<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): May 15, 1996
------------------------------
CORPORATE EXPRESS, INC.
- - --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Colorado 0-24642 84-0978360
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(State or Other Juris- (Commission File (IRS Employer
diction of Incorporation) Number) Identification No.)
325 Interlocken Parkway
Broomfield, Colorado 80021
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(Address of Principal (Zip Code)
Executive Offices)
(303) 373-2800
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
- - --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 15, 1996, the Registrant completed the acquisition (the
"Acquisition") of all of the issued and outstanding stock of ASAP Software
Express, Inc., an Illinois corporation ("ASAP"), which Acquisition is effective
April 22, 1996. The Acquisition was made pursuant to the terms of a certain
Stock Purchase Agreement (the "Stock Purchase Agreement") dated April 22, 1996,
as amended by the Amendment to Stock Purchase Agreement effective as of April
22, 1996, by and among the Registrant, ASAP and all of the Shareholders of ASAP
(the "ASAP Shareholders"). Pursuant to the terms of the Stock Purchase
Agreement, the Registrant purchased all of the issued and outstanding capital
stock of ASAP from the ASAP Shareholders, consisting of 679,800 shares of common
stock and 6,118,200 shares of non-voting common stock, in exchange for aggregate
consideration of $87,621,037, subject to certain adjustments, comprised of
$52,500,000 paid in cash and $35,121,037 in promissory notes issued by the
Registrant. The source of the cash used in the transaction was ASAP's cash on
hand and the Registrant's credit facility with Bank of America Illinois. At the
time of the Acquisition, ASAP had cash on hand of approximately $14 million,
which amount is expected to be available to finance the operations of ASAP
and/or to be used to partially satisfy the obligations under the promissory
notes issued by the Registrant in connection with the Acquisition. The nature
and amount of consideration paid in connection with the Acquisition was
determined based on negotiations between the Registrant and the ASAP
Shareholders. Prior to the Acquisition, there was no material relationship
between the Registrant or any of its affiliates, directors or officers or any
associates thereof and the ASAP Shareholders or ASAP. The foregoing summary of
the Acquisition is qualified in its entirety by reference to the Stock Purchase
Agreement referenced as Exhibit 2.1 and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. It is impracticable to
provide the financial statements and the pro forma financial information
required under Items 7(a) and 7(b) of Form 8-K at the time this Form 8-K is
required to be filed. In accordance with Item 7(a)(4) and 7(b)(2) of Form 8-K,
the Company will file the required financial statements and pro forma financial
information under cover of Form 8-K/A as soon as practicable, but not later than
July 29, 1996.
(b) PRO FORMA FINANCIAL INFORMATION. See Item 7(a).
(c) EXHIBITS.
2.1 Stock Purchase Agreement dated April 22, 1996 by and among
Corporate Express, Inc., ASAP Software Express, Inc. and the
Shareholders of ASAP Software Express, Inc.
2.2 Amendment to Stock Purchase Agreement effective as of April 22, 1996
by and among Corporate Express, Inc., ASAP Software Express, Inc. and
the Shareholders of ASAP Software Express, Inc.
________________________
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CORPORATE EXPRESS, INC.
(Registrant)
________________________________________
Date: May __, 1996 By: Joanne C. Farver
Title: Vice President - Controller
<PAGE>
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STOCK PURCHASE AGREEMENT
Among
ASAP SOFTWARE EXPRESS, INC.,
the SHAREHOLDERS of ASAP SOFTWARE EXPRESS, INC.
and
CORPORATE EXPRESS, INC.
April 22, 1996
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TABLE OF CONTENTS
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<TABLE>
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PAGE
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ARTICLE I
PURCHASE AND SALE OF SHARES............................................ 1
1.01 Purchase and Sale of Shares...................................... 1
1.02 Estimated and Final Closing Adjusted Net Book Value Adjustments.. 3
1.03 The Closing...................................................... 4
ARTICLE II
CONDITIONS TO CLOSING.................................................. 7
2.01 Conditions to Buyer's Obligations................................ 7
2.02 Conditions to the Shareholders' Obligations...................... 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER..................... 10
3.01 Execution, Delivery; Valid and Binding Agreements................ 10
3.02 Authority........................................................ 10
3.03 Ownership of Capital Stock....................................... 10
3.04 No Breach........................................................ 11
3.05 Brokerage........................................................ 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SHAREHOLDERS....................................... 11
4.01 Organization and Corporate Power................................. 11
4.02 Subsidiaries..................................................... 11
4.03 Authorization; No Breach......................................... 12
4.04 Capital Stock.................................................... 12
4.05 Financial Statements............................................. 13
4.06 Absence of Certain Developments.................................. 13
4.07 Title to Properties.............................................. 14
4.08 Tax Matters...................................................... 15
4.09 Contracts and Commitments........................................ 16
4.10 Intellectual Property............................................ 17
4.11 Litigation....................................................... 17
4.12 Brokerage........................................................ 18
4.13 Governmental Consents, etc....................................... 18
4.14 Employee Benefit Plans........................................... 18
4.15 Insurance........................................................ 19
4.16 Compliance with Laws............................................. 20
4.17 Environmental.................................................... 20
4.18 Banking and Agency Arrangements.................................. 21
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4.19 Affiliated Transactions......................................................... 22
4.20 Personnel....................................................................... 22
4.21 Business Relations.............................................................. 22
4.22 Warranties...................................................................... 22
4.23 Other Financial Information..................................................... 22
4.24 Undisclosed Liabilities......................................................... 22
4.25 Disclosure...................................................................... 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER............................................... 23
5.01 Organization and Corporate Power................................................ 23
5.02 Authorization................................................................... 23
5.03 No Violation.................................................................... 23
5.04 Governmental Authorities; Consents.............................................. 24
5.05 Litigation...................................................................... 24
5.06 Brokerage....................................................................... 24
5.07 Investment Representation....................................................... 24
5.08 Financing....................................................................... 24
5.09 No Knowledge of Misrepresentations or Omissions................................. 24
5.10 Business Relations.............................................................. 24
ARTICLE VI
COVENANTS OF THE COMPANY, THE SHAREHOLDERS
AND THE SHAREHOLDERS' REPRESENTATIVE.................................................. 25
6.01 Conduct of the Business......................................................... 25
6.02 Access to Books and Records..................................................... 25
6.03 Regulatory Filings; Third Party Consents........................................ 25
6.04 Conditions...................................................................... 26
6.05 Exclusive Dealing............................................................... 26
6.06 Section 338(h)(10) Election..................................................... 26
6.07 Employment Contract............................................................. 26
6.08 Notification.................................................................... 27
ARTICLE VII
COVENANTS OF BUYER.................................................................... 27
7.01 Access to Books and Records..................................................... 27
7.02 Notification.................................................................... 27
7.03 Post-Closing Indemnification of Officers and Directors of the Company........... 27
7.04 Regulatory Filings.............................................................. 28
7.05 Conditions...................................................................... 28
7.06 Contact with Customers and Suppliers............................................ 28
7.07 SAR Plan........................................................................ 29
7.08 Management Options.............................................................. 29
</TABLE>
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ARTICLE VIII
TERMINATION............................................................................. 29
8.01 Termination....................................................................... 29
8.02 Effect of Termination............................................................. 30
ARTICLE IX
SHAREHOLDERS' REPRESENTATIVE............................................................ 30
9.01 Designation....................................................................... 30
9.02 Authority......................................................................... 30
9.03 Exculpation....................................................................... 31
ARTICLE X
ADDITIONAL COVENANTS.................................................................... 31
10.01 Survival.......................................................................... 31
10.02 Indemnification................................................................... 31
10.03 Limitation of Recourse............................................................ 34
10.04 Disclosure Generally.............................................................. 36
10.05 Acknowledgment by Buyer........................................................... 36
10.06 Arbitration Procedure............................................................. 36
10.07 Certain Tax Matters............................................................... 38
10.08 Further Assurances................................................................ 39
ARTICLE XI
DEFINITIONS............................................................................. 39
ARTICLE XII
MISCELLANEOUS........................................................................... 46
12.01 Press Releases and Communications................................................. 46
12.02 Expenses.......................................................................... 46
12.03 Waiver of Certain Transfer Restrictions; Termination of Shareholders
Agreement......................................................................... 46
12.04 Knowledge Defined................................................................. 46
12.05 Notices........................................................................... 46
12.06 Assignment........................................................................ 49
12.07 Severability...................................................................... 49
12.08 No Strict Construction............................................................ 49
12.09 Amendment and Waiver.............................................................. 49
12.10 Complete Agreement................................................................ 49
12.11 Counterparts...................................................................... 49
12.12 Third Party Beneficiaries......................................................... 49
12.13 Governing Law..................................................................... 50
</TABLE>
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STOCK PURCHASE AGREEMENT
------------------------
THIS AGREEMENT is made as of April 22, 1996, among Corporate Express,
Inc., a Colorado corporation ("Buyer"), ASAP Software Express, Inc., an
-----
Illinois corporation (the "Company"), and the Persons listed on the
-------
Shareholders Schedule attached hereto (referred to herein collectively as the
- - ---------------------
"Shareholders" and individually as a "Shareholder"). Unless otherwise provided,
------------ -----------
capitalized terms used herein are defined in Article XI below.
The Shareholders own all of the issued and outstanding capital stock
of the Company, which as of the date hereof consists of 679,800 shares of Common
and 6,118,200 shares of Non-Voting Common. In addition, certain of the Company's
executive employees set forth on the Capital Stock Schedule attached hereto own
----------------------
an aggregate of 605,000 SARs (collectively, the "SAR Employees"). The
-------------
outstanding shares of Common and Non-Voting Common owned by the Shareholders are
referred to collectively as the "Shares." The Company is a general partner of
------
and owns a 75% interest in Romar Venture, an Illinois general partnership
("Romar").
-----
Subject to the terms and conditions set forth herein, Buyer desires to
acquire from the Shareholders all of the issued and outstanding Shares, and the
Shareholders desire to sell to Buyer all of such Shares owned by the
Shareholders as of the Closing Date. Except as otherwise provided herein, all of
the SARs outstanding as of the date hereof shall remain the obligations of the
Company, in accordance with their terms.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
---------------------------
1.01 Purchase and Sale of Shares.
---------------------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, the Shareholders shall sell, assign, transfer and convey to Buyer,
and Buyer shall purchase and acquire from the Shareholders, all of the Shares
free and clear of any and all liens, encumbrances or rights of others of any
kind whatsoever for the Final Purchase Price (as defined below). At the Closing,
the Shareholders will transfer all of the Shares to Buyer free and clear of any
and all liens, encumbrances or rights of others of any kind whatsoever against
payment by Buyer at the Closing of an aggregate amount equal to the Closing
Purchase Price by wire transfer of immediately available funds to one or more
accounts specified by the Shareholders' Representative and delivery of the
Closing Note and the Offset Closing Note (as defined in Section 1.03(b)(iii)).
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(b) The aggregate purchase price for the Shares (the "Final Purchase
--------------
Price") shall be equal to (i) $92,000,000 plus the Final Closing Adjusted Net
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Book Value, plus the Pre-Closing SAR Payment, minus (ii) the Final SAR Amount.
The amount set forth in clause (i) above is referred to herein as the "Equity
------
Value".
- - -----
(c) The price to be delivered to the Shareholders at the Closing
(the "Closing Purchase Price") shall be equal to (i) $92,000,000 plus the
----------------------
Estimated Closing Adjusted Net Book Value, plus the Pre-Closing SAR Payment,
minus (ii) the Estimated SAR Amount. The amount set forth in clause (i) above is
referred to herein as the "Estimated Equity Value".
----------------------
(d) As soon as practicable (but in no event later than five days)
after the Final Closing Adjusted Net Book Value has been finally determined
pursuant to Section 1.02 hereof, (i) Buyer shall pay to the Shareholders in the
manner described in Section 1.01(h), an amount equal to (w) the amount, if any,
by which the Final Purchase Price exceeds the Closing Purchase Price, plus (x)
simple interest computed on the amount of clause (w) at the rate of 6% per
annum from (and including) the Closing Date to (but not including) the date on
which such amount is paid and (ii) the Shareholders shall pay to Buyer in the
manner described in Section 1.01(g), an amount equal to (y) the amount, if any,
by which the Closing Purchase Price exceeds the Final Purchase Price, plus (z)
simple interest computed on the amount of clause (y) at the rate of 6% per annum
from (and including) the Closing Date to (but not including) the date on which
such amount is paid.
(e) As soon as practicable (but in no event later than five days)
after the Final Closing Adjusted Net Book Value has been finally determined
pursuant to Section 1.02 hereof, (i) Buyer shall pay to the SAR Escrow, on
behalf of the Company, in the manner described in Section 1.01(j), an amount
equal to (w) the amount, if any, by which the Final SAR Amount exceeds the
Estimated SAR Amount, plus (x) simple interest computed on the amount of clause
(w) at the rate of 6% per annum from (and including) the Closing Date to (but
not including) the date on which such amount is paid and (ii) the SAR Escrow
shall refund to the Buyer, on behalf of the Company, in the manner described in
Section 1.01(i), an amount equal to (y) the amount, if any, by which the
Estimated SAR Amount exceeds the Final SAR Amount, plus (z) simple interest
computed on the amount of clause (y) at the rate of 6% per annum from (and
including) the Closing Date to (but not including) the date on which such amount
is paid.
(f) The Closing Purchase Price and the Final Purchase Price
(including any adjustment thereto to be paid by or to the Shareholders) shall be
allocated among the Shareholders based on each Shareholder's Pro Rata Share.
(g) If any amount is to be paid to Buyer pursuant to Section 1.01(d)
hereof, the obligations of each Shareholder will only be to pay its Pro Rata
Share thereof and will be several, and each Shareholder shall pay its Pro Rata
Share of such aggregate amount by wire transfer of immediately available funds
to an account specified in writing by Buyer. In the event any such Shareholder
shall fail to pay such Pro Rata Share within 15 days of the date such amount is
determined pursuant to Section 1.02(d), Buyer shall be entitled to offset such
amount against amounts payable upon maturity of the Offset Closing Note (such
offset being applied first to reduce any
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accrued interest outstanding as of the date of such offset and any remaining
offset being applied to reduce the principal amount outstanding as of such
date).
(h) If any amount is to be paid to the Shareholders pursuant to
Section 1.01(d) hereof, the Buyer shall pay to each Shareholder its Pro Rata
Share thereof by wire transfer of immediately available funds to an account
designated to Buyer in writing by such Shareholder, provided that if a
Shareholder fails to so designate an account, the Buyer will pay all amounts due
to such Shareholder by wire transfer of immediately available funds to one or
more accounts designated in writing by the Shareholders' Representative.
(i) Any amount to be paid to the Buyer, on behalf of the Company,
pursuant to Section 1.01(e) hereof shall be paid from the SAR Escrow by wire
transfer of immediately available funds to an account specified in writing by
Buyer to the SAR Escrow Agent.
(j) Any amount to be paid to the SAR Escrow pursuant to Section
1.01(e) hereof shall be paid by Buyer, on behalf of the Company, by wire
transfer of immediately available funds to an account designated by the SAR
Escrow Agent.
1.02 Estimated and Final Closing Adjusted Net Book Value Adjustments.
---------------------------------------------------------------
(a) "Estimated Closing Adjusted Net Book Value" means total Assets
-----------------------------------------
minus total Liabilities, in each case determined pursuant to Section 1.02(b) as
of the close of the Company's business on the last business day immediately
preceding the Closing Date.
(b) For purposes of determining Estimated Closing Adjusted Net Book
Value, the Shareholders' Representative, on behalf of the Shareholders, shall in
good faith prepare and deliver to Buyer, two business days prior to the Closing,
a written statement setting forth in reasonable detail the Shareholders'
determination of Estimated Closing Adjusted Net Book Value. If Buyer objects to
the Shareholders' determination of Estimted Closing Adjusted Net Book Value,
Buyer shall promptly notify the Shareholders' Representative of the basis of
such objections and the Buyer and the Shareholders' Representative, on behalf of
the Shareholders, shall work to resolve the dispute and agree upon Estimated
Closing Adjusted Net Book Value.
(c) "Final Closing Adjusted Net Book Value" means total Assets minus
-------------------------------------
total Liabilities, in each case determined pursuant to Section 1.02(d) as of the
close of the Company's business on the Closing Date, determined without taking
into account liabilities or obligations arising on or after the Closing (but
including any accrued bonus liabilities and fees and expenses payable, if any,
to Merrill Lynch, Kirkland & Ellis, Ernst & Young and other consultants,
advisers, agent and representatives of the Company incurred in connection with
the transactions contemplated by this Agreement).
(d) Following the Closing Date, the Shareholders' Representative, on
behalf of the Shareholders, and Buyer shall promptly begin working together to
determine a mutually agreeable value for Final Closing Adjusted Net Book Value.
Buyer and the Shareholders' Representative shall
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use reasonable efforts to resolve any disputes regarding the determination of
Final Closing Adjusted Net Book Value, and if Buyer and the Shareholders'
Representative are unable to resolve any such disputes and arrive at a mutual
determination of Final Closing Adjusted Net Book Value within 30 days following
the Closing Date, Buyer and Shareholders' Representative shall select a
mutually acceptable independent accounting firm to resolve any such disputes.
If Buyer and the Shareholders' Representative are unable to mutually agree on
such an accounting firm within 15 days, a "big-six" accounting firm shall be
selected by lot after eliminating one firm designated as objectionable by each
of Buyer and the Shareholders' Representative. The accounting firm agreed upon
or so selected shall be referred to herein as the "Selected Accounting Firm".
------------------------
Buyer and the Shareholders' Representative shall use reasonable efforts to
cause the Selected Accounting Firm to decide all disputed items as soon as
practicable and in a manner consistent with the accounting policies and
procedures used in the preparation of the audited financial statements of the
Company dated as of and for the year ended December 31, 1995. The determination
of the disputed items by the Selected Accounting Firm shall be based upon the
provisions of this Agreement and shall be conclusive and binding upon the
parties and shall be used to make the final determination of the Final Closing
Adjusted Net Book Value. Buyer shall take all steps necessary to ensure that the
Shareholders' Representative, its attorneys, accountants and representatives and
the Selected Accounting Firm have reasonable access to the books, records and
personnel of the Company and its Subsidiaries in connection with determining the
Final Closing Adjusted Net Book Value. The fees and expenses of the Selected
Accounting Firm shall be borne equally between Buyer and the Shareholders, with
each Shareholder responsible severally only for its Pro Rata Share thereof.
(e) Physical Inventory. In connection with the determination of
------------------
Final Closing Adjusted Net Book Value, Buyer and the Company shall conduct a
physical count of the Company's inventory as of the close of business on the
business day immediately preceding the Closing Date in accordance with
reasonable practices and procedures to be mutually agreed to by Buyer and the
Shareholders' Representative.
1.03 The Closing
-----------
(a) The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Kirkland & Ellis, 200 East
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Randolph Drive, Chicago, Illinois 60601, at 10:00 A.M. on the second business
day following full satisfaction or due waiver of each of the closing conditions
set forth in Article II hereof (other than those to be satisfied at the Closing)
or on such other date and/or at such other place as is mutually agreeable to
Buyer and the Shareholders' Representative. The date and time of the Closing are
herein referred to as the "Closing Date."
------------
(b) Subject to the terms and conditions set forth in this Agreement,
the parties hereto shall consummate the following "Closing Transactions" on the
--------------------
Closing Date:
(i) each Shareholder, or the Shareholders' Representative (on
behalf of such Shareholder), shall deliver to Buyer one or more stock
certificates representing the aggregate number of Shares held by such
Shareholder as set forth opposite such Shareholder's
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<PAGE>
name on the Shareholders Schedule, duly endorsed for transfer or accompanied by
---------------------
duly executed stock powers with signatures guaranteed;
(ii) Buyer shall deliver to each Shareholder such Shareholder's
Pro Rata Share of a portion of the Closing Purchase Price equal to the Closing
Cash Payment Amount by wire transfer of immediately available funds to an
account designated by such Shareholder to Buyer in writing at least two business
days prior to the Closing Date, provided that if a Shareholder fails to so
designate an account, the Buyer will pay all amounts due to such Shareholder by
wire transfer of immediately available funds to one or more accounts designated
in writing by the Shareholders' Representative to Buyer at least two business
days prior to the Closing;
(iii) Buyer shall deliver to the Shareholders' Representative,
on behalf of the Shareholders,
(A) a note in the form attached hereto as Exhibit B in
---------
the principal amount equal to the Closing Purchase Price
minus the Closing Cash Payment Amount minus $9,182,764
(the "Closing Note"); and
------------
(B) a security agreement in the form attached hereto as
Exhibit E (the "Security Agreement") securing Buyer's
--------- ------------------
obligations pursuant to the Notes, and shall have pledged
to the Shareholders' Representative, as agent for the
holders of such Notes, all of the Shares pursuant thereto.
(iv) Buyer, on behalf of the Company, shall deposit into the
SAR Escrow an amount equal to the Estimated SAR Amount minus the Pre-Closing SAR
Payments minus $817,236. Such deposit shall be comprised of (A) an amount equal
to the SAR Escrow Cash Portion, which shall be in immediately available funds,
and (B) a note (the "SAR Closing Note") in the form attached hereto as Exhibit G
---------------- ---------
with principal amount equal to the balance of such deposit;
(v) Buyer shall deliver to the Shareholders' Representative,
on behalf of the Shareholders, a warrant in the form of Exhibit J hereto (the
---------
"Warrant") to purchase at any time and from time to time all or any portion of
-------
the Total Warrant Shares at an exercise price per share equal to the Exercise
Price (it being understood that the Warrant shall expire upon the first to occur
of (i) the scheduled maturity of the Closing Note, provided that if the Closing
Note, the Offset Closing Note and SAR Closing Note are not paid in full by such
time, the term of the Warrant will continue until payment in full of such notes,
and (ii) prepayment in full of the Closing Note, the Offset Closing Note and the
SAR Closing Note, but only if Buyer shall have given the Shareholders'
Representative written notice of such prepayment at least ten business days in
advance of such prepayment);
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(vi) Buyer shall deliver to Bank of America (or another
third party mutually acceptable to the Shareholders' Representative and the
Buyer) as escrow agent (the "Escrow Agent") pursuant to the Escrow
------------
Agreement between Shareholders' Representative, on behalf of the
Shareholders and the participants in the Incentive Plan, and Buyer,
substantially in the form attached as Exhibit A hereto, a note in the
---------
principal amount of $10,000,000 (the "Offset Closing Note") in the form
-------------------
attached hereto as Exhibit N; and
----------
(vii) Buyer, the Company and the Shareholders' Representative
(on behalf of the Shareholders) shall make such other deliveries as are
required by and in accordance with Article II hereof.
(c) Provisions Relating to Notes. The Escrow Agreement shall provide
----------------------------
that upon maturity or prepayment of the Offset Closing Note, the Escrow Agent
shall retain, in its capacity as escrow agent under the Escrow Agreement, eight
million dollars ($8,000,000) of the proceeds thereof and pay any and all amounts
of principal and accrued interest under the Offset Closing Note in excess
thereof (the "Excess Offset Note Amount") upon maturity thereof or prepayment
-------------------------
thereof in full, as follows: (i) to the Buyer to the extent required by Section
1.01(g), (ii) to the Shareholders (allocated among them based on each
Shareholder's Pro Rate Share) in an aggregate amount equal to the sum of (x) the
product of the SAR Adjustment Factor multiplied by the Excess Offset Note Amount
plus (y) the product of the SAR Adjustment Factor multiplied by the aggregate
amount, if any, paid to Buyer pursuant to clause (i), and (iii) to the SAR
Escrow in an amount equal to the sum of the remaining Excess Offset Note Amount;
provided that the amount of any payment to any Shareholder pursuant to the
foregoing shall be reduced by the portion of the payment to Buyer pursuant to
clause (i) attributable to the failure of such Shareholder to satisfy its
obligations pursuant to Section 1.0(g). The parties acknowledge that Buyer may,
in lieu of issuing the Closing Note, the Offset Closing Note and the SAR Escrow
Note, pay (A) the Closing Purchase Price and (B) the Estimated SAR Amount minus
the Pre-Closing SAR Payment, by wire transfer of immediately available funds. In
such event, at Closing and in the lieu of issuing the Offset Closing Note
pursuant to Section 1.03(b)(vi), the Buyer shall pay to the Escrow Agent, to
hold pursuant to the Escrow Agreement, eight million dollars ($8,000,000) by
wire transfer of immediately available funds and the other provisions of this
Agreement relating to the Closing Note, the Offset Closing Note and the SAR
Closing Note shall be modified or deleted as appropriate. In the event Buyer
elects to pay, and pays, (A) the Closing Purchase Price and (B) the Estimated
SAR Amount minus the Pre-Closing SAR Payment, in immediately available funds at
Closing, Buyer shall not be obligated to issue the Warrant.
(d) Pre-Closing Dividend. At or prior to Closing, the Company will
--------------------
declare and pay a dividend (the "Pre-Closing Dividend") with respect to the
--------------------
Shares in an amount to be determined by the Board of Directors of the Company,
in any event in an aggregate amount not more than $11,000,000 minus the
Pre-Closing SAR Payment.
(e) Pre-Closing SAR Payment. At or prior to the Closing, the Company
-----------------------
may prepay in cash all or any portion of its obligations with respect to the
SARs otherwise payable in connection with the Closing, in an aggregate amount
which the Company reasonably believes, in good
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<PAGE>
faith, will not exceed 50% of the Estimated SAR Amount (the aggregate amount of
such pre-closing payments, the "Pre-Closing SAR Payment").
-----------------------
ARTICLE II
CONDITIONS TO CLOSING
---------------------
2.01 Conditions to Buyer's Obligations. The obligation of Buyer to
---------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction or waiver by Buyer of the following conditions as of the Closing
Date:
(a) The representations and warranties set forth in Articles III and
IV hereof shall be true and correct in all material respects at and as of the
execution hereof and the representations and warranties set forth in Article III
shall be true and correct in all material respects as of the Closing Date (it
being understood (i) that the representations and warranties set forth in
Article IV will not be restated at any time after execution hereof and (ii) that
if this condition was not satisfied as of the date hereof, Buyer shall have the
right to terminate this Agreement as provided in Article VIII, provided such
termination is made at or prior to 10:00 A.M. Chicago time on the second
business day following Buyer's knowledge thereof, or to consummate the
transactions contemplated hereby and seek indemnification as provided in Article
X);
(b) The Company and the Shareholders shall have, in all material
respects, performed and complied with all of the covenants and agreements
required to be performed by them under this Agreement at or prior to the
Closing;
(c) The applicable waiting periods, if any, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall have
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expired or been terminated, and all other material governmental filings,
consents, authorizations and approvals that are required for the consummation of
the transactions contemplated hereby (all of which items are set forth on the
Governmental Consents Schedule attached hereto) shall have been made and
- - ------------------------------
obtained;
(d) The Executive Employment Agreement, attached hereto as Exhibit I,
---------
shall have been executed and delivered by S. Scott Wald;
(e) No action or proceeding before any court or government body shall
be pending wherein an unfavorable judgment, decree or order is likely to prevent
the performance of this Agreement or the consummation of any of the transactions
contemplated hereby, declare unlawful the transactions contemplated by this
Agreement, cause such transactions to be rescinded or have a material adverse
effect on Buyer's right to own, operate or control the Company and its
Subsidiaries (provided that, should such an action or proceeding be threatened
but not pending on the date on which all other conditions to Buyer's obligations
described in this Section 2.01 are satisfied, Closing shall be delayed for the
period such action or proceeding remains threatened, up to a maximum of seven
(7) days;
-7-
<PAGE>
(f) Buyer shall have received form Kirkland & Ellis, counsel to the
Company, an opinion with respect to the matters set forth in Exhibit D hereto,
---------
addressed to Buyer and dated as of the Closing Date;
(g) The Company, or the Shareholders' Representative on behalf of the
Shareholders in the case of clause (iii) below, shall have delivered to Buyer
each of the following:
(i) a certificate of the Company in the form set forth in
Exhibit H attached hereto, dated the Closing Date, stating that the
---------
precondition specified in subsection (b) hereof as it relates to the
Company and its Subsidiaries has been satisfied;
(ii) copies of any governmental consents required by subsection
(c) above;
(iii) the stock certificates representing the Shares from the
Shareholders, duly endorsed for transfer or accompanied by duly executed
stock powers with signatures guaranteed;
(iv) all minute books, stock books, ledgers and registers,
corporate seals and other corporate records relating to the organization,
ownership and maintenance of the Company and its Subsidiaries;
(v) resignations effective as of the Closing Date from such
officers and directors of the Company and its Subsidiaries as Buyer shall
have requested in writing not less than five days prior to the Closing
Date; and
(vi) a copy of the Company's Articles of Incorporation,
certified by the Secretary of the State of Illinois, and a good standing
certificate for the Company from the Secretary of State of the State of
Illinois.
(h) Each Shareholder shall have delivered to Buyer a certificate in
the form set forth in Exhibit L hereto, dated the Closing Date, stating that the
---------
representations and warranties set forth in Article III with respect to such
Shareholder are true and correct at and as of the Closing Date as though then
made;
(i) The Shareholders Agreement, dated December 6, 1994 by and among
the Company and the Shareholders (as amended, the "Shareholders Agreement")
----------------------
shall have been terminated;
(j) The Software License Agreement, dated March 25, 1996, by and
between Romar Services, Inc. and the Company shall have been terminated;
(k) The Hardware Time-Sharing Agreement, dated March 25, 1996, by and
between Romar Services, Inc. and the Company shall have been terminated;
-8-
<PAGE>
(l) Either the consent of the Aid Association for Lutherans to the
transactions contemplated hereby shall have been obtained and provided to Buyer
or the Company shall have refinanced (such refinancing to be funded by a loan
by the Shareholders or a third party to Romar on substantially the same terms as
reflected in the Mortgage Loan) the Mortgage Loan and paid any related required
prepayment penalties;
(m) Any consent required under the lease of the Company
headquarters at Buffalo Grove, Illinois shall have been obtained in a form
reasonably acceptable to Buyer;
(n) Vendor Acknowledgements executed by each of the Select Vendors
and by either of Symantec Corporation or Attachmate Corporation shall have been
obtained;
(o) Merrill Lynch shall have confirmed in writing to the Company,
the Shareholders and Buyer that all amounts owing to it in connection with the
consummation of the transactions contemplated hereby have been paid in full or
accrued or provided for;
(p) Buyer shall have received from Shareholders' counsel an opinion
with respect to matters set forth in Exhibit O hereto, addressed to Buyer and
---------
dated as of the Closing Date, and
(q) The Shareholders, if so requested in writing by Buyer, shall
have made the election required by Section 338(h)(10) of the Code.
2.02 Conditions to the Shareholders' Obligations. The obligations
-------------------------------------------
of the Shareholders to consummate the transactions contemplated by this
Agreement are subject to the satisfaction or waiver by the Shareholders'
Representative, on behalf of the Shareholders, of the following conditions as of
the Closing Date:
(a) The representations and warranties set forth in Article V
hereof shall be true and correct in all material respects at and as of the
Closing as though then made and as though the Closing Date was substituted for
the date of this Agreement throughout such representations and warranties;
(b) Buyer shall have performed in all material respects all the
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing;
(c) No action or proceeding before any court or government body
shall be pending wherein an unfavorable judgement, decree or order would prevent
the performance of this Agreement or the consummation of any of the transactions
contemplated hereby, declare unlawful the transactions contemplated by this
Agreement or cause such transactions to be rescinded;
(d) The applicable waiting periods, if any, under the HSR Act shall
have expired or been terminated, and all other governmental filings, consents,
authorizations and approvals that are required for the consummation of the
transactions contemplated hereby shall have been duly made and obtained;
-9-
<PAGE>
(e) The Executive Employment Agreement, in the form attached hereto
as Exhibit I, shall have been executed and delivered to S. Scott Wald by the
---------
Company;
(f) Each Shareholder which is a guarantor of the obligations of the
Company or its Subsidiaries set forth on the Gurantee Schedule hereto have
-----------------
received a comprehensive indemnity by Buyer for all obligations thereunder or
relating thereto, in writing and in form and substance reasonably satisfactory
to such Shareholder;
(g) Buyer shall have delivered to the Shareholders' Representative
(on behalf of the Shareholders) a certificate in the form set forth as Exhibit M
---------
attached hereto, dated the Closing Date, stating that the preconditions
specified in subsections (a) through (d), inclusive, and subsection (i) hereof,
have been satisfied;
(h) The Shareholders shall have received from Ballard Spahr
Andrews & Ingersoll, counsel to Buyer, an opinion with respect to the matters
set forth in Exhibit C hereto, addressed to the Shareholders and dated as of the
---------
Closing Date; and
(i) The Closing Transactions set forth in Sections 1.03(b)(ii),
(iii), (iv), and (v) shall have been completed (including that the Security
Agreement shall have been executed and delivered to the Shareholders by Buyer
and that UCC financing statements shall have been executed and delivered (the
"UCC Financing Statements"), in form and substance satisfactory to the
------------------------
Shareholders' Representative, as agent for the holders of the Notes, by Buyer
and that the Buyer shall have delivered the certificates representing the
Shares, endorsed in blank, to the Shareholders' Representative in accordance
with the terms of the Security agreement).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER
--------------------------------------------------
Each Shareholder, solely for such Shareholder (on a several, and not
joint and several basis), represents to Buyer as follows:
3.01 Execution Delivery; Valid and Binding Agreements. This
------------------------------------------------
Agreement has been duly executed and delivered by such Shareholder and, assuming
that this Agreement is the valid and binding agreement of Buyer, the Company and
each other Shareholder, this Agreement constitutes the valid and binding
obligation of such Shareholder, enforceable in accordance with its terms (except
as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally or by equitable principles).
3.02 Authority. Such Shareholder has all requisite power and
---------
authority and full legal capacity to execute and deliver this Agreement and to
perform such Shareholder's obligations hereunder (including, without limitation,
all right, power, capacity and authority to sell, transfer and convey the Shares
as provided by this Agreement, subject to applicable federal and state
securities law restrictions).
-10-
<PAGE>
3.03 Ownership of Capital Stock. Such Shareholder is the record
--------------------------
owner of the number of Shares as set forth opposite such Shareholder's name on
the attached Shareholders Schedule. On the Closing Date, on the terms and
---------------------
subject to the conditions set forth herein, such Shareholder shall transfer to
Buyer good title to such Shares, free and clear of all claims, pledges, security
interests, liens, charges, encumbrances, options, proxies, voting trusts or
agreements and other restrictions and limitations of any kind, other than
applicable federal and state securities law restrictions and the lien pursuant
to the Security Agreement.
3.04 No Breach. Except as set forth on the Shareholder Breach
--------- ------------------
Schedule attached hereto, the execution, delivery and performance of this
- - --------
Agreement by such Shareholder and the consummation of the transactions
contemplated hereby to be consummated by such Shareholder do not conflict with
or result in any breach of, constitute a default under, result in a violation
of, result in the creation of any lien, security interest, charge or encumbrance
upon such Shareholder's Shares or require any authorization, consent,
approval, exemption or other action by or notice to any court or other
governmental body, under the provisions of any agreement to which such
Shareholder is a party.
3.05 Brokerage. There are no contracts or arrangements for the
---------
payment of brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by such Shareholder in his or her capacity as a
Shareholder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
THE COMPANY AND THE SHAREHOLDERS
--------------------------------
The Company and the Management Shareholders represent and warrant and
each Passive Shareholder represents and warrants to his or her knowledge that:
4.01 Organization and Corporate Power. The Company is a corporation
--------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Illinois, and the Company has all requisite corporate power and
authority and all authorizations, licenses and permits necessary to own and
operate its properties and to carry on its businesses as now conducted, except
where the failure to hold such authorizations, licenses and permits would
not individually or in the aggregate have a material adverse effect upon the
business, operations, properties, assets, financial condition or operating
results of the Company and its Subsidiaries taken as a whole (a "Material
--------
Adverse Effect"). The Company is not required to be qualified to do business in
- - --------------
any jurisdiction other than those jurisdictions listed on the Qualification
-------------
Schedule, except where the failure to be so qualified would not have a Material
- - --------
Adverse Effect.
4.02 Subsidiaries. Except as set forth on the attached Subsidiaries
------------ ------------
Schedule, neither the Company nor any of its Subsidiaries owns or holds the
- - --------
right to acquire any stock, partnership interest or joint venture interest or
other equity ownership interest in any other corporation,
-11-
<PAGE>
organization or entity. The Subsidiaries Schedule sets forth the name of each
---------------------
Subsidiary, the jurisdiction of its incorporation or organization and the
Persons owning the outstanding capital stock or other equity interests of such
Subsidiary. Each Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, has all requisite corporate or partnership power and authority and
all authorizations, licenses and permits necessary to own its properties and to
carry on its businesses as now conducted and is qualified to do business in
every jurisdiction in which its ownership of property or the conduct of business
requires it to qualify, except where the failure to hold such authorizations,
licenses and permits or to be so qualified would not have a Material Adverse
Effect. For purposes of this Agreement, the term "Subsidiary" shall mean any
----------
corporation, limited liability company or partnership of which the securities or
other equity interests having a majority of the ordinary voting power in
electing the board of directors or similar such governing or managing body are,
at the time of such determination, owned by the Company or another Subsidiary.
4.03 Authorization: No Breach. The execution, delivery and
------------------------
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite corporate action, and no other proceedings on its part are necessary
to authorize the execution, delivery and performance of this Agreement. Except
as set forth on the attached Authorization Schedule, the execution, delivery and
----------------------
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby do not conflict with or result in any breach
of, constitute a default under, result in a violation of, result in the creation
of any lien, security interest, charge or encumbrance upon any assets of the
Company or any of its Subsidiaries, or require any authorization, consent,
approval, exemption or other action by or notice to any court or other
governmental body, under the provisions of the Company's or any of its
Subsidiaries' certificate of incorporation or bylaws or any indenture, mortgage,
lease, loan agreement or other agreement or instrument to which the Company or
any of its Subsidiaries is bound, or any law, statute, rule or regulation or
order, judgment or decree to which the Company or any of its Subsidiaries is
subject except where such breach, violation, default, conflict, lien, security
interest, charge or encumbrance or the failure to obtain any such authorization,
consent, approval, exemption or other action or the failure to give such notice
would not, together with all such other breaches, violations, defaults,
conflicts, liens, security interests, charges, encumbrances or failures, have a
Material Adverse Effect. Assuming that this Agreement is a valid and binding
obligation of Buyer and the Shareholders, this Agreement constitutes a valid and
binding obligation of the Company, enforceable in accordance with its terms
(except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally or by equitable principles). As of the Closing, the
Shareholders' Representative has executed and delivered the Escrow Agreement,
the SAR Escrow Agreement and the Security Agreement and, assuming they
constitute valid and binding obligations of each other party thereto, the Escrow
Agreement, the SAR Escrow Agreement and the Security Agreement constitute the
valid and legally binding obligations of the Shareholders' Representative,
enforceable in accordance with their terms (except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally or by equitable
principles).
-12-
<PAGE>
4.04 Capital Stock. The authorized number of shares of capital stock
-------------
of the Company consist of the following: 750,000 shares of Common and 6,750,000
shares of Non-Voting Common. As of the date hereof, 679,800 shares of Common and
6,118,200 shares of Non-Voting Common are issued and outstanding and are owned
of record by the Shareholders in the amounts as set forth on the Shareholders
------------
Schedule. Seventy-five percent (75%) of the partnership interest in Romar is
- - --------
owned of record and beneficially by the Company free and clear of all claims,
pledges, security interests, liens, charges, encumbrances, options, voting
trusts, proxies, agreements or other arrangements or restrictions whatsoever,
except as set forth on the attached Capital Stock Schedule. All of the
----------------------
outstanding shares of capital stock of the Company have been duly authorized and
are validly issued, fully paid and nonassessable. Except as set forth on the
Capital Stock Schedule, neither the Company nor any Subsidiary has any other
- - ----------------------
capital stock, equity securities or securities containing any equity features
authorized, issued or outstanding, and there are no agreements, options,
warrants or other rights or arrangements existing or outstanding which provide
for the sale or issuance of any of the foregoing by the Company or any
Subsidiary. Except as set forth on the Capital Stock Schedule, there are no
----------------------
rights, subscriptions, warrants, options, conversion rights or agreements of any
kind outstanding to purchase or otherwise acquire any shares of capital stock or
other equity securities of the Company or any Subsidiary of any kind. Except
as set forth on the Capital Stock Schedule, there are no agreements or
----------------------
other obligations (contingent or otherwise) which require the Company or any
Subsidiary to repurchase or otherwise acquire any shares of the Company's
capital stock or other equity securities.
4.05 Financial Statements. The Company has furnished Buyer with
--------------------
copies of (i) its audited consolidated balance sheet as of December 31, 1995,
and the related statements of income and cash flows for the 12-month period then
ended (such balance sheet referred to herein as the "Latest Balance Sheet"),
--------------------
(ii) its audited consolidated balance sheet and statements of income and cash
flows for the fiscal year ended December 31, 1994, and (iii) its unaudited
balance sheet as of March 31, 1996 and its statement of income for the
three-month period then ended. Except as set forth on the attached Accounting
----------
Schedule, such financial statements have been based upon the information
- - --------
contained in the Company's and its Subsidiaries' books and records, have been
prepared in accordance with generally accepted accounting principles,
consistently applied throughout the periods indicated, and present fairly in
all material respects the financial condition and results of operations of the
Company and its Subsidiaries as of the times and for the periods referred to
therein, subject in the case of the unaudited statements to (i) the absence of
footnote disclosures and other presentation items and (ii) changes resulting
from normal year-end adjustments.
4.06 Absence of Certain Developments. Since the date of the Latest
-------------------------------
Balance Sheet, there has not been any material adverse change in the financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole. Except as set forth on the attached Developments Schedule and except as
---------------------
expressly contemplated by this Agreement, since the date of the Latest Balance
Sheet, neither the Company nor any Subsidiary has:
(a) borrowed any amount or incurred or become subject to any
material liabilities, except liabilities incurred in the ordinary course of
business, liabilities under contracts entered into
-13-
<PAGE>
in the ordinary course of business and borrowings from banks (or similar
financial institutions) necessary to meet ordinary course working capital
requirements;
(b) mortgaged, pledged or subjected to any material lien, charge or
other encumbrance, any material portion of its assets, except liens for current
property taxes not yet due and payable;
(c) sold, leased, assigned or transferred, in any one transaction or
any series of related transactions, tangible assets for consideration in excess
of $100,000, except in the ordinary course of business;
(d) sold, licensed, assigned or transferred any material patents,
trademarks, trade names, copyrights, trade secrets or other intangible assets
other than the sale, license, assignment or transfer of software licenses in the
ordinary course of business;
(e) suffered any material extraordinary losses or waived any rights
of material value;
(f) issued, sold or transferred any of its capital stock or other
equity securities, securities convertible into its capital stock or other equity
securities or warrants, options or other rights to acquire its capital stock or
other equity securities, or any bonds or debt securities;
(g) declared or paid any dividends or made any distributions on
the Company's capital stock or other equity securities or redeemed or purchased
any shares of the Company's capital stock or other equity securities;
(h) made any material capital expenditures or commitments therefor,
except in the ordinary course of business;
(i) terminated any material contract other than contracts which
expired by their terms or which were terminated in the ordinary course of
business;
(j) amended its articles of incorporation or bylaws;
(k) increased by more than 10% the base salary of any employee
whose base salary was greater than $100,000 on the date of the Latest Balance
Sheet;
(l) entered into any material contracts, except in the ordinary
course of business;
(m) committed to do any of the foregoing; or
(n) entered into any other material transaction, except in the
ordinary course of business.
-14-
<PAGE>
4.07 Title to Properties.
-------------------
(a) The real property demised by the leases described on the
attached Leased Real Property Schedule constitutes all of the real property
-----------------------------
leased by the Company and its Subsidiaries.
(b) The lease of the Buffalo Grove, Illinois property described on
the Leased Real Property Schedule is in full force and effect, and the Company
-----------------------------
holds a valid and existing leasehold interest under such lease for the term set
forth in such lease. The Company has delivered to Buyer a complete and accurate
copy of such lease, and such lease has not been modified in any material
respect, except to the extent that such modifications are disclosed by the copy
delivered to Buyer. The Company is not in default in any material respect under
such lease. Except for matters which would not have a Material Adverse Effect,
(i) the leases described on the Leased Real Property Schedule are in full force
-----------------------------
and effect and (ii) the Company has a valid and existing leasehold interest
under each such lease for the term set forth in such lease.
(c) Except as set forth on the attached 0wned Real Property
-------------------
Schedule, neither the Company nor any of its Subsidiaries owns any real
- - --------
property. With respect to each parcel of real property listed on the Owned Real
----------
Property Schedule, except as set forth thereon.
- - -----------------
(i) one of the Company, a Subsidiary or Cole Taylor Bank, as
Trustee under the provisions of the Trust Agreement, owns good and
marketable title to such parcel of real property, free and clear of all
liens, security interests, easements and other restrictions, other than (A)
real estate taxes and installments of special assessments not yet
delinquent, (B) easements, covenants and restrictions of record, (C)
utility easements, building restrictions, zoning restrictions and other
easements and restrictions which are not violated by existing usage of and
improvements on such property, (D) matters which would be disclosed by an
accurate survey of each parcel of real property, (E) public roads and
highways and (F) other encumbrances and exceptions set forth on the Owned
-----
Real Property Schedule;
----------------------
(ii) there are no leases, subleases, licenses, concessions or
other agreements granting to any party or parties the right of use or
occupancy of any portion of such parcel of real property; and
(iii) there are no outstanding options or rights of first
refusal to purchase such parcel of real property, any portion thereof or
interest therein.
(d) The Company owns good and marketable title to all of the
personal property shown on the Latest Balance Sheet, free and clear of all
material liens, security interests and other encumbrances, except for liens
relating to current taxes not yet due and payable and liens and encumbrances set
forth on the attached Liens Schedule.
--------------
4.08 Tax Matters. Except as set forth in the attached Taxes
----------- -----
Schedule, the Company and its Subsidiaries have (i) duly filed with the
- - --------
appropriate governmental authorities all Tax Returns required to be filed by
them for all periods ending on or prior to the Closing Date and such Tax
-15-
<PAGE>
Returns are true, correct and complete in all material respects, and (ii) duly
paid in full or made adequate provision in the Company's balance sheet as of
March 31, 1996, books and records for the payment of all Taxes for all periods
ending at or prior to the Closing Date (whether or not shown on any Tax Return),
except where the failure to file such Tax Return or pay such Taxes would not
have a Material Adverse Effect. Except as set forth in the Taxes Schedule, there
--------------
are no material liens for Taxes upon any property or asset of the Company or any
of its Subsidiaries, except for liens for Taxes not yet due or for Taxes being
contested in good faith, and no deficiencies for any Taxes in respect of the
Company or its Subsidiaries have been proposed or assessed in writing against
the Company or its Subsidiaries which, if decided adversely to the Company would
have a Material Adverse Effect, and, to the Company's knowledge, no such
proposal or assessment is pending. Neither the Company nor any of its
Subsidiaries is a party to any agreement providing for the allocation or sharing
of Taxes with any entity that is not, directly or indirectly, a wholly-owned
Subsidiary of Company. Neither the Company nor any of its corporate Subsidiaries
has, with regard to any assets or property held, acquired or to be acquired by
any of them, filed a consent to the application of Section 341(f) of the Code.
The Company has elected to be an S corporation for federal income tax purposes
and has made (or has been deemed to have made) analogous elections under the
applicable tax laws of the states listed in the Taxes Schedule (collectively the
--------------
"S Elections"). None of the S Elections has or will be terminated prior to the
-----------
Closing Date.
4.09 Contracts and Commitments.
-------------------------
(a) Except as set forth on the attached Contracts Schedule, neither
------------------
the Company nor any Subsidiary is a party to any: (i) collective bargaining
agreement or contract with any labor union; (ii) bonus, pension, profit sharing,
retirement or other form of deferred compensation plan, other than as described
in Section 4.14 or the Schedules relating thereto; (iii) stock purchase, stock
option or similar plan; (iv) contract for the employment of any officer,
individual employee or other person on a full-time or consulting basis; (v)
agreement or indenture relating to the borrowing of money or to mortgaging,
pledging or otherwise placing a lien on any material asset or any material
portion of the assets of the Company and its Subsidiaries, taken as a whole;
(vi) guaranty of any obligation for borrowed money or other material guaranty;
(vii) lease or agreement under which it is lessee of, or holds or operates any
personal property owned by any other party, for which the annual rental exceeds
$100,000; (viii) lease or agreement under which it is lessor of or permits any
third party to hold or operate any property, real or personal, for which the
annual rental exceeds $100,000; (ix) contract or group of related contracts with
the same party for the purchase of products or services, under which the
undelivered balance of such products and services has a selling price in excess
of $100,000; (x) contract or group of related contracts with the same party for
the sale of products or services under which the undelivered balance of such
products or services has a sales price in excess of $100,000; or (xi) contract
which prohibits the Company or any Subsidiary from freely engaging in business
anywhere in the world.
(b) Buyer either has been supplied with, or has been given access
to, a true and correct copy of all written contracts which are referred to on
the Contracts Schedule and required to be disclosed thereon, together with all
------------------
material amendments thereto or waivers thereof.
-16-
<PAGE>
(c) Except with respect to any default which would not have a
Material Adverse Effect (as to which no representation is made), neither the
Company nor any Subsidiary is in default under any contract listed on the
Contracts Schedule and, to the Company's knowledge, no other party to such
- - ------------------
contract is in default of its obligations thereunder.
(d) There are no material contracts to which the Company or any
Subsidiary is a party, or to which any of its properties or assets is subject,
except as disclosed on the Contracts Schedule.
------------------
4.10 Intellectual Property.
---------------------
(a) All of the patents, trademarks, service marks, trade names,
corporate names (including all registrations and applications therefor) and
copyright registrations and applications used by the Company or any of its
Subsidiaries in the conduct of the Company's and the Subsidiaries' respective
businesses and material to the business of the Company and its Subsidiaries
taken as a whole, excluding all software sold or sublicensed by the Company in
the ordinary course of its business (collectively, "Intellectual Property"), are
---------------------
listed on the attached Intellectual Property Schedule. The Company and its
------------------------------
Subsidiaries own or have the right to use pursuant to license, sublicense,
agreement, or permission all Intellectual Property necessary for the operation
of the businesses of the Company and its Subsidiaries as presently conducted.
The Company owns or has the necessary right and authority to use all material
rights to the software commonly known as Tracker, which rights have not been
encumbered, licensed or otherwise transferred in any way, except as set forth on
the Intellectual Property Schedule. Each item of Intellectual Property owned or
------------------------------
used by any of the Company and its Subsidiaries immediately prior to the Closing
hereunder will be owned or available for use by the Company or the Subsidiary on
identical terms and conditions immediately subsequent to the Closing hereunder.
(b) Except as set forth on the Intellectual Property Schedule, to
------------------------------
the Company's knowledge, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of any of the Company and its Subsidiaries.
(c) The Intellectual Property Schedule identifies each item in
------------------------------
Intellectual Property that any third party owns and that any of the Company and
its Subsidiaries uses pursuant to license, sublicense, agreement, or permission,
other than the software sold or sublicensed by the Company in the ordinary
course of its business. The Company has made available to the Buyer correct and
complete copies of all such licenses, sublicenses, agreements, and permissions
(as amended to date). Except as set forth on the Intellectual Property Schedule
------------------------------
or as would not have a Material Adverse Effect, none of the Company and its
Subsidiaries has interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of third parties and,
to the Company's knowledge, none of the Company and its Subsidiaries has ever
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that any of the Company and its Subsidiaries must license or refrain from using
any Intellectual Property rights of any third party).
-17-
<PAGE>
4.11 Litigation. Except as set forth on the attached Litigation
---------- ----------
Schedule, there are no actions, suits or proceedings pending or, to the
- - --------
Company's knowledge, threatened (where such threat, to the Company's knowledge,
is credible and relates to a claim which presents reasonable grounds for a
lawsuit) against the Company or any Subsidiary, at law or in equity, or before
or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, which
if determined adversely to the Company or any Subsidiary would have a Material
Adverse Effect, and neither the Company nor any Subsidiary is subject to any
outstanding judgment, order or decree of any court or governmental body.
4.12 Brokerage. There are no contracts or arrangements for the
---------
payment of brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Company or any Subsidiary,
except for the fees and expenses of Merrill Lynch Pierce Fenner & Smith
("Merrill Lynch") which shall be paid by the Company at the Closing by wire
-------------
transfer of immediately available funds.
4.13 Governmental Consents, etc. Except for the applicable
--------------------------
requirements of the HSR Act and except as set forth on the Governmental
------------
Consents Schedule, no permit, consent, approval or authorization of, or
- - -----------------
declaration to or filing with, any governmental or regulatory authority (other
than any such consents, approvals, authorizations, declarations, permits or
filings required in connection with any contract for the provision of services
or products between the Company or any of its Subsidiaries and any government,
governmental agency, subdivision or body, or other entity directly or indirectly
affiliated with any government) is required in connection with any of the
execution, delivery or performance of this Agreement by the Company or the
Shareholders, other than where the failure to possess such permits or to obtain
such consent, approval or authorization, or to make such declaration or filing
would not have a Material Adverse Effect.
4.14 Employee Benefit Plans.
----------------------
(a) At the date hereof, except as set forth in the Benefits
--------
Schedule, the Company and its Subsidiaries do not maintain or contribute to, and
- - --------
have not maintained or contributed to any material employee benefit plans,
programs, arrangements and practices (such material plans, programs,
arrangements and practices of the Company and its Subsidiaries being referred to
as the "Company Plans"), including in each case employee benefit plans within
-------------
the meaning set forth in Section 3(3) of ERISA, or other similar material
arrangements for the provision of benefits (excluding any "Multi-employer Plan"
within the meaning of Section 3(37) of ERISA or a "Multiple Employer Plan"
within the meaning of Section 413(c) of the Code) and except as set forth in the
Benefits Schedule or as reflected in the Latest Balance Sheet or of a type so
- - -----------------
reflected and incurred in the ordinary course of business since the date
thereof, the Company and its Subsidiaries do not have any material obligation or
material liability to or under any employee benefit plans, programs,
arrangements and practices. The Benefits Schedule attached hereto lists all
-----------------
Multi-employer Plans and Multiple Employer Plans which any of the Company or its
Subsidiaries maintains or to which any of them makes contributions or has any
liability, contingent or otherwise. Neither the Company nor its Subsidiaries has
any obligation to create any additional such plan or to amend any such plan so
as
-18-
<PAGE>
to increase benefits thereunder, except as required under the terms of the
Company Plans, under existing collective bargaining agreements or to comply with
applicable law.
(b) Except as set forth in the Benefits Schedule, (i) there have
-----------------
been no prohibited transactions within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code with respect to any of the Company Plans that
could result in penalties, taxes or liabilities which, alone or in the
aggregate, could have a Material Adverse Effect, (ii) except for premiums due,
there is no outstanding material liability, whether measured alone or in the
aggregate, under Title IV of ERISA with respect to any of the Company Plans,
(iii) neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of the Company Plans
subject to Title IV of ERISA other than in a "standard termination" described in
Section 4041(b) of ERISA, (iv) none of the Company Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the Company Plans ended prior to the date of this
Agreement, (v) the current present value of all projected benefit obligations
under each of the Company Plans which is subject to Title IV of ERISA (if any)
did not, as of its latest valuation date, exceed the then current value of the
assets of such plan allocable to such benefit liabilities by more than the
amount, if any, disclosed in the Latest Balance Sheet, based upon reasonable
actuarial assumptions currently utilized for such Company Plan, (vi) each of the
Company Plans has been operated and administered in all material respects in
accordance with applicable laws during the period of time covered by the
applicable statute of limitations, (vii) each of the Company Plans which is
intended to be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified and such
determination has not been modified, revoked or limited by failure to satisfy
any condition thereof or by a subsequent amendment thereto or a failure to
amend, except that it may be necessary to make additional amendments
retroactively to maintain the "qualified" status of such Company Plans, and the
period for making any such necessary retroactive amendments has not expired,
(viii) with respect to Multi-employer Plans, neither the Company nor any of its
Subsidiaries has, made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are defined in Sections 4203, 4204 and 4205 of ERISA,
respectively, and, to the Company's knowledge, no event has occurred or is
expected to occur which presents a material risk of a complete or partial
withdrawal under said Sections 4203, 4204 and 4205, (ix) to the Company's
knowledge, there are no material pending, threatened or anticipated claims
involving any of the Company Plans other than claims for benefits in the
ordinary course, and (x) the Company and its Subsidiaries have no current
material liability, whether measured alone or in the aggregate, for plan
termination or complete withdrawal or partial withdrawal under Title IV of ERISA
based on any plan to which any entity that would be deemed one employer with the
Company and its Subsidiaries under Section 4001 of ERISA or Section 414 of the
Code contributed during the period of time covered by the applicable statute of
limitations (the "Company Controlled Group Plans"), and the Company and its
------------------------------
Subsidiaries do not anticipate that any such liability will be reasonably
asserted against the Company or any of its Subsidiaries. None of the Company
Controlled Group Plans has an "accumulated funding deficiency" (as defined in
Section 302 of ERISA and 412 of the Code).
-19-
<PAGE>
(c) The Benefits Schedule contains a true and complete summary or
-----------------
list of or otherwise describes all material employment contracts and other
employee benefit arrangements with "change of control" or similar provisions and
all severance agreements with executive officers.
4.15 Insurance. The attached Insurance Schedule lists each material
--------- ------------------
insurance policy maintained by the Company and its Subsidiaries. Neither the
Company nor any of its Subsidiaries is in material default with respect to the
obligations under any of such insurance policies and, to the Company's
knowledge, each of such policies is in full force and effect, without any
premium past due or pending notice of cancellation. There are no pending claims
by the Company, singly or in the aggregate, under such policies (excluding
health policies) in excess of $100,000 and which are in excess of the
limitations of coverage set forth in such policies. Neither the Company nor any
of its Subsidiaries has knowledge of any fact with respect to its own operations
(and not relating generally to any market for insurance) indicating that such
policies or similar policies will not continue to be available to the Company
and its Subsidiaries subsequent to the Closing Date.
4.16 Compliance with Laws. Except as set forth on the Compliance
-------------------- ----------
Schedule, the Company and each Subsidiary is in compliance with all applicable
- - --------
laws and regulations of foreign, federal, state and local governments and all
agencies thereof, except where the failure to comply would not have a Material
Adverse Effect.
4.17 Environmental. Except as disclosed on the Environmental
------------- -------------
Schedule, to the Company's knowledge, (i) the Company and its Subsidiaries have
- - --------
conducted their respective businesses in compliance with all applicable
Environmental Laws, including, without limitation, having all permits, licenses
and other approvals and authorizations necessary for the operation of their
respective businesses as presently conducted, (ii) none of the properties owned
by the Company or any of its Subsidiaries contain any Hazardous Substance as a
result of any activity of the Company or any of its Subsidiaries in amounts
exceeding the levels permitted by applicable Environmental Laws, (iii) neither
the Company nor any of its Subsidiaries has received any notices, demand letters
or written requests for information from any Federal, state, local or foreign
governmental entity or third party indicating that the Company or any of its
Subsidiaries may be in violation of, or liable under, any Environmental Law in
connection with the ownership or operation of their businesses, (iv) there are
no civil, criminal or administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or threatened against the Company or any
of its Subsidiaries relating to any violation, or alleged violation, of any
Environmental Law, (v) no reports have been filed, or are required to be filed,
by the Company or any of its Subsidiaries concerning the release of any
Hazardous Substance or the threatened or actual violation of any Environmental
Law, (vi) no material amount of Hazardous Substance has been disposed of,
released or transported in violation of any applicable Environmental Law from
any properties owned by the Company or any of its Subsidiaries as a result of
any activity of the Company or any of its Subsidiaries during the time such
properties were owned, leased or operated by the Company or any of its
Subsidiaries; (vii) there have been no environmental investigations, studies,
audits, tests, reviews or other analyses regarding compliance or noncompliance
with any applicable Environmental Law conducted by or which are in the
possession of the Company or its Subsidiaries relating to the activities of the
Company or its Subsidiaries, (viii) there are no underground storage tanks on,
in or under any properties owned by
-20-
<PAGE>
the Company or any of its Subsidiaries and no underground storage tanks have
been closed or removed from any of such properties during the time such
properties were owned, leased or operated by the Company or any of its
Subsidiaries, (ix) there is no friable asbestos or friable asbestos containing
the material present in any of the properties owned by the Company and its
Subsidiaries, and no asbestos has been removed from any of such properties
during the time such properties were owned, leased or operated by the Company or
any of its Subsidiaries, and (x) neither the Company, its Subsidiaries nor any
of their respective properties are subject to any material liabilities or
expenditures (fixed or contingent) relating to any suit, settlement, court
order, administrative order, regulatory requirement, judgment or claim asserted
or arising under any Environmental Law, except for violations of the foregoing
clauses (i) through (x) that, singly or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect.
For the purposes of this Agreement, "Environmental Law" means any
-----------------
Federal, state, local or foreign law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, legal doctrine, order,
judgment, decree, injunction, requirement or agreement with any governmental
entity relating to (x) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface land, subsurface land, plant and
animal life or any other natural resource) or to human health or safety or (y)
the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Hazardous Substances, in each case as amended and as in effect on the Closing
Date. The term Environmental Law includes, without limitation, (i) the Federal
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, each as
amended and as in effect on the Closing Date, or any state counterpart thereof,
and (ii) any common law or equitable doctrine (including, without limitation,
injunctive relief and tort doctrines such as negligence, nuisance, trespass and
strict liability) that may impose liability or obligations for injuries, damages
or penalties due to, or threatened as a result of, the presence of, effects of
or exposure to any Hazardous Substance.
For purposes of this Agreement, "Hazardous Substance" means any
-------------------
substance presently or hereafter listed, defined, designated or classified as
hazardous, toxic, radioactive, or dangerous, or otherwise regulated, under any
Environmental Law. Hazardous Substance includes any substance to which exposure
is regulated by any government authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos or asbestos containing material, urea formaldehyde foam
insulation, lead or polychlorinated biphenyls.
-21-
<PAGE>
4.18 Banking and Agency Arrangements.
-------------------------------
(a) The Banking/Agency Schedule attached hereto sets forth a
-----------------------
correct and complete list of:
(i) each bank, savings and loan or similar financial
institution in which the Company and each Subsidiary has an account or safe
deposit box or other custodial arrangement and the numbers of such accounts
or safe deposit boxes maintained by the Company and each Subsidiary; and
(ii) the names of all Persons authorized to draw on each
such account or to have access to any such safe deposit box facility.
(b) Except as set forth on the Banking/Agency Schedule attached
-----------------------
hereto, neither the Company nor any Subsidiary has granted any general or
special powers of attorney or any other agency arrangement.
4.19 Affiliated Transactions. Except as set forth on the Affiliated
----------------------- ----------
Transactions Schedule attached hereto, no officer, director, shareholder or
- - ---------------------
Affiliate of the Company or any individual in such officer's, director's or
shareholder's immediate family is a party to any material agreement, contract,
commitment or transaction with the Company or any Subsidiary or has any material
interest in any material property used by the Company or any Subsidiary, except
for employment arrangements on customary terms and transactions in the ordinary
course of business on arms-length terms.
4.20 Personnel. None of the Company and its Subsidiaries is a party
---------
to or bound by any collective bargaining agreement, nor has any of them
experienced any strikes, claims of unfair labor practices, or other collective
bargaining disputes. To the Company's knowledge, none of the Company and its
Subsidiaries has committed any unfair labor practice which would have a Material
Adverse Effect. To the Company's knowledge, there are no organizational efforts
presently being made or threatened by or on behalf of any labor union with
respect to employees of any of the Company and its Subsidiaries. The Company is
not aware of any specific intention on the part of any sales representative team
(which may be comprised of one or more persons), which is fully responsible for
customer accounts representing 10% or more of the Company's gross sales, to
terminate its employment with the Company. All sales representatives are
employees of the Company and no sales representative is an independent
contractor.
4.21 Business Relations. The Company is not aware of an intention on
------------------
the part of any Select Vendor to terminate or materially reduce the scope of the
Company's rights as a reseller, licensor or sublicensor of such Select Vendor's
software under volume licensing arrangements after the consummation of the
transactions contemplated hereby.
-22-
<PAGE>
4.22 Warranties. Provided that following the Closing Buyer maintains
----------
and extends the Company's existing insurance coverage applicable thereto, all
material liabilities with respect to the "virus protection" offered to certain
customers of the Company either (i) have been reasonably accrued or reserved for
in the Company's book and records or (ii) are reasonably insured under the
Company's insurance policies. The Company's liabilities under warranties by the
Company as of the Closing to its customers extending manufacturers' warranties
with respect to the physical condition of computer diskettes delivered by the
Company to such customers will not have a Material Adverse Effect.
4.23 Other Financial Information. The amounts set forth on the
---------------------------
attached Adjustments Schedule do not include any material amounts other than
--------------------
payments to S. Scott Wald, XXXXXXXXX and members of the Board of Directors of
the Company, which the Company is not obligated to continue following the
Closing.
4.24 Undisclosed Liabilities. Except as set forth on the Liabilities
----------------------- -----------
Schedule, none of the Company and its Subsidiaries has any liability, except for
- - --------
(i) liabilities included on the Latest Balance Sheet (rather than the notes
thereto) or not required, in accordance with generally accepted accounting
principles, to be set forth thereon, (ii) liabilities which have arisen since
the date of the Latest Balance Sheet in the ordinary course of business (none of
which to the Company's knowledge results from, arises out of, relates to, is in
the nature of, or was caused by any breach of contract, breach of warranty,
tort, infringement, or violation of law) and (iii) liabilities which would not
have a Material Adverse Effect.
4.25 Disclosure. This Agreement and the Schedules hereto do not
----------
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained herein and therein, in light of the
circumstances in which they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to the Shareholders and the Company
that:
5.01 Organization and Corporate Power. Buyer is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the State of
Colorado, with full corporate power and authority to enter into this Agreement
and perform its obligations hereunder.
5.02 Authorization. The execution, delivery and performance of this
-------------
Agreement by Buyer and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all requisite corporate action, and no
other corporate proceedings on its part are necessary to authorize the
execution, delivery or performance of this Agreement. Assuming that this
Agreement is a valid and binding obligation of the Shareholders and the Company,
this Agreement constitutes a valid and binding obligation of Buyer, enforceable
in accordance with its terms (except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
-23-
<PAGE>
moratorium or other similar laws affecting creditors' rights generally or by
equitable principles). As of the Closing, the execution, delivery and
performance of the Security Agreement, the Closing Note, the SAR Closing Note,
the Offset Closing Note, the UCC Financing Statements, the Warrant and the
Escrow Agreement by Buyer and the consummation of the transactions contemplated
thereby have been duly and validly authorized by all requisite corporate action,
and no other corporate proceedings on its part are necessary to authorize the
execution, delivery or performance of the Security Agreement, the Closing Note,
the SAR Closing Note, the Offset Closing Note, the UCC Financing Statements, the
Warrant and the Escrow Agreement. Assuming that each of the Security Agreement,
the Closing Note, the SAR Closing Note, the Offset Closing Note, the UCC
Financing Statements, the Warrant and the Escrow Agreement is a valid and
binding obligation of the Shareholders and the Company, constitute a valid and
binding obligations of Buyer, enforceable in accordance with their terms (except
as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally or by equitable principles).
5.03 No Violation. Buyer is not subject to or obligated under its
------------
certificate of incorporation, its bylaws, any applicable law, or rule or
regulation of any governmental authority, or any material agreement or
instrument, or any license, franchise or permit, or subject to any order, writ,
injunction or decree, which would be breached or violated by Buyer's execution,
delivery or performance of this Agreement, the Security Agreement, the Closing
Note, the SAR Closing Note, the Offset Closing Note, the UCC Financing
Statements, the Warrant and the Escrow Agreement or any of the transactions
contemplated hereby or thereby.
5.04 Governmental Authorities; Consents. Except for the applicable
----------------------------------
requirements of the HSR Act, Buyer is not required to submit any notice, report
or other filing with any governmental authority in connection with the
execution, delivery or performance by it of this Agreement, the Security
Agreement, the Closing Note, the SAR Closing Note, the Offset Closing Note, the
UCC Financing Statements, the Warrant and the Escrow Agreement or the
consummation of the transactions contemplated hereby or thereby. No consent,
approval or authorization of any governmental or regulatory authority or any
other party or Person is required to be obtained by Buyer in connection with its
execution, delivery and performance of this Agreement, the Security Agreement,
the Notes, the UCC Financing Statements, the Warrant and the Escrow Agreement or
the consummation of the transactions contemplated hereby or thereby.
5.05 Litigation. There are no actions, suits or proceedings pending
----------
or, to the Buyer's knowledge, overtly threatened against or affecting Buyer at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which would adversely affect Buyer's performance under this
Agreement or the consummation of the transactions contemplated hereby.
5.06 Brokerage. There are no contracts or arrangements for the
---------
payment of brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of Buyer.
-24-
<PAGE>
5.07 Investment Representation. Buyer is purchasing the Shares for
-------------------------
its own account with the present intention of holding such securities for
investment purposes and not with a view to or for sale in connection with any
public distribution of such securities in violation of any federal or state
securities laws.
5.08 Financing. Buyer has and shall have at the Closing sufficient
---------
cash to pay the full cash consideration payable at Closing to the Shareholders
and to the SAR Escrow hereunder, and Buyer has and shall have sufficient
resources to make all other necessary payments by it in connection with the
purchase of the Shares and to pay all of its related fees and expenses.
5.09 No Knowledge of Misrepresentations or Omissions. Buyer has no
-----------------------------------------------
actual knowledge that the representations and warranties of the Company in this
Agreement and the Schedules hereto are not true and correct in all material
respects, and Buyer has no actual knowledge of any material errors in, or
material omissions from, the Schedules to this Agreement.
5.10 Business Relations. Buyer is not aware of any materially
------------------
adverse business relations between Buyer and any of the Select Vendors which may
reasonably be expected to cause or contribute to an intention on the part of any
of such Select Vendors to terminate or materially reduce the scope of the
Company's rights as a reseller, licensor or sublicensor of such vendor's
software under volume licensing arrangements after the consummation of the
transactions contemplated hereby.
ARTICLE VI
COVENANTS OF THE COMPANY, THE SHAREHOLDERS
------------------------------------------
AND THE SHAREHOLDERS' REPRESENTATIVE
------------------------------------
6.01 Conduct of Business.
-------------------
(a) From the date hereof until the Closing Date, (i) the Company
shall use its reasonable efforts to carry on its and its Subsidiaries'
respective businesses according to their ordinary and usual course of business
and substantially in the same manner as heretofore conducted; provided that the
Company may use any or all available cash prior to the Closing to repay any
indebtedness (other than the Mortgage Loan) and/or to make distributions to the
Shareholders consistent with the provisions of Section 1.03(d) and (ii) the
Company shall inform Buyer of any material adverse development regarding the
Company or its business known by the Company.
(b) From the date hereof until the Closing Date, except as
otherwise provided for by this Agreement or consented to in writing by Buyer,
the Company shall not and shall not permit any Subsidiary to (i) issue, sell or
deliver any shares of its or any Subsidiary's capital stock or issue or sell any
securities convertible into, or options with respect to, or warrants to purchase
or rights to subscribe for, any shares of its or any Subsidiary's capital stock;
(ii) effect any recapitalization, reclassification, stock dividend, stock split
or like change in its or any Subsidiary's capitalization; (iii) amend its or any
Subsidiary's certificate of incorporation (or other charter documents) or
bylaws; (iv)
-25-
<PAGE>
declare or pay any dividends or make any distributions with respect to the
Company's capital stock except for dividends and distributions payable in cash
consistent with the provisions of Section 1.03(d), (v) make any redemption or
purchase of any shares of the Company's capital stock; or (vi) take any action
described in Section 4.06 hereof (other than the purchase of computer equipment
as disclosed on the Developments Schedule).
---------------------
6.02 Access to Books and Records. From the date hereof until the
---------------------------
Closing Date, the Company shall provide Buyer and its authorized representatives
("Buyer's Representatives") with reasonable access during normal business hours
-----------------------
and upon reasonable notice to the offices, properties, personnel, books and
records of the Company and its Subsidiaries in order for Buyer to have the
opportunity to make such investigation as it shall reasonably desire to make of
the affairs of the Company and its Subsidiaries. Buyer acknowledges that it
remains bound by the Confidentiality Agreement with the Company, dated December
4, 1995, as amended (the "Confidentiality Agreement").
-------------------------
6.03 Regulatory Filings; Third Party Consents. The Company shall
----------------------------------------
make or cause to be made all filings and submissions under the HSR Act and any
other laws or regulations applicable to the Company and its Subsidiaries for the
consummation of the transactions contemplated herein. The Company shall
coordinate and cooperate with Buyer in exchanging such information and
assistance as Buyer may reasonably request in connection with all of the
foregoing. The Company and Buyer shall together use reasonable efforts to obtain
all consents and acknowledgments included as Closing conditions in Section
2.01(n) prior to Closing.
6.04 Conditions. The Company shall use reasonable efforts to cause
----------
the conditions set forth in Section 2.01, and each Shareholder shall use
reasonable efforts to cause the conditions set forth in Section 2.01(g)(iii),
2.01(h), 2.01(i), 2.01(p), and 2.01(q), to the extent applicable to such
Shareholder, to be satisfied. The Company shall use reasonable efforts to
consummate the transactions contemplated herein as soon as reasonably possible
after the satisfaction of the conditions set forth in Article II (other than
those to be satisfied at the Closing) but in any event to consummate such
transactions within two business days after such date; provided that the Company
shall only be required to expend funds with respect to the lender consent
required under Section 2.01(l) and, if applicable, Section 2.01(m) (including
any prepayment penalties), and neither the Company nor any Shareholder shall be
required to expend any funds to obtain any third-party or governmental consents
or acknowledgments required under Section 2.01(c) or 2.01(n).
6.05 Exclusive Dealing. During the period from the date of this
-----------------
Agreement through the Closing or the earlier termination of this Agreement
pursuant to Section 8.01, each Shareholder shall not take or permit any other
Person on its behalf to take, and the Company shall not take, any action to
encourage, initiate or engage in discussions or negotiations with, or provide
any information to, any Person (other than Buyer and Buyer's Representatives)
concerning any purchase of the Shares or any merger, sale of substantial assets
or similar transaction involving the Company or its Subsidiaries (other than
assets sold in the ordinary course of business).
-26-
<PAGE>
6.06 Section 338(h)(10) Election. The Shareholders agree, if so
---------------------------
requested by Buyer, to join with the Buyer in making elections under Section
338(h)(10) of the Code with respect to the sale and purchase of the Shares and,
if so requested by Buyer, to make any analogous elections under applicable
state law provisions (including such state elections, the "Election"), and to
--------
take such actions as are necessary to make an appraisal of the value of the
assets of the Company (which appraisal shall be at Buyer's sole cost and
expense). Buyer and the Shareholders agree to prepare and file all Tax Returns
in accordance with such appraisal; provided, however, that such appraisal shall
be approved by Shareholders and Buyer. Buyer will indemnify Shareholders on an
after-tax basis for any actual increase in Taxes of Shareholders (including any
such increase incurred as a result of any payment in satisfaction of such
indemnification obligation) resulting from the Election as compared to the Taxes
Shareholders would have paid if no Election had been made with respect to the
sale of the Shares pursuant to this Agreement. The amount of any indemnity
payable under the preceding sentence shall be determined by an independent
accounting firm selected by agreement of the Shareholders' Representative and
Buyer, and the expense of any such determination shall be paid by Buyer.
6.07 Employment Contract. S. Scott Wald shall execute and deliver
-------------------
the Executive Employment Agreement attached as Exhibit I hereto.
---------
6.08 Notification. Prior to the Closing, upon discovery by the
------------
Company, the Company shall promptly inform Buyer in writing of any variances
from Buyer's representations and warranties contained in Article V.
ARTICLE VII
COVENANTS OF BUYER
------------------
7.01 Access to Books and Records. From and after the Closing, Buyer
---------------------------
shall, and shall cause the Company and its Subsidiaries to, provide the
Shareholders' Representative, the Shareholders and their agents with reasonable
access (for the purpose of examining and copying), during normal business hours,
to the books and records of the Company and its Subsidiaries with respect to
periods or occurrences prior to the Closing Date in connection with any matter
relating to any asset or liability, or potential or contingent asset or
liability, of any of the Shareholders or otherwise reasonably requested by any
Shareholder, including, without limitation, any tax records, any records
relating to any potential, pending or threatened litigation or government
action, any matters relating to a claim or potential claim for indemnification
by Buyer, and any matters relating to a dispute or potential dispute involving
Buyer and/or its affiliates and the Shareholders. Unless otherwise consented to
in writing by the Shareholders' Representative, neither the Company nor its
Subsidiaries or any successor to all or substantially all of the assets thereof
shall, for a period of seven years following the Closing Date, destroy, alter or
otherwise dispose of any of the books and records of the Company or its
Subsidiaries for the period prior to the Closing Date without first offering to
surrender to the Shareholders' Representative such books and records or any
portion thereof which Buyer, the Company or its Subsidiaries may intend to
destroy, alter or dispose of.
-27-
<PAGE>
7.02 Notification. Prior to the Closing, upon discovery Buyer shall
------------
promptly inform the Company and the Shareholders' Representative in writing of
any variances from Buyer's representations and warranties contained in Article
V, and Buyer shall promptly notify the Shareholders' Representative if, to the
Buyer's knowledge, any of the representations and warranties of the Shareholders
or the Company in this Agreement or the Schedules hereto are not true and
correct.
7.03 Post-Closing Indemnification of Officers and Directors of the
-------------------------------------------------------------
Company.
-------
(a) From and after the Closing Date and for the shorter of six (6)
years or the applicable statute of limitations, the Buyer shall cause the
Company to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Company) by reason of the fact that he is or was a
director or officer of the Company, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment or settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Company, and with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
(b) From and after the Closing Date, the Buyer shall cause the
Company to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that he is or was a director or officer of the Company or is or was serving at
the request of the Company as a director or officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be or not opposed
to the best interests of the Company and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for gross negligence or misconduct in the performance
of his duty to the Company unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnify for such expenses
which the court shall deem proper.
(c) To the extent that a director or officer of the Company has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) above, or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
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<PAGE>
7.04 Regulatory Filings. Buyer shall make or cause to be made all
-------------------
filings and submissions under the HSR Act and any other laws or regulations
applicable to Buyer as may be required of Buyer for the consummation of the
transactions contemplated herein, and Buyer shall be responsible for all filing
fees under the HSR Act. Buyer shall coordinate and cooperate with the Company
in exchanging such information and assistance as the Company may reasonably
request in connection with all of the foregoing.
7.05 Conditions. Buyer shall use all reasonable efforts to cause the
----------
conditions set forth in Section 2.02 to be satisfied and to consummate the
transactions contemplated herein as soon reasonably possible after the
satisfaction of the conditions set forth in Article II (other than those to be
satisfied at the Closing) but in any event within two business days after such
date.
7.06 Contact with Customers and Suppliers. Prior to the Closing,
------------------------------------
Buyer and the Buyer's Representatives shall contact and communicate with the
employees (other than employees that are also officers or directors), customers
and suppliers of the Company and its Subsidiaries in connection with the
transactions contemplated hereby only with the prior written consent of the
Company or the Shareholders' Representative.
7.07 SAR Plan. At the Closing, the Company shall enter into a SAR
--------
Escrow Agreement in the form of Exhibit F hereto and, as contemplated by the
---------
terms thereof, the Buyer shall deposit the Estimated SAR Amount minus the
Pre-Closing SAR Payment minus $817,236 into an escrow account (the "SAR Escrow")
----------
for the benefit of (a) the Shareholders and (b) holders of SARs issued pursuant
to the Company's 1995 Equity Incentive Plan (the "Incentive Plan") who are
--------------
employees, officers and directors of the Company as of the Closing. As and when
payments are made pursuant to Section 1.01 as adjustments to the Closing
Purchase Price, the Buyer will make additional payments to or receive additional
payments from the SAR Escrow as described in Article I. In addition, any amounts
owing from holders of SARs to the Company pursuant to the Incentive Plan shall
be paid to the SAR Escrow. On the third anniversary of the Closing, any amounts
in the SAR Escrow not paid or then payable pursuant to the Incentive Plan shall
be paid to the Shareholders in proportion to their holdings of Shares as
reflected on the Shareholders Schedule. Buyer agrees that the Committee, as
---------------------
defined in the Incentive Plan, shall be comprised solely of the Shareholders'
Representative, provided that the Committee may not, without the prior written
consent of Buyer, waive any noncompetition agreement, nonsolicitation agreement
or other material restriction under the Incentive Plan or any related SARs or
accelerate the vesting of any SAR. Buyer further agrees not to amend or waive,
or to consent to the amendment or waiver of any provision of, the Incentive Plan
or any SARs issued thereunder without the prior written consent of the
Shareholders' Representative and Buyer shall indemnify each member of the
Committee, and shall cause the Company to indemnify each such member, against
all Losses arising on account of any actions or inactions by the Buyer or the
Company in connection with the Incentive Plan or the SARs.
7.08. Management Options. At the first meeting of the compensation
------------------
committee of Buyer's board of directors following the Closing Date, Buyer shall
grant or cause to be granted to each Management Option Recipient the Management
Options in the amount set forth opposite each such recipient's name on Exhibit K
---------
hereto and shall reserve for future grant to current or future
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<PAGE>
employees of the Company, at the sole discretion of the Shareholders'
Representative, any Management Options not allocated on Exhibit K.
---------
ARTICLE VIII
TERMINATION
-----------
8.01 Termination. This Agreement may be terminated at any time prior
-----------
to the Closing.
(a) by the mutual consent of Buyer and the Shareholders'
Representative;
(b) by Buyer, if there has been a violation or breach by the Company
or the Shareholders of any covenant, representation or warranty contained in
this Agreement which has prevented the satisfaction of any condition to the
obligations of Buyer at the Closing and such violation or breach has not been
waived by Buyer or, in the case of a covenant breach, cured by the Company
or the Shareholders within ten days after written notice thereof from Buyer;
(c) by the Shareholders' Representative, (i) if there has been a
violation or breach by Buyer of any covenant, representation or warranty
contained in this Agreement which has prevented the satisfaction of any
condition to the obligations of the Shareholders at the Closing and such
violation or breach has not been waived by the Shareholders' Representative or,
with respect to a covenant breach, cured by Buyer within ten days after written
notice thereof by the Shareholders' Representative or any Shareholder (provided
that neither a breach by Buyer of Section 5.08 hereof nor the failure to deliver
the Closing Purchase Price at the Closing as required hereunder shall be subject
to cure hereunder unless otherwise agreed to in writing by the Shareholders'
Representative) or (ii) if any "Event of Default" (within the meaning of the
Notes) would be in effect if the Notes were then issued and outstanding); or
(d) by either Buyer or the Shareholders' Representative if the
transactions contemplated hereby have not been consummated by May 31, 1996
provided that (i) neither Buyer nor the Shareholders' Representative shall
be entitled to terminate this Agreement pursuant to this Section 8.01(d) if
such Person's (or the Company's or any Shareholder's, in the case of the
Shareholders' Representative) breach of this Agreement has prevented the
consummation of the transactions contemplated hereby and (ii) Buyer shall not
be entitled to terminate this Agreement pursuant to this Section 8.01(d) if
it fails to obtain sufficient financing for the consummation of the transactions
contemplated hereby.
8.02 Effect of Termination. In the event of termination of this
---------------------
Agreement by either Buyer or the Shareholders' Representative as provided above,
the provisions of this Agreement shall immediately become void and of no further
force and effect (other than this Section 8.02 and Article XII hereof and the
Confidentiality Agreement which shall survive the termination of this
Agreement), and there shall be no liability on the part of either Buyer, the
Company or the Shareholders to one another, except for (i) any breaches of this
Agreement prior to the time of such termination and (ii)
- 30 -
<PAGE>
in the case of Buyer, its failure to obtain sufficient financing for the
consummation of the transactions contemplated hereby.
ARTICLE IX
SHAREHOLDERS' REPRESENTATIVE
----------------------------
9.01 Designation. S. Scott Wald (the "Shareholders' Representative")
----------- ----------------------------
is hereby designated by each of the Shareholders to serve as the representative
of the Shareholders with respect to the matters expressly set forth in each or
any of this Agreement, the Escrow Agreement, the SAR Escrow Agreement, the
Notes, the Security Agreement and the Warrant to be performed by the
Shareholders' Representative.
9.02 Authority. Each of the Shareholders, by the execution of this
---------
Agreement, hereby irrevocably appoints the Shareholders' Representative as the
agent, proxy and attorney-in-fact for such Shareholders for all purposes of this
Agreement and the other agreements and transactions contemplated hereby
(including without limitation the full power and authority on such Shareholder's
behalf (i) to consummate the transactions contemplated herein, and the
transactions contemplated in each of the Escrow Agreement, the SAR Escrow
Agreement, the Security Agreement, the Notes and the Warrant; (ii) to deduct
from amounts otherwise due to such Shareholder pursuant to this Agreement or any
of the other agreements contemplated hereby such Shareholder's share of expenses
incurred in connection with the negotiation and performance of this Agreement
(whether incurred on or after the date hereof); (iii) to direct the remittance
of, receive on behalf of and disburse any funds received hereunder to such
Shareholder and each other Shareholder; (iv) to execute and deliver any
certificates representing the Shares and execution of such further instruments
of assignment as Buyer shall reasonably request; (v) to execute and deliver on
behalf of such Shareholder any amendment or waiver hereto or to any of the
Escrow Agreement, the SAR Escrow Agreement, the Security Agreement, the Notes
and the Warrant; (vi) to take all other actions to be taken by or on behalf of
such Shareholder in connection herewith or in connection with any of the Escrow
Agreement, the SAR Escrow Agreement, the Security Agreement, the Notes and the
Warrant; (vii) to negotiate, settle, compromise and otherwise handle the
determination of Estimated Closing Adjusted Net Book Value and the Final Closing
Adjusted Net Book Value adjustment and all claims for indemnification made by
Buyer pursuant to Section 10.02 hereof; (viii) to exercise the Warrant in whole
or in part, at his sole discretion; and (ix) to do each and every act and
exercise any and all rights which such Shareholder or the Shareholders
collectively are permitted or required to do or exercise under this Agreement or
in connection with any of the Escrow Agreement, the SAR Escrow Agreement, the
Security Agreement, the Notes and the Warrant). Each of the Shareholders agrees
that such agency and proxy are coupled with an interest, are therefore
irrevocable without the consent of the Shareholders' Representative and shall
survive the death, incapacity, bankruptcy, dissolution or liquidation of any
Shareholder. Buyer may rely on the authorizations provided to the Shareholders'
Representative herein.
9.03 Exculpation: Neither the Shareholders' Representative nor any
-----------
agent employed by it shall incur any liability to any Shareholder by virtue of
the failure or refusal of the Shareholders'
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<PAGE>
Representative for any reason to consummate the transactions contemplated hereby
or relating to the performance of his other duties hereunder, except for actions
or omissions constituting fraud or bad faith.
ARTICLE X
ADDITIONAL COVENANTS
--------------------
10.01 Survival. The representations and warranties set forth in this
--------
Agreement and in any certificates delivered at the Closing in connection with
this Agreement shall survive the Closing Date and the consummation of the
transactions contemplated hereby subject to the limitations set forth in this
Article X.
10.02 Indemnification.
---------------
(a) Subject to the other provisions of this Article X, including
without limitation, Section 10.02(d) below, the Shareholders shall indemnify and
hold Buyer harmless against any actual loss, liability, damage or expense
(including reasonable legal fees and expenses and cost of indemnification paid
to the escrow agent pursuant to Section 5(b) of the Escrow Agreement, but
excluding incidental, consequential or punitive damages other than consequential
or punitive damages paid by the Company or any of its Subsidiaries to an
unrelated third party pursuant to a judgement entered against the Company or any
of its Subsidiaries by a court of competent jurisdiction) (collectively,
"Losses" and individually, a "Loss") which Buyer suffers, sustains or becomes
------ ----
subject to as a result of any breach of any of the covenants, representations
and warranties of the Company and the Shareholders set forth herein or in any
Schedule hereto or any certificates delivered by the Company or the
Shareholders' Representative at the Closing in connection with the transactions
contemplated hereby; provided that (i) except as provided in Sections 10.02(b)
and 10.03(b), Buyer's right to seek indemnification with respect to any and all
of such breaches shall be limited solely to the funds deposited in the Escrow
Fund pursuant to Section 1.03(b)(iii), and only to such funds remaining in such
Escrow Fund, and none of the Shareholders shall have any personal liability to
Buyer hereunder with respect to any such breach and (ii) Buyer shall not be
entitled to seek indemnification with respect to any individual Loss unless such
Loss, together with all other such Losses, exceeds $500,000 (the "Basket") in
------
the aggregate (it being understood that the limitations in this clause (ii) will
cease to have effect if such Loss, together with all other such Losses, exceeds
$500,000 such that Buyer may recover for such Losses irrespective of the Basket
but subject to all other limitations of this Article X); and provided further
that Buyer shall not be entitled to seek indemnification with respect to any
Loss arising from any matter or breach on or prior to the Closing Date unless
(A) such Loss resulted from a representation or warranty of the Company failing
to be true and correct as of the execution of this Agreement and (B) such breach
was not known to Buyer or any of Buyer's Representatives as of such time.
(b) In the event any such Shareholder breaches any of such
Shareholder's representations and warranties in Article III above, then such
Shareholder shall indemnify the Buyer from and against the entirety of any
Losses the Buyer may suffer to the extent caused directly by such
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<PAGE>
breach; provided that the aggregate liability of any Shareholder under this
Section 10.02(b) shall not exceed the portion of the Final Purchase Price
received by such Shareholder (as reduced by such Shareholder's Pro Rata Share of
any recovery by Buyer under Section 10.02(a) or otherwise paid or payable by or
on behalf of such Shareholder pursuant to this Article X).
(c) Subject to the provisions of Section 10.02(d) below, Buyer
shall indemnify each Shareholder and hold him or it harmless against any Loss
which any such Shareholder suffers, sustains or becomes subject to as a result
of (i) any breach by Buyer of its covenants, representations and warranties set
forth herein or representations and warranties restated in any certificates
delivered by Buyer at the Closing, (ii) the operations of the Company and its
Subsidiaries following the Closing (other than Losses suffered solely in such
Shareholder's capacity as an employee of the Buyer or the Company following the
Closing, which Losses may be subject to indemnity pursuant to arrangements
otherwise applicable for the benefit of employees of Buyer and/or the Company);
(iii) any violations of any Environmental and Safety Requirements by the Company
or its Subsidiaries or any remediation obligations of the Company or its
Subsidiaries thereunder (other than those violations and obligations with
respect to which Buyer is entitled to indemnification under 10.02(a) above); and
(iv) any preclosing environmental liabilities not otherwise covered by the
indemnification provisions of Section 10.02(a).
(d) No Person shall be liable for any claim for indemnification
under any of subsections (a), (b) or (c) above (other than claims (i) for
indemnification under Section 10.02(c)(ii), (iii) or (iv), (ii) relating to
breaches of covenants required to be performed by Buyer subsequent to the
Closing pursuant to any of Sections 7.01, 7.03, 7.07 and 7.08, (iii) for breach
of (A) a Shareholder's representation or warranty set forth in Article III, (B)
for breach of Section 4.08, or (C) for breach of Section 4.14, but only if,
contrary to representations and warranties of the Company set forth in Section
4.14, the Company contributed to or was obligated to contribute to any material
defined benefit plan at any time prior to Closing; each of which claims may be
brought at any time prior to the expiration of the statute of limitations
applicable thereto, or (iv) for breach of Section 4.17, which claim may be
brought at any time prior to the third anniversary of the Closing Date) unless
written notice specifying in reasonable detail the nature of the claim for
indemnification is delivered by the Person seeking indemnification to the Person
from whom indemnification is sought before May 1, 1997. In the event that Buyer
seeks indemnification with respect to any Loss in connection with, arising from
or relating to any breach described in clause (iii) or clause (iv) of the
foregoing sentence within the time period provided in such sentence but after
such time as all amounts, if any, in the Escrow Fund shall have been distributed
to the Shareholders, then Buyer may seek indemnification from the Shareholders
with respect to such Loss (subject to the other provisions of this Article X);
provided that in no event shall any Shareholder be liable for any amount
- - --------
pursuant to this sentence in excess of the lesser of (x) the aggregate amount
received by such Shareholder as distributions from the Escrow Fund, minus the
-----
aggregate amount previously paid or otherwise payable by such Shareholder
pursuant to this sentence, and (y) such Shareholder's Pro Rata Share of such
Loss, and none of the Shareholders shall have any further personal liability to
Buyer hereunder with respect to any such Loss.
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<PAGE>
(e) Promptly after the assertion by any unrelated third party of
any claim (a "Third Party Claim") against any Person entitled to indemnification
-----------------
under this Section 10.02 (the "Indemnitee") that results or may result in the
----------
incurrence by such Indemnitee of any Loss for which such Indemnitee would be
entitled to indemnification pursuant to this Agreement, such Indemnitee shall
promptly notify the parties from whom such indemnification could be sought (the
"Indemnitors") and the Shareholders' Representative of such Third Party Claim.
-----------
The Shareholders' Representative shall act on behalf of all Indemnitors in the
case of all Third Party Claims with respect to which Buyer is seeking
indemnification under subsection (a) above and may, at its option, assume the
defense of the Indemnitee against such Third Party Claim (including the
employment of counsel reasonably acceptable to Buyer and the payment of
expenses, which expenses shall be paid from the Escrow Fund). Any Indemnitee
shall have the right to employ separate counsel in any such Third Party Claim
and to participate in the defense thereof, but the fees and expenses of such
counsel shall not be an expense of the Indemnitor unless (i) the Indemnitor
shall have failed, within a reasonable time after having been notified by the
Indemnitee of the existence of such Third Party Claim as provided in the
preceding sentence, to assume the defense of such Third Party Claim or (ii) the
employment of such counsel has been specifically authorized by the Indemnitor
and/or the Shareholders' Representative in the case of all Third Party Claims
with respect to which the Buyer is entitled to indemnification under subsection
(a) above.
(f) The amount of any Loss subject to indemnification hereunder or
of any claim therefor shall be calculated net of (i) any Tax Benefit inuring to
Buyer, the Company, its Subsidiaries or any of their Affiliates on account of
such Loss, (ii) any insurance proceeds (net of direct collection expenses)
received or receivable by Buyer, the Company and its Subsidiaries on account of
such Loss, and (iii) any accruals, reserves or provisions reflected in the
determination of Final Closing Adjusted Net Book Value. If Buyer, the Company,
its Subsidiaries or any of their Affiliates receives a Tax Benefit after an
indemnification payment is made, Buyer shall promptly pay to the Shareholders'
Representative (on behalf of the Shareholders) the amount of such Tax Benefit at
such time or times as and to the extent that such Tax Benefit is realized by the
Buyer or any of its affiliates and has not been used to offset a prior
indemnification payment made by the Shareholders. For purposes hereof, "Tax
---
Benefit" shall mean any refund of Taxes paid or reduction in the amount of Taxes
- - -------
which otherwise would have been paid, in each case computed at the highest
marginal tax rates applicable to the recipient of such benefit. Buyer, the
Company and its Subsidiaries shall seek full recovery under all insurance
policies covering any Loss to the same extent as they would if such Loss were
not subject to indemnification hereunder, and Buyer, the Company and its
Subsidiaries shall maintain insurance coverage which is comparable to the
coverages of the Company prior to the Closing Date; provided however, that to
----------------
the extent that a Loss is not covered by insurance in effect after Closing,
which would have been covered by insurance in effect prior to Closing had it
been maintained in effect after the Closing (the "Uncovered Amount"), Buyer
----------------
shall be deemed to have recovered the Uncovered Amount for purposes hereof. In
the event that an insurance or other recovery is made by Buyer, the Company, its
Subsidiaries or any of their affiliates with respect to any Loss for which any
such Person has been indemnified hereunder, then a refund equal to the aggregate
amount of the recovery (net of all direct collection expenses) shall be made
promptly to the Shareholders' Representative (on behalf of the Shareholders).
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<PAGE>
(g) All indemnification payments made hereunder shall be treated by
all parties as an adjustment to the Final Purchase Price.
(h) Notwithstanding anything to the contrary contained in this
Section 10.02, there shall be no recovery for any Loss by the Buyer under this
Section 10.02, and the Loss shall not be included in meeting the stated
thresholds hereunder, to the extent such item has been included in the
calculation of the Final Closing Adjusted Net Book Value under Section 1.02
hereof.
10.03 Limitation of Recourse.
----------------------
(a) Except as provided in Section 10.02(b) and except for an
action for fraud pursuant to Section 10.03(b), following the Closing the
indemnification provided by Section 10.02(a) shall be the sole and exclusive
remedy for any Losses of Buyer, the Company or its Subsidiaries with respect to
any misrepresentation or inaccuracy in, or breach of, any representations or
warranties or any breach or failure in performance at or prior to Closing of any
covenants or agreements made by the Company or any Shareholder in this Agreement
or in any Exhibit or Schedules hereto or any certificate delivered hereunder.
Prior to the Closing and in the event that the transactions contemplated are not
consummated for any reason, Buyer agrees that its sole recourse for damages will
be against the Company and that it will have no claim, and will not bring any
claim or action against any Shareholder or any officer, director or agent of the
Company (except that, after satisfaction in full of the conditions to the
obligations of the Shareholders and the Company hereunder, Buyer may seek
specific performance by the Shareholders and the Company of the Closing
Transactions). Effective as of the Closing, the Company waives any claim it may
have against any of the Shareholders, it being understood that this Article X
constitutes Buyer's sole remedy against the Shareholders in connection with the
transactions contemplated hereby. Effective as of the Closing, the Shareholders
hereby release the Company for any breach, on or prior to the Closing, of
representations and warranties set forth in Article IV hereof and any breach by
the Company at or prior to the Closing of any covenant of the Company set forth
in this Agreement.
(b) Except as provided in Sections 10.02(a) or 10.02(b), no claim
shall be brought or maintained by Buyer, the Company or any of its Subsidiaries
or their respective successors or permitted assigns against any officer,
director or employee (present or former) of the Company or any of its
Subsidiaries, the Shareholders' Representative or any Shareholder, and no
recourse shall be brought or granted against any of them, by virtue of or based
upon any alleged misrepresentation or inaccuracy in or breach of any of the
representations, warranties or covenants of the Company or any Shareholder set
forth or contained in this Agreement or any Exhibit or Schedule hereto or any
certificate delivered hereunder, except to the extent that the same shall have
been the result of fraud by the Person against whom such claim is made (and in
the event of such fraud, such recourse may be brought or granted solely against
the Person or Persons committing such fraud), and without limiting the
foregoing, in no event shall Buyer, its successors or permitted assigns be
entitled to claim or seek any rescission of the transactions consummated under
this Agreement or other remedy at law or in equity (except that, after
satisfaction in full of the conditions to the obligations of the Shareholders
hereunder, Buyer may seek specific performance of the Closing Transactions). The
obligations of the Shareholders for all purposes under this Agreement are
several and not joint and
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<PAGE>
several, and in no event shall any Shareholder, the Shareholders' Representative
or any present or former officer, director or employee of the Company or its
Subsidiaries have any shares or vicarious liability for the actions or omissions
of any other Person. The Buyer acknowledges and agrees that representations and
warranties of the Shareholders (other than in Article III) are not intended to,
and will not, create or result in any liability for any such Shareholder, it
being understood that Buyer's sole recourse for indemnification for breaches of
representations and warranties (other than representations and warranties
included in Article III) is pursuant to Section 10.02(a).
(c) Except for claims against Shareholders as contemplated by
Section 10.02(a), each of the Buyer, the Company, its Subsidiaries and their
respective successors and permitted assigns, hereby waives any right to seek
contribution or other recovery from any officer, director or employee (present
or former) of the Company, its Subsidiaries or any Shareholder that any of them
may now or in the future have under any Environmental Law. Except for claims
against Shareholders as contemplated by Section 10.02(a), each of the Buyer, the
Company, its Subsidiaries and their respective successors and permitted assigns
hereby releases all officers, directors and employees (present or former) of the
Company, its Subsidiaries, and the Shareholders from any and all such claims,
demands and causes of action that any of them may now or in the future have
under such Environmental Law.
(d) Notwithstanding any other provision of this Agreement, Buyer
may not seek or obtain any indemnity in respect of any breach of any
representation or warranty included in Section 4.08 above pursuant to Article X
of this Agreement or any other remedy relating to any sales or use Tax unless
and to the extent that (i) Buyer has complies in all respects with the
notification requirements of and in all material respects with all other
requirements of its obligations pursuant to Section 10.07(c), and (ii) the
relevant Tax authority has determined, based on an audit of transactions
consummated during periods ending at or prior to the Closing (or extrapolation
therefrom), and not based on any audit of transactions following the Closing,
that the Company is liable for additional sales or use Taxes with respect to
periods prior to the Closing.
10.04 Disclosure Generally. The inclusion of any information in any
--------------------
Schedule attached hereto or in any update to any Schedule provided to Buyer
prior to Closing shall not be deemed to be an admission or acknowledgement by
the Company, its Subsidiaries or the Shareholders, in and of itself, that such
information is required by the terms hereof to be disclosed or is material to or
outside the ordinary course of the business of the Company and its Subsidiaries.
10.05 Acknowledgement by Buyer. Buyer acknowledges that the
------------------------
representations and warranties by the Company and the Shareholders set forth in
this Agreement constitute the sole and exclusive representations and warranties
of the Company and the Shareholders to Buyer in connection with the transactions
contemplated hereby, and Buyer understands, acknowledges and agrees that all
other representations and warranties of any kind or nature expressed or implied
(including, but not limited to, any relating to the future or historical
financial condition, results of operations, assets or liabilities of the Company
and its Subsidiaries and any set forth in the confidential descriptive
memorandum delivered to Buyer by Merrill Lynch) are specifically disclaimed by
the Company and the Shareholders.
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<PAGE>
10.06 Arbitration Procedure.
---------------------
(a) Except as otherwise provided in Section 1.02(d) hereof, Buyer
and the Shareholders agree that the arbitration procedure set forth below shall
be the sole and exclusive method for resolving and remedying any and all
disputes based upon, arising out of or in any way connected with the Agreement
or the transactions contemplated herein (the "Disputes"). Nothing in this
--------
Section 10.06 shall prohibit an party hereto from instituting litigation to
enforce any Final Determination (as defined below). The parties hereby agree and
acknowledge that, except as otherwise provided in this Section 10.06 or in the
Commercial Arbitration Rules of the American Arbitration Association as in
effect from time to time, the arbitration procedures and any Final Determination
hereunder shall be governed by and shall be enforced pursuant to the Uniform
Arbitration Act as in effect in the State of Illinois.
(b) In the event that any party asserts that there exists a
Dispute, such party shall deliver a written notice to each other party involved
therein specifying the nature of the asserted Dispute and requesting a meeting
to attempt to resolve the same. If no such resolution is reached within 20 days
after such delivery of such notice, the party delivering such notice of Dispute
(the "Dispute Person") may, within 30 days after the expiration such 20-day
--------------
period, commence arbitration hereunder by delivering to each other party
involved therein a notice of arbitration (a "Notice of Arbitration"). Such
---------------------
Notice of Arbitration shall specify the matters as to which arbitration is
sought, the nature of any Dispute, the claims of each party to the arbitration
and the amount and nature of damages or other relief sought to be recovered as a
result of any alleged claim and any other matters required by the Commercial
Arbitration Rules of the American Arbitration Association as in effect from time
to time to be included therein.
(c) Buyer and the Shareholders' Representative each shall select
one arbitrator expert in the subject matter of the Dispute (the arbitrators so
selected shall be referred to herein as "Buyer's Arbitrator" and "Seller's
------------------ --------
Arbitrator," respectively). In the event that either party fails to select an
- - ----------
arbitrator as set forth herein within 30 days after the delivery of a Notice of
Arbitration, then the matter shall be resolved by the arbitrator selected by the
other party. Seller's Arbitrator and Buyer's Arbitrator shall select a third
independent, neutral arbitrator expert in the subject matter of the Dispute, and
the three arbitrators so selected shall resolve the Dispute according to the
procedures set forth in this Section 10.06. If Seller's Arbitrator and Buyer's
Arbitrator are unable to agree on a third arbitrator within 20 days after their
selection, Seller's Arbitrator and Buyer's Arbitrator shall each prepare a list
of three independent arbitrators. Seller's Arbitrator and Buyer's Arbitrator
shall each have the opportunity to designate as objectionable and eliminate one
arbitrator from the other arbitrator's list within ten days after submission
thereof, and the third arbitrator shall then be selected by lot from the
arbitrators remaining on the lists submitted by Seller's Arbitrator and Buyer's
Arbitrator.
(d) The arbitrators selected pursuant to paragraph (c) shall
determine the allocation of the costs and expenses of arbitration based upon the
percentage which the portion of the contested amount not awarded to each party
bears to the amount actually contested by such party (it being understood that
amounts paid prior to commencement of arbitration proceedings by the
-37-
<PAGE>
three arbitrators will be deemed to be not contested for such purposes). For
example, if Buyer submits a claim for $1,000 and if the Shareholders contest
only $500 of the amount claimed by Buyer, and if the arbitrators ultimately
resolves the dispute by awarding Buyer $300 of the $500 contested, then the
costs and expenses of arbitration will be allocated 60% (i.e., 300 divided by
500) to the Shareholders according to their respective Pro Rata Shares and 40%
(i.e., 200 divided by 500) to Buyer.
(e) The arbitration shall be conducted in Chicago, Illinois under
the Commercial Arbitration Rules of the American Arbitration Association as in
effect from time to time, except as modified by the agreement of Buyer and the
Shareholders' Representative. The arbitrators shall conduct the arbitration such
that a final result, determination, finding, judgment and/or award (the "Final
-----
Determination") is made or rendered as soon as practicable, but in no event
- - -------------
later than 120 days after the delivery of the Notice of Arbitration nor later
than ten days following completion of the arbitration. The Final Determination
shall be made in writing, shall state the basis for such determination and shall
be agreed upon and signed by the sole arbitrator or by at least two of the three
arbitrators (as the case may be). The Final Determination shall be final and
binding on all parties, and there shall be no appeal from or reexamination of
the Final Determination, except for fraud, perjury, evident partiality or
misconduct by an arbitrator prejudicing the rights of any party and to correct
manifest clerical errors.
(f) Buyer and the Shareholders may enforce any Final Determination
in any state or federal court in Illinois having jurisdiction over the Dispute.
For the purpose of any action or proceeding instituted with respect to any Final
Determination, each party hereto hereby irrevocably submits to the jurisdiction
of such courts, irrevocably consents to the service of process by registered
mail or personal service and hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may have or hereafter have as to
personal jurisdiction, the laying of the venue of any such action or
jurisdiction, the laying of the venue of any such action or proceeding brought
in any such court and any claim that any such action or proceeding brought in
any court has been brought in an inconvenient form.
(g) If any party shall fail to pay the amount of any damages, if
any, assessed against it within 20 days after the delivery to such party of such
Final Determination, the unpaid amount shall bear interest from the date of such
delivery at the lesser of (i) the prime rate of interest in The Wall Street
---------------
Journal, in effect from time to time (which rate shall be adjusted on the
- - -------
effective date of each change in such prime rate) and (ii) the maximum rate
permitted by applicable usury laws. Interest on any such unpaid amount shall be
compounded semi-annually, computed on the basis of a 360-day year consisting of
twelve 30-day months and shall be payable on demand. In addition, such party
shall promptly reimburse the other party for any and all costs and expenses of
any nature or kind whatsoever (including reasonable legal fees and expenses)
incurred in seeking to collect such damages or to enforce any Final
Determination.
-38-
<PAGE>
10.07 Certain Tax Matters. The following provisions shall govern the
-------------------
allocation of responsibility as between Buyer and the Company on the one hand
and the Shareholders and the Shareholders' Representative on the other hand for
certain tax matters following the Closing:
(a) For any tax periods ending on or before the Closing Date, the
Company shall prepare or cause to be prepared all Tax Returns for the Company
and its Subsidiaries which are required to be filed after the Closing Date.
Subject to the requirements of applicable law, each such Tax Return shall be
prepared in a manner consistent with past practices of the Company and its
Subsidiaries. Each such Tax Return shall be submitted to the Shareholders'
Representative at least 30 days prior to the due date (including any extension
thereof) for filing such Tax Return. The Company shall make any changes in such
proposed Tax Return as are requested by the Shareholders' Representative no less
than five days prior to the due date (including extensions) for filing such Tax
Return unless, in the written opinion of legal counsel to the Company reasonably
satisfactory to the Shareholders' Representative addressed to the Shareholders'
Representative there would not be as of the due date for such tax return
"substantial authority" (within the meaning of Section 6662 of the Code) for the
changes requested by the Shareholders' Representative. The Company shall file
timely or cause to be filed timely such Tax Return, as so modified.
(b) Buyer, the Company, the Shareholders and the Shareholders'
Representative shall cooperate fully, as and to the extent reasonably requested
by the other party, in connection with the filing of Tax Returns pursuant to
this Section 10.07 for periods prior to Closing and any audit, litigation or
other proceeding with respect to Taxes due with respect to periods prior to
Closing. Such cooperation shall include the retention and (upon the party's
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. The Company shall retain all books and
records with respect to Tax matters pertinent to the Company and its
Subsidiaries relating to any tax periods and shall abide by all record retention
agreements entered into with any taxing authority, and shall give the
Shareholders' Representative reasonable written notice prior to transferring,
destroying or discarding any such books and records prior to the expiration of
the applicable statute of limitations for that tax period, and if the
Shareholders' Representative so requests in the event of any proposed
destruction or discarding of the books and records, the Company shall allow the
Shareholders' Representative to take possession of such books and records.
(c) Buyer agrees to give prompt notice to the Shareholders'
Representative of the assertion of any claim, or the commencement of any suit,
action or proceeding in respect of Taxes for any period ending on or prior to
the Closing Date and will give the Shareholders' Representative such information
with respect thereto as the Shareholders' Representative may reasonably request.
If the assertion of any such claim, or the commencement of any such suit, action
or proceeding, results or may result in any Loss to the Indemnitee for which
such Indemnitee would be entitled to indemnification pursuant to Section 10.02
of this Agreement, then such claim, suit, action or proceeding shall constitute
a Third Party Claim to which the provisions of Section 10.02(e) of this
Agreement apply.
-39-
<PAGE>
(d) Subject to Section 6.06, the Shareholders' Representative shall
be entitled to control any Tax audit to the extent such audit affects or may
affect the amount or character of income, gain or loss includable by any of the
Shareholders for periods on or before the Closing Date.
10.08 Further Assurances. From time to time, as and when requested
------------------
by any party hereto and at such party's expense, any other party shall execute
and deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions as such other party may reasonably deem necessary or desirable to
evidence and effectuate the transactions contemplated by this Agreement.
ARTICLE XI
DEFINITIONS
-----------
"Affiliate" of any particular Person means any other Person
---------
controlling, controlled by or under common control with such Particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise, and the "Affiliates" of any such
----------
Person means all of such Affiliates, collectively.
"Aggregate SAR Exercise Price" means $1,052,700.
----------------------------
"Assets" means the assets of the Company and its Subsidiaries,
------
determined on a consolidated basis in accordance with the accounting principles,
methods and procedures used in preparation of the Latest Balance Sheet, but
excluding (i) all prepaid assets, if any, with respect to the SARs and (ii) all
liabilities, if any, with respect to the SARs.
"Basket" has the meaning set forth in Section 10.02(a).
------
"Buyer" has the meaning set forth in the preamble.
-----
"Buyer's Arbitrator" has the meaning set forth in Section 10.06(c).
-----------------
"Buyer's knowledge" has the meaning set forth in Section 12.04
-----------------
hereof.
"Buyer's Representatives" has the meaning set forth in Section 6.02
-----------------------
hereof.
"Closing" has the meaning set forth in Section 1.03(a)
-------
"Closing Cash Fraction" means a fraction, the numerator of which
---------------------
shall be the sum of (i) fifty-two and one-half million dollars ($52,500,000)
plus (ii) the Pre-Closing Payout plus (iii) the Pre-Closing SAR Payment, and the
denominator of which shall be the sum of (a) the Closing Purchase Price, plus
(b) the Estimated SAR Amount, plus (c) the Pre-Closing Payout.
-40-
<PAGE>
"Closing Cash Payment Amount" means an amount equal to:
---------------------------
(A) the product of
(i) the sum of the Closing Purchase Price plus the Pre-Closing
Payout multiplied by
----------
(ii) the Closing Cash Fraction.
minus
-----
(B) the Pre-Closing Payout.
"Closing Date" has the meaning set forth in Section 1.03(a).
------------
"Closing Note" has the meaning set forth in Section 1.03.
------------
"Closing Purchase Price" has the meaning set forth in Section
----------------------
1.01(c).
"Closing Transactions" has the meaning set forth in Section 1.03(b).
--------------------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Common" means the Company's Common stock, par value $.01 per share.
------
"Company" has the meaning set forth in the preamble.
-------
"Company Controlled Group Plans" has the meaning set forth in Section
------------------------------
4.14(b).
"Company Plans" has the meaning set forth in Section 4.14(a)
-------------
"Company's knowledge" has the meaning set forth in Section 12.04.
-------------------
"Confidentiality Agreement" has the meaning set forth in Section
-------------------------
6.02.
"Dispute Person" has the meaning set forth in Section 10.06(b).
--------------
"Disputes" has the meaning set forth in Section 10.06(a).
--------
"Election" has the meaning set forth in Section 6.06.
--------
"Environmental Law" has the meaning set forth in Section 4.17.
-----------------
"Equity Value" has the meaning set forth in Section 1.01(b).
------------
-41-
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Escrow Fund" has the meaning set forth in Section 1.03(c).
-----------
"Estimated Closing Adjusted Net Book Value" has the meaning set forth
-----------------------------------------
in Section 1.02(a) and determined pursuant to Section 1.02(d).
"Estimated Equity Value" has the meaning set forth in Section
----------------------
1.01(c).
"Estimated SAR Amount" means an amount equal to:
--------------------
(A) the product of
(i) the sum of the Estimated Equity Value plus the Pre-Closing
Payout plus the Aggregate SAR Exercise Price, multiplied
by ----------
(ii) one (1) minus the SAR Adjustment Factor.
minus
-----
(B) the Aggregate SAR Exercise Price.
"Excess Offset Note Amount" has the meaning set forth in Section
-------------------------
1.03(c).
"Exercise Price" means the weighted average trading price of Buyer's
--------------
common stock, as recorded in the Nasdaq National Market System, of all trades of
Buyer's common stock on five trading days selected by lot by the Shareholders'
Representative from the ten trading days ending on the date immediately
preceding the Closing determined by taking into account the price and number of
shares included in each trade on each day so selected. The Shareholders'
Representative shall select such days by lot at the Closing.
"Final Closing Adjusted Net Book Value" has the meaning set forth in
-------------------------------------
Section 1.02(c) and determined pursuant to Section 1.02(d).
"Final Determination" has the meaning set forth in Section 10.06(e).
-------------------
"Final Purchase Price" has the meaning set forth in Section 1.01(b).
--------------------
-42-
<PAGE>
"Final SAR Amount" means an amount equal to:
----------------
(A) the product of
(i) the sum of the Equity Value plus the Pre-Closing Payout
plus the Aggregate SAR Exercise Price, multiplied by
----------
(ii) one (1) minus the SAR Adjustment Factor.
minus
-----
(B) the Aggregate SAR Exercise Price.
"Hazardous Substance" has the meaning set forth in Section 4.17.
-------------------
"HSR Act" has the meaning set forth in Section 2.01(c).
-------
"Incentive Plan" has the meaning set forth in Section 7.07.
--------------
"Indemnitee" has the meaning set forth in Section 10.02(e).
----------
"Indemnitors" has the meaning set forth in Section 10.02(e).
-----------
"Intellectual Property" has the meaning set forth in Section 4.10.
---------------------
"Latest Balance Sheet" has the meaning set forth in Section 4.05.
--------------------
"Liabilities" means the liabilities of the Company and its
-----------
Subsidiaries, determined on a consolidated basis in accordance with the
accounting principles, methods and procedures used in preparation of the Latest
Balance Sheet, but excluding (i) all prepaid assets, if any, with respect to the
SARs and (ii) all liabilities, if any, with respect to the SARs.
"Loss" has the meaning set forth in Section 10.02(a).
----
"Management Option Recipient" shall mean each of the Company's
---------------------------
employees, directors and officers set forth on Exhibit K hereto.
---------
"Management Options" shall mean options issued or to be issued
pursuant to Buyer's 1994 Stock Option Plan to purchase an aggregate of 600,000
shares of Buyer's common stock, at an exercise price equal to the fair market
value of the Buyer's common stock (as defined in and otherwise in accordance
with the Buyer's 1994 Stock Option Plan) on the date that the Management Options
are authorized by the compensation committee of the Buyer's Board of Directors,
such time not to be later than 45 days following Closing; all of such options
are intended to be incentive stock options within the meaning of the Code to the
extent permitted by the Code.
-43-
<PAGE>
"Management Shareholders" means any Shareholder who, as of the date
-----------------------
hereof, is an executive officer or director of the Company.
"Material Adverse Effect" has the meaning set forth in Section 4.01.
------------------------
"Merrill Lynch" has the meaning set forth in Section 4.12.
-------------
"Mortgage Loan" means that certain Mortgage Note, dated June 21,
-------------
1994, between Cole Taylor Bank (as trustee) and Romar Venture, as borrowers, and
Aid Association for Lutherans, as lender, and all amounts owed thereunder.
"Non-Voting Common" means the Company's Non-Voting Common stock, par
-----------------
value $.01 per share.
"Notes" shall mean the Closing Note, the SAR Closing Note and the
-----
Offset Closing Note.
"Notice of Arbitration" has the meaning set forth in Section
---------------------
10.06(b).
"Passive Shareholder" shall mean all Shareholders who are not
-------------------
Management Shareholders.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Pre-Closing Dividend" has the meaning set forth in Section 1.03(d).
--------------------
"Pre-Closing Payout" means the excess of the Pre-Closing Dividend
------------------
over the Pre-Closing Tax Dividend.
"Pre-Closing SAR Payment" has the meaning set forth in Section
-----------------------
1.03(e).
"Pre-Closing Tax Dividend" means the portion of the Pre-Closing
------------------------
Dividend designated by resolution of the board of directors of the Company prior
to the Closing (and determined in the sole judgment of such board of directors)
as a distribution that relates to the payment of taxes by the Shareholders.
"Pro Rata Share" means the pro rata share of each Shareholder as set
--------------
forth on the Shareholders Schedule.
---------------------
"Romar" has the meaning set forth in the preamble.
-----
"SAR Adjustment Factor" means 0.918276374446.
---------------------
-44-
<PAGE>
"SAR Closing Note" has the meaning set forth in Section 1.03.
----------------
"SAR Employees" has the meaning set forth in the preamble.
-------------
"SAR Escrow" has the meaning set forth in Section 7.07.
----------
"SAR Escrow Agent" shall mean a third party mutually acceptable to
----------------
Buyer and the Shareholders' Representative.
"SAR Escrow Cash Portion" shall mean an amount equal to:
-----------------------
(A) the product of
(i) the Estimated SAR Amount, multiplied by
----------
(ii) the Closing Cash Fraction.
minus
-----
(B) the Pre-Closing SAR Payment;
provided, if the amount so calculated is negative, the "SAR Cash Portion" shall
- - --------
be zero (0), and the principal amount of the SAR Closing Note shall decrease by
the absolute value of the amount so calculated.
"SARs" means the stock appreciation rights issued to officers,
----
directors and/or employees of the Company pursuant to the Incentive Plan.
"Security Agreement" has the meaning set forth in Section 1.03.
------------------
"S Elections" has the meaning set forth in Section 4.08.
-----------
"Select Vendors" shall mean (i) Microsoft Corporation, (ii) IBM
--------------
Corporation and (iii) Novell, Inc.
"Selected Accounting Firm" has the meaning set forth in Section
------------------------
1.02(d).
"Seller's Arbitrator" has the meaning set forth in Section 10.06(c).
-------------------
"Shareholders" means the Persons listed on the Shareholders Schedule
------------ ---------------------
attached hereto.
"Shareholders Agreement" has the meaning set forth in Section 2.01.
----------------------
-45-
<PAGE>
"Shareholders' Representative" has the meaning set forth in Section
----------------------------
9.01.
"Shares" has the meaning set forth in the preamble.
------
"Subsidiary" has the meaning set forth in Section 4.02.
----------
"Tax Benefit" has the meaning set forth in Section 10.02(f).
-----------
"Taxes" means all taxes of the Company, including, without
-----
limitation, income, gross receipts, excise, property, sales, withholding, social
security, occupation, use, service, service use, license, payroll, franchise,
transfer and recording taxes, fees and charges, windfall profits, severance,
customs, import, export, employment or similar taxes, charges, fees, levies or
other assessments imposed by the United States, or any state, local or foreign
government or subdivision or agency thereof, whether computed on a separate,
consolidated, unitary, combined or any other basis, and such term shall include
any interest, fines, penalties or additional amounts and any interest in respect
of any additions, fines or penalties attributable or imposed or with respect to
any such taxes, charges, fees, levies or other assessments.
"Tax Return" means any return, report or other document or information
----------
required to be supplied to a taxing authority in connection with Taxes.
"Third Party Claim" has the meaning set forth in Section 10.02(e).
-----------------
"Total Warrant Shares" shall mean a number of shares of Buyer's common
--------------------
stock equal to a fraction, the numerator of which is the aggregate original
principal amount of the Closing Note, the Closing Offset Note and the SAR
Closing Note and the denominator of which is the Exercise Price.
"Trust Agreement" means the Trust Agreement, dated May 18, 1994,
---------------
known as trust number 94-4056, between Cole Taylor Bank and Romar Venture.
"Uncovered Amount" shall have the meaning set forth in Section
----------------
10.02(f).
"UCC Financing Statements" shall have the meaning set forth in Section
------------------------
1.03.
"Vendor Acknowledgment" shall mean an acknowledgment of the change of
---------------------
control of the Company reasonably acceptable to the Buyer, it being understood
that in any case, any acknowledgment substantially as set forth in Exhibit P
---------
shall be acceptable.
"Warrant" shall have the meaning set forth in Section 1.03(b)(v).
-------
-46-
<PAGE>
ARTICLE XII
MISCELLANEOUS
-------------
12.01 Press Releases and Communications. No press release or public
---------------------------------
announcement related to this Agreement or the transactions contemplated herein,
or prior to the Closing any other announcement or communication to the customers
or suppliers of the Company or its Subsidiaries, shall be issued or made without
the joint approval of Buyer and the Shareholders' Representative, unless
required by law (in the reasonable opinion of counsel) in which case Buyer and
the Shareholders' Representative shall have the right to review such press
release or announcement prior to publication.
12.02 Expenses. Except as otherwise expressly provided herein, the
--------
Shareholders and Buyer shall pay all of their own expenses (including attorneys'
and accountants' fees and expenses) in connection with the negotiation of this
Agreement, the performance of their respective obligations hereunder and the
consummation of the transactions contemplated by this Agreement (whether
consummated or not).
12.03 Waiver of Certain Transfer Restrictions; Termination of
--------------------------------------------------------
Shareholders Agreement. In connection with the transactions contemplated in
- - ----------------------
this Agreement, the Shareholders hereby waive the applicability of any provision
of the Shareholders Agreement between the Company, the Shareholders and the
other parties listed on the signature page thereto, and agree that the
Shareholders Agreement shall terminate and be of no further force and effect as
of the Closing without any further action by the parties thereto.
12.04 Knowledge Defined. For purposes of this Agreement, the terms
-----------------
"the Company's knowledge" or "known by the Company" as used herein shall mean
----------------------- --------------------
the actual knowledge of S. Scott Wald, Bob Lewandowski, Rick Gunther, Harry
Zoberman, Paul Jarvie and David Polster and shall not refer to the knowledge of
any other Person. For purposes of this Agreement, the terms "the Buyer's
------
knowledge" or "known by the Buyer" as used herein shall mean the actual
- - --------- ------------------
knowledge of Gary M. Jacobs, Sam R. Leno, Sam Humphreys, Bob King, Jirka Rysavy,
Mike Jones and John Skinner and shall not refer to the knowledge of any other
Person.
12.05 Notices. All notices, demands and other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given (a) when personally
delivered, (b) one business day after being deposited with Federal Express or
similar overnight courier service, postage prepaid, or (c) five business days
after being mailed by first class mail, return receipt requested. Notices,
demands and communications to Buyer, the Company and the Shareholders shall,
unless another address is specified in writing, be sent to the address indicated
below:
-47-
<PAGE>
Notices to Buyer:
----------------
Corporate Express, Inc.
325 Interlocken Parkway
Broomfield, CO 80021
Attn: Gary M. Jacobs
Telecopy: (303) 438-5180
with a copy to:
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, PA 19103
Attn: Gerald J. Guarcini
Telecopy: (215) 864-8999
Notices to Shareholders prior to Closing:
----------------------------------------
ASAP Software Express, Inc.
850 Asbury Drive
Buffalo Grove, IL 60089
Attn: S. Scott Wald
Telecopy: (847) 465-3734
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attn: John A. Weissenbach
Telecopy: (312) 861-2200
Note to Shareholders after Closing:
----------------------------------
Notice shall be provided to the address of each Shareholder set forth
on the Shareholders Schedule, with a copy to:
---------------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attn: John A. Weissenbach
Telecopy: (312) 861-2200
-48-
<PAGE>
Notices to Company prior to Closing:
-----------------------------------
ASAP Software Express, Inc.
850 Asbury Drive
Buffalo Grove, IL 60089
Attn: S. Scott Wald
Telecopy: (847) 465-3734
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attn: John A. Weissenbach
Telecopy: (312) 861-2200
Notices to Company after Closing:
--------------------------------
ASAP Software Express, Inc.
850 Asbury Drive
Buffalo Grove, IL 60089
Attn: S. Scott Wald
Telecopy: (847) 465-3734
with a copy to:
each Shareholder at such Shareholder's address as set forth on the
Shareholders Schedule
---------------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attn: John A. Weissenbach
Telecopy: (312) 861-2200
Corporate Express, Inc.
325 Interlocken Parkway
Broomfield, CO 80021
Attn: Gary M. Jacobs
Telecopy: (303) 438-5180
-49-
<PAGE>
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, PA 19103
Attn: Gerald J. Guarcini
Telecopy: (215) 864-8999
12.06 Assignment. This Agreement and all of the provisions hereof
----------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned or
delegated by Buyer without the prior written consent of the Shareholders'
Representative; provided that Buyer may assign its rights hereunder to a
wholly-owned Subsidiary of Buyer, so long as such assignee agrees in writing
with the Company to be jointly and severally liable with Buyer for all of
Buyer's obligations hereunder.
12.07 Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
12.08 No Strict Construction. The language used in this Agreement
----------------------
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
Person. For purposes of construction, one gender includes the other, the neuter
includes both genders and the singular and plural include each other where the
meaning would be appropriate.
12.09 Amendment and Waiver. Any provision of this Agreement or the
--------------------
Schedules or Exhibits hereto may be amended or waived only in writing signed by
Buyer, the Company and the Shareholders' Representative. No waiver of any
provision hereunder or any breach or default thereof shall extend to or affect
in any way any other provision or prior or subsequent breach or default.
12.10 Complete Agreement. This Agreement, the documents referred to
------------------
herein (including the Confidentiality Agreement) and the other agreements and
documents of even date herewith contain the complete agreement between the
parties hereto and supersede any prior understandings, agreements or
representations by or between the parties, written or oral, which may have
related to the subject matter hereof in any way.
12.11 Counterparts. This Agreement may be executed in multiple
------------
counterparts, including by facsimile, any one of which need not contain the
signatures of more than one party, but all such counterparts taken together
shall constitute one and the same instrument.
12.12 Third Party Beneficiaries. No provision of this Agreement is
-------------------------
intended to confer upon any person other than the parties hereto and the
Indemnitees any rights or remedies hereunder.
-50-
<PAGE>
12.13 GOVERNING LAW. All matters relating to the interpretation,
-------------
construction, validity and enforcement of this Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Illinois
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdiction) that would cause
the application of laws of any jurisdiction other than the State of Illinois.
* * * *
-51-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
SHAREHOLDERS' REPRESENTATIVE
----------------------------
(on behalf of all of the Shareholders):
/s/ S. Scott Wald
--------------------------------------------
S. Scott Wald
CORPORATE EXPRESS, INC.
-----------------------
/s/ Gary M. Jacobs
--------------------------------------------
Name :______________________________________
Title:______________________________________
ASAP SOFTWARE EXPRESS, INC.
---------------------------
/s/ S. Scott Wald
--------------------------------------------
Name: S. Scott Wald
Title: President and Chief Executive Officer
<PAGE>
AMENDMENT TO STOCK PURCHASE AGREEMENT
-------------------------------------
This AMENDMENT TO STOCK PURCHASE AGREEMENT (the "Amendment") is effective
---------
as of April 22, 1996, by and among Corporate Express, Inc., a Colorado
corporation ("Buyer"), ASAP Software Express, Inc., an Illinois corporation (the
-----
"Company"), and the other Persons listed below (each such Person, other than
-------
xxxxxxxxx acting in his individual capacity, referred to herein collectively as
the "Shareholders" and individually as a "Shareholder").
------------ -----------
This Amendment is entered into in connection with the transactions
contemplated by that certain Stock Purchase Agreement, dated April 22, 1996, by
and among Buyer, the Company, certain of the Shareholders and one other Person
(the "Original Agreement") and that certain Letter Agreement dated of even date
------------------
therewith by and among Buyer, the Company and the Shareholders' Representative
(the "Letter Agreement"). All capitalized terms not defined herein shall have
----------------
the meanings assigned to them in the Original Agreement, as amended.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree to amend the Original
Agreement and the Letter Agreement as follows:
1. Amendment to Section 1.01. Clause (i) of Section 1.01(c) of the
-------------------------
Original Agreement is hereby amended and restated as "$93,245,127 plus Estimated
Adjusted Net Book Value at April 22, 1996, plus the Pre-Closing SAR Payment,
minus". Clause (i) of Section 1.01(b) of the Original Agreement is hereby
amended and restated as "$93,245,127 plus Estimated Adjusted Net Book Value at
April 22, 1996, plus the Pre-Closing SAR Payment, plus Final Closing Adjusted
Net Book Value, minus $5,393,037, minus."
2. Estimated Closing Adjusted Net Book Value. The title of Section 1.02
-----------------------------------------
is hereby amended and restated to read "Final Closing Adjusted Net Book Value."
Each of subsections (a) and (b) of Section 1.02 are hereby deleted in their
entirety and replaced with "[Omitted]," without altering the numbering of any
other subparagraph or subsection thereof. The definition of "Estimated Closing
Adjusted Net Book Value" included in Article XI is hereby deleted, and
"Estimated Adjusted Net Book Value at April 22, 1996" is hereby substituted for
"Estimated Closing Adjusted Net Book Value" in Section 9.02 of the Original
Agreement.
3. Estimated Adjusted Net Book Value at April 22, 1996. For all purposes
---------------------------------------------------
hereof, "Estimated Adjusted Net Book Value at April 22, 1996" means $4,365,910.
---------------------------------------------------
4. Closing Date. The parties agree that the Closing Date shall be deemed
------------
to be May 15, 1996.
5. Accounting Effective Date. The Shareholders understand that for
-------------------------
financial accounting purposes the Buyer's financial statements will reflect that
the effective date of this transaction shall be April 22, 1996 and that Buyer
shall report as part of its consolidated financial statements the revenue and
expenses of the Company from and after such date (based upon sales based on the
Company's actual sales and cost of sales after April 21, 1996 and pro rated
general
<PAGE>
and administrative expenses on a daily basis based on a 30-day month), and none
of the Shareholders will object thereto.
6. Amendment to Section 1.03(d). Section 1.03(d) of the Original
----------------------------
Agreement is hereby amended and restated as follows:
At or prior to Closing, the Company will declare and pay one or more
dividends (collectively, the "Pre-Closing Dividend") with respect to the
--------------------
Shares in an amount to be determined by the Board of Directors of the
Company, in any event in an aggregate amount not more than $11,218,000
minus the Pre-Closing SAR Payment.
7. Pre-Closing Payout. For purposes of the definitions of "Estimated SAR
------------------
Amount" and "Final SAR Amount," the "Pre-Closing Payout" shall mean the Pre-
Closing Payout as otherwise determined pursuant to the Original Agreement minus
$218,000.
8. Present Value Adjustment of SAR Escrow Amount. (a) The parties hereto
---------------------------------------------
agree that 49.338843% of the Final SAR Amount will be payable in respect of SARs
which vest as of the Closing (the "Closing Vested SAR Portion") (which amount
--------------------------
would be offset to the extent of the Pre-Closing SAR Payment) and the remaining
50.661157% of the Final SAR Amount will become payable under the balance of the
SARs if they vest on the third anniversary of the Closing (the "Third
-----
Anniversary Portion"). Prior to any adjustment pursuant to this Amendment, the
- - -------------------
"Estimated SAR Amount" is $7,797,824. If the Final SAR Amount equals the
Estimated SAR Amount, the Closing Vested SAR Portion thereof will equal
$3,847,356 (i.e., $7,797,824 x 49.338843%) and the Third Anniversary Portion
thereof will equal $3,950,468 (i.e., $7,797,824 x 50.66157%), and if the Final
SAR Amount exceeds or is less than the Estimated SAR Amount, the Closing Vested
SAR Portion and the Third Anniversary Portion thereof will be proportionately
higher or lower, respectively.
(b) The parties desire to ensure that, as of the third anniversary of the
Closing, the SAR Escrow shall include an amount in cash equal to (i) the Third
Anniversary Portion of the Final SAR Amount, minus (ii) the aggregate amount of
-----
payments made (if any), after the Closing and prior to such third anniversary,
in respect of the SARs to holders thereof in accordance with the terms of the
outstanding SARs and the Incentive Plan (collectively the "Early SAR Payment
-----------------
Amount"). The parties recognize that, since the amounts to be contributed to
- - ------
the SAR Escrow will be invested from time to time during the period following
the Closing Date to such third anniversary, it will not be necessary to
contribute the full Third Anniversary Portion to the SAR Escrow at the Closing
in order to achieve this objective. Consequently, the parties hereby agree that
notwithstanding any provision of the Original Agreement or any other agreement
between the parties: (i) the aggregate amount of cash to be paid to the
Shareholders pursuant to the Original Agreement (as amended hereby, excluding
the effects of this paragraph 8) shall be increased by an aggregate amount equal
to the product of 12.5% multiplied by the Third Anniversary Portion of the Final
SAR Amount, and the aggregate amount of cash to be paid to the SAR Escrow
pursuant to the Original Agreement (as amended hereby, excluding the effects of
this paragraph 8) shall be reduced by such amount (and, accordingly, cash
payments at Closing shall be so adjusted, based upon the Third Anniversary
Portion of the Estimated SAR Amount, subject to subsequent adjustment upon
determination of the Final SAR Amount); and
-2-
<PAGE>
(ii) if the aggregate amount in the SAR Escrow as of the third anniversary of
the Closing is less than the portion of the Third Anniversary Portion of the
Final SAR Amount which is then payable in respect of SARs which vest on such
date, the Shareholders will promptly contribute to the SAR Escrow an amount in
immediately available federal funds equal to the amount of such deficit.
9. Signatory Matters. The execution of the Original Agreement by
-----------------
xxxxxxxxx shall, for all purposes, be deemed to have been by xxxxxxxxx in his
capacity as trustee of that certain Revocable Trust dated March 22, 1988 F/B/O
xxxxxxxxx.
10. Election of Scott Wald as a Director of the Company. The Buyer
---------------------------------------------------
acknowledges and agrees that the Company and the Buyer have declined S. Scott
Wald's offer to resign as a director of the Company, that S. Scott Wald is and
will continue as a director of the Company through and after the Closing and
that the Buyer will take all steps necessary to ensure that S. Scott Wald is not
removed from and will remain as a duly elected director of the Company
continuing until the first to occur of (i) such time as all amounts owing under
the Closing Note, the SAR Closing Note and the Offset Closing Note have been
indefeasibly paid in full in cash, and (ii) such time after the Closing as he
delivers a written notice to the Company stating that he has resigned from the
Company's board of directors.
11. Company Bylaws. To induce the Shareholders to enter into this
--------------
agreement, the Buyer and the Company agree that effective as of the Closing, the
Company's bylaws will provide that the Company will not have the power to
declare or pay any dividend without the prior unanimous written consent of all
directors of the Company, including (until the first to occur of (i) such time
as all amounts owing under the Closing Note, the SAR Closing Note and the Offset
Closing Note have been indefeasibly paid in full in cash, and (ii) such time
after the Closing as he delivers a written notice to the Company stating that he
has resigned from the Company's board of directors) S. Scott Wald, and that such
provision of the bylaws may not be amended without the prior written consent of
the holders of the Closing Note, the SAR Closing Note and the Offset Closing
Note.
12. Amendment and Waiver. The first sentence of Section 12.09 of the
--------------------
Original Agreement is hereby amended and restated as follows:
Any provision of this Agreement (as hereafter amended) or the Schedules or
Exhibits hereto (as hereafter amended) may be amended or waived by a
written agreement executed by Buyer, the Company and the Shareholders'
Representative, even if not executed by any other Shareholder.
13. Miscellaneous. This Amendment may be executed in multiple
-------------
counterparts, including by facsimile, any one of which need not contain the
signatures of more than one party, but all such counterparts taken together
shall constitute one and the same instrument. All matters relating to the
interpretation, construction, validity and enforcement of this Amendment shall
be governed by and construed in accordance with the domestic laws of the State
of Illinois without giving effect to any choice or conflict of law provision or
rule (whether of the State of Illinois or any other jurisdiction) that would
cause the application of laws of any jurisdiction other than the State of
Illinois.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first above written.
SHAREHOLDERS' REPRESENTATIVE
(on behalf of the Shareholders)
__________________________________________
S. Scott Wald
CORPORATE EXPRESS, INC.
__________________________________________
Name: ___________________________________
Title: __________________________________
ASAP SOFTWARE EXPRESS, INC.
__________________________________________
Name: S. Scott Wald
Title: President and Chief Executive Officer
