<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 8, 1997
Datatrend Services, Inc.
------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-15929 13-3006788
-------- ------- ----------
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
1515 Washington Street, Braintree, MA 02184
------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including Area Code: (617) 691-1200
--------------
<PAGE>
Item 5. Other Events
On September 8, 1997 Datatrend Services, Inc. (the "Company") and
its principal operating subsidiary, Datatrend, Inc. ("Datatrend"), entered
into an Asset Purchase Agreement and a Management and Administrative
Services Agreement with Genco Management Company ("GMC"), a subsidiary of
GENCO I, INC. ("Genco"). GMC's obligations under both Agreements are
guaranteed by Genco.
The Asset Purchase Agreement (the "Purchase Agreement") provides
that Datatrend will sell substantially all of its operating assets to GMC.
This asset transfer will result in the sale of all of the Company's
computer equipment refurbishment and returns management business. In
consideration for the sale of such assets, GMC will pay at the closing a
minimum of $1,000,000 and will assume various liabilities including current
recorded liabilities and certain future liabilities relating to the ongoing
operation of the business being acquired by GMC. GMC will not assume
liabilities relating to outstanding litigation matters, employment and
consulting contracts, and tax and other matters. The purchase price will be
increased by 50% of the amount by which the difference between the assumed
liabilities and acquired assets (subject to various adjustments) is less
than $2,500,000. The transaction is terminable by GMC in the event that
such difference exceeds $3,000,000. The closing of the transaction is
subject to approval of the Company's stockholders and other terms and
conditions.
Datatrend and GMC also entered into a Management and
Administrative Services Agreement (the "Management Agreement") which
provides that GMC will operate the Company's business pending the closing
of the transactions contemplated by the Purchase Agreement. Among other
matters, GMC will handle personnel and facility decisions and will oversee
the previously announced closure of the Company's Braintree facility. The
Management Agreement is terminable if the Purchase Agreement is terminated
and may also be terminated by GMC in certain circumstances including
bankruptcy, potential liability under government regulatory schemes, or
dispute by the Company of GMC's management decisions. GMC will receive a
monthly management fee of $2,500 and reimbursement of direct expenses
incurred by GMC. GMC is entitled to retain any operating profits generated
during the term of the Management Agreement and will reimburse Datatrend
for any operating losses incurred during such term. GMC is also obligated
to contribute to the Company up to $500,000 to cover operating losses and
provide working capital during the term of the Management Agreement.
The foregoing is only a partial summary of the terms of the
Purchase Agreement and the Management Agreement. Reference is made to the
complete text of such Agreements filed as exhibits herewith.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
Not Applicable
(b) Pro Forma Financial Information.
Not Applicable
(c) Exhibits
10.1. Asset Purchase Agreement dated as of September 8,
1997, by and among Datatrend Services, Inc., Datatrend,
Inc., GENCO I, INC., and Genco Management Company.
10.2. Management and Administrative Services Agreement dated
as of September 8, 1997 between
2
<PAGE>
Datatrend, Inc. and Genco Management Company.
Exhibits and Schedules of these exhibits are in standard
format and have been omitted but will be supplied upon
request of the Securities and Exchange Commission.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Datatrend Services, Inc.
Date: September 24, 1997 By: /s/ Mark Hanson
-----------------
Mark Hanson
President and Chief Executive Officer
4
<PAGE>
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
This Agreement, dated as of the 8th day of September, 1997, by
and among each of Genco Management Company, a Pennsylvania corporation
("Purchaser"), Datatrend, Inc., a Massachusetts corporation (the "Seller"),
Datatrend Services, Inc., a Delaware corporation which owns all of the issued
and outstanding shares of common stock of the Seller ("DSI") and GENCO, INC., a
Pennsylvania corporation which owns all of the outstanding shares of capital
stock of Purchaser ("Genco") (the "Agreement")
W I T N E S S E T H:
WHEREAS, the Seller desires to sell and transfer, and the Purchaser
desires to purchase and acquire, in exchange for the consideration hereinafter
specifically set forth, all, or substantially all, of the assets of the Seller
relating to the Seller's business of computer refurbishment and distribution and
computer returns management services (the "Business") upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of, and subject to, the premises and
mutual agreements contained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE I
Sale and Purchase
1.1. The Assets. At the Closing (as hereinafter defined) the Seller
will sell, transfer, assign, convey and deliver to the Purchaser, and the
Purchaser will purchase, acquire and accept from the Seller, all of the Seller's
right, title and interest in and to the assets of the Seller relating to the
Business, excluding only those assets delineated in Section 1.3 hereof (all of
such assets, property and business to be acquired by the Purchaser are
hereinafter collectively referred to as the "Acquired Assets"), upon the terms
and subject to the conditions hereinafter set forth. The Acquired Assets shall
include, without limitation, the following:
(a) all notes, trade and other accounts receivable, royalties, deferred
charges, advance payments, prepaid items and rights of offset and credits (other
than income tax credits) relating to the Business (the "Accounts");
(b) all property, plant and equipment listed on Schedule 1.1(b),
including but not limited to all fee simple, possessory and leasehold interests
of the Seller in any and all land, leaseholds, easements, rights of way,
licenses, railroad and other use agreements (including, without limitation,
rights arising under all options to purchase, or lease, rights of first refusal
and the like), certain office computer and telephone equipment, machinery,
equipment, tools, motor vehicles, transportation and packing and delivery
equipment and supplies, furniture and fixtures (the "Equipment and Supplies");
(c) all computers, peripherals, components and accessories constituting
the Seller's inventory associated with the Business, (the "Inventory");
(d) all contracts and contract rights, including but not limited to all
contractual and other rights and licenses under outstanding purchase orders,
supply agreements, sales orders, agreements pursuant to which the Seller is to
be indemnified, permits, leases, joint venture
<PAGE>
agreements, restrictive covenant agreements running in favor of the Seller,
representative agreements, dealer agreements, export agent agreements,
consulting agreements, confidentiality agreements, development agreements,
assignment agreements and all other contracts (the "Contracts"), all as more
particularly described on Schedule 1.1(d) hereof;
(e) all customer lists, supplier lists, engineering data, customer
records, patents, trade names (including but not limited to the name
"Datatrend"), trademarks, all other intellectual property rights and intangible
assets associated with the Business ("Intangible Assets"); and
(f) all cash on hand and in all checking, savings, investment and other
similar accounts of the Seller.
1.2. Transfer of Acquired Assets. To the extent that any of the
Acquired Assets are non-assignable or non-transferable to the Purchaser, or
non-assignable or non-transferable without the consent of a third party, or
shall be subject to any option by any third party (a list of all of such assets,
and relevant particulars with respect hereto, is set forth on Schedule 1.2(a)
hereto), this Agreement shall not constitute a contract to assign or a transfer
of the same (unless such consent is obtained or option waived) if an attempted
assignment or transfer would constitute a breach thereof. If the Seller shall
have failed to procure a required consent to any assignment or transfer or
waiver of such option, with respect to any of the assets listed on Schedule
1.2(a) (the "Consent Assets") prior to the Closing (as hereinafter defined), the
Seller shall use commercially reasonable efforts (which shall not include the
obligation to pay money) to make the use and benefit of such Consent Assets
available to the Purchaser to the same extent, as nearly as may be possible, as
if such impediment to the assignment or transfer did not exist. The Purchaser
shall assume and pay, discharge, perform or otherwise satisfy all debts,
obligations and liabilities of the Seller which arise after the date of the
Closing with respect to those contracts the use and benefit of which shall have
been made available to the Purchaser pursuant to this Section 1.2.
1.3. Assets Not Purchased by Purchaser. The parties hereto agree that,
notwithstanding anything to the contrary contained herein, the Purchaser shall
not purchase, directly or indirectly, any right, title or interest in, and to,
the assets listed on Schedule 1.3 to this Agreement (hereinafter collectively
referred to as the "Excluded Assets").
1.4. Consideration. Subject to the provisions of this Section 1.4 and
section 9.3 hereof, the consideration for the Acquired Assets shall be One
Million Dollars ($1,000,000) as adjusted (the Cash "Purchase Price"), which
shall be paid by cash wire transfer at the Closing (as hereinafter defined),
together with the assumption of liabilities of the Seller as provided in Section
1.5 hereof. The Cash Purchase Price shall be subject to adjustment as follows:
(a) Initial Balance Sheet. Within 45 days following the
execution of this Agreement, the Seller shall cause to be prepared a balance
sheet (the "Initial Balance Sheet") which reflects the assets of Seller
(excluding the Excluded Assets) at the date of execution of this Agreement and
only the liabilities of Seller at the date of execution of this Agreement (the
"Base Liabilities") which would have been Assumed Liabilities had the Closing
occurred on such date. The Initial Balance Sheet shall be prepared in accordance
with the valuation and accounting practices and procedures described in Schedule
1.4(a) hereof (the "Agreed Upon Procedures"). The Agreed Upon Procedures shall
provide, among other things, that the lease for the Seller's
<PAGE>
Braintree, Massachusetts facility shall be reflected as a liability on the
Initial Balance Sheet as a discontinued operation and that the leasehold
improvements to such facility shall be excluded as assets on the Initial Balance
Sheet. The Initial Balance Sheet shall become final and binding upon the parties
unless the Purchaser gives written notice of a disagreement (a "Notice of
Disagreement") to the Seller and DSI within ten (10) days following receipt
thereof. If a Notice of Disagreement is received by the Seller and DSI, then the
Initial Balance Sheet shall become final and binding upon the parties on the
earlier of (i) the date the parties hereto resolve in writing any differences
they may have with respect to any matter specified in a Notice of Disagreement
and (ii) the date any Disputed Matters (as hereinafter defined) are finally
resolved in writing by the Arbitrator (as hereinafter defined). Any such Notice
of Disagreement shall state in reasonable detail the nature of any disagreement
so asserted and the amount in dispute. During a period of ten (10) business days
following the receipt by the Seller and DSI of a Notice of Disagreement, the
Seller and DSI and the Purchaser shall attempt to resolve in writing any
differences that they may have with respect to any matter specified in the
Notice of Disagreement. If at the end of such ten (10) business-day period, the
Seller, DSI and the Purchaser have failed to reach written agreement with
respect to all such matters, then all such matters as specified in any Notice of
Disagreement as to which such written agreement has not been reached (the
"Disputed Matters") shall be submitted to and reviewed by an arbitrator
("Arbitrator"), which shall be an accounting firm which is a member of the SEC
Practice Section and the Private Companies Section of the Division of Firms of
the American Institute of Certified Public Accountants having an office in
Pennsylvania and having no other relationship with any party hereto during the
past five (5) years. The identity of the Arbitrator shall be determined mutually
by the independent public accountants of the Seller and the Purchaser's
independent public accountants; and if such accountants cannot agree as to the
selection of the Arbitrator, then each accounting firm shall select one nominee
and the parties shall choose the Arbitrator by lot. The Arbitrator shall
consider only the Disputed Matters and shall be instructed to act promptly to
resolve all Disputed Matters and its decision shall be final and binding upon
the Seller, DSI and the Purchaser. The fees and expenses of the Arbitrator with
respect to all Disputed Matters shall be allocated between the Seller and the
Purchaser in the same proportion that the aggregate amount of all Disputed
Matters is resolved by the Arbitrator in favor of or against the Seller, DSI and
the Purchaser. As used herein, the term "Initial Balance Sheet" shall refer to
the Initial Balance Sheet in the form in which it becomes final in accordance
with the foregoing procedures.
(b) Final Balance Sheet. Within five (5) days prior to the
Closing, the Purchaser shall prepare and deliver to the Seller and DSI a balance
sheet as of the date of the Initial Balance Sheet (the "Draft Final Balance
Sheet") but which adjusts the asset side of the Initial Balance Sheet to reflect
the liquidation of the assets reflected on the Initial Balance Sheet (such
assets as so adjusted being hereinafter referred to collectively as the
"Adjusted Assets"). The Draft Final Balance Sheet shall be prepared in
accordance with the Agreed Upon Procedures. The Negative Amount means the amount
by which the Base Liabilities exceed the Adjusted Assets. If the Negative Amount
is $2,500,000 or less, the Cash Purchase Price shall be increased by fifty
percent (50%) of the amount by which the $2,500,000 exceeds the Negative Amount.
If the Negative Amount exceeds $3,000,000, then the Purchaser may, by notice
given not more than four (4) days after the Draft Final Balance Sheet is
prepared, at its sole option, elect to terminate this Agreement as provided in
Section 9.16 hereof.
(c) The Draft Final Balance Sheet shall become final and
binding upon the
<PAGE>
parties unless the Seller or DSI gives written notice of a disagreement (a
"Notice Disagreement") to the Purchaser within thirty (30) days following
receipt thereof. If a Notice of Disagreement is received by the Purchaser, then
the Draft Final Balance Sheet shall become final and binding upon the parties on
the earlier of (i) the date the parties hereto resolve in writing any
differences they may have with respect to any matter specified in a Notice of
Disagreement and (ii) the date any Disputed Matters (as hereinafter defined) are
finally resolved in writing by the Arbitrator (as hereinafter defined). Any such
Notice of Disagreement shall state in reasonable detail the nature of any
disagreement so asserted and the amount in dispute. During a period of ten (10)
business days following the receipt by the Purchaser of a Notice of
Disagreement, the Seller and DSI and the Purchaser shall attempt to resolve in
writing any differences that they may have with respect to any matter specified
in the Notice of Disagreement. If at the end of such ten (10) business-day
period, the Seller, DSI and the Purchaser have failed to reach written agreement
with respect to all such matters, then all such matters as specified in any
Notice of Disagreement as to which such written agreement has not been reached
(the "Disputed Matters") shall be submitted to and reviewed by an arbitrator
("Arbitrator"), which shall be an accounting firm which is a member of the SEC
Practice Section and the Private Companies Section of the Division of Firms of
the American Institute of Certified Public Accountants having an office in
Pennsylvania and having no other relationship with any party hereto during the
past five (5) years. The identity of the Arbitrator shall be determined mutually
by the independent public accountants of the Seller and the Purchaser's
independent public accountants; and if such accountants cannot agree as to the
selection of the Arbitrator, then each accounting firm shall select one nominee
and the parties shall choose the Arbitrator by lot. The Arbitrator shall
consider only the Disputed Matters and shall be instructed to act promptly to
resolve all Disputed Matters and its decision shall be final and binding upon
the Seller, DSI and the Purchaser. The fees and expenses of the Arbitrator with
respect to all Disputed Matters shall be allocated between the Seller and the
Purchaser in the same proportion that the aggregate amount of all Disputed
Matters is resolved by the Arbitrator in favor of or against the Seller, DSI and
the Purchaser. As used herein, the term "Final Balance Sheet" shall refer to the
Draft Final Balance Sheet in the form in which it becomes final in accordance
with the foregoing procedures.
Within five (5) business days following the establishment of the Final
Balance Sheet, the Purchaser, if applicable, shall pay to DSI any additional
amounts owed based upon the Negative Amount as reflected therein. If the Final
Balance Sheet indicates that the Purchaser paid to DSI more than owed to DSI
under Section 1.4(b) above, DSI shall refund to the Purchaser the amount of such
overpayment within five (5) days after the establishment of the Final Balance
Sheet.
1.5. Liabilities Assumed by the Purchaser. Purchaser hereby, effective
as of the Closing, assumes and agrees to discharge, in accordance with their
terms, only (a) the trade accounts payable, accrued expenses, notes payable and
long-term debt and other liabilities of the Seller which are reflected in the
Initial Balance Sheet or in the Closing Date Balance Sheet, (b) all future
obligations and liabilities of Seller under the Contracts, (c) all warranty
obligations with respect to products sold by the Business from and after the
commencement of the term of the Management and Administrative Services
Agreement, dated as of September 8, 1997, by and between the Purchaser and the
Seller (the "Management Services Agreement"), (d) up to $5,000 in warranty
claims for products sold by the Business prior to the commencement of the term
of the Management Services Agreement, (e) claims made by third-party purchasers
of products from the Business for periods prior to the commencement of the term
of the Management Services Agreement, up to a maximum of $5,000 and (f)
additional liabilities, other than Retained Liabilities (as hereinafter
defined), in addition to those described in (a) through (e) of
<PAGE>
this Section 1.5, in an amount not to exceed the lesser of (i) $500,000 and (ii)
the amount by which $3,000,000 exceeds the Negative Amount. The liabilities of
Seller which are assumed by Purchaser as aforesaid are referred to herein as the
"Assumed Liabilities". The Assumed Liabilities specifically exclude, (i) any
litigation or claims arising out of or in connection with the Business (except
for those arising out of any efforts by the Seller to collect the Accounts)
including the warranty claims and third-party claims not expressly assumed by
the Purchaser as provided above; (ii) any litigation or claims arising out of or
in connection with this Agreement; (iii) any obligations arising under or in
connection with existing employment agreements or other arrangements between the
Seller or DSI and their respective employees, specifically including those with
John Bulman and James Hendricks, (iv) the consulting agreement by and between
the Seller and DSI and Target Capital Corporation; (v) any liabilities arising
out of the operation of the Business prior to the Closing relating to violations
of any federal, state or local laws or regulations relating to environmental or
occupational health and safety matters; and (vi) any liabilities for federal,
state and local taxes, assessments, reassessments, governmental charges,
penalties, interest and fines relating to the Business arising or accruing prior
to the date of the Management Services Agreement. The Closing Date Balance Sheet
shall be prepared by the Purchaser in accordance with the Agreed Upon
Procedures, and a draft Closing Date Balance Sheet shall be delivered to the
Seller and DSI at least two (2) business days prior to the Closing Date. Other
than the Assumed Liabilities, Purchaser is not assuming and shall not otherwise
become liable for any debts, liabilities and obligations of Seller or the
Business, whether now asserted or unasserted, known or unknown, fixed or
contingent. All liabilities not assumed by the Purchaser in accordance with this
Section 1.5 are hereinafter referred to collectively as the "Retained
Liabilities".
ARTICLE II
Representations and Warranties of the Seller and DSI
The Seller and DSI hereby jointly and severally represent and warrant
to the Purchaser as follows:
2.1. Organization and Authority. Each of the Seller and DSI (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, (b) has full corporate power and
authority to own and lease its assets and to carry on its business as and where
such assets are now owned or leased and where such business is now conducted and
to be conducted to the Closing Date (as hereinafter defined), and (c) is duly
licensed or qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which the character of the property or assets
now owned or leased by it or the nature of the business now conducted by it
require it to be so licensed and qualified. Schedule 2.1(a) is a true and
complete list of each jurisdiction in which the Seller and DSI are qualified to
do business as a foreign corporation. The copy of the certificate of
incorporation and by-laws of the Seller, each of which is attached hereto as
Schedule 2.1(b), and the copy of the certificate of incorporation and by-laws of
DSI, each of which is attached hereto as Schedule 2.1(c), is complete and
correct and there are no dissolution, liquidation or bankruptcy proceedings
pending, contemplated by or, to the knowledge of the Seller or DSI, threatened
against, either the Seller or DSI.
2.2. Absence of Conflict. Neither the execution nor the delivery of
this Agreement by the Seller or DSI, the compliance by the Seller or DSI with
the terms and conditions of this Agreement nor the consummation by the Seller or
DSI of the transactions contemplated hereby will (a) conflict with any of the
terms, conditions and provisions of the
<PAGE>
certificate of incorporation or by-laws of either the Seller or DSI; (b) violate
any provision of, or require any consent, authorization or approval under, any
law or administrative regulation or any judicial, administrative or arbitration
order, award, judgment, writ, injunction or decree applicable to, or any
governmental permit or license issued to, the Seller or DSI or (c) conflict
with, result in a breach of, constitute a default or event of default under
(whether by notice or the lapse of time, or both) or accelerate or permit the
acceleration of, the performance required by, or require any consent,
authorization or approval under, any indenture, mortgage, lien, charge,
agreement or instrument to which either the Seller or DSI is a party or by the
terms of which either the Seller or DSI or their respective properties and
assets may be bound.
2.3. Validity and Enforceability of Agreement. Each of the Seller and
DSI has the corporate power and authority to execute, deliver and, subject to
the approval of the stockholders of DSI, carry out the terms and provisions of
this Agreement in accordance with its terms. This Agreement has been duly
authorized, executed and delivered by each of the Seller and DSI pursuant to
action taken by the Boards of Directors of the Seller and DSI and constitutes a
valid and binding obligation of each of the Seller and DSI enforceable in
accordance with its terms.
2.4. Financial Statements. Except as set forth on Schedule 2.4(a)
attached hereto, since January 1, 1995, DSI has filed with the U.S. Securities
and Exchange Commission ("SEC") all material forms, statements, reports and
documents (including all exhibits, amendments and supplements thereto) required
to be filed by it under each of the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the respective rules and regulations thereunder, all of
which, as amended if applicable, complied in all material respects with all
applicable requirements of the appropriate act and the rules and regulations
thereunder. DSI has previously delivered to the Purchaser copies of its (a)
Annual Report on Form 10-K for the fiscal years ended December 31, 1996 and
December 31, 1995, as filed with the SEC, (b) proxy and information statements
relating to (i) all meetings of its stockholders (whether annual or special) and
(ii) actions by written consent in lieu of a stockholders meeting from January
1, 1995 until the date hereof, and (c) all other reports, including quarterly
reports, or registration statements filed by the Company with the SEC since
January 1, 1995 (other than Registration Statements filed on Form S-8) and (the
documents referred to in clauses (a), (b) and (c) are collectively referred to
as the "SEC Reports"). Except as set forth in Schedule 2.4(a) attached hereto,
as of their respective dates, the SEC Reports did not contain any untrue
statement of a material fact or omit to state a materiel fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated financial
statements of DSI included in such reports (collectively, the "DSI Financial
Statements") have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be indicated therein or
in the notes thereto) and fairly present the financial position of DSI and its
subsidiaries, including the Seller, as of the dates thereof and the results of
their operations and changes in financial position for the periods then ended,
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein.
2.5. Assets. Except as listed on Schedule 2.5 ("Permitted Liens"),
Seller has, and shall have as of the Closing, good, valid and marketable title
to all of the Acquired Assets, free and clear of all liens, encumbrances and
claims of third parties. The Seller further represents and warrants that there
are no options, conditional rights or other agreements or arrangements of any
<PAGE>
kind to purchase or acquire from the Seller any of the Acquired Assets except
purchase orders for Inventory received in the ordinary course of business.
Purchaser acknowledges that the equipment, inventory and other tangible property
which are included in the Acquired Assets are being sold on an as-is where-is
basis, AND THAT ALL WARRANTIES OF MERCHANTABILITY AND FITNESS ARE EXPRESSLY
EXCLUDED. No representation or warranty is made hereunder regarding the
applicability or effect of bulk sales laws to this transaction.
2.6. Real Property. Schedule 2.6(a) contains a complete and correct
list and legal description of all real properties, buildings and structures
owned, leased or licensed, in whole or in part, by the Seller. All leases for
real property leased by or to the Seller are valid and enforceable (and a
correct and complete copy of each has been delivered to the Purchaser). Such
leases have not been amended or modified and neither the Seller, nor, to the
knowledge of the Seller or DSI, the other party or parties to such leases are in
default with respect thereto, nor has any event which, with the passage of time
or giving of notice, or both, could constitute such a default occurred. The
Seller owns no real property. The Seller has enforceable leasehold interests in
all real property and buildings used by the Seller with respect to the Business.
2.7. Contracts. Other than as listed on Schedule 1.1(d) and purchase
and sales contracts entered into in the ordinary course of business, the Seller
is not a party to any written or, to the knowledge of Seller or DSI, oral
contract with respect to the Business. The Seller has performed all material
obligations required to be performed by it through the date hereof under all of
the agreements relating to the Business to which the Seller is a party or
pursuant to the terms of which the Seller may be bound. Each of the other
parties to the agreements to which the Seller is a party or pursuant to the
terms of which the Seller may be bound has, to the knowledge of the Seller and
DSI, in all material respects performed all the obligations required to be
performed by it thereunder. Neither the Seller nor DSI received any written
notice of the intention of any party to any Contract to terminate any such
Contract. Each such Contract is valid, binding and enforceable in accordance
with its terms and is in full force and effect with no default, and no event has
occurred which, with the passage of time, or the giving of notice, or both,
could constitute such a default by the Seller, nor is there a dispute in
existence with respect thereto.
2.8. Customers and Suppliers. Neither the Seller nor DSI is aware of
any change, or threat of any change, in the relations of the Seller with any
sales agent, sales representative, sales distributor or salaried employee of the
Seller. Neither the Seller nor DSI has received any written notice or, to the
knowledge of the Seller, any other notice, of any material dispute, of any kind,
between the Seller and any of its significant suppliers or any written notice of
any material dispute between the Seller and any of its significant customers and
none of its significant suppliers or significant customers has, either in
writing or otherwise, advised the Seller or DSI that it intends to cease its
purchases from or sales to the Seller. For purposes of this Section 2.8,
"significant customers" and "significant suppliers" shall mean the ten largest
customers or suppliers based on revenues from products sold to, or purchased
from, the Seller.
2.9. Compliance with Laws. Except as set forth on Schedule 2.9, the
Seller is in compliance, in all material respects, with all foreign, federal,
state or local statutes, laws, regulations and orders including, but not limited
to, all health, labor, employment, environmental, fire, safety, pollution,
zoning and building laws and ordinances with respect to the operation, ownership
and affairs of the Business. The Seller has received no written or, to
<PAGE>
the knowledge of the Seller or DSI, other notice that the Acquired Assets do not
comply, in any material respect, with all applicable federal, state or local
laws, regulations and standards, and there are no judgments, orders, writs,
notices, decrees or injunctions of any court, governmental commission,
regulatory body, department, board, agency or instrumentality, domestic or
foreign, presently in effect issued against the Seller with respect to the
Business or the products or services of the Business, including any such orders
or notice relating to environmental or occupational health or safety matters.
2.10. Governmental Licenses and Permits. Schedule 2.10(a) hereto
specifically identifies all licenses, permits and variances, including those
relating to environmental matters (collectively, the "Permits") from any
federal, state, local or municipal authority (each a "Governmental Authority"
and collectively, "Governmental Authorities") relating in whole or in part, or
directly or indirectly, to the Business of the Seller, to which the Seller is a
party or pursuant to the terms of which the Seller or its properties and assets
may be bound. The Seller possesses all Permits necessary in accordance with
applicable law with respect to the Business. All of the Permits are in full
force and effect, the Seller is not is in violation of any of the Permits and no
proceeding is pending or, to the knowledge of the Seller or DSI, threatened, to
revoke or limit in any way any such Permit. Except as set forth in Schedule
2.10(b), the consummation of the transaction contemplated hereby will not result
in a violation or termination of any of the Permits.
2.11. Insurance. The Seller has provided the Purchaser with true,
complete and correct copies of all non-employee benefit related insurance
policies or fidelity or surety bonds maintained by or on behalf of the Seller
with respect to the Business. Except as set forth on Schedule 2.11, all such
insurance policies are in full force and effect and will remain in effect to the
Closing (as hereinafter defined), and no written or other notification of
cancellation or non-renewal of any such insurance policies has been received.
2.12 Patents and Trademarks. The Seller does not own any patents,
patent applications, trademarks, service marks, tradenames, copy-rights,
know-how or trade secrets, applications for registration thereof, licenses or
rights, and no such rights are necessary to the present conduct of the Business.
To the knowledge of the Seller and DSI, the Business is being carried on without
conflict with trade secrets, registered patents, patent applications, licenses,
trademarks, service marks, copyrights, business names or tradenames of others.
There is no claim or, to the knowledge of the Seller or DSI, threatened claim
alleging any violation by the Seller in the course of conducting the Business of
any trade secret or secrets of others, nor has the Seller misappropriated trade
secrets of any other person or entity in connection with or in any way related
to the Business. No employee of the Seller is obligated pursuant to the terms of
any contract, agreement or understanding or subject to any other obligation,
judgment, decree or order of any court or administrative agency that would
interfere with the use of the technology included in the current products and
processes of the Seller or the Business. No employee of the Business has
executed a proprietary information, secrecy, non-disclosure, confidentiality or
like agreement with the Seller.
2.13. Employees. Schedule 2.13(a) is a list of all employment,
compensation (including any "golden parachute," severance or similar
agreements), confidentiality, non-competition, assignment of invention and
consulting agreements or arrangements currently in effect by and between the
Seller and any person who is now employed or engaged by the Seller, whether
written or oral, and a list of each current employee of the Seller. The Seller
is not in
<PAGE>
default with respect to any obligation to any of its employees, including but
not limited to those under the instruments or arrangements noted on Schedule
2.13(a), and the Seller has no outstanding commitment or agreement to effect any
general wage or salary increase or bonus or any increase in fringe benefits for
any of its employees. The Seller has not made any agreement or arrangement with,
or promise to, any director, officer, employee or shareholder of the Seller
regarding future compensation or payments or fringe benefits of any kind except
as specifically noted on Schedule 2.13(a).
2.14. Litigation and Claims. Other than as set forth on Schedule
2.14(a), there has not been, at any time in the two (2) year period ending on
the date hereof, and is not now, any action, suit, claim, proceeding,
investigation, order, ruling, judgment, notice or decree in any court or by, or
before, any Governmental Authority or before any arbitrator, or otherwise, of
any kind, pending or, to the knowledge of Seller or DSI, threatened against the
Seller or to which the Seller is a party or by which the Acquired Assets are
bound.
2.15. INTENTIONALLY OMITTED
2.16. Taxes. Other than as set forth on Schedule 2.16(a), all required
federal, state and local tax returns of the Seller required to have been
completed and filed for all taxable years up to and including December 31, 1996,
have been filed and all payments shown thereon to be due and all assessments,
reassessments, governmental charges, penalties, interest and fines due and
payable have been timely paid. The federal, state and local tax returns filed by
the Seller accurately reflect the income, credits, deductions and losses of the
Seller with respect to which such filing was made. The Seller has paid, or fully
reserved for payment on its books and records, all required property, sales,
excise and ad valorem taxes owed for, or attributable to, all periods prior to,
the date hereof.
With respect to the Business, other than as set forth on Schedule
2.16(b): (i) there is no (nor has there been any request for) agreement, waiver
or consent providing for an extension of time with regard to the assessment of
any tax, levy or impost with respect to the Seller and no power of attorney
granted by the Seller with respect to any tax matters; (ii) there is no
investigation, audit, claim, demand, deficiency, or additional assessment
pending or, to the knowledge of Seller or DSI, threatened against, or with
respect to, any tax, duty, levy or impost nor is there any factual or legal
basis therefore; and (iii) the Seller is not a party to, is not bound by, or has
no obligation under any tax sharing, tax indemnity or similar agreement.
2.17. Customer Lists. Except as set forth on Schedule 2.17, the Seller
has the right to use, free and clear of any claims or rights of others, all of
the customer and mailing lists owned or used by the Seller.
2.18. Brokers or Finders. The Seller is not obligated, directly or
indirectly, to any person for investment banking, brokerage or finders' fees,
agents' commissions or any similar charges in connection with this Agreement or
the transaction contemplated hereby.
2.19. Transactions with Affiliates. Schedule 2.19 includes a list of
all outstanding loans made by the Seller to any employee of the Business.
2.20. Company Products. Except as set forth on Schedule 2.20, there are
no statements, citations or decisions issued by any Governmental Authority
within the past five (5) years that any product manufactured, marketed or
distributed by the Business (a "Company
<PAGE>
Product") is, in whole or in part, defective or fails to meet any standard
promulgated by any such Governmental Authority or Underwriters' Laboratories,
Inc.
2.21. Books and Records. The books and records of the Business
accurately reflect, in all material respects, the business, operations and
affairs of the Business, including but not limited to the accurate and timely
reflection thereon of any and all material transactions between the Seller and
any of its shareholders, officers, directors or affiliates, including DSI.
2.22. Employee Benefit Plans. Schedule 2.22(a) is a true and complete
list of all pension, retirement, disability, medical, dental or other health,
life insurance or death benefit, profit sharing, deferred compensation,
vacation, sick, holiday or other paid leave, severance and fringe benefit plans
or arrangements (the "Plans") maintained, or contributed to, by the Seller with
respect to past or present employees of the Seller or an ERISA Affiliate (as
hereinafter defined) or their dependents or other affiliated parties, including
but not limited to any "employee benefit plans" (as defined in Section 3(3) of
ERISA), welfare plans and pension plans (as defined in Sections 3(1) and 3(2),
respectively, of ERISA) employment contracts which are maintained by the Seller
or an ERISA Affiliate (as hereinafter defined) in respect of, or which otherwise
cover, any current or former employees of the Seller and any eligible
beneficiaries and contingent beneficiaries of said current and former employees.
For purposes of this Agreement, an "ERISA Affiliate" means each trade or
business (whether or not incorporated) which, together with the Seller would be
treated as a single employer under Sections 4001(b)(l) or 4001 (a)(14) of ERISA
or Sections 414 (b), (c), (m), (n) or (o) of the Internal Revenue Code of 1986,
as amended (the "Code").
2.23. Compliance with Various Laws. Except as set forth on Schedule
2.23(a), each of the Plans and any related trust agreement, annuity contract,
insurance contract or funding instrument, is currently, and has been in the
past, in compliance in all material respects with all applicable laws, orders,
notices, rules and regulations including, but not limited to, ERISA and the
Code. Each of the Plans which is an "employee benefit pension plan," as defined
in Section 3(2) of ERISA, and which is intended to be a qualified plan under
Code Section 401(a), and any related trust called for under the Code which is
intended to be exempt from tax under Code Section 501(a), has been issued a
favorable determination letter by the Internal Revenue Service of the Department
of the Treasury (the "Service") and no event has occurred or condition exists
which could adversely affect such determination letter, except as otherwise set
forth on Schedule 2.23(a). Except as set forth on Schedule 2.23(b), all material
reports, notices, descriptions and applications relating to the Plans required
by any law, ordinance, rule, regulation or government agency have been timely
filed and/or distributed as required thereby. Except as set forth on Schedule
2.23(c), all contributions required to be made by the Plans on or before the
date hereof have been, and all contributions required to be made before the
Closing, with respect to such Plans under the terms of such plans, ERISA, the
Code or by contract or other applicable law and all insurance premiums will be
timely paid. Except as set forth in Schedule 2.23(c), there are no claims for
benefits under any employee benefit plan, nor will there be, as of the Closing,
any such claim other than to the extent either funded under a related trust,
annuity contract, insurance contract or funding instrument or fully and
completely reserved against on: (i) the books and records of the Seller at the
close of business on the business day next preceding the Closing; or (ii) the
Initial Balance Sheet. With respect to each of the Plans, neither the Seller,
nor, to the knowledge of the Seller and DSI, any Plan fiduciary, has engaged in
any material transaction in violation of Section 406(a) or (b) of ERISA (for
which no exemption exists) or any "prohibited transaction" as defined in Section
4975(c)(1) of the Code (for which no exemption exists).
<PAGE>
Neither the Seller nor DSI has any knowledge of any pending or threatened claims
or lawsuits with respect to any of the Plans.
2.24. Excise Tax Liability. Neither the Seller nor any of its ERISA
Affiliates has any excise tax liability under Code Sections 4971, 4972, 4976,
4979 or 4980B, and neither the Seller nor DSI is aware of any circumstances
which would give rise to such excise tax liability.
2.25 Certain Exclusions. Purchaser has made due diligence
investigations in respect of Seller's Assets and Purchaser is concurrently
herewith entering into the Management Services Agreement to manage the Business.
No representation or warranty is made hereunder as to any matter on which
Purchaser has actual knowledge. Except as set forth in Section 4.3, Seller shall
have no liability in respect of representations or warranties made under this
Agreement, it being understood that the sole consequence of any
misrepresentation or breach of warranty shall be the resulting right of
Purchaser, in accordance with the provisions of Section 9.16, not to close the
transactions contemplated hereby. In no event shall any fact or circumstance
which arises from any act or omission by Purchaser ,under the Management
Services Agreement or otherwise, constitute a breach of a representation or
warranty hereunder. Seller makes no representation or warranty whatsoever except
as expressly set forth in this Agreement. Seller shall be deemed to have
"knowledge" only of matters known to Mark Hanson or John Bulman.
ARTICLE III
Representations and Warranties of the Purchaser.
The Purchaser and Genco hereby jointly and severally warrant to the
Seller as follows:
3.1. Organization and Authority. Each of Genco and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. The copy of the articles of
incorporation, and by-laws of each of Purchaser and Genco attached hereto as
Schedule 3.1 is complete and correct, and there are no dissolution, liquidation
or bankruptcy proceedings pending, contemplated by or threatened against the
Purchaser or Genco.
3.2. Absence of Conflict. Neither the execution nor delivery by the
Purchaser or Genco, the compliance by the Purchaser or Genco with the terms and
conditions of this Agreement nor the consummation by the Purchaser or Genco of
the transactions contemplated hereby will (i) conflict with any of the terms,
conditions or provisions of the articles of incorporation, like constituent
instruments, regulations or other constituent instruments of the Purchaser or
Genco, (ii) violate any provision of, or require, other than as set forth on
Schedule 3.2, any consent, authorization or approval under any law or
administrative regulation or any judicial, administrative or arbitration order,
award, judgment, writ, injunction or decree applicable to, or any governmental
permit or license issued to, the Purchaser or Genco or (iii) conflict with,
result in a breach of, constitute a default or event of default under (whether
by notice or lapse of time, or both) or accelerate, or permit the acceleration
of, the performance required by, or require any consent, authorization or
approval under, any indenture, mortgage, lien, lease, agreement or instrument to
which the Purchaser or Genco is a party or by which the Purchaser or Genco may
be bound.
3.3. Power and Authority. Each of the Purchaser and Genco has the power
to execute, deliver and carry out the terms and provisions of this Agreement in
accordance with its
<PAGE>
terms. This Agreement has been duly authorized, executed and delivered by the
Purchaser and Genco and constitutes a valid and binding obligation of the
Purchaser and Genco enforceable in accordance with its terms.
3.4. Sufficient Funds. The Purchaser has, and will have as of the
Closing (as hereinafter defined), the financial capability to purchase the
Acquired Assets and satisfy the Assumed Liabilities on the terms and conditions
contained in this Agreement. The financial information regarding the Purchaser
and Genco heretofore provided to the Seller or DSI accurately reflects, in all
material respects, the financial condition of the Purchaser.
3.5. Brokers or Finders. The Purchaser is not obligated, directly or
indirectly, to any person for investment banking, brokerage or finders' fees,
agents' commissions or any similar charges in connection with the Agreement or
the transactions contemplated hereby.
3.6. Certain Exclusions. Seller and DSI made due diligence
investigations in respect of Purchaser and Seller is concurrently herewith
entering into the Management Services Agreement to engage Purchaser to manage
the Business. No representation or warranty is made hereunder as to any matter
on which Seller or DSI has actual knowledge. Except as set forth in Section 4.3,
Purchaser shall have no liability in respect of representations or warranties
made under this Agreement, it being understood that the sole consequence of any
misrepresentation or breach of warranty shall be the resulting right of Seller
and DSI, in accordance with the provisions of Section 9.16, not to close the
transactions contemplated hereby. In no event shall any fact or circumstance
which arises from any act or omission by Seller or DSI ,under the Management
Services Agreement or otherwise, constitute a breach of a representation or
warranty hereunder. Purchaser makes no representation or warranty whatsoever
except as expressly set forth in this Agreement. Purchaser shall be deemed to
have "knowledge" only of matters known to Herbert S. Shear or Larry
Schoeneberger.
ARTICLE IV
Covenants of the Seller and DSI
The Seller and DSI hereby jointly and severally covenant and agree as
follows:
4.1. Confidentiality. From and after the date hereof and until the
termination of this Agreement pursuant to Section 9.16 hereof, the Seller and
DSI will hold in confidence, and will cause all of its affiliates to hold in
confidence, all knowledge or information of a confidential nature which is
related to the Business (including, but not limited to, customer lists and
intellectual property rights) and not disclose, publish or use the same
provided, however, that the foregoing restrictions shall not apply to any
portion of the foregoing which (a) becomes generally available to the public, in
any manner or form, through no fault, action or omission of the Seller or DSI,
(b) is independently developed by the Seller or DSI if they previously had not
had any access to the foregoing knowledge or information, (c) is released for
disclosure, with Purchaser's express prior written consent, (d) is required to
be disclosed by a Governmental Authority or otherwise required by law or in
order to establish rights under this Agreement or any other agreements referred
to herein or (e) is necessary to be disclosed in order to comply with applicable
law. In the event of any such disclosure, the Seller and DSI shall furnish to
the Purchaser as much advance notice with respect thereto as is reasonably
possible in order that the Purchaser may seek a protective order with respect to
disclosure or take such other and further
<PAGE>
action as may, in the opinion of the Purchaser, be considered by the Purchaser
to be desirable in order to preclude or limit disclosure thereof.
4.2. Non-Competition.
(a) From and after the Closing (as hereinafter defined), and
for the next succeeding five (5) years (the "Restricted Period"), neither Seller
nor DSI, nor any subsidiary or affiliate of the Seller or DSI, shall, directly
or indirectly, or in whole or in part, (i) engage in the business of computer
refurbishment and distribution or computer return management in North America,
South America and Western Europe (the "Competitive Activity") or (ii) become
interested in any person engaged in such Competitive Activity in any capacity
including, but not limited to, as a partner, shareholder, principal, agent,
representative, supplier, trustee, employee or consultant; provided, however,
that the foregoing shall not prohibit either the Seller or DSI or any subsidiary
or affiliate thereof from owning up to 2% of the issued and outstanding capital
stock of any corporation whose shares are listed for trading on the, the New
York Stock Exchange, the American Stock Exchange, NASDAQ National Market or
other publicly recognized stock exchange.
(b) From and after the Closing, until the third anniversary
thereof, neither Seller nor DSI shall, without the express prior written consent
of the Purchaser, directly or indirectly, hire or employ or engage as
independent contractor any present employee of the Seller or DSI, with respect
to the Business, or directly or indirectly hire or encourage, in any way, any
employee of the Purchaser or the Business hired by the Purchaser to leave such
employment.
From and after the date of this Agreement until the earlier to
occur of the Closing or the 180th day after the termination of this Agreement,
neither Purchaser nor Genco nor any of their affiliates will directly or
indirectly (i) disclose or use any confidential or proprietary information
regarding Buyers of the products and services offered by the Business, or (ii)
conduct any business whatsoever with any Buyer or (iii) hire or otherwise retain
any person who was at any time during the one-year period preceding the date of
this Agreement an employee or consultant to Seller; provided, however, that this
clause (iii) shall be void and have no further effect in the event of a
termination of this Agreement pursuant to the second paragraph of Section
9.16(c) hereof. Except as provided in this paragraph, GMC and its affiliates
shall have no other obligations to Datatrend with respect to confidentiality and
non-competition.
(c) The parties hereto acknowledge that any breach or
threatened breach of any of the covenants contained herein would cause
irreparable harm to the aggrieved party and that money damages would not, alone,
provide an adequate remedy to the aggrieved party. The aggrieved party shall
have all of the rights and remedies available under law, or in equity, to a
party enforcing any such covenants, each of such rights and remedies to be
independent of the other and severally enforceable including, but not limited
to, the right to have such covenants enforced by any court of competent
jurisdiction including, but not limited to, through temporary injunctive relief,
temporary restraining order and/or permanent injunctive relief, all without
requirement for the posting or provision of any bond or other security, which
requirements are hereby expressly waived by the Seller and DSI. No violating
party, nor any affiliate or subsidiary thereof, shall raise as a defense to the
granting of any such relief that the person requesting any such relief has an
adequate remedy at law.
<PAGE>
(d) Each of the parties hereto acknowledges and agrees that
the covenants set forth herein are reasonable in duration and scope and in all
other respects. If any court determines that any such covenants, or any part
thereof, are invalid or unenforceable, the remaining covenants shall not thereby
be affected and they shall be given full effect, without regard to the invalid
portions. If any court determines that all or any part of the covenants
contained herein are unenforceable because of the duration or scope of such
provision, such court is requested to reduce the duration or scope of such
provision, as the case may be, so that, in its reduced form, such provisions
shall then be enforceable.
(e) The parties hereto intend to and do hereby confer
jurisdiction to enforce the covenants contained herein upon the courts of any
jurisdiction within the United States. If the courts of any one or more of such
jurisdictions hold such covenants unenforceable by reason of the breadth of
their scope, or otherwise, it is the intention of the parties that such
determination not preclude, or in any way affect, the right of the Purchaser to
the relief provided above in the courts of any other jurisdiction within the
United States as to breaches of such covenant in such other respective
jurisdictions, such covenants as they relate to each jurisdiction being, for
this purpose, severable and independent covenants.
4.3. Indemnification of the Purchaser. From and after the Closing (as
hereinafter defined), the Seller and DSI shall jointly and severally indemnify,
defend and hold harmless the Purchaser, and its affiliates, officers, directors,
agents, representatives and employees (hereinafter collectively referred to as
the "Purchaser Indemnified Parties"), from and against any and all liabilities,
loss, cost, damage, expense, fines or penalties (including, but not limited to,
the reasonable fees, costs and expenses of counsel incurred by the Purchaser
with respect to the investigation of any breaches of warranties, representations
or covenants of the Seller or DSI or of any Retained Liabilities) arising, in
whole or in part, out of (i) any misrepresentation or breach of any
representation or warranty of the Seller or DSI under Section 2.3, the first
sentence of Section 2.5, and Section 2.16, (ii) the failure of the Seller or DSI
to comply with any of the covenants or agreements of the Seller or DSI contained
herein, (iii) the benefit plans and other benefits of employees of the Seller or
DSI up to and including the Closing Date (as hereinafter defined) and (iv) any
Retained Liabilities (each a "Loss").
4.4. Accounts Receivable. Except for receivables which are not included
in the Acquired Assets, from and after the Closing (as hereinafter defined), the
Seller does hereby agree to remit, or cause to be remitted, free and clear of
any liens, claims, charges or encumbrances, of whatever nature, to the
Purchaser, or as may be directed by the Purchaser, any and all payments received
by or on behalf of the Seller with respect to products or services of the
Business which were sold or rendered prior to the Closing (as hereinafter
defined), within five (5) days of receipt thereof by the Seller, or any
financial or other intermediary by or on behalf of the Seller. Any such sum not
so received by the Purchaser within five (5) days of receipt therein by the
Seller shall bear interest, until so received by the Purchaser, from and after
such fifth day after receipt by the Seller, at the prime rate as may be
announced from time to time by National City Bank (the "Prime Rate"), plus three
percent (3%). The foregoing provision shall not apply to the Returned Assets (as
hereinafter defined).
If, within thirty (30) days following the Closing, the Purchaser has
been unable to liquidate certain of the Acquired Assets (consisting only of
Accounts or Inventory) by such date and does not wish to take any further action
to liquidate, the Purchaser shall notify the Seller in writing and shall assign
and transfer such assets back to the Seller (the "Returned Assets").
<PAGE>
The Purchaser shall thereafter have no further right, title or interest in and
to the Returned Assets or the proceeds thereof, all of which shall belong
exclusively to the Seller.
4.5. Permits. The Seller, prior to the Closing, will complete the
appropriate applications for transfer of the Permits which are transferable and
to take any other action which may be necessary or appropriate or which may be
reasonably requested by the Purchaser to effect, prior to the Closing (as
hereinafter defined), the transfer of the Permits and the Environmental Permits.
The foregoing provisions
4.6. Change of Name. Immediately following the Closing (as hereinafter
defined) the Seller shall change its name to a name not similar in any way to
Datatrend and shall thereupon promptly advise, the Purchaser in writing that the
same has been accomplished and provide a copy of all significant documentation
with respect thereto to the Purchaser.
4.7. Vesting in Datatrend Pension Benefit Plans. Each employee of
Datatrend shall be fully vested in his or her accrued benefit under each of the
Plans listed on Schedule 2.28(a) which is an employee pension benefit plan,
within the meaning of Section 3(2) of ERISA, upon the Closing Date and the
Seller shall amend each such pension benefit plan as necessary to vest such
employees as of the Closing Date.
4.8. Operation of Business Prior to the Closing Date. From and after
the date of the Agreement and until the Closing (as hereinafter defined) the
Seller shall, absent the express prior written consent of the Purchaser, (i) not
pay any dividend or other distribution of any kind, whether directly or
indirectly, to its stockholder;(ii) maintain insurance against loss to the
properties and assets of and such other insurance with respect to their
properties and assets as has heretofore been maintained; (iii) not permit the
Business to sell (other than sales in the ordinary course of business consistent
with this Agreement), dispose of or encumber or enter into any agreement for the
sale, disposition or encumbrance of all, or any part of, the properties or
assets of the Business, except for the Permitted Liens; (iv) not to enter into
any employment contract or increase any employees compensation other than in
accordance with the terms of this Agreement; (v) not acquire or agree to acquire
by merging or consolidation with, or by purchasing any substantial portion of
the assets of, or by any other manner, any business or corporation, partnership,
association, or other business organization or division thereof or otherwise
acquire or agree to acquire any assets other than in the ordinary course of
business consistent with past practice and the Agreement; (vi) comply with all
foreign, federal, state, and local laws, ordinances, rules, regulations and
orders applicable to the Business and to the conduct of its business; (vii)
immediately advise the Purchaser, in writing, of the threat or commencement of
any dispute, claim, action, suit, proceeding, arbitration or governmental
investigation against the Seller; (viii) not enter into any new real property
leases or extend existing real property leases, except on a month-to-month
basis; (iv) seek to continue to maintain existing business relationships with
suppliers and customers to the extent that such relationships are beneficial to
the Business; (v) keep its books of account, records and files in the ordinary
course and in accordance with existing practices; and (vi) not commit itself to
take, or omit to take, any action volatile, directly or indirectly, or in whole
or in part, of this Agreement.
4.9. Best Efforts. The Seller and DSI shall use their best efforts to
satisfy the conditions precedent contained in Sections 7.1 and 7.2. In addition,
the Seller shall use their reasonable best efforts to cooperate in promptly
providing to the Purchaser information
<PAGE>
reasonably requested by the Purchaser in connection with its due diligence
inquiries and in preparing the Proxy Statement (as hereinafter defined).
4.10 Insurance. From and after the Closing, Seller and DSI shall
maintain directors and officers liability insurance for the benefit of Mark A.
Hanson, upon such terms and in such amounts as were in effect immediately prior
to the Closing until the first anniversary of the Closing.
ARTICLE V
Covenants of the Purchaser and Genco
The Purchaser and Genco jointly and severally covenant and agree as
follows:
5.1. Best Efforts. The Purchaser and Genco shall use its reasonable
best efforts to satisfy the conditions precedent contained in Section 6.4. In
addition, each of the Purchaser and Genco shall use its reasonable best efforts
to cooperate in promptly providing to the Seller information requested by the
Seller for the purpose of preparing the Proxy Statement (as hereinafter
defined).
ARTICLE VI
Additional Agreements
Section 6.1. Access to Information.
(a) The Seller and DSI shall afford to the Purchaser and its
accountants, counsel, financial advisors and other representatives (the
"Purchaser Representatives"), full access during normal business hours
throughout the period prior to the Closing to all of their respective
properties, books, contracts, commitments and records (including, but not
limited to), and, during such period, shall furnish promptly to the Purchaser
and the Purchaser Representatives: (i) a copy of each report, schedule and other
document filed or received by any of them with the SEC in connection with the
transactions contemplated by this Agreement or which may have a material effect
on their respective businesses, properties or personnel; and (ii) such other
information concerning their respective businesses, properties and personnel as
the Purchaser or the Purchaser Representatives, shall reasonably request;
provided that no investigation pursuant to this Section 6.1 shall amend or
modify any representations or warranties made herein or the conditions to the
obligations of the respective parties to consummate the transactions
contemplated hereby.
(b) The Seller and DSI shall promptly advise the Purchaser in
writing of any change or the occurrence of any event after the date of this
Agreement having, or which, insofar as can reasonably be foreseen, in the future
may have, any material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or prospects of
the Seller or DSI.
Section 6.2. Proxy Statement. The parties acknowledge and agree that
this Agreement and the transactions contemplated hereby shall be submitted to
the stockholders of DSI for their approval as provided in Section 6.3 of this
Agreement. In connection with the solicitation of proxies from DSI's
stockholders for such approval, DSI shall prepare and file with the SEC as soon
as is reasonably practicable after the date hereof (and in no event later than
September 30, 1997), a proxy statement prepared in accordance with Section 14(a)
of the
<PAGE>
Exchange Act and Regulation 14A thereunder (the "Proxy Statement"). DSI shall
provide the Purchaser with the opportunity to review and comment upon those
sections of the Proxy Statement that pertain to the Purchaser or the
transactions contemplated by this Agreement before it is filed with the SEC. The
information provided and to be provided by DSI and the Seller for use in the
Proxy Statement shall be true and correct in all material respects without
omission of any material fact which is required to make such information not
false or misleading as of the date thereof and in light of the circumstances
under which given or made. Prior to the date of approval of the transactions
contemplated hereby by the stockholders of DSI, each of DSI and the Seller shall
correct promptly any information provided by it to be used specifically in the
Proxy Statement that shall have become false or misleading in any material
respect and shall take all steps necessary to file with the SEC and have cleared
by the SEC any amendment or supplement to the Proxy Statement so as to correct
the same and to cause the Proxy Statement as so corrected to be disseminated to
the stockholders of DSI to the extent required by applicable law.
Section 6.3. Stockholders' Approval. DSI shall, as promptly as
practicable, submit this Agreement and the transactions contemplated hereby for
the approval of its stockholders at a meeting of stockholders and, subject to
the fiduciary duties of the Board of Directors of DSI under applicable law,
shall use its reasonable best efforts to obtain stockholder approval and
adoption (the "DSI Stockholders' Approval") of this Agreement and the
transactions contemplated hereby. Such meeting of stockholders shall be held as
soon as permissible following the date upon which the Proxy Statement has been
cleared by the SEC and the definitive Proxy Statement has been filed with the
SEC in accordance with Regulation 14A promulgated by the SEC under the Exchange
Act. Subject to the fiduciary duties of the Board of Directors of the Company
under applicable law, DSI shall, through its Board of Directors, recommend to
its stockholders approval of the transactions contemplated by this Agreement.
DSI (i) acknowledges that a breach of its covenant contained in this Section
6.3(a) to use its best efforts to convene a meeting of its stockholders and call
for a vote thereat with respect to the approval of this Agreement and the
transactions contemplated hereby will result in irreparable harm to the
Purchaser which will not be compensable in money damages and (ii) agrees that
such covenant shall be specifically enforceable and that specific performance
and injunctive relief shall be a remedy properly available to the Purchaser for
a breach of such covenant.
Section 6.4. Agreement to Cooperate.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto shall use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including using its
reasonable efforts to obtain all necessary or appropriate waivers, consents and
approvals to effect all necessary registrations, filings and submissions, and to
lift any injunction or other legal bar to the transactions contemplated hereby
(and, in such case, to proceed with such transactions as expeditiously as
possible); subject, however, to the requisite vote of the stockholders of DSI.
Reference is made to Section 9.3 for certain limitations on the operation of
this Section.
(b) In the event any litigation is commenced by any person or
entity relating to the transactions contemplated by this Agreement, each party
shall have the right, at its own expense, to participate therein, and no other
party will settle any such litigation without the consent of each party hereto,
which consent will not be unreasonably withheld.
<PAGE>
Section 6.5. Public Statements. The parties shall consult with each
other prior to issuing any press release or any written public statement with
respect to this Agreement or the transactions contemplated hereby and shall not
issue any such press release or written public statement prior to such
consultation; however, DSI shall be permitted to issue such public statements as
are required by applicable laws, including, but not limited to, a report on Form
8-K, and shall promptly furnish to the Purchaser a copy of any such public
statements.
Section 6.6. Notification of Certain Matters. Each of the Seller, DSI
and the Purchaser agrees to give prompt notice to each other of, and to use
their respective reasonable best efforts to prevent or promptly remedy: (i) the
occurrence or failure to occur, or the impending or threatened occurrence or
failure to occur, of any event that would be likely to cause any of its
representations or warranties in this Agreement to be untrue or inaccurate in
any material respect at any time from the date hereof to the Closing Date; and
(ii) any material failure on its part to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.6
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
ARTICLE VII
Conditions of Closing
The respective obligations set forth herein of the Seller and the
Purchaser to consummate the transactions contemplated hereby shall be subject to
the fulfillment, on or before the Closing Date (as hereinafter defined), in the
case of the obligations of the Purchaser, of the conditions set forth in
Sections 7.1 and 7.2 and, in the case of the obligations of the Seller, of the
conditions set forth in Sections 7.1 and 7.3.
7.1. Conditions to Obligation of Seller and Purchaser.
(a) No Orders. There shall be in force no order or decree
restraining, enjoining, prohibiting, invalidating or otherwise preventing the
consummation of the transactions contemplated by this Agreement.
(b) No Litigation. There shall not be instituted or pending
any action, proceeding, investigation, application or counterclaim by or before
any Governmental Authority or any court: (i) challenging or seeking to make
illegal, delay or otherwise directly or indirectly restrain or prohibit the
Purchaser's acquisition of all, or any portion of, the Acquired Assets; or (ii)
seeking to prohibit or limit the ownership or operation by the Purchaser of any
portion of the business or assets of the Seller comprising the Acquired Assets.
(c) Consents and Approvals. Any and all consents, orders,
permits, licenses, qualifications, authorizations or approvals from any and all
Governmental Authorities and any other third parties required for the
consummation of the transactions pursuant to this Agreement shall have been duly
obtained.
(d) DSI Stockholders' Approval. This Agreement and the
transactions contemplated hereby shall have been approved and adopted by the
requisite vote of the stockholders of DSI under applicable law.
7.2. Condition to Obligations of the Purchaser.
<PAGE>
(a) Representations and Warranties of the Seller and DSI;
Performance of Covenants. The representations and warranties of the Seller and
DSI shall be true and correct in all material respects when made and as of the
Closing (as hereinafter defined) with the same force and effect as though made
at and as of such date. The Seller and DSI shall have complied in all material
respects with all covenants and conditions contained herein required to be
performed or complied with by the Seller and DSI at or before the Closing (as
hereinafter defined).
(b) Opinion of Counsel for the Seller and DSI. Purchaser shall
have received from counsel to the Seller and DSI, an opinion, dated the Closing
Date (as hereinafter defined), in the form attached hereto as Exhibit 1 hereto.
(c) Permits, Consents. Any and all consents by Governmental
Authorities or third parties that are required for the consummation of the
transactions contemplated hereby will have been obtained, in form reasonably
satisfactory to the Purchaser.
(d) Title. On the Closing Date (as hereinafter defined) the
Purchaser shall receive evidence satisfactory to the Purchaser that the Acquired
Assets are free and clear of any and all Liens, (except for Permitted Liens).
(e) Settlement of Accounts. Purchaser shall have received
evidence or assurance satisfactory to Purchaser, in its sole discretion, of the
settlement or compromise of those accounts payable of Seller set forth on
Schedule 7.2 hereto.
(f) Employment Agreement. The Seller and Mark A. Hanson shall
have terminated the employment agreement, dated as of January 30, 1995, by and
between the Seller and Mr. Hanson, and the Seller and DSI shall have released
Mr. Hanson from all obligations under said agreement, including specifically
those provided in Section 5 of the employment agreement, pursuant to a release
satisfactory in form and substance to the Purchaser (the "Hanson Release").
Purchaser and Mark A. Hanson hereby agree at the Closing to execute and deliver
an employment agreement in form satisfactory to the Purchaser ("Employment
Agreement"), which shall provide, among other things, for the purchase by the
Purchaser from Mr. Hanson of the shares of common stock of DSI owned by Mr.
Hanson at the time of the Closing. Purchaser hereby agrees to contribute such
shares of DSI common stock to DSI immediately following the Closing.
7.3. Conditions to Obligations of the Seller and DSI.
(a) Representations and Warranties of the Purchaser;
Performance of Covenants. The representations and warranties of the Purchaser
contained herein shall be true and correct in all material respects when made
and as of the Closing Date (as hereinafter defined) with the same force and
effect as though made at and as of such time. The Purchaser shall have complied
in all material respects with all covenants and conditions contained herein
required to be performed or complied with by the Purchaser at or before the
Closing Date (as hereinafter defined).
(b) Opinion of Counsel for the Purchaser. The Seller and DSI
shall have received from Thorp Reed & Armstrong, counsel for the Purchaser, an
opinion, dated the Closing Date (as hereinafter defined), in the form attached
hereto as Exhibit 2.
<PAGE>
7.4. Permits, Consents, etc. Any and all consents relating to
agreements and the transactions contemplated hereby and required to be obtained
by the Seller or DSI on or before the Closing Date (as hereinafter defined),
pursuant to this Agreement shall have been duly obtained, in form reasonably
satisfactory to the Purchaser.
7.5 Fairness Opinion. Seller shall have received the opinion of its
investment banker that the transaction contemplated hereby is fair to the
shareholders of DSI.
ARTICLE VIII
The Closing
The Closing shall be held at the offices of Thorp Reed & Armstrong, One
Riverfront Center, Pittsburgh, Pennsylvania 15222, as soon as is possible after
the satisfaction of all conditions precedent or at such other time or place as
may be reasonably agreed upon by the Purchaser, the Seller and DSI (herein
referred to as the "Closing" or the "Closing Date").
8.1. Documents to be delivered by the Seller and DSI. In addition to,
and without limiting any of the other provisions of this Agreement, the Seller
agrees to deliver to the Purchaser at the Closing:
(a) the opinion of counsel consistent with Section 7.2(b)
hereof;
(b) a bill of sale in the form attached hereto as Exhibit 3
and such and other instruments of conveyance as are, in the opinion of counsel
for the Purchaser, necessary and desirable in order to effect transfer of the
Acquired Assets to Purchaser;
(c) a certificate, dated the Closing Date, certifying to the
fulfillment of the conditions set forth in Section 7.2(a), signed by the
President and Secretary of each of the Seller and DSI in the form attached
hereto as Exhibit 4.
(d) all governmental, administrative or regulatory consents
and approvals required pursuant to the terms hereof;
(e) the Hanson Release; and
(f) such other consents, approvals, agreements, certificates
and documents as the Purchaser or its counsel may reasonably request.
8.2. Documents to be delivered by the Purchaser. In addition to, and
without limiting any of the other provisions of the Agreement, the Purchaser
agrees to deliver to the Seller and to take the following action at the Closing:
(a) opinion of counsel consistent with Section 7.3(b) hereof;
(b) the Purchase Price to DSI in accordance with Section 1.4
hereof;
(c) an instrument of assumption with respect to the Assumed
Liabilities in the form attached hereto as Exhibit 5;
<PAGE>
(d) a certificate, dated at the Closing Date, certifying to
the fulfillment of the conditions set forth in Section 7.3(b), signed by the
President and Secretary of the Purchaser in the form of Exhibit 6;
(e) all governmental, administrative or regulatory consents
and approvals required pursuant to the terms hereof;
(f) the Employment Agreement; and
(g) such other consents, approvals, agreements, certificates
and other documents as the Seller, DSI or their counsel may reasonably request.
ARTICLE IX
Miscellaneous
9.1. Further Assurance. From time to time, at the Purchaser's request
(whether at or after the Closing Date), and without further consideration, the
Seller will execute and deliver such further instruments of conveyance and
transfer as the Purchaser may reasonably request in order to assist the
Purchaser in the collection or reduction to possession of any of the Acquired
Assets. From and after the Closing, the Purchaser shall be constituted as the
true and lawful attorney of the Seller, with full power of substitution, in the
name of the Seller but for the benefit and at the expense of the Purchaser, (i)
to collect for the account of the Purchaser all items to be sold or transferred
or intended to be sold and transferred to the Purchaser as provided herein and,
(ii) to institute and prosecute all proceedings which the Purchaser may
reasonably deem necessary in order to collect or enforce any right or title of
any kind in or to the Acquired Assets and to defend or compromise any and all
actions, suits or proceedings in respect of any of the Acquired Assets.
9.2. Survival. Except as otherwise provided in this Section 9.2, the
representations and warranties of the parties contained herein, or any document,
statement or certificate furnished, or to be furnished, to any party in
connection with and pursuant to the Agreement shall terminate effective upon the
Closing. Notwithstanding the foregoing, (i) those representations and warranties
contained in Sections 2.3 and the first sentence of Section 2.5 shall survive
forever the Closing and (ii) those representations and warranties relating to
the tax liability of the Seller or DSI with respect to the Business (which
include, without limitation, of the generality of the foregoing, Section 2.16
hereof) shall survive the Closing until the expiration of the applicable statute
of limitations periods.
9.3. Expenses. (a) Except as hereinafter provided, the Seller and DSI
will pay all costs and expenses attributable to the performance of and
compliance with all agreements and conditions contained in this Agreement to be
performed or complied with by either the Seller or DSI. The Purchaser will pay
all costs and expenses attributable to the performance of and compliance with
all agreements and conditions contained in this Agreement to be performed or
complied with by the Purchaser.
(b) Notwithstanding anything to the contrary provided herein,
the Purchaser agrees that it shall pay the following costs and expenses:
<PAGE>
(i) legal fees payable to counsel to the Seller and DSI in
connection with the negotiation of this Agreement and the Management
Services Agreement, based upon actual time and disbursements expended
by such counsel, up to a maximum of $30,000, which fees are to be paid
as monthly invoices are rendered by such counsel;
(ii) legal fees payable to counsel to the Seller and DSI in
connection with the preparation of the Proxy Statement, based on actual
time and disbursements expended by such counsel, until this Agreement
is terminated as provided in Section 9.16 hereof, which fees are to be
paid as monthly invoices are rendered by such counsel; and
(iii) fees of an investment banker or other financial advisor
to the Seller and DSI relating to the preparation and rendering of a
fairness opinion with respect to the transactions contemplated by this
Agreement, up to a maximum of $30,000, and, if such fees are
anticipated to be in excess of $30,000, the Purchaser shall not be
obligated to advance the amount of such excess unless it has consented
in advance to such expenditure.
The total amount of the foregoing fees and expenses advanced by the Purchaser
shall be deducted from the amount of the Purchase Price to be paid by the
Purchaser at Closing; provided, however, that with respect to the amount of
legal fees paid pursuant to clause 9.3(a)(ii) above, only up to $137,500 of the
total amount shall be so deducted. In addition, the Purchaser may, but shall not
be required to, make advances to the Seller and DSI in connection with the
defense of any litigation of the type described in Section 6.4 hereof. The
amount of any such advances, up to a maximum of $75,000, shall be deducted from
the Purchase Price paid by the Purchaser at the Closing, but any amounts in
excess of $75,000 shall not be so deducted. In the event that this Agreement is
terminated prior to the Closing, the Seller and DSI shall not be obligated to
the Purchaser for the foregoing amounts. Notwithstanding anything contained
herein to the contrary, unless advanced by Purchaser in accordance with this
Section 9.3, Seller and DSI shall not be required to incur any expenses in
connection with the defense of any litigation of the type described in Section
6.4 hereof.
9.4. Notice of Proceeding. Prior to the Closing, Purchaser, Seller and
DSI shall, upon becoming aware of any order or decree or any complaint praying
for an order or decree restraining, enjoining or seeking substantial damages in
connection with the consummation of this Agreement or the transactions
contemplated by this Agreement, or upon receiving any notice from any
Governmental Authority of its intention to institute an investigation into, or
institute a suit or proceedings restraining or enjoining, the consummation of
this Agreement or such transactions, or to nullify or render ineffective this
Agreement or such transactions, if consummated, promptly notify the other party
hereto, in writing, of such order, decree, complaint or notice.
9.5. Governing Law. The Agreement shall be governed by, and construed
in accordance with the internal laws, and not the law of conflicts, of the
Commonwealth of Pennsylvania.
9.6. Entire Agreement, Modification and Waiver. This Agreement,
including the Exhibits and Schedules hereto, constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior agreements, understandings, negotiations and discussions, whether oral
or written, of the parties and there are no warranties,
<PAGE>
representations or other agreements, express or implied, made to any party by
any other party in connection with the subject matter hereof except as may be
set forth herein. To the fullest extent permitted by applicable law, unless
otherwise expressly provided herein, no supplement, modification, waiver or
termination of the Agreement shall be binding unless executed, in writing, by
the parties to be bound thereby. No waiver of any provision of the Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
9.7. Notices. All notices, consents, requests, reports, demands or
other communications hereunder shall be in writing and may be delivered
personally, by registered or certified mail or by facsimile transmission.
If to Purchaser:
Herbert S. Shear
President and Chief Executive Officer
Genco Management Company
100 Papercraft Park
Pittsburgh, Pennsylvania 15238
Fax Number: (412) 826-0856
With a copy to:
James K. Goldberg, Esq.
Thorp, Reed & Armstrong
One Riverfront Center
Pittsburgh, Pennsylvania 15222-4895
Fax Number: (412) 394-2555
If to the Seller or DSI:
c/o Yitz Grossman
Director
Datatrend Services, Inc.
1515 Washington Street
Braintree, Massachusetts 02184
Fax Number: _________________
With a copy to:
Oscar D. Folger, Esq.
521 Fifth Avenue, 24th Floor
New York, New York 10175
Fax Number: (212) 697-7833
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. Notices given by registered or
certified mail or by facsimile transmission shall be deemed to have been given
three (3) days after being deposited in the mail
<PAGE>
or with the telegraph company with postage or other charges pre-paid. All other
notices shall be deemed to have been given when received.
9.8. Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute but one and
the same instrument.
9.9. Headings. The article and section headings in this Agreement are
for convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.
9.10. Record Retention. The Seller and DSI hereto agree to retain, for
a period of five (5) years from and after the Closing Date, and to make
available to Purchaser's agents, counsel, employees or representatives, all the
books, records and documents (including records with respect to accounts
receivable and accounts payable) (the "Records") relating to the Seller or the
Business which existed on the date preceding the Closing Date and which were in
its possession. From and after the Closing Date, upon reasonable written
request, the Seller shall furnish or cause to be furnished to the Purchaser and
its representatives, employees, counsel and accounts access, during normal
business hours and upon reasonable prior written request, the Records relating
to periods prior to the Closing Date, and shall permit such persons to examine
and copy at such persons' sole cost and expense, such Records to the extent
reasonably requested as is reasonably necessary for financial reporting and
accounting matters, the preparation and filing of any returns, reports or forms,
the defense of any claim or assertion or other appropriate commercial purposes.
Prior to the disposal or destruction of the records by the Seller or DSI, the
Seller or DSI, as the case may be, shall notify the Purchaser and give the
Purchaser an opportunity to obtain such Records.
9.11. Indemnity Claim. After the Closing, the Purchaser, the Seller and
DSI shall promptly give notice to each other after either of them obtains
knowledge of any claim, obligation, liability or action for which
indemnification may be sought hereunder or prompt written notice of the
commencement of any legal proceeding for which indemnification may be sought
hereunder, whichever occurs first, provided that the failure to give such notice
shall not adversely affect any right of indemnification under the Agreement
absent any material prejudice to the rights of the indemnifying party. The
indemnifying party shall be entitled to control the defense of any such legal
proceeding, retain counsel reasonably satisfactory to the indemnified party, at
the sole expense of the indemnifying party, and the indemnified party shall
cooperate with the indemnifying party in the defense of such claim and shall
have the right, but not the obligation, to participate in the defense at its own
expense. If the indemnifying party elects not to direct such defense, the
indemnified party shall have the right, at its own discretion, to direct such
defense at the indemnifying party's sole expense. The indemnifying party shall
have the right to compromise or settle (for money damages only), with the
indemnified party's prior written approval, any claim or litigation regarding
which it is required to indemnify. If the indemnified party refuses to approve
any compromise or settlement recommended by the indemnifying party which would
have concluded such claim or litigation but for the indemnified party's failure
to give approval, the indemnifying party's liability to the indemnified party
hereunder with respect to such claim or litigation shall not exceed the amount
which the indemnifying party would have paid pursuant to the proposed compromise
or settlement.
<PAGE>
9.12. Limitation.
(a) The obligations to indemnify and hold harmless pursuant to
Sections 4.3 and 9.2 hereof shall survive the consummation of the transactions
contemplated by this Agreement, provided that no party providing indemnification
hereunder shall be obligated to provide such indemnification unless such party
shall have received written notice thereof from the party seeking
indemnification within the applicable survival time period therefor as set forth
in Section 9.2. In no event, however, shall the amount of Losses under Section
4.3 hereof as to which the Purchaser shall be entitled to indemnification exceed
the total cash purchase price paid by the Purchaser pursuant to Section 1.4
hereof.
(b) The amount of any indemnifiable Losses (including
environmental indemnifiable Losses) will be net of any amount recovered by the
indemnified party under insurance policies covering such indemnified party
(unless such amounts received thereunder is subject to retroactive billing or
recapture by the insurer). The indemnified party shall use its reasonable
efforts, but shall be under no obligation to commence litigation with respect
thereto, to recover any amounts available under insurance policies covering such
indemnifiable Losses, shall advise the indemnifying party of the results of such
efforts and make available to the indemnifying party a copy of any and all
material documentation with respect to the efforts of the indemnified party with
respect to this subsection and the response, or responses, of any insurance
companies with respect thereto.
9.13. Cooperation. The parties hereto agree to cooperate with one
another in a reasonable manner so as to facilitate: (i) effective communications
to employees of the Seller as to the treatment to be afforded to them under the
various employment compensation programs and policies of the Purchaser; and (ii)
the timely filing of required government reports.
9.14. Gender and Number. Any personal pronouns used in the Agreement
shall include the other gender, whether used in the masculine, feminine or
neuter gender, and the singular shall include the plural and vice versa,
whenever and as often as may be appropriate.
9.15. Severability. If any provision of the Agreement or the
application thereof shall be invalid, illegal or unenforceable the remainder of
this Agreement shall remain in full force and effect and each court making any
such determination is requested to amend such provision in order that it may, in
such amended version, be enforceable.
9.16. Termination.
(a) Each of the parties does hereby agree that in the event
that the Closing shall not have occurred by the close of business on the first
anniversary of the date of this Agreement, for any reason (time being of the
essence with respect to the terms, covenants, representations and warranties
herein), other than in the event that the failure to so consummate this
transaction is based upon a breach by any party of its obligations under this
Agreement, any party hereto may, at its sole discretion, terminate this
Agreement. In addition, any party hereto may, at its sole discretion, terminate
this Agreement upon the termination of the Management Services Agreement for any
reason.
(b) In addition to the foregoing rights of termination, either
the Seller or DSI may terminate this Agreement in the event of: (i) a breach by
the Purchaser of any material representation, warranty or covenant made by the
Purchaser in this Agreement or the failure by the Purchaser to perform any
material obligation of the Purchaser hereunder; or (ii) a
<PAGE>
determination by the Board of Directors of DSI or the Seller, in the good faith
exercise of their fiduciary duties, that the transactions contemplated by this
Agreement are not in the best interests of the Seller or DSI or the stockholders
of either of them, subject to the provisions of Section 9.16(e)(i) hereof.
(c) In addition to the right of termination set forth in
Section 9.16(a) above, the Purchaser may terminate this Agreement (i) in the
event of a breach by the Seller of DSI of any material representation, warranty
or covenant made by the Seller or DSI hereunder or the failure of the Seller or
DSI to perform any material obligation hereunder; or (ii) if, as a result of the
Purchaser's due diligence inquiry with respect to the Seller and DSI, the
Purchaser reasonably determines that the representations and warranties of the
Seller and DSI are not true and correct in any material respect; or (iii) if the
Draft Final Balance Sheet prepared in accordance with Section 1.4 hereof shows
that the Negative Amount exceeds $3,000,000; or (iv) if the Purchaser becomes
aware of any potential liability under any federal, state or local law,
regulation, order, decree or ordinance regulating environmental or occupational
health and safety matters, which liability is significantly likely to occur,
and, if occurring, would have a material adverse effect on the Business.
In addition, the Purchaser shall have the right to terminate
this Agreement immediately if (i) the Seller or DSI shall commence any cause,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to either of them, or seeking to adjudicate either of them a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to their debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for the Seller or DSI or for all or any substantial part
of the assets of the Seller or DSI; or (ii) the Seller or DSI shall make a
general assignment for the benefit of creditors; or (iii) there shall be
commenced against the Seller or DSI any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of sixty (60) days; or (iv)
there shall be commenced against the Seller or DSI any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets, which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within thirty (30) days from the
entry thereof; or (v) the Seller or DSI shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in clauses (i), (ii), (iii) or (iv) above.
(d) Any party who elects to terminate this Agreement as
permitted herein shall promptly notify the other parties in writing of its
intention to terminate.
(e) In the event of a termination of this Agreement as
provided herein, the parties shall have no further obligations hereunder, except
as follows:
(i) In the event of a termination by the Seller or DSI
pursuant to Section 9.16(b)(ii) hereunder, the Seller and DSI shall pay
to the Purchaser an amount equal to all expenses incurred by the
Purchaser in connection with the transactions contemplated hereby,
including but not limited to those described in Section 9.3(b) hereof,
plus the amounts of all Advances (as defined in the Management Services
Agreement) made by the Purchaser to the Seller pursuant to the
Management Services Agreement plus the sum of $1,000,000.00. Such
amount shall be payable in cash or by
<PAGE>
the issuance of such number of shares of DSI common stock as would,
upon such issuance, constitute a majority of the issued and outstanding
common stock of DSI.
(ii) In the event of a termination by the Purchaser or by
Seller or DSI for any reason other than the applicability of Section
9.16(a) or 9.16(c)(iii) or (iv), or a breach by the Purchaser of a
representation, warranty or covenant made by it hereunder, then the
Seller and DSI shall reimburse the Purchaser for any amounts paid by
the Purchaser to counsel to the Seller and DSI in connection with the
transactions contemplated by this Agreement. Such counsel shall have no
obligation or liability whatsoever to reimburse any party for any
amount.
(iii) Any amounts payable by the Seller and DSI to the
Purchaser under this Section 9.16(e) shall be payable within ten (10)
days after demand is made therefor by the Purchaser. Any amounts not so
paid within such period shall bear interest until so paid at the Prime
Rate announced by National City Bank, Pittsburgh, Pennsylvania, plus
three percent (3%) and costs of collection.
(f) Reference is made to Section 4.2 for certain confidentiality and
non-compete provisions which shall apply after termination of this
Agreement.
9.17. Guaranty. By countersigning this Agreement, Genco guarantees the
obligations of GMC hereunder. This is a guaranty of payment, not of collection.
Datatrend shall not be required to proceed first against GMC before proceeding
against Genco on this guaranty.
9.18. Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement, or a breach hereof, except for matters covered by
Sections 4.1 and 4.2 hereof, shall be settled by arbitration in Pittsburgh,
Pennsylvania, before a panel of arbitrators selected by the American Arbitration
Association ("AAA") and in accordance with the Commercial Arbitration Rules of
AAA, and judgment upon the award may be enforced in any court having
jurisdiction thereof. The fees and costs of such arbitration, together with the
fees and costs of the attorneys for the parties, shall be apportioned between
the parties by the arbitrators.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
Datatrend, Inc.
By: /s/ Mark Hanson
______________________________________
Name: Mark Hanson
____________________________________
Title: President
___________________________________
Date: September 8, 1997
____________________________________
Datatrend Services, Inc.
By: /s/ Mark Hanson
______________________________________
Name: Mark Hanson
____________________________________
Title: President, CEO
___________________________________
<PAGE>
Date: September 8, 1997
____________________________________
Genco Management Company
By: /s/ Herbert S. Schear
______________________________________
Name: Herbert S. Schear
____________________________________
Title: President
___________________________________
Date: September 8, 1997
____________________________________
Genco, Inc.
By: /s/ Herbert S. Schear
______________________________________
Name: Herbert S. Schear
____________________________________
Title: President
___________________________________
Date: September 8, 1997
____________________________________
<PAGE>
EXHIBIT 10.2
MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT is made and entered into as of the 8th day of
September, 1997, by and between Datatrend, Inc., a Massachusetts corporation
("Datatrend"), and Genco Management Company, a Pennsylvania corporation ("GMC").
WHEREAS, Datatrend has requested GMC to provide certain
management, administrative and support services to Datatrend in connection with
its operations; and
WHEREAS, GMC has agreed to provide Datatrend with such
management, administrative and support services upon the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the mutual promises,
covenants and agreements herein, and intending to be legally bound hereby, the
parties agree as follows:
1. Services to be Performed.
(a) GMC agrees to provide to Datatrend during the term of this
Agreement management of the day-to-day business operations of Datatrend,
including but not limited to those management, administrative and support
services set forth on Exhibit A of this Agreement (collectively, the
"Services"). In no event, however, shall GMC have any responsibility or
liability with respect to environmental or occupational health and safety
matters under any federal, state or local laws, rules or regulations, arising
prior to the commencement of the Services. Datatrend agrees that, in the
performance of the Services, GMC shall have no fiduciary responsibilities to
Datatrend but shall have the right to take , and shall take, such actions as
GMC, in a commercially reasonable manner, deems to be appropriate with respect
to the management of Datatrend's operations, including but not limited to the
liquidation of Datatrend's inventory or other assets, the collection of accounts
receivable (including any discounting of the same), the compromise or settlement
of accounts payable, and the hiring or termination of employees of Datatrend
(subject, in the case of termination of employees, to the prior approval of Mark
A. Hanson).
(b) The parties understand and agree that, subject to the
authority of the Board of Directors of Datatrend. Datatrend through Mark Hanson
and its other officers shall cooperate with GMC in the performance of GMCAEs
duties hereunder during the term of this Agreement. Datatrend acknowledges and
agrees that any acts or actions of Mr. Hanson during the term of this Agreement
pursuant to the preceding sentence shall not be deemed to breach or conflict
with the obligations of Mr. Hanson under the employment agreement, dated January
30, 1995, by and between Mr. Hanson and Datatrend (the "Employment Agreement"),
including specifically Section 5 of the Employment Agreement.
2. Term of Agreement; Termination. (a) The term of this Agreement shall
commence on September 8, 1997 and shall continue until terminated as follows:
(i) by GMC by giving to Datatrend at least twenty (20) days' prior
written notice of its intent to terminate (A) within 90 days after GMC has paid
the sum of at least $500,000 to Datatrend pursuant to Section 4 hereof or within
30 days after GMC has paid at least $50,000 of additional funds pursuant to such
Section, or (B) in the event that the Board of Directors of Datatrend overrules
or countermands any decision made by GMC or policy implemented by GMC in the
performance of the Services hereunder, or (c) in the event that GMC becomes
aware of any potential liability under any federal, state or local law,
regulation, order, decree or ordinance regulating environmental or occupational
health and safety matters, which liability is believed by GMC to have a
potential material adverse effect on the Business; or
<PAGE>
(ii) by either party immediately upon the termination of the Purchase
Agreement, dated as of September 8, 1997, by and between GMC and Datatrend and
Datatrend Services, Inc. (the "Purchase Agreement").
(b) In addition, GMC shall have the right to terminate this
Agreement immediately if (i) Datatrend or Datatrend Services, Inc.
("DSI") shall commence any cause, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to
them, or seeking to adjudicate them a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to their debts,
or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for Datatrend or DSI or for all or any substantial
part of the assets of Datatrend or DSI; or (ii) Datatrend or DSI shall
make a general assignment for the benefit of creditors; or (iii) there
shall be commenced against Datatrend or DSI any case, proceeding or
other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of sixty (60) days; or (iv) there shall be commenced against
Datatrend or DSI any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets, which results in the
entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within thirty
(30) days from the entry thereof; or (v) Datatrend or DSI shall take
any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clauses (i), (ii),
(iii) or (iv) above.
3. Management Fee and Expenses. As consideration for providing the
Services, Datatrend shall pay to GMC for each month, without setoff,
counterclaim or deduction, the sum of $2,500.00 (such amount is hereinafter
referred to as the "Management Fee"), which fee shall be prorated in the case of
a partial month. In addition, Datatrend shall pay to GMC an amount equal to the
actual out of pocket costs of Direct Services (as hereinafter defined) provided
to Datatrend by or through GMC (the "Direct Services Fee"). For purposes of this
Agreement, the term "Direct Services" shall mean any products and
non-administrative services performed by non-executive personnel of GMC or
purchased by GMC from a third party, including an affiliate of GMC, on
commercially reasonable terms and provided to Datatrend, including but not
limited to those described on Exhibit B attached hereto. Direct Services shall
not include any allocation of general and administrative expenses or overhead
expenses of GMC or its affiliates. Within ten (10) days following the end of
each month, GMC shall provide Datatrend with an invoice for the Management Fee
and also showing in reasonable detail the manner in which the Direct Services
Fee was determined, and the Management Fee and Direct Services Fee shall be paid
by Datatrend within ten (10) days after the receipt of such invoice. A late fee
of 1% shall be payable with respect to any fees not paid when due as provided
herein.
In addition, GMC shall be entitled to receive any net
operating income of Datatrend during the term of this Agreement and shall
promptly reimburse Datatrend for any losses from the operations of Datatrend
during the term of this Agreement. All income or losses generated from the
liquidation of assets of Datatrend as of the date hereof or the discharge,
settlement or compromise of Datatrend's liabilities as of the date hereof shall
be excluded from the calculation of net operating income or losses under this
paragraph. For purposes of this
<PAGE>
Section 3, "net operating income" of Datatrend shall mean all net earnings
attributable to the Business, before taxes and interest, using the accrual
method of accounting in accordance with generally accepted accounting
principles, consistently applied with the principles heretofore used by
Datatrend.
4. Payments by GMC. GMC agrees that it will pay to Datatrend up to
$500,000 in the aggregate for the term of this Agreement (collectively, the
"Payments") in installments as needed to fund operating losses arising from the
ordinary course of Datatrend's business operations during the term of this
Agreement or for working capital; however, no portion of the Payments shall be
applied to any extraordinary items, including but not limited to costs
associated with litigation. GMC may, but shall not be obligated to, pay to
Datatrend additional sums in excess of $500,000. In the event of the termination
of this Agreement, Datatrend shall not be obligated to repay any Payments made
under this Section 4.
5. Access. Datatrend shall grant to GMC and its employees, officers,
agents, designees and representatives who are participating in the provision of
the Services full and complete access to the facilities, books, records, assets
and personnel of Datatrend in order to permit GMC to perform the Services in
accordance with this Agreement.
6. Release from Liability. Datatrend hereby remises, releases and
forever discharges, and for its successors and assigns, does hereby remise,
release and forever discharge, GMC and its successors, assigns, directors,
officers and employees from any and all liabilities, claims, demands, rights and
causes of action of whatever kind or nature arising out of or resulting from the
provision of Services hereunder, except to the extent that said liabilities
arise out of or result solely from the breach by GMC of its obligations
hereunder.
In addition, Datatrend agrees to indemnify, defend and hold harmless
GMC (and its directors, officers, employees, affiliates and assigns), to the
extent that Datatrend has insurance to cover such losses, from and against any
and all losses, damages (including incidental and consequential damages),
expenses (including court costs, reasonable attorney's fees, interest expenses
and amounts paid in compromise or settlement), suits, actions, claims,
penalties, liabilities or obligations, related to, caused by arising or on
account of the business of Datatrend, including but not limited to any claims
asserted against GMC relating in any way to the provision of Services hereunder
in conformity with the provisions hereof, or the failure of Datatrend to comply
with any covenant, provision or agreement of Datatrend contained herein.
Datatrend agrees to maintain in effect during the term of this
Agreement policies of insurance covering the assets and business of Datatrend in
such amounts and such types of coverage as GMC, in its sole discretion, deems to
be adequate. Datatrend shall, upon the execution of this Agreement, take all
actions necessary to ensure that GMC is named as an additional insured on all
policies of insurance covering the business or assets of Datatrend. Datatrend
shall promptly provide GMC with certificates of insurance showing that GMC has
been named as an additional insured and also stating that any notice of
non-renewal or cancellation or such policies shall be sent to GMC at least
thirty (30) days prior to such non-renewal or cancellation.
7. Limitation of Damages. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR CONSEQUENTIAL,
INCIDENTAL OR INDIRECT DAMAGES ARISING OUT OF THE PROVISION OF SERVICES OR
OTHERWISE UNDER THIS AGREEMENT. GMC ASSUMES NO OBLIGATION OR LIABILITY FOR ANY
ADVICE GIVEN IN
<PAGE>
CONFORMITY WITH THE PROVISIONS HEREOF WITH RESPECT TO THE PROVISION OF SERVICES
HEREUNDER; ALL SUCH ADVICE IS PROVIDED AND ACCEPTED AT DATATREND'S SOLE RISK.
GMC HAS MADE SUCH INVESTIGATION OF DATATREND'S AFFAIRS AS GMC DEEMED
APPROPRIATE, AND DATATREND HAS MADE NO REPRESENTATION OR WARRANTY WITH RESPECT
TO ITS FINANCIAL CONDITION, ASSETS, PROSPECTS OR ANY OTHER MATTER EXCEPT AS
PROVIDED HEREIN AND IN THE PURCHASE AGREEMENT.
8. Confidentiality and Non-Compete. GMC agrees that, during the term of
this Agreement and for six months thereafter except in connection with the
performance of Services hereunder, neither GMC nor any of its affiliates will
directly or indirectly (i) disclose or use any confidential or proprietary
information regarding Buyers of the products and services offered by the
Business or (ii) conduct any business whatsoever with any Buyer or (iii) hire or
otherwise retain any person who was at any time during the one-year period
preceding the date of this Agreement an employee or consultant to Datatrend;
provided, however, that this clause (iii) shall be void and have no further
force or effect in the event that this Agreement is terminated by GMC pursuant
to Section 2(b) hereof. For purposes of this Section 8, "Buyer" shall mean an
entity that was an existing buyer of the products and services offered by the
Business or conduct prior to the date of this Agreement and that was not, at
that date, an existing buyer of the products and services offered by GMC or its
affiliates. Except as set forth in this Section 8, GMC and its affiliates shall
have no other obligations to Datatrend with respect to confidentiality and
non-competition.
9. Force Majeure. Neither party shall be liable for any delay in the
performance of its obligations hereunder due to any cause beyond its reasonable
control, including, but not limited to, fires, floods, strikes, or other labor
disputes, accidents to machinery, delay in performing the Services because of
the installation or removal of data processing equipment, production shutdowns,
shortages of fuel, acts of sabotage, riots, precedence or priorities granted at
the request or for the benefit, directly or indirectly, of the federal or any
state government or any subdivision or agency thereof, delay in transportation
or lack of transportation facilities, or restrictions imposed by federal, state
or other governmental legislation or rules or regulations thereof.
10. Independent Relationship. GMC and Datatrend acknowledge and agree
that the relationship created by this Agreement is that of owner and independent
contractor, and this Agreement is not intended to create any other relationship
between the parties, including, without limitation, a partnership or joint
venture, nor shall GMC be deemed to be in control of Datatrend in any way.
11. Authority; Authorizations. Datatrend represents and warrants to GMC
that Datatrend has the power and authority to enter into this Agreement and to
perform its obligations hereunder, and that it has taken all necessary corporate
action required to be taken to authorize the execution, delivery and performance
of this Agreement by Datatrend. GMC represents and warrants to Datatrend that
GMC has the power and authority to enter into this Agreement and to perform its
obligations hereunder, and that it has taken all necessary corporate action
required to be taken to authorize the execution, delivery and performance of
this Agreement by GMC.
12. Assignment. Neither party shall assign its rights under this
Agreement or its interest herein without the other party's prior written
consent.
<PAGE>
13. Non-Waiver. Failure of either party hereto to enforce any of the
terms and provisions herein or to exercise any right accruing through the
default of the other party shall not constitute a waiver of other or
future defaults of the defaulting party.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
principles of conflicts of law thereof.
15. Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement, or a breach hereof, shall be settled by arbitration
in Pittsburgh, Pennsylvania, before a panel of arbitrators selected by the
American Arbitration Association ("AAA") and in accordance with the Commercial
Arbitration Rules of the AAA. and judgment upon the award rendered may be
enforced in any court having jurisdiction thereof. The fees and costs of such
arbitration, including the fees and costs of the attorneys for the parties,
shall be apportioned between the parties by the arbitrators.
16. Guaranty. Genco I, Inc. owns all of the outstanding shares of
capital stock of GMC. By countersigning this Agreement, Genco I, Inc. guarantees
the obligations of GMC hereunder. This is a guaranty of payment, not of
collection. Datatrend shall not be required to proceed first against GMC before
proceeding against Genco I, Inc. on this guaranty.
17. Entire Agreement. This Agreement constitutes the entire agreement
between the parties relative to the subject matter of this Agreement. This
Agreement expressly supersedes all prior negotiations, representations, offers,
letters, contracts, writings or other agreements or understandings with respect
hereto. No change, amendment or modification hereof shall be valid unless it is
made in writing and signed by both GMC and Datatrend.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
Attest: Genco Management Company
___________________________ By: /s/ Herbert S. Schear
__________________________________
Title: President
________________________________
Attest: Genco I, Inc.
___________________________ By: /s/ Herbert S. Schear
__________________________________
Title: President
_______________________________
Attest: Datatrend, Inc.
__________________________ By: /s/ Mark Hanson
___________________________________
Title: President
________________________________
<PAGE>
Mark A. Hanson executes this Agreement for the sole purpose of
acknowledging and agreeing to the provisions of Section 1(b) hereof.
/s/ Mark A. Hanson
-----------------------------------
Mark A. Hanson
Date: September 8, 1997
-----------------------------
<PAGE>
Datatrend Services, Inc., the holder of all of the issued and
outstanding shares of common stock of Datatrend, Inc., acknowledges and agrees
to the foregoing Management and Administrative Services Agreement.
Datatrend Services, Inc.
By: /s/ Mark A. Hanson
_________________________________
Title: President
______________________________
Date: September 8, 1977
_______________________________
