have been obtained.
11.4. Officer's Certificates. Each of the other parties to
this Agreement shall have delivered to Computer 2000 and Seller certificates,
dated the Closing Date, executed by its respective authorized executive officer,
stating that as of the Closing Date all of the respective representations and
warranties of such party contained in this Agreement are true and correct in all
material respects, that such party has performed all of its respective
obligations and covenants to be performed by it hereunder, and that all of the
conditions precedent to the obligations of such party hereunder have been
satisfied or waived by such party in writing.
11.5. Litigation. No action, suit or proceeding shall have
been instituted by or before any court or Governmental Authority or Regulatory
Body, or instituted or threatened by any Governmental Authority or Regulatory
Body, to restrain, or to modify in any material respect, or to prevent the
carrying out of the transactions contemplated by this Agreement, or to seek
damages or a discovery order in connection with such transactions.
11.6. Opinions of Counsel.
(a) Computer 2000 and Seller shall have received an
opinion of J. Britton Gourley, Jr., counsel to the Purchaser, dated the Closing
Date, substantially in the form appended hereto as Exhibit A.
(b) Computer 2000 and Seller shall have received an
opinion of Morgan, Lewis & Bockius LLP, counsel to the Company, dated the
Closing Date, substantially in the form appended hereto as Exhibit C.
11.7. Director Nominations. As of the Closing Date, no fewer
than two Unaffiliated Directors shall then be serving on the Company's Board of
Directors.
11.8. Comfort Letter. The Financial Advisor shall have
delivered the Comfort Letter, dated as of the Closing Date, in form and
substance satisfactory to Computer 2000.
11.9. Releases. Computer 2000 and Seller and their respective
Affiliates shall have been released from any and all liabilities, debts and
obligations, guarantees and suretyships
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relating to the business or assets of the Company. The Company shall have
delivered to Computer 2000 and Seller evidence of all Releases, in form and
substance satisfactory to Computer 2000.
11.10. Insurance Payment. Purchaser shall have made the
Insurance Payment.
11.11. Payment for Shares. Purchaser shall have paid the sum
of One U.S. Dollar ($1.00) to Seller in payment for the purchase of the Shares.
11.12. Cancellation. The Company shall have caused the
Achievement Warrants and the Maintenance Option to be cancelled, effective as of
the Closing Date.
11.13. Six-Year Run-Off Policy. The Company shall have caused
the Six-Year Run-Off Policy to be in place, effective as of the Closing.
SECTION 12. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.
The obligations of Purchaser hereunder are, at the option of Purchaser, subject
to the satisfaction on or prior to the Closing Date of the following conditions:
12.1. Representations and Warranties on Closing Date. All
representations and warranties of the other parties contained in this Agreement
or in any document or certificate delivered by any party to Purchaser pursuant
to this Agreement 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 and as of the Closing Date.
12.2. Terms, Covenants and Conditions. All the terms,
covenants and conditions of this Agreement to be complied with and performed by
each of the other parties on or prior to the Closing Date shall have been
complied with and performed in all material respects.
12.3. Consents, Approvals, Etc. All consents, permits,
approvals, authorizations or orders of any court or Governmental Authority or
Regulatory Body necessary for the lawful consummation of the transactions
contemplated hereby shall have been obtained.
12.4. Officer's Certificates. Each of the other parties to
this Agreement shall have delivered to Purchaser certificates, dated the Closing
Date, executed by its respective authorized executive officer, stating that as
of the Closing Date all of the respective representations and warranties of such
party contained in this Agreement are true and correct in all material respects,
that such party has performed all of its respective obligations and covenants to
be performed by it hereunder, and that all of the conditions precedent to the
obligations of such party hereunder have been satisfied or waived by such party
in writing.
12.5. Litigation. No action, suit or proceeding shall have
been instituted by or before any court or Governmental Authority or Regulatory
Body, or instituted or threatened by any Governmental Authority or Regulatory
Body, to restrain, or to modify in any material
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<PAGE> 15
respect, or to prevent the carrying out of the transactions contemplated by this
Agreement, or to seek damages or a discovery order in connection with such
transactions.
12.6. Opinion of Counsel.
(a) The Purchaser shall have received an opinion of
Morgan, Lewis & Bockius LLP, counsel to the Company, dated the Closing Date,
substantially in the form appended hereto as Exhibit C.
(b) The Purchaser shall have received an opinion of
Rogers & Wells LLP, counsel to Computer 2000 and Seller, dated the Closing Date,
substantially in the form appended hereto as Exhibit B.
12.7. Computer 2000 Contribution to Capital. Computer 2000
shall have paid to or for the benefit of the Company Three Million U.S. Dollars
($3,000,000) by wire transfer of immediately available funds to an account or
accounts specified by the Company.
12.8. Director Resignations. Each of the Computer 2000
Designees then sitting on the Board of Directors of the Company shall have
submitted his written resignation to the Company, effective as of the Closing,
conditional upon nothing other than the consummation of the transactions
contemplated hereby.
12.9. Delivery of Shares. Computer 2000 shall have delivered
to Purchaser a certificate or certificates evidencing the Shares, with stock
powers duly executed and attested, sufficient to vest in Purchaser good and
marketable title to the Shares, free and clear of any and all liens and
encumbrances.
12.10. Delivery of Certificates. Computer 2000 shall have
delivered to the Company a certificate or certificates or other proper
documentation evidencing the Preferred Stock, Achievement Warrants and the
Maintenance Option, in each case, free and clear of any and all liens and
encumbrances, to be deemed a contribution to the capital of the Company.
12.11. Forgiveness of Indebtedness. Computer 2000 shall have
caused all intercompany loans and receivables against the Company, including
accrued interest, to be forgiven, effective as of the Closing Date, and Computer
2000 shall have delivered to Purchaser evidence of all such forgiveness, in form
and substance satisfactory to Purchaser.
12.12. Cancellation. The Company shall have caused the
Achievement Warrants and the Maintenance Option to be cancelled, effective as of
the Closing Date. Seller shall have waived all rights to receive any dividends
payable or accrued as of the Closing Date with respect to the Preferred Stock.
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SECTION 13. INDEMNIFICATION.
13.1. Indemnification by the Company.
(a) After the Closing, subject to the limitations set
forth in Section 13.4 below, the Company hereby agrees to indemnify, hold
harmless and defend Computer 2000, Seller and Purchaser and their respective
Affiliates against and in respect of any and all Losses arising out of or based
upon or relating or pertaining in any way to:
(i) the inaccuracy of any representation or
warranty made by the Company in this Agreement or in the officer's certificate
delivered pursuant hereto; and
(ii) the breach by the Company of any
agreement or covenant contained in this Agreement.
13.2. Indemnification by Computer 2000 and Seller.
(a) After the Closing, subject to the limitations set
forth in Section 13.4 below, Computer 2000 and Seller, jointly and severally,
hereby agree to indemnify, hold harmless and defend the Company and Purchaser
and their respective Affiliates against and in respect of any and all Losses
arising out of or based upon or relating or pertaining in any way to:
(i) the inaccuracy of any representation or
warranty made by Computer 2000 or Seller in this Agreement or in the officer's
certificate delivered pursuant hereto; and
(ii) the breach by Computer 2000 of Seller
of any agreement or covenant contained in this Agreement.
13.3. Indemnification by Purchaser.
(a) After the Closing, subject to the limitations set
forth in Section 13.4 below, Purchaser hereby agrees to indemnify, hold harmless
and defend the Company, Computer 2000 and Seller and their respective Affiliates
against and in respect of any and all Losses arising out of or based upon or
relating or pertaining in any way to:
(i) the inaccuracy of any representation or
warranty made by Purchaser in this Agreement or in the officer's certificate
delivered pursuant hereto; and
(ii) the breach by Purchaser of any
agreement or covenant contained in this Agreement.
13.4. Limitations on Indemnification.
(a) Liability for any Indemnifying Party (as defined
below) to indemnify, hold harmless or defend any Indemnified Party (as defined
below) under this
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Agreement (collectively, "Indemnification") shall be conditioned upon compliance
with the following notification procedures:
(i) in the case of any Indemnification
described in Section 13.1(a)(i), Section 13.2(a)(i) or Section 13.3(a)(i)
relating to a breach of a representation or warranty contained herein, notice of
such matter on which such right to Indemnification is based shall be given in
accordance with the provisions of Section 13.5 below, but in no event later than
12 months after the Closing Date;
(ii) in the case of any Indemnification
described in Section 13.1(a)(ii), Section 13.2(a)(ii) or Section 13.3(a)(ii)
relating to a breach of any agreement or covenant hereunder, other than (A) the
Company's covenants set forth in Section 7.4 (Releases), Section 7.5
(Indemnification of Computer 2000 Designees), Section 7.6 (Indemnification of
Computer 2000 and Seller) or Section 7.8 (No Common Stock Repurchase), or (B)
Purchaser's covenants set forth in Section 9.3 (Unaffiliated Directors), Section
9.4 (Voting Arrangements) or Section 9.5 (Standstill Provisions), notice of such
matter on which such right to Indemnification is based shall be given in
accordance with the provisions of Section 13.5 below, but in no event later than
36 months after the breach of such agreement or covenant; and
(iii) in the case of any Indemnification
described in (A) Section 13.1(a)(ii) relating to a breach of any covenant of the
Company set forth in Section 7.4 (Releases), Section 7.5 (Indemnification of
Computer 2000 Designees), Section 7.6 (Indemnification of Computer 2000 and
Seller) or Section 7.8 (No Common Stock Repurchase), or (B) Section 13.3(a)(ii)
relating to a breach of any covenant of Purchaser set forth in Section 9.3
(Unaffiliated Directors), Section 9.4 (Voting Arrangements) or Section 9.5
(Standstill Provisions), notice of such matter on which such right to
Indemnification is based shall be given in accordance with the provisions of
Section 13.5 below, but in no event later ninety (90) days after the expiration
of the period of the applicable statute of limitations governing the right of
any third party or Governmental Authority or Regulatory Body, as the case may
be, to bring a claim relating or pertaining in any way to the matters described
in Section 7.4, Section 7.5, Section 7.6, Section 9.3, Section 9.4 or Section
9.5, as the case may be, ignoring for such purposes any voluntary extension
thereof by an Indemnifying Person (as defined below).
13.5. Indemnification Procedures. A party seeking
Indemnification pursuant to this Agreement (the "Indemnified Party") shall give
reasonably prompt notice to the party from whom such Indemnification is sought
(the "Indemnifying Party") of the assertion of any claim, or the commencement of
any action, suit or proceeding, in respect of which indemnity may be sought
hereunder, and shall give the Indemnifying Party such information with respect
thereto as the Indemnifying Party may reasonably request, but no failure to give
such notice shall relieve the Indemnifying Party of any liability hereunder,
except to the extent that the Indemnifying Party has suffered actual prejudice
thereby. The Indemnifying Party shall have the right to undertake the defense of
any such claim asserted by a third Person and the Indemnified Party shall
cooperate in such defense and make available all records and materials requested
by the Indemnifying Party in connection therewith at the Indemnifying Party's
expense. The Indemnified Party shall be entitled to participate in such defense,
but shall not be entitled to Indemnification with respect to the costs and
expenses of such defense if the
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Indemnifying Party shall have assumed the defense of the claim with counsel
reasonably satisfactory to the Indemnified Party. The Indemnifying Party shall
not be liable for any claim settled without its consent, which consent may not
be unreasonably withheld. The Indemnifying Party may settle any claim without
the consent of the Indemnified Party, but only if the sole relief awarded is
monetary damages.
13.6. Survival. All representations and warranties contained
in this Agreement shall survive the Closing hereunder for a period of 12 months.
SECTION 14. TERMINATION OF AGREEMENT.
14.1. Termination. This Agreement may be terminated at any
time prior to the Closing as follows:
(a) by mutual written agreement of all of the parties
hereto;
(b) at the election of any party, if any legal
proceeding is commenced or threatened by any Governmental Authority or
Regulatory Body or other Person directed against the consummation of the Closing
or any other transaction contemplated under this Agreement and such party,
reasonably and in good faith deems it impractical or inadvisable to proceed in
view of such legal proceeding or threat thereof;
(c) at the election of the Company (i) if any one or
more of the conditions to the Company's obligations to close has not been
fulfilled as of the Closing Date in all material respects, (ii) if the Computer
2000, Seller or Purchaser has breached any representation, warranty, covenant or
agreement contained in this Agreement or in any document or other papers
delivered pursuant to this Agreement in any material respect or (iii) if the
Closing shall not have taken place by July 31, 1998; and
(d) at the election of Computer 2000, (i) if any one
or more of the conditions to Computer 2000's obligations to close has not been
fulfilled as of the Closing Date in all material respects, (ii) if the Company
or Purchaser has breached any representation, warranty, covenant or agreement
contained in this Agreement or in any document or other papers delivered
pursuant to this Agreement in any material respect or (iii) if the Closing shall
not have taken place by July 31, 1998; and
(e) at the election of Seller, (i) if any one or more
of the conditions to Seller's obligations to close has not been fulfilled as of
the Closing Date in all material respects, (ii) if the Company or Purchaser has
breached any representation, warranty, covenant or agreement contained in this
Agreement or in any document or other papers delivered pursuant to this
Agreement in any material respect or (iii) if the Closing shall not have taken
place by July 31, 1998; and
(f) at the election of Purchaser, (i) if any one or
more of the conditions to Purchaser's obligations to close has not been
fulfilled as of the Closing Date in all material respects, (ii) if the Company,
Computer 2000 or Seller has breached any representation, warranty, covenant or
agreement contained in this Agreement or in any document or other
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papers delivered pursuant to this Agreement in any material respect or (iii) if
the Closing shall not have taken place by July 31, 1998.
14.2. Effect of Termination. If this Agreement is terminated
as permitted by Section 14.1, then, except as set forth in Section 15.1 (Dispute
Resolution); Section 15.2 (Expenses); Section 15.4 (Brokers); Section 15.6
(Notices) and Section 15.9 (Governing Law), such termination shall be without
any liability or obligation of any party or any of its respective Affiliates to
any other party or any of its respective Affiliates; provided, however, that
nothing set forth in this Section 14 shall relieve any party from any material
breach of this Agreement.
SECTION 15. MISCELLANEOUS.
15.1. Dispute Resolution.
(a) Dispute resolution under the procedures provided
in this Section 15.1 shall be the exclusive remedy for all disputes between the
parties in respect of a breach of any term of this Agreement. Each party agrees
not to resort to any court, agency or private group with respect to such
disputes except in accordance with this Section 15.1.
(b) In any disputes arising out of or relating to the
performance of this Agreement the parties shall attempt reasonably to resolve
such disputes in good faith by negotiation between senior executives of each.
(c) If any such dispute has not been resolved by
negotiation by senior executives of the parties within a period of thirty (30)
calendar days (or such other reasonable amount of time as the parties may in
good faith agree is warranted by the circumstances), the dispute shall be
settled exclusively by arbitration as described in this Section 15.1 pursuant to
the applicable rules of the American Arbitration Association ("AAA"), such
arbitration to be conducted in New York, New York, U.S.A. If for any reason
certain claims or disputes are deemed to be non-arbitrable, the
non-arbitrability of those claims or disputes shall in no way affect the
arbitrability of any other claims or disputes. The parties may initiate the
arbitration procedures set forth in this Section 15.1 by providing notice to the
other party, as provided in this Section 15.1, and to the AAA of the existence
of a dispute to be arbitrated.
(d) Arbitration shall be conducted by one arbitrator
to be selected by the parties. The arbitrator shall not be an officer, director
or employee of either party or of any of their respective Affiliates. The
arbitrator shall be an attorney licensed to practice law and familiar with the
rules of evidence and shall be generally knowledgeable with respect to business
issues being submitted to arbitration that would reasonably be expected to arise
in relation to this Agreement. If the parties are unable to agree on an
arbitrator within fifteen (15) calendar days of the effective delivery of the
notice required by Section 15.1(c), then the AAA shall appoint the arbitrator.
The decision of the arbitrator shall be final and binding upon the parties. The
arbitrator shall provide reasoned written opinions for all decisions.
(e) All hearings that may be required shall be
concluded within sixty (60) calendar days (or such other reasonable amount of
time as the parties may in good faith
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agree is warranted by the circumstances) after the selection of the arbitrator.
The arbitrator shall render his or her award within fifteen (15) calendar days
after the last hearing.
(f) The parties may by written notice to one another
and to the arbitrator freely specify further controversies or claims to be
arbitrated upon until the day of any pre-hearing conference held by the
arbitrator for such purpose. Thereafter, additional controversies or claims may
be added only with the consent of the arbitrator.
(g) The arbitrator may make interim awards and may
award equitable and declaratory relief; provided, however, that the arbitrator
may not order the termination of this Agreement for any reason other than as
expressly set forth in Section 14.1 hereof.
(h) The costs and expenses of the arbitration
(including reasonable attorneys' fees) shall be allocated by the arbitrator
between the parties as the arbitrator sees fit.
(i) The arbitrator shall not consider, nor shall any
award include amounts for, punitive or exemplary damages.
(j) Notwithstanding any other provision of this
Section 15.1, either party may seek from any U.S. federal or state court of
competent jurisdiction sitting in New York County, New York, U.S.A., interim
relief, including but not limited to temporary restraining orders, preliminary
injunctions and other interim equitable relief as the same may vary from
jurisdiction to jurisdiction, in aid of arbitration or to protect the rights of
a party pending the appointment of the arbitrator and the rendering of the
arbitration decision.
(k) In addition to the available remedy or remedies
awarded by the arbitrator, in an action to enforce a decision of the arbitrator,
the prevailing party shall be entitled to its reasonable attorneys' fees, expert
fees, costs and expenses without regard to the local rules of the court in which
such action is brought.
15.2. Expenses. The parties to this Agreement shall, except as
otherwise specifically provided herein, bear their respective expenses incurred
in connection with the preparation, execution and performance of this Agreement
and the transactions contemplated hereby. The Company shall pay the fees due to
the Financial Advisor to render the Comfort Letter.
15.3. Further Assurances. Each of the parties shall execute
such documents and other papers and take such further actions as may reasonably
be required or desirable to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall use its reasonable efforts to fulfill
or obtain the fulfillment of the conditions to the Closing, including, without
limitation, the execution and delivery of any document or other papers, the
execution and delivery of which are conditions precedent to the Closing.
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15.4. Brokers.
(a) The Company represents and warrants to the other
parties to this Agreement that no broker, finder, agent or similar intermediary
has acted on its behalf in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with the Company or any action taken by
the Company.
(b) Computer 2000 represents and warrants to the
other parties to this Agreement that no broker, finder, agent or similar
intermediary has acted on behalf of Computer 2000 in connection with this
Agreement or the transactions contemplated hereby, and that there are no
brokerage commissions, finders' fees or similar fees or commissions payable in
connection therewith based on any agreement, arrangement or understanding with
Computer 2000, or any action taken by Computer 2000.
(c) Seller represents and warrants to the other
parties to this Agreement that no broker, finder, agent or similar intermediary
has acted on behalf of Seller in connection with this Agreement or the
transactions contemplated hereby, and that there are no brokerage commissions,
finders' fees or similar fees or commissions payable in connection therewith
based on any agreement, arrangement or understanding with Seller, or any action
taken by Seller
(d) Purchaser represents and warrants to the other
parties to this Agreement that no broker, finder, agent or similar intermediary
has acted on its behalf in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with Purchaser or any action taken by
Purchaser.
(e) Each party agrees to indemnify and save the
harmless the other parties hereto from any claim or demand for commissions or
other compensation by any broker, finder, agent or similar intermediary claiming
to have been employed by or on behalf of such party, and to bear the cost of
legal expenses incurred in defending against any such claim.
15.5. Certain Definitions. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
(a) "Actions or Proceedings" means any action, suit,
proceeding, arbitration or investigation or audit by any Governmental Authority
or Regulatory Body.
(b) "Affiliate" with respect to any Person, means any
other Person controlling, controlled by or under common control with such
Person;
(c) "Contracts or Other Agreements" means all
material contracts, agreements, understandings, indentures, notes, bonds, loans,
instruments, leases, mortgages,
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franchises, licenses, commitments or other binding arrangements, written or
oral, express or implied;
(d) "Governmental Authority or Regulatory Body" means
any government or political subdivision thereof, whether foreign, U.S. federal,
state, provincial or local, or any agency or instrumentality of any such
government or political subdivision;
(e) "Knowledge" means the knowledge a party actually
has and the knowledge a party, after due inquiry, should have had. A party is
deemed to have knowledge of any matter as to which any officer or director of
such party has knowledge.
(f) "Law" means any law, statute, rule, regulation,
ordinance or other pronouncement having the effect of law in the United States
or in any other country, or in any state, providence, county, city or other
political subdivision thereof.
(g) "Loss" means any loss, liability, damages,
deficiency, cost or expense, including interest, penalties and reasonable
attorneys' fees and disbursements and other costs.
(h) "Order" means any writ, judgment, decree,
injunction or similar order of any Governmental Authority or Regulatory Body of
the United States or of any other country, or of any state, providence, county,
city or other political subdivision thereof (in each such case, whether
preliminary or final).
(i) "Person" means any individual, corporation,
partnership, firm, joint venture, association, joint-stock company, trust,
limited liability company, unincorporated organization, Governmental Authority
or Regulatory Body or other entity of any kind whatsoever.
15.6. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, sent
by facsimile transmission or sent by certified, registered or express mail,
postage prepaid, or by an internationally recognized overnight courier such as
Federal Express. Any such notice shall be deemed given when so delivered
personally, or sent by facsimile transmission or, if mailed or sent by courier,
three days after the date of mailing or deliver to a courier service, as
follows:
(a) If to the Company to:
AmeriQuest Technologies, Inc.
425 Privet Road
Horsham, Pennsylvania 19044-0965
Attention: Chief Executive Officer
Facsimile: (215) 675-1824
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with required copies to:
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, Pennsylvania 19103
Attention: Steven M. Cohen, Esq.
Facsimile: (215) 963-5299
(b) if to Computer 2000, to:
Computer 2000 AG
Wolfratshauser Strasse 84
D-81379 Munich
Federal Republic of Germany
Attention: Manfred Gunzel
Facsimile: 011-49-89-7427-4402
with required copies to:
Rogers & Wells LLP
Two Hundred Park Avenue
New York, NY 10166-0153
Attention: Klaus H. Jander, Esq.
Facsimile (212) 878-8375
(c) if to Seller to:
Computer 2000, Inc.
Wolfratshauser Strasse 84
D-81379 Munich
Federal Republic of Germany
Attention: Manfred Gunzel
Facsimile: 011-49-89-7427-4402
with required copies to:
Rogers & Wells LLP
Two Hundred Park Avenue
New York, NY 10166-0153
Attention: Klaus H. Jander, Esq.
Facsimile (212) 878-8375
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(d) If to Purchaser, to:
The Listen Group Partners LLC
c/o AmeriQuest Technologies, Inc.
425 Privet Road
Horsham, Pennsylvania 19044-0965
Attention: Alexander C. Kramer and
Jon D. Jensen
Facsimile: (215) 675-1824
with required copies to:
J. Britton Gourley, Jr., Esq.
P.O. Box 1905
1003 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Facsimile: (610) 265-2480
Any party may by notice given in accordance with this Section 15.6 to the other
parties designate another address or person for receipt of notices hereunder.
15.7. Entire Agreement. This Agreement and the agreements,
certificates and other documents delivered pursuant hereto or in connection with
the transactions contemplated hereby contain the entire agreement among the
parties with respect to the transactions described herein, and supersede all
prior agreements, written or oral, with respect thereto.
15.8. Waivers and Amendments; Preservation of Remedies. This
Agreement may be amended, superseded, canceled, renewed or extended, and the
terms hereof may be waived, only by a written instrument signed by the parties
or, in the case of a waiver, by the party waiving compliance. No delay on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party of
any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
that any party may otherwise have at law or in equity. The rights and remedies
of any party based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
contained in this Agreement shall in no way be limited by the fact that the act,
omission, occurrence or other state of facts upon which any claim of any such
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement contained in this Agreement (or
in any other agreement between the parties) as to which there is no inaccuracy
or breach.
15.9. Governing Law. This Agreement shall be exclusively
governed and construed exclusively in accordance with the laws of the State of
New York, without reference to its conflicts-of-law rules or principles.
15.10. Binding Effect; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and legal representatives.
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Except by operation of law, this Agreement is not assignable without the consent
of the parties and any purported assignment without such consent shall be null
and void.
15.11. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
15.12. Headings. The headings in this Agreement are for
reference only, and shall not affect the interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
AMERIQUEST TECHNOLOGIES, INC.
By: /s/ Alexander C. Kramer, Jr.
Name: Alexander C. Kramer, Jr.
Title: President
COMPUTER 2000 AG
By: /s/ Dr. Harry Krischik
Name: Dr. Harry Krischik
Title: Member of the Executive Board
By: /s/ Manfred Gunzel
Name: Manfred Gunzel
Title: Member of the Executive Board
COMPUTER 2000, INC.
By: /s/ Martin E. Loffler By: /s/ Richard E. Obermaier
Name: Martin E. Loffler Name: Richard E. Obermaier
Title: President Title: Secretary
THE LISTEN GROUP PARTNERS LLC
By: /s/ Jon D. Jensen
Name: Jon D. Jensen
Title: Co-President
<PAGE> 1
Exhibit 99.1
AMERIQUEST MANAGEMENT SIGNS DEAL TO BUY COMPUTER 2000 STAKE IN AMERIQUEST
Horsham, PA July 2, 1998
AmeriQuest Technologies, Inc. (OTC:AMQT) and Computer 2000, A.G. announced today
that Listen Group Partners, LLC, a group headed by AmeriQuest's senior
management, Alex Kramer (CEO) and Jon Jensen (CFO), signed an agreement to
acquire the 36,349,878 shares of AmeriQuest common stock owned by Computer 2000.
The transaction was approved by the disinterested directors of AmeriQuest and by
the full board of directors of AmeriQuest.
In taking over majority control of AmeriQuest from Computer 2000, AmeriQuest's
management has arranged for a new $10 million asset-backed bank credit line for
AmeriQuest, obtained the release of Computer 2000 and its affiliates from all
guarantees of AmeriQuest obligations, and agreed to pay certain transaction
costs totaling approximately $250,000.
As part of the transaction, Computer 2000 has agreed to contribute to the
capital of AmeriQuest approximately $28 million in intercompany debt obligations
and an additional $3 million in cash. Computer 2000 has further agreed to the
redemption by AmeriQuest of all of the outstanding AmeriQuest preferred stock,
convertible into approximately 42 million common shares, and to the cancellation
of all outstanding AmeriQuest options and warrants held by Computer 2000. As a
result of the transaction, the number of outstanding shares of AmeriQuest, on a
fully diluted basis, will be reduced from approximately 118 million to
approximately 67 million. The Board of Directors of the Company has agreed to
reserve 6.7 million of the canceled shares of common stock for future issuance
to AmeriQuest employees as incentive compensation pursuant to terms to be
approved by the disinterested directors of the board.
L. H. Friend, Weinress, Frankson & Presson, Inc., financial advisor to the
Company, has issued an opinion to the Company and Computer 2000 that, based upon
certain assumptions set forth in its opinion letter, the Company is a viable
business entity, from a financial point of view, upon effectiveness of the
transaction.
The transaction is subject to customary conditions to closing, and is expected
to be completed by the end of July.
"This should put to rest any rumors about the future of AmeriQuest," said
Kramer. Our customers, vendors and employees now know that AmeriQuest will not
just survive, but will have a stable foundation for future growth."
"We have a stronger balance sheet in place now in terms of equity to total
assets than at any other time during my years with AmeriQuest. Now we can
concentrate on growing the business along the path we started almost a year
ago," according to Jensen.
<PAGE> 2
For the quarter ended June 30, 1998, AmeriQuest forecasts sales of $18-19
million. To achieve long-term profitability, the Company estimates that an
increase in sales of 20% will be required over recent earlier historical levels.
This press release contains forward-looking statements that involve a number of
risks and uncertainties. Among other factors that could cause actual operating
results to differ materially are general economic and business conditions, the
rate of growth in the computer industry, competitive factors and pricing
pressures, changes in product mix, inventory risks due to shifts in market
demand, and changes in agreements with manufacturers and master distributors
regarding the terms of product sales to the Company.
AmeriQuest Technologies, Inc. is a distributor of computer technology solutions
to value-added resellers (VARs) and systems integrators. In addition to
distribution of Servers, Wide Area Networking, Mass Storage Subsystems, and
Peripherals, AmeriQuest provides pre and post sales engineering, logistics,
financial and marketing services to its customers.
