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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 1, 1994
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(Date of earliest event reported)
PIONEER-STANDARD ELECTRONICS, INC.
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(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
Ohio 0-5734 34-0907152
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(State or other jurisdiction (Commission (I.R.S. employer
of incorporation) file number) identification no.)
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4800 East 131st Street, Cleveland, Ohio 44105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 587-3600
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Item 2. Acquisition or Disposition of Assets.
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On June 1, 1994, Pioneer-Standard Electronics, Inc. (the "Company")
acquired certain of the assets of the Zentronics Division ("Zentronics") of
Westburne Industrial Enterprises Ltd., a Canada corporation ("Westburne"), and
assumed certain of Westburne's liabilities. The transaction was completed by
Pioneer-Standard Canada Inc., a newly formed Canadian subsidiary of the
Company. The acquired assets include (i) the name "Zentronics" and all related
trademarks and tradenames, if any, and all of the trade accounts receivables of
Zentronics; (ii) certain product lines and related inventory of Zentronics;
(iii) certain fixed assets; (iv) the rights of Westburne under or pursuant to
certain vendor agreements; (v) the rights of Westburne under or pursuant to
certain operating leases; (vi) the rights of Westburne under or pursuant to
certain equipment leases and real property leases; (vii) prepaid expenses and
deposits, if any, made by Westburne pertaining or relating to the Zentronic's
business; (viii) the rights of Westburne under or pursuant to certain
outstanding purchase and sales orders; (ix) certain of Westburne's rights in
and to any third-party manufacturer's warranties; and (x) all operating data
and other books and records pertaining to the acquired assets. The acquisition
was accomplished pursuant to an Asset Purchase Agreement, dated April 22, 1994
(the "Asset Purchase Agreement"), by and between the Company and Westburne. A
copy of the Asset Purchase Agreement is filed as an Exhibit hereto.
Zentronics distributes and markets a broad range of electronic
components and computer products for applications in the industrial and
end-user Canadian markets. The Company intends to continue to use the assets
acquired through the purchase of Zentronics in the manner in which they were
previously used by Zentronics.
As consideration for the acquisition of the assets of Zentronics, the
Company assumed certain of Westburne's liabilities and paid Westburne
$12,460,825 Cdn ($9,021,775 U.S.) at the closing. An estimated additional
$4,153,625 Cdn (the "Additional Amount") will be paid to Westburne after
September 14, 1994. The Additional Amount is subject to possible adjustment
based on certain schedules delivered by Westburne to the Company on June 1,
1994. The price for Zentronic's assets was determined through arm's length
negotiations among the parties.
The consideration paid by the Company was financed under its revolving
credit facility, dated January 23, 1992, by and among the Company, National
City Bank, Society National Bank (successor in interest to Ameritrust Company
National Association), Star Bank, N.A., and National City Bank, as agent, as
amended June 30, 1993 and May 27, 1994 (the "Credit Facility"). In addition,
it is presently contemplated that the Additional Amount to be paid by the
Company will be financed by amounts which may be available under the Credit
Facility. The principal amount advanced and the Additional Amount to be
advanced under the Credit Facility are subject to an interest rate at a
floating prime rate or at other
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floating rate options (certificate of deposit, LIBOR, or banker's acceptance)
plus 3/4%.
There are no material relationships between Westburne and the Company
or any of their affiliates, directors or officers.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
On June 1, 1994, the Company completed the asset acquisition of certain assets
of Zentronics for approximately $16.6 million Cdn ($12.0 million U.S.). The
acquisition does not meet the significant subsidiary tests as defined in Rule
3-05 of Regulation S-X.
Exhibits.
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<CAPTION>
Sequential
Exhibit No. Description Page No.
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2.1 Asset Purchase Agreement, dated 5
April 22, 1994 (without Schedules),
by and between the Company and
Westburne
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3
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SIGNATURES
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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.
PIONEER-STANDARD ELECTRONICS, INC.
/s/ John V. Goodger
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John V. Goodger,
Vice President, Treasurer and
Assistant Secretary
Date: June 14, 1994
431/15154IID.451
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EXECUTION COPY
ACQUISITION OF CERTAIN ASSETS
OF
THE ZENTRONICS DIVISION
OF
WESTBURNE INDUSTRIAL ENTERPRISES LTD.
BY
PIONEER-STANDARD ELECTRONICS, INC.
ASSET PURCHASE AGREEMENT
April 22, 1994
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ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT is entered into this 22nd day of
April, 1994, by and between Pioneer-Standard Electronics, Inc., an Ohio
corporation ("Buyer") and Westburne Industrial Enterprises Ltd., a Canada
corporation ("Seller").
RECITALS:
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WHEREAS, the parties desire that Seller sell to Buyer and that
Buyer purchase from Seller certain of the assets of Seller's Zentronics
Division upon the terms hereinafter set forth.
NOW THEREFORE, in consideration of and in reliance upon the
representations, warranties and obligations contained in this Agreement and for
other good and valuable consideration the receipt and sufficiency of which
hereby is acknowledged, the parties agree as follows.
ARTICLE I
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PURCHASE OF ASSETS
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1.1 DEFINITION REFERENCE. Certain capitalized terms are
defined in Section 9.1 hereof.
1.2 PURCHASED ASSETS. Seller agrees to sell, transfer and
assign to Buyer free and clear of all Liens (except Permitted Liens), and Buyer
agrees to purchase from Seller all of Seller's right, title and interest in and
to all of the assets of Seller's Zentronics Division (the "Division") existing
as of the Closing (except for the Retained Assets, as hereinafter defined),
including but not limited to the following:
(a) the name "Zentronics" and all related trademarks
and tradenames, if any, and all of the trade accounts receivables of
the Division, including net debit balances from payees (the
"Receivables"), which Receivables shall be identified on Schedule
1.2(a), and which Schedule shall be prepared in accordance with
Sections 1.3, 3.3, and 3.4 hereof, shall indicate the gross book value
of each such Receivable, and shall indicate customer or payee name,
invoice or debit number, invoice or
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debit amount, invoice or debit date, net balance due, and the location
from which each Receivable was generated;
(b) all product lines and related inventory of the
Division (the "Inventory"), which Inventory shall be identified on
Schedule 1.2(b), and which Schedule shall be prepared in accordance
with Sections 1.3, 3.3, and 3.4 hereof and shall indicate by part
number the date of acquisition, quantity, net book value, one year
usage (where applicable) and location of each such item of Inventory;
(c) the fixed assets which shall be identified on
Schedule 1.2(c) (the "Fixed Assets"), which Schedule shall be prepared
in accordance with Sections 3.3 and 3.4 hereof and shall indicate the
invoice cost, date of purchase, net book value, and present location
of each such Fixed Asset;
(d) the rights of Seller under or pursuant to the
authorized Inventory supplier agreements identified on Schedule 1.2(d)
attached hereto (the "Vendor Agreements"), any such authorized
Inventory supplier being hereinafter referred to as a ("Vendor");
(e) the rights of Seller under or pursuant to the
operating leases identified on Schedule 1.2(e) attached hereto (the
"Operating Leases");
(f) the rights of Seller under or pursuant to (i)
those equipment leases identified by location on Schedule 1.2(f)
attached hereto (the "Equipment Leases"), and (ii) those real property
leases identified by location on Schedule 1.2(f) attached hereto (the
"Real Property Leases");
(g) prepaid expenses and deposits, if any, made by
Seller pertaining or relating to the Division's business, including
but not limited to Operating Leases, Equipment Leases and Real
Property Leases;
(h) the rights of Seller under or pursuant to all
outstanding purchase and sales orders identified on Schedule 1.2(h)
attached hereto (the "Open Orders") which relate to (i) products or
Inventory which are to be purchased or sold in the ordinary course of
business of the Division and are required to fill valid open customer
orders or (ii) supplies which are useable by Buyer and are utilized in
the ongoing sales operations;
(i) all of Seller's rights in and to any third-party
manufacturer's warranties relating to any of the foregoing to the
extent that such rights are assignable; and
(j) all operating data and other Books and Records
pertaining exclusively to any of the foregoing.
The assets to be sold and purchased hereunder are sometimes hereinafter
referred to collectively as the "Purchased Assets".
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1.3 BOOK VALUES. As used herein:
(a) the gross book value of Receivables shall mean
the face amount of such Receivables net of credits issued, partial
payments received, and any valid deductions taken by the
customer/payee;
(b) the net book value of Fixed Assets shall mean
the invoice cost for such Fixed Assets, MINUS depreciation in
accordance with Seller's policies, applied on a consistent basis; and
(c) the net book value of Inventory shall mean the
Acquisition Cost (as hereinafter defined) of those Inventory items
which:
(i) consist of quantities not in excess of one
(1) year of Seller's historical usage (except (x) where Buyer
has usage that would justify a higher quantity or (y) where
such items were purchased within the six (6) month period
prior to Closing from a new Vendor or (z) where such items are
new items purchased from an existing Vendor within six (6)
months prior to the Closing, all of which also satisfy (ii),
(iii) and (iv) below); and
(ii) are in current standard catalogs or parts
listings of the Vendor and are Inventory rotatable; and
(iii) are from: (A) a current Seller Vendor or a
current Buyer Vendor, OR (B) a non-Vendor but are covered by a
noncancellable, nonreturnable purchase contract from a
historical customer of Seller that is currently purchasing on
an open account; and
(iv) are in an original Vendor package which is
unopened.
As used herein, "Acquisition Cost" means the lower of cost (at
Seller's election, on a FIFO basis or average unit cost basis) or
market, based on supplier invoice cost, plus the applicable tariffs,
less applicable price protections. Computer Inventory items which do
not meet the above criteria will be valued at zero and will be
retained by Seller, and component Inventory items which do not meet
the above criteria will be valued at zero and shall be part of the
Inventory and Purchased Assets and shall be transferred to Buyer at no
cost. Subject to its needs, Buyer agrees to use its best efforts to
assist the Seller in selling Inventory that is retained by Seller
pursuant to the previous sentence.
1.4 RETAINED ASSETS. The Buyer is not purchasing cash,
receivables other than the Receivables, Inventory which is valued at zero
pursuant to Section 1.3 (c) above (except for components), the name of Seller
or, except for the
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business of the Division, any other business (as a going concern or otherwise)
of Seller (the "Retained Assets").
ARTICLE II
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ASSUMPTION OF LIABILITIES
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2.1 ASSUMED LIABILITIES. Buyer agrees to assume the
following and only the following Liabilities (the "Assumed Liabilities") of
Seller existing as of the Closing:
(a) the accounts payable of Seller (the "Payables"),
which Payables shall be identified on Schedule 2.1(a), which Schedule
shall be prepared in accordance with Sections 3.3 and 3.4 hereof
showing by Payee the invoice date, invoice amount, and net balance
owing;
(b) Liabilities of Seller under the Vendor
Agreements, Operating Leases, Equipment Leases and Real Property
Leases, but only to the extent accruing and relating solely to the
period after the Closing;
(c) Liabilities of Seller pertaining to the
performance after the Closing of the Open Orders, but only to the
extent accruing and relating solely to the period after the Closing;
(d) Liabilities of the Seller pertaining to the
return of Inventory and related products, to the extent provided in
Section 7.1;
(e) Liabilities related to any prepayments or
deposits received by Seller as of the Closing Date which pertain to
Inventory to be shipped or services to be performed after the Closing
Date and which are listed on Schedule 4.10(a);
(f) all Liabilities for unused vacation pay earned
prior to the Closing Date ("Accrued Vacation Pay") with respect to
those employees who accept employment with Buyer, which amounts are
set forth by employee on Schedule 2.1(f); and
(g) all Liabilities for accrued pay earned prior
to the Closing Date by those employees who accept employment with
Buyer, which amounts are set forth by employee in Schedule 2.1(g).
2.2 RETAINED LIABILITIES. Notwithstanding anything in this
Agreement to the contrary, Buyer does not assume and will not become
responsible for any Liability of Seller except the Assumed Liabilities.
Without limiting the generality of the foregoing, the following are included
among the Liabilities of Seller which Buyer shall not assume or become
responsible for:
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(a) all Liabilities of Seller to customers or third
parties, whether arising before or after the Closing, with respect to
shortages and defects in goods delivered to customers of the Division
or in transit to customers prior to the Closing or placed in finished
goods Inventory prior to the Closing and shipped to customers after
the Closing, including, but not limited to, Liabilities for product
warranty and product liability claims unless and to the extent that
Buyer may be held responsible therefor on account of its own
negligence or fault;
(b) all Liabilities of Seller to customers with
respect to services performed by Seller prior to the Closing;
(c) all Liabilities of Seller arising out of or
attributable to Seller's or its predecessors' operation or conduct of
business or use or occupancy of any owned or Leased Real Property,
including but not limited to any noncompliance with, or violation of,
any Law, regulation or order, including but not limited to,
environmental Laws, competition Laws, and consumer protection Laws;
(d) all Liabilities of Seller arising out of any
Contract, other than those Liabilities constituting Assumed
Liabilities;
(e) all Liabilities of Seller with respect to any
pending, threatened or unasserted litigation, claims, demands,
investigations or proceedings;
(f) except as expressly provided in Section 7.4
hereof, all Liabilities arising out of the employment relationship
between Seller and any of its employees (and/or contract employees) or
former employees existing at any time, including but not limited to
wages and salaries, bonuses and commissions, retirement plan benefits,
medical benefits, severance pay, insurance benefits or any other
fringe benefit incurred or accrued prior to the Closing;
(g) all U.S. or Canadian federal, state, provincial,
local or foreign taxes (and any penalties or interest thereon) based
on sales, income or otherwise or tariffs or duties arising from
Seller's conduct of the business of the Division prior to the Closing
Date, it being understood that refunds paid to Buyer by taxing
authorities for the same period shall be reimbursed forthwith to
Seller; and
(h) all retirement and group insurance benefits
available to employees of the Division, to the extent that they were
earned prior to Closing.
ARTICLE III
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CONSIDERATION
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3.1 AGGREGATE CONSIDERATION. In consideration for the
Purchased Assets, Buyer shall assume the Assumed Liabilities and pay to Seller
a cash sum
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to be paid in Canadian dollars determined in accordance with Sections 3.2
through 3.6 below.
3.2 ESTIMATED PURCHASE PRICE. Because the final cash amount
to be paid for the Purchased Assets is not known on the date hereof, Buyer and
Seller have agreed that the estimated purchase price (the "Estimated Purchase
Price") shall be agreed upon within the five (5) business day period before the
Closing. The Estimated Purchase Price will be derived from the parties' mutual
estimate of the "values" of the Purchased Assets and will be calculated as
follows: (gross book value of Receivables) PLUS (net book value of Inventory)
PLUS (net book value of Fixed Assets) PLUS (amount of prepaid expenses and
deposits constituting a Purchased Asset) MINUS (accrued pay set forth on
Schedule 2.1(g) and Accrued Vacation Pay set forth on Schedule 2.1(f)) MINUS
(amount of prepayments and deposits constituting an Assumed Liability) MINUS
(total amount of Payables assumed by Buyer) PLUS ($3,000,000). At the Closing,
Buyer shall pay to Seller by wire transfer, to an account designated by Seller,
an amount equal to 75% of the Estimated Purchase Price. The balance of the
purchase price shall be paid in accordance with Section 3.6 below.
3.3 PREPARATION OF SCHEDULES. Upon the execution of this
Agreement, Buyer and Seller shall deliver all Schedules required by this
Agreement; PROVIDED, HOWEVER, that upon execution of the Agreement only, the
Inventory Schedule to be delivered by Seller pursuant to Section 1.2(b) may
indicate thereon the current carrying cost of each item of Inventory (rather
than the net book value of such item), and Seller shall not be required to
deliver a draft of Schedules 2.1(f) or 2.1(g). During the period from the
execution of this Agreement until the seventh (7th) day prior to the Closing,
Buyer and Seller shall jointly review and revise the following Schedules (the
"Purchase Schedules"):
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(a) Schedule 1.2(a): the Receivables;
(b) Schedule 1.2(b): the Inventory;
(c) Schedule 1.2(c): the Fixed Assets;
(d) Schedule 1.2(d): Vendor Agreements;
(e) Schedule 1.2(f): Real Property and Equipment
Leases;
(f) Schedule 1.2(h): the Open Orders;
(g) Schedule 2.1(a): the Payables;
(h) Schedule 2.1(f): Accrued Vacation Pay;
(i) Schedule 2.1(g): Accrued Pay;
(j) Schedule 4.5: Product Warranty Claims;
(k) Schedule 4.7(a): Employees;
(l) Schedule 4.10(a): the prepayments and
deposits which have been received by Seller as of the Closing Date and
relate or pertain to Inventory to be shipped or service to be
performed after the Closing Date with respect to the Purchased Assets;
and
(m) Schedule 4.10(b): the prepayments and
deposits made by Seller as of the Closing Date which relate or pertain
to the Operating Leases, Equipment Leases or Real Property Leases.
Updated drafts of the Purchase Schedules shall be delivered to Buyer by Seller
on or before the seventh (7th) day prior to the Closing. At a mutually
agreeable time during the period beginning seven (7) days prior to the Closing
and ending seven (7) days after the Closing, the Inventory shall be inspected
and counted by Buyer and Seller at each location where inventory is maintained
by Seller. Final drafts of the Purchase Schedules shall be delivered by Seller
at the Closing. When the updated and final drafts of the Purchase Schedules
are delivered, Schedule 1.2(b) (Inventory) shall include the net book value of
each item of inventory in accordance with Section 1.3 hereof, not the current
carrying cost of such item. Except as provided above, no Schedule shall be
amended or modified without the prior written consent of the other party.
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3.4 REVIEW OF SCHEDULES. On or before the thirtieth (30th)
day after its receipt of the final drafts of the Purchase Schedules, Buyer
shall notify Seller in writing of any objections it may have to the Purchase
Schedules (the "Buyer Objections"). On or before the thirtieth (30th) day
following its receipt of a Buyer Objection, Seller shall deliver a notice in
writing (the "Dispute Notice"), advising Buyer of any Buyer Objections which
Seller disputes or does not accept. Upon the delivery of a Dispute Notice,
Seller and Buyer shall meet promptly for the purpose of resolving in good faith
any dispute relating to such Purchase Schedules. In the event that Seller and
Buyer are unable to resolve their disputes within fifteen (15) business days
after the date of the Dispute Notice, all unresolved issues shall be submitted
for resolution (consistent with the terms and provisions set forth in this
Agreement) to Price Waterhouse or, if Price Waterhouse declines to act, to
Arthur Andersen. Buyer and Seller shall, and shall cause their respective
financial advisers to, make available to such accounting firm all relevant
information as may be necessary for the purposes of resolving such issues. The
accounting firm shall be requested to render its decision as expeditiously as
possible. The fees and expenses of the accounting firm shall be shared equally
by Buyer and Seller. The Purchase Schedules shall be deemed final and binding
upon Buyer and Seller (the "Final Purchase Price Schedules") upon the earliest
to occur of the following:
(a) Buyer does not timely deliver Buyer Objections
(in which case the Purchase Schedules, as delivered by Seller pursuant
to Section 3.3 shall become the Final Purchase Price Schedules);
(b) Seller does not timely deliver a Dispute Notice
(in which case the Purchase Schedules, as delivered by Seller and
amended by the Buyer Objections, shall become the Final Purchase Price
Schedules);
(c) Seller and Buyer mutually resolve the issues
raised by a Dispute Notice that was timely delivered by Seller (in
which case the Purchase Schedules, as revised by such mutual
agreement, shall become the Final Purchase Price Schedules); or
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(d) the issues raised by a timely delivered Dispute
Notice are resolved by the accounting firm as provided above (in which
case the Purchase Schedules, as revised in accordance with the
decision of such third party, shall become the Final Purchase Price
Schedules).
In the event that Seller delivers a Dispute Notice which contends some but not
all Buyer Objections, the Buyer Objections which are not disputed or contended
shall be deemed accepted and be incorporated into the Final Purchase Price
Schedules. Likewise, in the event that Seller and Buyer agree upon a
resolution of some but not all disputes which may be raised by a Dispute
Notice, such resolutions shall become part of the Final Purchase Price
Schedules and only those matters which have not been resolved shall be
submitted to a third party for resolution.
3.5 ADJUSTMENT OF PURCHASE PRICE. After the Final Purchase
Price Schedules referenced in Section 3.4 above have been prepared, the parties
shall recalculate the purchase price of the Purchased Assets by applying the
values set forth in such Final Purchase Price Schedules to the same formula
which they previously used to arrive at the Estimated Purchase Price. Subject
to the terms and provisions of Section 7.11, the resulting amount shall be the
"Final Purchase Price."
3.6 PAYMENT OF BALANCE OF PURCHASE PRICE.
(a) If the Purchase Schedules become the Final Purchase
Price Schedules prior to October 31, 1994, then within five (5) business days
after the delivery of the Final Purchase Price Schedules, Buyer shall pay to
Seller an amount equal to the difference between the Final Purchase Price and
the amount paid by Buyer to Seller at the Closing; PROVIDED, HOWEVER, that in
no event shall such payment be made prior to the one hundred sixth (106th) day
after the Closing.
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(b) If the Purchase Schedules have not become the Final
Purchase Price Schedules prior to October 31, 1994, then:
(i) on October 31, 1994, Buyer shall pay to Seller
an amount which is equal to 15% of the Estimated Purchase
Price; PROVIDED, HOWEVER, that if it reasonably appears that
the Final Purchase Price might be an amount which is less than
90% of the Estimated Purchase Price or greater than 110% of
the Estimated Purchase Price (the "Revised Estimated Purchase
Price"), Buyer shall pay to Seller on October 31, 1994 an
amount which is equal to the difference between: (X) 90% of
the Revised Estimated Purchase Price, and (Y) the amount paid
by Buyer at the Closing; and
(ii) within five (5) business days after the
subsequent delivery of the Final Purchase Price Schedules,
Buyer shall pay to Seller an amount equal to the difference
between (X) the Final Purchase Price, and (Y) the aggregate
amount already paid to Seller by Buyer at the Closing and
pursuant to subsection (i) above.
(c) Notwithstanding anything to the contrary herein:
(i) the payments to be made by Buyer to Seller
pursuant to (a) or (b) above shall bear interest, calculated
at a rate equal to three-eights of one percent (.375%) per
month from the Closing Date until the date of such payment;
and
(ii) the final payment pursuant to (a) or (b) above
shall be subject to an adjustment for any item for which
written notice has been provided to the other party and which
remains in dispute as of the date of such payment.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller represents and warrants to Buyer as of the date hereof
and as of the Closing as follows:
4.1 ORGANIZATION AND POWER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of Canada and
is a wholly-owned subsidiary of United Westburne Inc. (a Canadian Corporation),
and is the principal operating company in Canada among the group of companies
owned, in
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whole or in part, by United Westburne, Inc. Schedule 4.1, attached hereto,
lists the Provinces, states and countries in which the Division: (a) owns or
leases real property, (b) has employees or maintains sales offices or sales
agents, or (c) maintains inventory. Seller is qualified to do business in each
Province, state or country listed in Schedule 4.1 and in each other
jurisdiction where failure to qualify could have an adverse effect on the
Division. Seller has full corporate power to:
(a) own, lease and operate its assets and carry on
the business of the Division as and where such assets are now owned or
leased and as such business is presently being conducted; and
(b) execute, deliver and perform this Agreement and
all other agreements and documents to be executed and delivered by it
in connection herewith.
4.2 ENFORCEABILITY. All requisite corporate action necessary
to approve, execute, deliver or perform this Agreement and each other agreement
or document delivered by Seller in connection herewith has been taken by Seller
and United Westburne Inc. This Agreement and each other agreement and document
delivered by Seller in connection herewith have been duly executed or delivered
by Seller and constitute the binding obligations of Seller, enforceable in
accordance with their respective terms.
4.3 CONSENTS. Other than as set forth in Schedule 4.3 and
except for consents to the transfer and assignment of the Vendor Agreements,
Operating Leases, Equipment Leases and Real Property Leases, which shall be
delivered to Buyer pursuant to Section 6.2 hereof, no approval or consent of,
or filing with, any Person or Governmental Authority, is required to be
obtained or filed by Seller in connection with the transactions contemplated
hereby or the execution, delivery or performance by Seller of this Agreement or
any other agreement or document to be executed or delivered by or on behalf of
Seller in connection herewith.
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4.4 NO CONFLICTS. Except for the need for the consents to be
delivered to Buyer pursuant to Section 6.2 hereof, neither the execution,
delivery and performance of this Agreement nor any other agreement or document
delivered by Seller in connection herewith:
(a) gives rise to a right of termination or
acceleration under any Vendor Agreement or Operating Lease, Equipment
Lease or Real Property Lease except as set forth on Schedule 4.4;
(b) conflicts with or violates:
(i) any Law applicable to Seller;
(ii) Seller's Articles of Incorporation or
By-laws; or
(iii) any material Contract, arbitration award,
judgment, decree or other similar material restriction to
which Seller is subject; or
(c) constitutes an event which, after notice or
lapse of time or both, could result in any of the foregoing.
4.5 PRODUCT WARRANTY. Schedule 4.5 sets forth:
(a) a list of all product or service warranty claims
in excess of $1,000 made by customers of Seller in the one (1) year
period preceding the Closing Date; and
(b) forms of product and service warranties of
Seller outstanding or currently being offered to customers of Seller.
To the knowledge of Seller, there has not been a pattern of product warranty
claims with respect to any Purchased Asset which indicates that such Asset is
inherently defective or could otherwise reasonably be expected to form the
basis of a product liability or tort claim.
4.6 ACCRUED VACATION AND SICK PAY. Seller shall have
provided an accrual for the liability for paying to each employee who has
accepted employment with Buyer all earned but unused vacation pay. Sick pay is
paid as incurred and there is no liability for sick pay which requires an
accrual.
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4.7 EMPLOYMENT MATTERS.
(a) All full-time employees of the Division on the date
hereof are identified on Schedule 4.7(a) supplied by Seller, which includes
such employee's name, date of hire, function, rate of pay, bonus and commission
plan.
(b) Schedule 4.7(b) supplied by Seller includes and
identifies employees of the Division who are not presently at work but are
entitled, legally or otherwise, to return to work at the Division, including
people on pregnancy or parental or equivalent leave or on temporary lay-off, or
currently receiving disability, workmen's compensation or any similar
compensation or benefit.
(c) Seller represents that there are no (i) part-time
employees in the Division, (ii) employees hired for a determined period only,
or (iii) employees whose employment terms and conditions were specifically
agreed upon by written contract. The employees who are listed on Schedules
4.7(a) and (b) are the only employees of the Division.
4.8 COMPLIANCE WITH CONTRACTS. With respect to the Vendor
Agreements, Operating Leases, Equipment Leases and Real Property Leases:
(a) to Seller's knowledge each of them is
enforceable by Seller in accordance with its terms;
(b) Seller is not in default under or in violation
of any material provision thereof;
(c) no event has occurred which, with notice or
lapse of time or both, would constitute such a material default or
violation; and
(d) Seller has not received written or verbal notice
of termination of or default under any Operating Lease, Equipment
Lease, Real Property Lease or Vendor Agreement and, to Seller's
knowledge, no Vendor has threatened to terminate any Vendor Agreement.
To Seller's knowledge, there is no known material default under or any
violation of any of the foregoing by any other party thereto.
4.9 PURCHASES AND SALES. Set forth on Schedule 1.2(h)
attached hereto is a list of each outstanding purchase order, sales order or
open written
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<PAGE> 15
quotation pertaining or relating to the Purchased Assets. Seller has no open
purchase commitments with respect to the Purchased Assets in excess of its
normal business requirements.
4.10 PREPAYMENTS AND DEPOSITS. Schedule 4.10(a), which shall
be prepared in accordance with Sections 3.3 and 3.4 hereof, sets forth all
prepayments and deposits which have been received by the Seller as of the date
hereof and relate or pertain to Inventory to be shipped (detailed by location),
or services to be performed after the date hereof with respect to the Purchased
Assets. Schedule 4.10(b), which shall be prepared in accordance with Sections
3.3 and 3.4 hereof, sets forth all prepayments and deposits which have been
made by Seller as of the Closing Date and relate or pertain to the Division's
business, including but not limited to the Operating Leases, Equipment Leases
and Real Property Leases.
4.11 TITLE. Except for certain assets which are leased under
the Operating Leases, Equipment Leases and Real Property Leases and except as
set forth on Schedule 4.11, Seller owns the Purchased Assets free and clear of
all Liens, except for Permitted Liens.
4.12 RECEIVABLES. To Seller's knowledge, none of the
Receivables are subject to any set-off or counterclaim.
4.13 NO UNION. Seller is not a party to or subject to any
collective bargaining agreement or other union contract or agreement affecting
or pertaining to the Division or any of its employees.
4.14 CONDITION. The Fixed Assets are in good operational
condition and repair, subject to normal maintenance, ordinary wear and tear
excepted, and are capable of being used for their intended purpose in the
ordinary course of business consistent with past practice.
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<PAGE> 16
4.15 FINANCIAL STATEMENTS. Schedule 4.15 attached hereto
consists of:
(a) the unaudited balance sheet of the Division as
of December 31, 1993 and related statements of income and cash flow
for the twelve-month period then ended; and
(b) the unaudited balance sheet of the Division as
of February 28, 1994, and related statements of income and cash flow
for the two-month period then ended.
The above financial statements reflect the actual business transacted by the
Division for the periods reflected thereon, using consistent accounting
principles and practices, in a manner sufficiently reasonable so as not to be
materially misleading.
4.16 BROKERS AND FINDERS. Other than CIBC Mergers &
Acquisitions, whose fee shall be paid by Seller, no broker, finder or other
person or entity acting in a similar capacity has participated on behalf of
Seller in bringing about the transactions herein contemplated, rendered any
services with respect thereto or been in any way involved therewith.
4.17 ENVIRONMENTAL MATTERS. Without limiting the
obligations of Seller under Section 2.2 hereof:
(a) to the knowledge of Seller, there are no
underground storage tanks located on (nor, to the knowledge of Seller,
have any underground storage tanks been removed from) any Leased Real
Property;
(b) to the knowledge of Seller, there has been no
Release of any Hazardous Substance onto or into any Leased Real
Property;
(c) to the knowledge of Seller, there is no
threatened Release of any Hazardous Substance onto or into any Leased
Real Property;
(d) to the knowledge of Seller, there has been no
Release of any Hazardous Substance at or from any properties adjacent
to any Leased Real Property;
(e) to the knowledge of Seller, there are no
asbestos-containing materials, urea formaldehyde-containing materials,
or electrical transformers, fluorescent light fixtures with ballasts,
or other equipment containing polychlorinated biphenyls, located in or
on any Purchased Asset or any facility located on any Leased Real
Property; and
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<PAGE> 17
(f) the Division does not use (except to an
extent which is normal due to the nature of its business), generate,
treat or store any Hazardous Substance in the ordinary course of its
business.
4.18 TAX MATTERS. Except for any taxes which may be
assessed under Section 7.8 hereof as a result of this transaction, there are no
tax Liabilities of Seller or the Division, or any affiliate thereof, which
could result in Liability to Buyer as a transferee or successor, or otherwise
attach to the Purchased Assets.
4.19 INSURANCE. Schedule 4.19 sets forth in reasonable
detail a list of insurance policies and coverages presently available to the
Division and a list of the current and known past insurance agents for the
Seller and/or Division.
4.20 FULL DISCLOSURE. No representation or warranty by
Seller in this Agreement and no statement contained in any Schedule to this
Agreement prepared by Seller contains any untrue statement of a material fact,
or omits to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they are made, not misleading.
To the best of Seller's knowledge, there is no event or circumstance which
Seller has not disclosed to Buyer in writing which materially adversely affects
or, could reasonably be expected to materially adversely affect, the business
of the Division or the ability of Seller to perform this Agreement.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants to Seller as of the date hereof
and as of the Closing as follows:
5.1 ORGANIZATION AND POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio. Buyer has full corporate power to execute, deliver and perform this
Agreement and all
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<PAGE> 18
other agreements and documents to be executed and delivered by it in connection
herewith.
5.2 ENFORCEABILITY. All requisite corporate action necessary
to approve, execute, deliver or perform this Agreement and each other agreement
or document delivered by Buyer in connection herewith has been taken by Buyer.
This Agreement and each other agreement and document executed or delivered by
Buyer in connection herewith has been duly executed and delivered by Buyer and
constitutes the binding obligations of Buyer enforceable in accordance with
their respective terms.
5.3 CONSENTS. Except for such approvals or consents
described in Section 6.2, no approval or consent of, or filing with, any Person
or Governmental Authority is required in connection with the execution,
delivery or performance by Buyer of this Agreement or any other agreement or
document executed or delivered by or on behalf of Buyer in connection herewith.
5.4 NO CONFLICTS. Neither the execution, delivery and
performance of this Agreement, nor any other agreement or document delivered by
Buyer in connection herewith, conflicts with or violates:
(a) any Law applicable to Buyer;
(b) Buyer's Articles of Incorporation or Code of
Regulations; or
(c) any material Contract, arbitration award,
judgment, injunction, decree or similar material restriction to which
Buyer is subject;
or constitutes an event which, after notice or lapse of time or both, could
result in any of the foregoing.
5.5 BROKERS AND FINDERS. No broker, finder or other person
or entity acting in a similar capacity has participated on behalf of Buyer in
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bringing about the transactions herein contemplated, or rendered any services
with respect thereto or been in any way involved therewith.
5.6 FULL DISCLOSURE. No representation or warranty by Buyer
in this Agreement and no statement contained in any Schedule to this Agreement
prepared by Buyer contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they are made, not misleading. To the best
of Buyer's knowledge, there is no event or circumstance which Buyer has not
disclosed to Seller in writing which materially adversely affects or, could
reasonably be expected to materially adversely affect, the ability of Buyer to
perform this Agreement.
ARTICLE VI
----------
CLOSING
-------
6.1 DATE, TIME AND PLACE OF CLOSING. The consummation of the
transactions contemplated hereby (the "Closing") shall take place on Wednesday,
June 1, 1994, at 9:00 a.m. at the offices of McCarthy, Tetrault, Toronto
- - -Dominion Centre, Toronto, Canada, or on such other date as the parties may
mutually agree (the "Closing Date").
6.2 DELIVERIES AT OR BEFORE CLOSING; CERTAIN ACTIONS AT AND
CONDITIONS TO CLOSING.
(a) As a condition of Closing, Seller shall deliver the
following to Buyer at or before the Closing, all of which shall be in form and
substance reasonably acceptable to Buyer and its counsel:
(i) a general bill of sale and assignment "Bill
of Sale", together with such other documents of transfer,
assignment and conveyance as Buyer may reasonably request as
necessary or appropriate to transfer title to the Purchased
Assets free and clear of all Liens (except Permitted Liens),
and otherwise in accordance with the terms of this Agreement
and to
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<PAGE> 20
assign to Buyer the rights and benefits of Seller under the
Vendor Agreements, Operating Leases, Equipment Leases and Real
Property Leases, in each case executed by Seller;
(ii) such consents which are necessary for the
consummation of the transaction contemplated herein and for
the operation by Buyer of the business of the Division as
heretofore conducted, including but not limited to written
consents, executed by each party to an Operating Lease,
Equipment Lease or Real Property Lease and each Vendor that is
identified on Schedule 6.2(a)(ii) attached hereto;
(iii) such other endorsements, consents,
assignments, lessor estoppel certificates pertaining to
computer hardware and software, and instruments of transfer as
Buyer may reasonably request for the transfer to Buyer of
title to the Purchased Assets or Seller's rights under the
Vendor Agreements or Operating Leases, Equipment Leases or
Real Property Leases;
(iv) certified copies of the corporate actions
taken by the Board of Directors of Seller authorizing the
execution, delivery and performance of this Agreement and the
consummation of the transactions herein and therein
contemplated;
(v) Opinions of Louis-Gilles Gagnon, Esq. and
McCarthy, Tetrault, counsel for Seller, addressed to Buyer and
dated the Closing Date, in the form attached hereto
collectively as Exhibit A;
(vi) a certificate of Good Standing pertaining to
Seller from Canada, dated no earlier than fifteen (15) days
prior to the Closing Date;
(vii) clearance certificates under Section 6 of the
Retail Sales Tax Act of Ontario and comparable legislation of
other provinces;
(viii) releases and terminations of any Liens
(except Permitted Liens) in the Purchased Assets;
(ix) delivery of the Schedules required by
Section 3.3; and
(x) a certificate of an authorized officer of
Seller confirming that all representations and warranties and
agreements of Seller are true and correct and all agreements
of Seller contained herein have been complied with as of the
Closing, and that since December 31, 1993, there has not been
any material adverse change
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<PAGE> 21
in the assets, business or condition, financial or otherwise,
of the Division, and the Seller does not know of any such
change which is threatened, nor has there been any damage,
destruction or loss materially affecting the assets, business
or condition of the Division, whether or not covered by
insurance.
(b) As a condition of Closing, Buyer shall deliver the
following to Seller at or before the Closing, all of which shall be in form and
substance reasonably acceptable to Seller and its counsel:
(i) payment of the first installment of the
Purchase Price via a wire transfer to an account designated by
Seller in accordance with Section 3.2 hereof;
(ii) an assumption agreement or other such
appropriate documents as Seller may reasonably request
pursuant to which Buyer assumes the Assumed Liabilities
pursuant to Section 3.2 hereof;
(iii) opinions of Calfee, Halter & Griswold and
Blake Cassels & Graydon, counsel for Buyer, addressed to
Seller and dated the Closing Date, in the form of that
attached hereto collectively as Exhibit B;
(iv) certified copies of the corporate actions
taken by the Executive Committee of the Board of Directors of
Buyer authorizing the execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated herein and therein; and
(v) a certificate of Good Standing pertaining to
Buyer from the Secretary of State of Ohio, dated no earlier
than fifteen (15) days prior to the Closing Date.
(c) As a condition of Closing, Seller shall deliver or
cause to be delivered to Buyer, at or before the Closing: (i) an unaudited
Balance Sheet as of March 31, 1994, pertaining to the assets purchased and
liabilities assumed hereunder, and (ii) a Balance Sheet as of December 31, 1993
and an Income Statement and Statement of Cash Flows for the period from January
1, 1993 through December 31, 1993 pertaining to the business being purchased
hereunder (collectively, the "Regulation S-X Financial Statements"), which
Regulation S-X
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<PAGE> 22
Financial Statements shall: (A) be audited by Deloitte & Touche, C.A. or Peat
Marwick Thorne, C.A.; and (B) shall be prepared in accordance with U.S.
generally accepted accounting principles and, to the extent applicable, the
provisions of Regulation S-X promulgated by the United States Securities and
Exchange Commission. Buyer and Seller shall share equally the cost of the
Regulation S-X Financial Statements.
(d) As a condition of Closing, the parties shall have
given appropriate notification under the Competition Act (Canada) and shall
have received approval or a "no-action" letter or advance ruling certificate in
respect of the transaction contemplated hereby.
(e) As a condition of Closing, all proceedings to be
taken in connection with the transactions contemplated by this Agreement, and
all documents incident thereto, shall be reasonably satisfactory in form and
substance to Seller and Buyer and their respective counsel, and Seller and
Buyer shall have received copies of all such documents and other evidences as
they or their counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
(f) Seller acknowledges that Buyer has not been given the
opportunity to complete due diligence prior to the execution and delivery of
this Agreement. No Closing shall occur, and Buyer shall not be obligated to
proceed with the Closing and shall have no liability to Seller, unless and
until Buyer has completed its due diligence review and investigation of the
Purchased Assets, the Assumed Liabilities and the business conducted by Seller
with respect to the Division. If, in connection with its due diligence review
and investigation, Buyer learns or is informed of any fact, circumstance or
condition relating or pertaining to the business or the Purchased Assets, the
Vendor Agreements, the Equipment Leases, the Operating Leases, the Real
Property Leases, the open orders, the Accounts Receivable, the Inventory, the
Fixed Assets, the Payables
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<PAGE> 23
or any Vendor, customer or supplier of the Division, which fact, circumstance
or condition is of significance with respect to the Division and is reasonably
objectionable or unacceptable to Buyer, the Buyer shall not be obligated to
proceed with the Closing.
(g) As a condition of Closing, the parties shall have
agreed upon the Estimated Purchase Price as described in Section 3.2 hereof.
ARTICLE VII
-----------
COVENANTS
---------
7.1 RETURNS OF INVENTORY. If, during the three (3) month
period after the Closing Date, a customer returns to Buyer any product or part
which was originally sold by Seller to such customer during the six (6) month
period preceding the Closing Date and which is of a type or product line
identified on Schedule 1.2(b) as Inventory, and such product is not, in Buyer's
reasonable judgment, resalable as new, then: (a) Buyer shall deliver a notice
to Seller with proper supporting documents, advising of such return and stating
(i) the amount of the credit or refund that was paid in respect of the return
of the product or the amount of the Receivable that was forgiven or rendered
uncollectible as a result of such return, or the total of both (the "Credit and
Receivable Amount"), and (ii) the value of such returned product, based upon
Buyer's then current valuation policies (the "Product Value"); and (b) Seller
shall pay to Buyer, within thirty (30) days after Buyer's delivery of such
notice, an amount equal to the difference between the Credit and Receivable
Amount and the Product Value. If, during the three (3) month period after the
Closing Date, a customer returns to Buyer any product or part (originally sold
by Seller to such customer) which is of a type or product line identified on
Schedule 1.2(b) as Inventory, and such product is resalable as new, then Buyer
shall deliver a notice to Seller with proper supporting documents, advising of
such return and stating the Credit and Receivable Amount and the replacement
cost
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<PAGE> 24
pertaining thereto, and Seller shall pay to Buyer within thirty (30) days after
Buyer's delivery of such notice, an amount equal to the difference between the
Credit and Receivable Amount and the replacement cost of the product returned.
No payment shall be made by Seller to Buyer under this clause 7.1 unless and
until the aggregate amount due hereunder by Seller exceeds $5,000, in which
event Buyer may recover the full amount due.
7.2 CERTAIN LEASE MATTERS. Buyer agrees to use reasonable
efforts to locate acceptable office and warehouse space to serve as alternative
locations to that certain office and warehouse space that is currently being
occupied and used by Seller in Missisauga, Ontario, Richmond, B.C. and
Winnipeg, Manitoba. Buyer further agrees to attempt to enter into lease
arrangements for such alternative locations (or to otherwise remove its assets
from such locations) prior to or at the Closing Date. Notwithstanding the
foregoing, Buyer shall not be obligated to enter into any such lease or remove
any such asset and, unless such arrangements are made by Buyer, Seller
covenants and agrees to provide or cause its landlord to provide to Buyer, for
a period of ninety (90) days after the Closing, the right to occupy and use
such office and warehouse space that is currently being occupied and used by
Seller in Missisauga, Ontario, Richmond, B.C. and Winnipeg, Manitoba. In such
event, Buyer shall:
(a) pay to Seller or its designee as total rent for
occupancy, building insurance, taxes and utilities, the following
amounts:
(i) Missisauga, Ontario: $30,000 per month on a
pro rata basis for so long as Buyer occupies such premises;
(ii) Richmond, B.C.: $3,500 per month on a pro
rata basis for so long as Buyer occupies such premises;
(iii) Winnipeg, Manitoba: $1,000 per month on a
pro rata basis for so long as Buyer occupies such premises;
and
(b) be responsible for and indemnify Seller with
respect to all obligations, claims or liabilities caused by or
resulting from the use and occupancy of such premises by Buyer.
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<PAGE> 25
In any event, Buyer shall vacate such premises at the expiration of such ninety
(90) day period.
7.3 ADJUSTMENT OF PAYABLES. If, subsequent to the Closing, a
Payable listed on Schedule 2.1(a) is increased or decreased (as a result of a
Vendor "bill-back" or other similar cause including a documented discrepancy
with the Vendor), and if Buyer is reasonably satisfied that the adjustment
claimed is due in the case of an increase, Buyer shall pay the full amount of
such Payable; PROVIDED, HOWEVER, that within thirty (30) days after Buyer's
delivery to Seller of notice of such increase or decrease, which shall be
accompanied by the related documentation, (a) Seller shall reimburse and pay to
Buyer an amount equal to the difference between the amount of the Payable as
listed on Schedule 2.1(a) and the amount of the Payable as adjusted if such
adjustment constitutes an increase, or (b) Buyer shall pay to Seller an amount
equal to the difference between the amount of the Payable as listed on Schedule
2.1(a) and the amount of the Payable as adjusted if such adjustment constitutes
a decrease.
7.4 EMPLOYMENT MATTERS.
(a) Not later than seven (7) days before Closing:
(i) Buyer shall deliver to Seller a list showing
the names of all employees of the Division, as included in
Schedule 4.7(a) and 4.7(b), who as of such date have accepted
employment with Buyer (effective as of the Closing) following
an offer made by Buyer in accordance with subsection (iii)
below; and
(ii) Buyer shall deliver to Seller a list showing
the names of all employees of the Division, as included in
Schedule 4.7(a) and 4.7(b), who as of such date have not been
offered employment by Buyer; and
(iii) Buyer shall deliver to Seller a list showing
the names of all employees of the Division, as included in
Schedule 4.7(a) and 4.7(b), who as of such date have been
offered but have either refused or failed to accept employment
with Buyer although they were each offered such employment by
Buyer acting in good faith, in the same or similar job
function as the one now exercised, with compensation, on the
whole, comparable to that previously provided to such person
by Seller and with
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benefits, on the whole, comparable to those generally provided
by Buyer to its employees on the same or similar level. With
respect to this clause (iii) only, any such compensation and
benefits offered by Buyer shall be disclosed with reasonable
details in the list submitted.
(b) With respect to the employees identified pursuant to
7.4(a)(i), Buyer shall assume full responsibility for all such employees from
Closing, except that Seller shall be responsible for any claims made prior to
or after Closing by such employees with respect to their employment by Seller
prior to Closing, including claims with respect to the provision of all
retirement and group insurance benefits of such employees to the extent that
they were earned prior to Closing, but excluding any claims by such employees
(i) for any termination or severance pay or for any damages in lieu of notice
related to their dismissal or their alleged or constructive dismissal by Seller
upon their leaving the employment of Seller and becoming employees of Buyer and
(ii) for termination of their employment after Closing for which Buyer is
obligated to reimburse Seller under Section 7.4(g). Buyer covenants and agrees
that for purposes of calculating or evaluating eligibility under any benefit
plans of Buyer, including without limitation vacation pay plans, each such
employee shall receive past service credit (to the extent such service is
recognized by Seller under its plans) equal to the length of time for which
such employee has service credit from Seller but only for such purposes as are
required by any Canadian Laws and for the purpose of eligibility under any of
the Buyer's benefit plans.
(c) With respect to the employees identified pursuant to
Section 7.4(a)(ii), Buyer shall reimburse Seller on demand for any termination
and severance pay which the Seller has been required by statute to pay (under
the Employment Standards Act of Ontario and comparable legislation in other
provinces as applicable) and any additional amounts which the Seller has paid
in settlement of any claims for damages in lieu of notice to employees who are
not offered
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employment by Buyer; PROVIDED, that in any settlement resulting in amounts paid
on account of damages to any such employees, or in any claim brought by such
employees resulting in a judgment against Seller, Buyer shall have been
consulted by Seller prior to the claim being settled or brought to trial with
respect to any proposed payment to such employees.
(d) With respect to the employees identified pursuant to
7.4(a)(iii), and to the extent that the compensation and the benefits offered
by Buyer were in accordance therewith, Buyer shall have no responsibility
whatsoever towards employees whose names appear on the list therein referred
to.
(e) Buyer shall in no case be required to adopt any form
of defined benefit or defined contribution pension plan.
(f) During the 90 day period following Closing, Buyer
agrees not to hire any of the people whose name appears on the list referred to
in 7.4(a)(iii) and who would have initially refused employment.
(g) Without limiting Buyer's obligations under 7.4(b),
should any employee whose name appears on the list referred to in 7.4(a)(i) be
terminated by Buyer without just cause within a short time period after Closing
and, as a result, claims indemnity from Seller as if he or she had been
terminated at or prior to Closing, Section 7.4(c) shall apply mutatis mutandis,
except that Buyer shall have control of any negotiation or litigation with such
employees.
(h) Seller covenants and agrees that between the date
hereof and the Closing, Seller will not add any person(s) to Schedules 4.7(a)
or (b) or otherwise change any condition of employment of any such person
without the prior written consent of Buyer.
7.5 PRODUCT WARRANTY WORK. Because Seller may be unable, by
virtue of the transaction herein contemplated, to perform those product
warranty obligations presented to Buyer which are not Assumed Liabilities
("Customer
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<PAGE> 28
Claims") with respect to insufficient or defective goods sold prior to the
Closing, Buyer hereby agrees to:
(a) provide notice to Seller of Customer Claims;
(b) use reasonable efforts to cause the Vendor or
manufacturer to honor the product warranty at issue;
(c) to perform such functions on Seller's behalf
following the Closing, in accordance with Buyer's reasonable business
judgment and consistent with the ongoing operation of Buyer's
business; and
(d) to provide Seller with reasonable evidence of
the costs and expenses (including but not limited to material and
labor costs) incurred by Buyer and paid to third parties in performing
such functions.
Seller acknowledges and agrees that Buyer's agreement to perform such functions
shall not be deemed to be an assumption of any product warranty obligations of
Seller not constituting Assumed Liabilities. Seller covenants and agrees to
reimburse to Buyer, upon Buyer's demand, all of Buyer's reasonable costs and
expenses (including but not limited to out-of-pocket costs and material and
labor costs (salary and fringe benefits) and related expenses) which may be
incurred by Buyer in performing such functions to the extent that such
reimbursement with regard to any specific Customer Claim exceeds $1,000.
7.6 (a) COVENANTS NOT TO COMPETE. Seller, for and on behalf
of itself and United Westburne Inc., as well as any corporation under its
control or the control of United Westburne Inc. (the "Related Corporations"),
covenants and agrees that for two (2) years following the Closing Date (the
"Noncompetition Period") neither Seller nor any of the Related Corporations
shall, without the prior written consent of Buyer, either directly or
indirectly, (i) conduct its business in competition with the business of the
Division to an extent which is greater than currently exists, or (ii)
manufacture, sell or distribute in Canada or the United States any electronic
components and electronic computer systems products or product lines which are
manufactured or sold by any of the Vendors listed on Schedule 7.6. Seller, for
and on behalf of itself and the Related
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<PAGE> 29
Corporations, covenants and agrees that during the Noncompetition Period
neither Seller nor any of the Related Corporations will consult or otherwise
use in the pursuit or furtherance of its business any customer lists or data
which were previously owned or used by the Division, to the extent such lists
and data relate (or related) to any of the product lines or Inventory purchased
by Buyer hereunder. The parties hereto agree that money damages alone may not
be a sufficient remedy for any breach of the provisions of this Section 7.6,
and that in addition to all other remedies, Buyer shall be entitled to specific
performance and injunctive or other equitable relief as a remedy for any such
breach. If any of the covenants contained in this Section 7.6 shall be found
by a court of competent jurisdiction to be invalid or unenforceable as against
public policy or for any other reason, such court may exercise its discretion
to reform such covenant to the end that Seller and the Related Corporations
shall be subject to non-competition covenants that are reasonable under the
circumstances and are enforceable by the Buyer.
7.6 (b) NONINTERFERENCE. Seller covenants and agrees that
it will not induce, attempt to induce, or assist others in inducing or
attempting to induce any employee, agent, or Vendor of Buyer or the Division or
any other Person affiliated or doing business with Buyer or the Division (or
proposing to become affiliated or to do business with Buyer or the Division) to
terminate his or its relationship with Buyer or the Division (or to refrain
from becoming affiliated or doing business with Buyer or the Division) or in
any other manner to interfere with the relationship between Buyer or the
Division and any such Person.
7.7 PUBLICITY. All public announcements relating to this
Agreement or the transactions contemplated hereby shall be made only as may be
agreed upon by Seller and Buyer or as required by law. If a public notice is
required by
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law, Seller or Buyer, as the case may be, shall use its best efforts to give
the other party prior written notice of the disclosure to be made.
7.8 EXPENSES; TRANSFER TAXES. Except to the extent otherwise
specifically provided herein, Buyer shall pay all of the expenses incident to
the transactions contemplated by this Agreement which are incurred by Buyer or
its representatives, and Seller shall bear and pay all of the expenses incident
to the transactions contemplated by this Agreement which are incurred by Seller
or its representatives including but not limited to CIBC Mergers &
Acquisitions. Buyer agrees to pay all Canadian Federal, Provincial and local
sales or transfer taxes, if any, which may be payable in connection with the
transactions contemplated by this Agreement.
7.9 NO ASSIGNMENT. Except as provided in the next sentence,
no assignment by any party of this Agreement or any right or obligation
hereunder may be made without the prior written consent of all other parties,
and any assignment attempted without that consent will be void. Seller agrees
that Buyer may assign any right or obligation hereunder to a wholly-owned
Canadian subsidiary of Buyer at any time upon prior notice to Seller. Upon any
such assignment, the wholly-owned Canadian subsidiary shall, for all purposes
of this Agreement, be deemed to be the Buyer hereunder; provided, however, that
such assignment shall not release Pioneer-Standard Electronics, Inc. from any
of its obligations hereunder.
7.10 JURISDICTION. Any action or proceeding brought by a
party against any other party in connection with this Agreement may be
commenced either in a federal or state court in the State of Ohio or in a court
of competent jurisdiction in the Province of Ontario. All objections to
personal jurisdiction or venue in any action or proceeding so commenced are
hereby waived. Each party may be served with process by any such court by
notice as provided in Section 9.2 hereof.
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7.11 RECEIVABLES. Buyer shall use all reasonable efforts
for a period of up to 90 days after the Closing consistent with Buyer's
business practices to collect the Seller's Receivables included in the
Purchased Assets, including but not limited to contacting customers, where
appropriate, to attempt to confirm the Receivable to which a customer payment
relates; PROVIDED, HOWEVER, that Buyer shall not be required to take or
threaten legal action to collect any of such Receivables. If Buyer receives a
payment from an account debtor for which there is an outstanding account
receivable both before and after the Closing Date, such payment shall be
applied to the invoice to which it relates. If it cannot reasonably be
determined to which invoice the payment relates, said payment shall be applied
to the oldest outstanding invoice(s) the payment of which the account debtor is
not disputing. Seller covenants and agrees to forward to Buyer, within five
(5) business days of Seller's receipt of the same, any and all payments which
Seller may receive in respect of the Receivables or any payments which relate
or pertain to sales by Buyer after the Closing, which payments are delivered to
Seller's lockbox or are otherwise received by Seller. In the event that Buyer
at any time receives checks payable to the Seller for amounts owed to Buyer,
Buyer shall deliver such checks to Seller and Seller shall endorse such checks
to Buyer or remit to Buyer the amounts represented by such checks within five
(5) business days of Seller's receipt of same. No less frequently than every
week, each of Seller and Buyer shall provide the other with an accounting of
all payments to which the other is entitled. Buyer shall have the option to
remit and return to Seller any or all of the Receivables which remain
uncollected as of the ninetieth (90th) day after the Closing. To exercise this
option, Buyer shall deliver to Seller, during the period from the ninetieth
(90th) through the one-hundred fifth (105th) day after the Closing, a list of
such Receivables which Buyer elects to return to Seller, together with all
invoices and other documentation necessary for Seller to collect such unpaid
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Receivables, and Buyer shall have no further obligation to collect the
Receivables (other than to remit to Seller any payments received by Buyer with
respect to such uncollected Receivables). Upon the uncollected Receivables
being remitted to Seller, the Final Purchase Price shall be reduced by an
amount equal to the aggregate gross book value of the Receivables so remitted
to Seller as if such Receivables had never been included in the Purchased
Assets. Buyer agrees that it will, upon the request of Seller and at Seller's
expense, do such acts as may reasonably be required to assist Seller in its
collection of such Receivables remitted to Seller pursuant to this Section
7.11.
7.12 FURTHER ASSURANCES. Seller agrees that at any time and
from time to time after the Closing, it will, upon the request of Buyer, do all
such further acts as may be reasonably required to further transfer, assign and
confirm to Buyer, or to aid and assist in the gaining of possession by Buyer
of, any of the Purchased Assets, or to vest in Buyer good and marketable title
to the Purchased Assets.
7.13 ASSIGNMENT OF CONTRACTS, RIGHTS, ETC. Anything
contained in this Agreement or the Bill of Sale to the contrary
notwithstanding, this Agreement and the Bill of Sale shall not constitute an
agreement to assign any Vendor Agreement, Operating Lease, Equipment Lease,
Real Property Lease, purchase or sale order or quotation, or any claim, right
or benefit arising thereunder or resulting therefrom, if an attempted
assignment thereof, without the consent of a third party thereto, would
constitute a breach thereof or in any way affect the rights of Buyer
thereunder, and such consent has not been obtained. Seller covenants and
agrees to use its best efforts to obtain the consent of the other party to any
of the foregoing to the assignment thereof to Buyer in all cases in which such
consent is required for assignment or transfer, except that no payment or
consideration and no waiver of rights of Seller shall be required in connection
therewith. If such consent is not obtained, Seller agrees to
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cooperate with Buyer in any reasonable arrangement designed to provide for
Buyer the benefits thereunder, including, but not limited to, enforcement for
the benefit of Buyer of any and all rights of Seller against the other party
thereto arising out of the cancellation by such other party or otherwise.
7.14 USE OF NAME. Seller covenants and agrees that after the
Closing it shall not use the name "Zentronics" in the conduct of its business,
except as reference to such name is required to inform or explain to customers
or third parties the transactions consummated in connection with this
Agreement.
7.15 PURCHASE PRICE ALLOCATION. Buyer shall deliver to
Seller on or before April 1, 1995, a proposed schedule setting forth the
purchase price allocation. The proposed schedule shall be consistent with the
intent of the parties, respecting the fact that the purchase price allocated to
inventory, fixed assets and other assets acquired will be based upon fair
market values, and shall have been prepared in conformity with applicable tax
laws. Within seven (7) days following such delivery, Buyer and Seller shall
mutually agree on a final schedule.
7.16 ORDINARY COURSE. Seller covenants and agrees that
between the date hereof and the Closing Date Seller will operate the business
of the Division only in the ordinary course of business and will continue to
make available to the Buyer and its representatives all of the books and
records, Vendor Agreements, customer and supplier files, employee files,
Contracts, computer files and formats, monthly financial statements and all
other information reasonably requested with respect to the Division's business.
Seller acknowledges and agrees that sales of components Inventory by the
Division to Seller or any affiliate of Seller shall not be considered to be in
the ordinary course and Seller and Division covenant and agree not to make any
such sales or transfers.
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7.17. EXCISE TAX ACT. The Seller confirms that it is
registered under Subdivision d of Division V of the EXCISE TAX ACT (Canada) and
the corresponding provisions of the applicable Quebec legislation. Prior to
the Closing, Buyer or a subsidiary of Buyer to which this Agreement is assigned
pursuant to Section 7.9 hereof, shall register under Subdivision d of Division
V of the EXCISE TAX ACT (Canada) and the corresponding provisions of the
applicable Quebec legislation. On or before the Closing, each of the Seller
and the Buyer (or such subsidiary to which this Agreement is assigned) shall
jointly execute and Buyer shall file within the prescribed time limits,
elections pursuant to Section 167 of the EXCISE TAX ACT (Canada) and the
corresponding provisions of the equivalent Quebec legislation in the prescribed
form and containing the prescribed information in order to permit the
transaction contemplated hereby to be completed without the Goods and Services
Tax ("GST") or the Quebec equivalent, being payable in respect thereof.
7.18 SECTION 22. The parties agree to elect jointly
in prescribed form T2022 pursuant to Section 22 of the Income Tax Act (Canada)
and the corresponding provisions of any applicable Provincial income tax
legislation and on a timely basis with respect to Accounts Receivable
transferred pursuant to Section 1.2(a) hereof.
7.19 BOOKS AND RECORDS. Buyer agrees to maintain and
safeguard all Books and Records of the Division acquired pursuant to Section
1.2(j) for the minimum length of time required by applicable Canadian federal
and provincial legislations. Buyer and Seller each further agrees that, after
Closing, it will render all reasonable assistance to the other in obtaining
access to and extracts of its books and records for the purpose of enabling
such other party to fulfill its statutory obligations with respect to any time
period prior to Closing.
7.20 MIS AND OTHER STAFF. Until Buyer is able to convert
certain information and processes to its computer systems, Seller shall provide
to Buyer
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such administrative services and assistance as were customarily provided by
Seller to the Division, including but not limited to use of computer systems
and software for payroll and accounting purposes. Buyer reserves the right to
utilize any or all of the Division's MIS staff at any time until conversion to
Buyer's computer system, and (subject to more specific arrangements to take
place periodically as to timing, number of persons and duration) Seller shall
also make available to Buyer other Seller personnel selected by Seller on an
"as needed" basis, but for a period not to exceed one (1) year. Buyer shall
not be charged for the reasonable assistance of Division employees. For any
significant services or projects requested by Buyer and for which Seller's
personnel are used, Buyer will promptly reimburse Seller for actual times such
personnel are used at the Seller's cost (salary plus fringe benefits and
related out-of-pocket expenses). Seller covenants and agrees that prior to the
Closing and for a one-year period thereafter, no changes or modifications shall
be made by Seller to the software (excluding general ledger and accounts
payable systems) on the Division's AS400 computer without the prior written
consent of Buyer.
ARTICLE VIII
------------
INDEMNIFICATION
---------------
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller in Article IV and of Buyer in Article
V shall survive the Closing and continue to be binding, regardless of any
investigation made at any time by any party, for a period of two (2) years.
8.2 INDEMNIFICATION BY SELLER. The Seller shall indemnify
Buyer against and hold Buyer harmless from any and all Liabilities, losses,
damages or deficiencies, including any and all reasonable costs, expenses,
legal or accounting fees and costs of investigation (collectively "Losses"),
resulting from or arising out of:
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(a) any inaccuracy in or breach of any
representation or warranty by Seller herein or in any other agreement,
instrument or document delivered by or on behalf of Seller in
connection herewith;
(b) any breach or nonperformance of any covenant
or obligation made or incurred by Seller herein or in any other
agreement, instrument or document delivered by or on behalf of Seller
in connection herewith;
(c) the conduct of Seller's business and sales
made by Seller prior to the Closing, including but not limited to any
product liability or other tort claims which may be made with respect
thereto, other than the Assumed Liabilities; and
(d) any imposition (including, but not limited
to, by operation of any bulk sales or other Law) or attempted
imposition upon Buyer of any Liability which Buyer has not
specifically agreed to assume under Section 2.1 or Section 7.4 of this
Agreement.
8.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify Seller
against and hold Seller harmless from all Losses resulting from or arising out
of:
(a) any inaccuracy in or breach of any
representation or warranty by Buyer herein or in any other agreement,
instrument or document delivered by or on behalf of Buyer in
connection herewith;
(b) any breach or nonperformance of any covenant
or obligation made or incurred by Buyer herein or in any other
agreement, instrument or document delivered by or on behalf of Buyer
in connection herewith;
(c) the conduct of Buyer's business after the
Closing; and
(d) any imposition (including, but not limited
to, by operation of law) or attempted imposition upon Seller of any
Liability of Seller which Buyer specifically agreed to assume under
Section 2.1 or Section 7.4 of this Agreement.
8.4 LIMITATIONS. Indemnification under this Article VIII
shall be limited in certain respects as follows:
(a) Except as otherwise set forth in this Section
8.4(a), no indemnity shall be made for Losses resulting from or
relating to any misrepresentation or breach of a representation and
warranty unless a claim for indemnification is made not later than two
(2) years following the Closing Date. Any claim for indemnification
resulting from or relating to any misrepresentation or breach of a
representation and warranty by Seller under Sections 4.6 or 4.7 or
4.18 must be made not later than sixty (60) days after the expiration
of the longest applicable period of limitations applicable to the
matters therein represented, and under Section 4.17 must be made not
later than six (6) years following the Closing Date. No time
limitation shall exist with respect to the period during which a claim
for indemnification may be made for misrepresentation
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or breach of a representation and warranty under Sections 4.1, 4.2,
4.11, 4.16 and 5.1, 5.2 and 5.5. Any claim for indemnification
resulting from or relating to a breach or nonperformance of a covenant
set forth in Article VII must be made not later than four (4) years
following the Closing Date. Except as set forth in the preceding
sentence, no time limitation shall exist with respect to the period
during which a claim for indemnification may be made under Sections
8.2 (b)(c) and (d) and 8.3 (b)(c) and (d).
(b) No indemnity shall be made to an Indemnified
Party (as hereinafter defined) for any Losses resulting from or
relating to any misrepresentation or breach of a representation and
warranty of any matter identified under Section 8.2(a) or 8.3(a)
unless the aggregate amount of all claims for indemnification
resulting from or relating to misrepresentations or breaches of a
representation and warranty by such Indemnifying Party under this
Article VIII exceeds $25,000 (the "Threshold Amount"), in which event
the Indemnified Party may recover the full amount of its Losses,
including the Threshold Amount.
8.5 THIRD-PARTY CLAIMS. If any legal proceedings shall be
instituted or any claim is asserted by any third party in respect of which one
party hereto may have an obligation to indemnify the other, the party asserting
such right to indemnity (the "Indemnified Party") shall give the party from
whom indemnity is sought (the "Indemnifying Party") prompt notice thereof;
provided, however, that the failure to give such notice of a matter which may
give rise to an indemnification claim shall not affect the rights of the
Indemnified Party to maintain such claims or recover its Losses from the
Indemnifying Party, except that the Indemnifying Party shall be permitted to
reduce any such Losses by an amount equal to the actual damages the
Indemnifying Party can prove it suffered by reason of any delay in receiving
such notice. The Indemnifying Party shall have the right, at its option and
expense, to participate in the defense of such a proceeding or claim, but not
to control the defense, negotiation or settlement thereof, which control shall
at all times rest with the Indemnified Party, unless the Indemnifying Party (a)
irrevocably acknowledges in writing complete responsibility for and agrees to
indemnify the Indemnified Party therefor, and (b) furnishes to the Indemnified
Party a certificate of insurance (if applicable), and a copy of the most recent
annual report of Seller or Buyer, as
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the case may be, as evidence of its financial ability to indemnify the
Indemnified Party, in which case the Indemnifying Party may assume such control
through counsel of its choice and at its expense. If the Indemnifying Party
agrees to indemnify the Indemnified Party in accordance with (a) above AND
assumes control of the defense of such proceeding or claim in accordance with
(b) above, then: (i) the Indemnifying Party will not, without the prior written
consent of the Indemnified Party, settle the proceeding or claim or consent to
entry of any judgment relating thereto which does not include as an
unconditional term thereof the giving by the claimant to the Indemnified Party
a release from all Liability in respect of the proceeding or claim; and (ii)
the Indemnified Party shall continue to have the right to be represented, at
its own expense, by counsel of its choice in connection with the defense of
such a proceeding or claim. If the Indemnifying Party agrees to indemnify the
Indemnified Party in accordance with (a) above, but does NOT assume control of
the defense of such proceeding or claim, the defense of such matter shall be
controlled by the Indemnified Party at the expense (including attorney's fees)
of the Indemnifying Party; provided, however, that any settlement of such
proceeding or claim shall require the consent of the Indemnifying Party. If
the Indemnifying Party does not agree to indemnify the Indemnified Party in
accordance with (a) above, the entire defense of the proceeding or claim shall
be controlled by the Indemnified Party, and any settlement made by the
Indemnified Party, or any judgment entered in the proceeding or claim, shall be
deemed to have been consented to by, and shall be binding upon, the
Indemnifying Party as fully as though it alone had assumed the defense thereof
and a judgment had been entered in the proceeding or claim in the amount of
such settlement or judgment. The parties hereto agree to cooperate fully with
each other in connection with the defense, negotiation or settlement of any
such proceeding or claim. The parties further agree that
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whenever a consent is required under this Section 8.5, it shall not be
unreasonably withheld.
ARTICLE IX
----------
CONSTRUCTION
------------
9.1 DEFINITIONS. When used in this Agreement, the following
terms in all of their tenses and cases shall have the meanings assigned to them
below or elsewhere in this Agreement as indicated below:
"Accrued Vacation Pay" is defined in Subsection 2.2(f).
"Acquisition Cost" is defined in Section 1.3(c).
"Assumed Liabilities" is defined in Section 2.1.
"Bill of Sale" is defined in Section 6.2(a)(i).
"Books and Records" means all books and records of Seller
relating to the Division's business and properties, including, but not limited
to, (i) all books and records relating to the purchase of materials and
supplies, sales of products, dealings with customers, invoices, Vendor's lists
and personnel records for all persons identified on Schedule 7.4, (ii) all
Contracts, reports, opinions, maps and other documents affecting the title to
or the value of the properties of the Division, (iii) all financial and
operating data, files and other information with respect to the Division's
business and properties, and (iv) computer source codes, software, file layouts
and all related documentation necessary to operate the Division's business.
"Buyer" means Pioneer-Standard Electronics, Inc., an Ohio
corporation.
"Buyer Objections" is defined in Section 3.4.
"Closing" and "Closing Date" are defined in Section 6.1.
"Contract" means any commitment, understanding, instrument,
lease, permit, pledge, mortgage, indenture, note, license, agreement, purchase
or sale
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order, contract, promise, or similar arrangement evidencing or creating any
obligation, whether written or oral.
"Credit and Receivable Amount" is defined in Section 7.1.
"Customer Claims" is defined in Section 7.5.
"Dispute Notice" is defined in Section 3.4.
"Division" is defined in Section 1.2.
"Equipment Leases" is defined in Subsection 1.2(f).
"Estimated Purchase Price" is defined in Section 3.2.
"Final Purchase Price" is defined in Section 3.5.
"Final Purchase Price Schedules" is defined in Section 3.4.
"Fixed Assets" is defined in Subsection 1.2(c).
"Governmental Authority" means any Canadian, United States,
provincial, state, regional, municipal or local authority, agency, body, court
or instrumentality, regulatory or otherwise, which, in whole or in part, was
formed by or operates under the auspices of any foreign, federal, provincial,
state, regional, municipal or local government.
"Hazardous Substance" means any toxic or environment polluting
substance which is the subject of, or otherwise regulated or controlled by, any
Canadian Law.
"Indemnified Party" and "Indemnifying Party" are defined in
Section 8.5.
"Inventory" is defined in Section 1.2(b).
"Law" means any common or civil law and any Canadian, United
States, provincial, state, regional, municipal, local or foreign law, rule,
statute, ordinance, rule, order or regulation.
"Leased Real Property" means any property which is the subject
of a Real Property Lease or on which is located a building or facility which is
the subject of a Real Property Lease.
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"Liabilities" means responsibilities, obligations, duties,
commitments, claims, and liabilities of any and every kind, whether known or
unknown, accrued, absolute, contingent or otherwise.
"Lien" means any lien, charge, covenant, condition, easement,
adverse claim, demand, encumbrance, security interest, option, pledge, or any
other title defect or restriction of any kind.
"Losses" is defined in Section 8.2.
"Noncompetition Period" is defined in Section 7.6.
"Open Orders" is defined in Subsection 1.2(h).
"Operating Leases" is defined in Subsection 1.2(e)
"Payables" is defined in Subsection 2.1(a).
"Permitted Liens" means:
(a) Undetermined or inchoate liens, privileges
and charges arising or potentially arising under statutory provisions
which have not at the time been filed or registered in accordance with
applicable law and of which written notice has not been duly given in
accordance with applicable law;
(b) Security given to public utilities or to any
municipalities or governmental or other public authorities when
required by the utility, municipality, governmental or other public
authority in connection with the supply of services or utilities to
Seller;
(c) Liens or deposits in connection with bids,
tenders and contracts of Seller or to secure workers' compensation,
unemployment insurance or other similar statutory assessments; or
(d) Security interests in favor of lessors of
equipment leased by Seller, where the related leases are assumed by
Buyer.
"Person" means any individual, corporation, partnership,
association or any other entity or organization.
"Product Value" is defined in Section 7.1.
"Purchased Assets" is defined in Section 1.2.
"Purchase Schedules" is defined in Section 3.3.
"Real Property Leases" is defined in Subsection 1.2(f).
"Receivables" is defined in Section 1.2(a).
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"Regulation S-X Financial Statements" is defined in Section
6.2(c).
"Related Corporations" is defined in Section 7.6.
"Release" means any direct or indirect spilling, pumping,
pouring, emitting, emptying, placing, discharging, injecting, escaping,
leaking, dumping, or disposing on or into any building or facility or the
environment whether intentional or unintentional.
"Repurchase Amount" is defined in Section 7.11.
"Retained Assets" is defined in Section 1.4.
"Revised Estimated Purchase Price" is defined in Section 3.6.
"Seller" means Westburne Industrial Enterprises Ltd., a
Canadian corporation.
"Vendor Agreements" is defined in Subsection 1.2(d).
"Vendor" is defined in Subsection 1.2(d).
9.2 NOTICES. All notices shall be in writing and shall be
delivered by hand, sent by facsimile copy ("fax"), or mailed by overnight mail
(or courier) or certified mail (return receipt requested), addressed as
follows:
(a) If to Buyer, to:
Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105
Attn: Chairman of the Board
With a copy to:
William A. Papenbrock, Esq.
Calfee, Halter & Griswold
800 Superior Avenue, Suite 1800
Cleveland, Ohio 44114-2688
(b) If to the Seller, to:
Westburne Industrial Enterprises Ltd.
6333 Decarie Blvd.
Montreal, Quebec
Canada H3W 3E1
Attention: Secretary
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or to such other address as may be designated in a notice delivered pursuant
hereto. Notices sent by fax, overnight mail or certified mail shall be deemed
to have been given upon receipt thereof by the party to whom they are sent,
which receipt shall be confirmed promptly, either verbally or in writing.
Notwithstanding anything to the contrary above, notices delivered by hand shall
be deemed to have been given when delivered to the appropriate address set
forth above.
9.3 BINDING EFFECT. Except as may be otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns. Except as
otherwise provided in this Agreement, nothing in this Agreement is intended or
shall be construed to confer on any Person other than the parties hereto any
rights or benefits hereunder.
9.4 HEADINGS. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
9.5 EXHIBITS AND SCHEDULES. The Exhibits and Schedules
referred to in this Agreement shall be deemed to be a part of this Agreement.
9.6 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
9.7 GOVERNING LAW. This Agreement shall be governed by and
construed under Ontario law, without regard to or for the conflict of laws
principles thereof.
9.8 WAIVERS. Compliance with the provisions of this
Agreement may be waived only be a written instrument specifically referring to
this Agreement and signed by the party waiving compliance. No course of
dealing, nor any failure or delay in exercising any right, shall be construed
as a waiver. In
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addition, no single or partial exercise of a right shall preclude any other or
further exercise of that or any other right.
9.9 PRONOUNS. The use of a particular pronoun herein shall
not be restrictive as to gender or number but shall be interpreted in all cases
as the context may require.
9.10 TIME PERIODS. Any action required hereunder to be taken
within a certain number of days shall be taken within that number of calendar
days; provided, however, that if the last day for taking such action falls on a
weekend or a holiday, the period during which such action may be taken shall be
automatically extended to the next business day.
9.11 ENTIRE AGREEMENT. This Agreement and the agreements and
documents referred to in this Agreement or delivered hereunder are the
exclusive statement of the agreement among the parties concerning the subject
matter hereof. The Letter of Intent and all negotiations among the parties are
merged into this Agreement, and there are no representations, warranties,
covenants, understandings, or agreements, oral or otherwise, in relation
thereto among the parties other than those incorporated herein and to be
delivered hereunder.
9.12 MODIFICATION. No supplement, modification or amendment
of this Agreement shall be binding unless made in a written instrument which is
signed by all of the parties and which specifically refers to this Agreement.
9.13 NO THIRD-PARTY BENEFICIARIES. Nothing expressed or
implied in the Agreement is intended or shall be construed so as to confer upon
any person other than the parties hereto any rights or privileges hereunder.
9.14 CANADIAN DOLLARS. Except for Section 7.16, all
references in this Agreement to dollars or dollar amounts shall be deemed to be
references to Canadian dollars and amounts.
9.15 TERMINATION OF AGREEMENT. This Agreement may be
terminated prior to the Closing as follows:
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(a) at the election of the Seller, with recourse
to the Buyer for reimbursement of all of Seller's reasonable
out-of-pocket expenses (except any fee of CIBC referred to in Section
4.16), if any one or more of the conditions in Section 6.2(b) has not
been fulfilled as of the Closing Date, or shall have become incapable
of fulfillment prior to such time, or if the Buyer has breached any
covenant or agreement contained in this Agreement;
(b) at the election of the Buyer, with recourse
to the Seller for reimbursement of all of Buyer's reasonable out-
of-pocket expenses, if any one or more of the conditions in Sections
6.2(a), (c) or (f) has not been fulfilled as of the Closing Date, or
shall have become incapable of fulfillment prior to such time, or if
the Seller has breached any covenant or an agreement contained in this
Agreement;
(c) at the election of the Seller or the Buyer,
if the consummation of the transactions contemplated hereunder are
enjoined by a final order of either a United States or Canadian court
of competent jurisdiction from which no appeal may be taken;
(d) at the election of either the Buyer or the
Seller if the Closing has not occurred on or prior to June 30, 1994,
unless inconsistent with a prior agreement under Section 6.1;
(e) at any time on or prior to the Closing Date,
by mutual written consent of the Seller and the Buyer; or
(f) at the election of either Seller or Buyer, if
any one or more of the conditions in Sections 6.2(d), (e) or (g) has
not been fulfilled as of the Closing Date.
INTENDING TO BE LEGALLY BOUND, the parties have signed this
Agreement as of the date first above written.
WESTBURNE INDUSTRIAL ENTERPRISES LTD.
By: /s/ J.A. Merria
_________________________________
Title: Sr. VP Fin & Admin & CFO
______________________________
PIONEER-STANDARD ELECTRONICS, INC.
By: /s/
________________________________
Title: Chairman of the Board
21\15154AAS.343
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SCHEDULES
Schedule 1.2(a) Receivables
Schedule 1.2(b) Inventory
Schedule 1.2(c) Fixed Assets
Schedule 1.2(d) Vendor Agreements
Schedule 1.2(e) Operating Leases
Schedule 1.2(f) Equipment Leases and Real Property Leases
Schedule 1.2(h) Open Orders
Schedule 2.1(a) Payables
Schedule 2.1(f) Accrued Vacation Pay (to be provided at a
later date
Schedule 2.1(g) Accrued Pay (to be provided at a later date)
Schedule 4.1 Organization and Power
Schedule 4.3 Consents
Schedule 4.4 Conflicts
Schedule 4.5 Product Warranty
Schedule 4.7(a) Full-Time Employees
Schedule 4.7(b) Employees on Leave
Schedule 4.10(a) Prepayments and Deposits Received by Seller
Schedule 4.10(b) Prepayments and Deposits Made by Seller
Schedule 4.11 Title
Schedule 4.15 Financial Statements
Schedule 4.19 Insurance
Schedule 6.2(a)(ii) Certain Consents
Schedule 7.6 Certain Vendors of Electronic Components and
Electronic Computer System Products or Product
Lines
070\15154SCH.001
