STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of April
22, 2003, by and among ANTEON INTERNATIONAL CORPORATION, a Delaware corporation
(the "Purchaser"), INFORMATION SPECTRUM, INC., a New Jersey corporation (the
"Company"), each of the parties designated on the signature pages hereof as a
seller (each a "Seller" and collectively, the "Sellers") and Xxxx Xxxxx, as
representative of the Sellers (the "Sellers' Representative").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Sellers are the beneficial and record owners of
all of the issued and outstanding shares of Class A Common Stock, no par value,
(the "Class A Shares"), and Class B Common Stock, no par value (the "Class B
Shares," and together with the Class A Shares, the "Shares"), of the Company;
and
WHEREAS, the Sellers desire to sell and transfer to the
Purchaser, and the Purchaser desires to purchase from the Sellers, the Shares,
all as more specifically provided herein.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
Article I
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Shares.
The Purchaser agrees to purchase from the Sellers, and the Sellers agree to
sell to the Purchaser, the Shares, for an aggregate purchase price (the
"Purchase Price") of Ninety Million Seven Hundred Thirty-Two Thousand Dollars
($90,732,000), which amount shall be subject to adjustment as set forth in
Section 1.5, and paid in accordance with Section 1.2.
1.2 Payment of Purchase Price.
The Purchase Price shall be paid by the Purchaser as follows:
(a) Subject to the terms of Section 1.5, at the Closing (as defined in
Section 1.4), the Purchaser shall pay to the Sellers cash by wire transfer
of immediately available funds to bank accounts to be designated by the
Sellers' Representative in the aggregate amount of Eighty-Six Million Seven
Hundred Thirty-Two Thousand Dollars ($86,732,000) (the "Initial Payment"),
such aggregate amount to be allocated among the Sellers in accordance with
Schedule 1.2. The Purchaser and the Sellers agree that the per share values
of the Class A Shares and the Class B Shares shall be equal for purposes of
the transactions contemplated by this Agreement.
(b) At the Closing, the Purchaser shall deliver to U.S. Bank National
Association, a national banking association (the "Escrow Agent"), payment
by wire transfer of immediately available funds, in the amount of Four
Million Dollars ($4,000,000) to be held in an interest bearing account (the
"Escrow Account") in accordance with the terms of an escrow agreement,
substantially in the form attached hereto as Exhibit A, by and among the
Purchaser, the Sellers, the Sellers' Representative and the Escrow Agent
(the "Escrow Agreement").
1.3 Deliveries at Closing.
At the Closing, each Seller shall deliver, or cause to be delivered,
to the Purchaser stock certificates representing the number of Shares set
forth opposite such Seller's name on Schedule 2.1(C)(i), duly endorsed in
blank or accompanied by stock powers duly executed in blank, in proper form
for transfer.
1.4 Closing; Closing Date.
Subject to the satisfaction (or appropriate waiver) of the conditions
set forth in Article IV and subject to the proviso set forth in clause (B)
of the first sentence of Section 3.1(A)(i), the closing of the sale and
purchase of the Shares (the "Closing") shall take place at the offices of
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP, 0000 X Xxxxxx, XX,
Xxxxxxxxxx, XX 00000-0000 at 10:00 A.M. local time on the date (subject to
the proviso set forth in clause (B) of the first sentence of Section
3.1(A)(i)) that is the later of the following: (i) April 25, 2003 and (ii)
five (5) Business Days (as defined in Section 8.1) following the expiration
or termination of the waiting period with respect to the form filed under
the HSR Act (as defined in Section 2.1(L)) pursuant to Section 3.6.
Notwithstanding the foregoing, the Closing may occur at such other place or
such other time or date as the Purchaser and the Sellers' Representative
may mutually agree in writing. The time and date upon which the Closing
occurs is herein called the "Closing Date."
1.5 Purchase Price Adjustments.
(a) No later than three (3) Business Days prior to the Closing, the
Sellers will prepare and deliver to the Purchaser a statement (the
"Estimated Closing Statement"), prepared based upon the Company's accounts
which will be maintained in accordance with GAAP (as defined in Section
8.1) and on a basis consistent with the financial statements of the Company
for the periods ended August 31, 2002 and November 30, 2002 (including,
without limitation, the manner in which the Company recognizes revenue
under AICPA Statement of Position 81-1), each as modified by the express
terms of this Agreement, setting forth the Sellers' estimate of (i) the Net
Debt (as defined in Section 8.1) as of the Closing Date (the "Estimated
Closing Net Debt") and the amount, if any, by which the Estimated Closing
Net Debt is greater than zero and (ii) the Net Working Capital (as defined
in Section 8.1) as of the Closing Date (the "Estimated Closing Net Working
Capital") and the amount, if any, by which the Estimated Closing Net
Working Capital is less than $12,180,000 (the "Target Net Working
Capital"). If the amount of the reserve for health benefit plan claims or
rate overruns is increased in the Estimated Closing Statement pursuant to
Section 3.22 and/or Section 3.23, the Sellers shall be required to engage
the services of Sellers' Auditors (as defined in Section 8.1) to perform
certain agreed upon procedures and issue a related report (the "Agreed Upon
Procedures Report") to assist in confirming that such reserve(s) were
established by the Sellers using a methodology consistent with that used in
calculating such reserve(s) as used in preparing the Balance Sheet. The
costs and expenses incurred by the Sellers in connection with the
preparation of the Estimated Closing Statement shall be subject to Section
5.2. In the event that the Purchaser has any dispute with the calculation
of the Estimated Closing Net Debt and/or the Estimated Closing Net Working
Capital contained in the Estimated Closing Statement, the parties will use
their respective reasonable best efforts to resolve such dispute prior to
the Closing; provided, however, that the resolution of such dispute shall
not be a condition to the Closing or cause any delay in the occurrence of
the Closing.
(b) As soon as practicable, but in no event later than sixty (60)
calendar days following the Closing Date, the Purchaser shall prepare, in
consultation with the Sellers' Representative, and deliver to the Sellers'
Representative a statement (the "Closing Statement"), prepared based upon
the Company's accounts which will be maintained in accordance with GAAP and
on a basis consistent with the financial statements of the Company for the
periods ended August 31, 2002 and November 30, 2002 (including, without
limitation, the manner in which the Company recognizes revenue under AICPA
Statement of Position 81-1), each as modified by the express terms of this
Agreement, setting forth the Purchaser's determination of (i) the Net Debt
as of the Closing Date (the "Closing Net Debt") and the amount, if any, by
which the Closing Net Debt is greater than zero and (ii) the Net Working
Capital as of the Closing Date (the "Closing Net Working Capital") and the
amount, if any, by which the Closing Net Working Capital is less than the
Target Net Working Capital. The Closing Statement shall not in any manner
reflect any decrease in the amount of the reserves established by the
Company pursuant to Sections 3.22, 3.23 and 3.26.
(c) The Purchaser shall provide the Sellers and their representatives
(subject to the execution of confidentiality agreements and other similar
agreements customary under such circumstances) with timely access to the
work papers, records, accounts and similar materials of the Purchaser used
in connection with the preparation of the Closing Statement. The Sellers'
Representative shall have thirty (30) calendar days following its receipt
of the Closing Statement within which to deliver to the Purchaser a written
notice of objection thereto (the "Objection Notice"), which Objection
Notice shall (i) set forth the Sellers' Representative's determination of
the Closing Net Debt and/or the Closing Net Working Capital and (ii)
specify in reasonable detail the Sellers' Representative's basis for
objection. The failure by the Sellers' Representative to deliver the
Objection Notice within such thirty (30) calendar-day period shall
constitute the Sellers' Representative's acceptance, on behalf of the
Sellers, of the Closing Statement. If the Purchaser has no objection to the
Sellers' Representative's determination of the Closing Net Debt or the
Closing Net Working Capital, as the case may be, set forth in the Objection
Notice, the Purchaser shall so notify the Sellers' Representative in
writing as soon as practicable after receipt thereof. The Purchaser and the
Sellers' Representative shall in good faith attempt to resolve their
differences, if any, with respect to the Closing Statement and reach a
written agreement with respect thereto (the "Settlement Agreement") within
twenty (20) calendar days following timely delivery of the Objection
Notice, and any such resolution between them shall be final, binding and
conclusive. If the Purchaser and the Sellers' Representative are unable to
resolve all of such differences within such twenty (20) calendar-day
period, the items in dispute will be referred for determination as promptly
as practicable to the Independent Accounting Firm (as defined in Section
8.1), which shall be jointly engaged by the Purchaser, on the one hand, and
the Sellers' Representative, on the other hand, pursuant to an engagement
letter in customary form which each of the Purchaser and the Sellers'
Representative shall execute. If Ernst & Young LLP is unable to serve as
the Independent Accounting Firm and the Purchaser and the Sellers'
Representative have failed to reach agreement on an Independent Accounting
Firm within ten (10) calendar days following the termination of the twenty
(20) calendar-day period referred to in the immediately preceding sentence,
then the Independent Accounting Firm shall be selected by the American
Arbitration Association. The Independent Accounting Firm shall prescribe
procedures for resolving the disputed items and in all events shall make a
written determination, with respect to such disputed items only, whether
and to what extent, if any, the Closing Statement and the accompanying
calculation(s) of the Closing Net Working Capital and/or Closing Net Debt
require adjustment based on the terms and conditions of this Agreement (the
"Determination"). The Determination shall be based solely on presentations
with respect to such disputed items by the Purchaser and the Sellers'
Representative to the Independent Accounting Firm and not on the
Independent Accounting Firm's independent review; provided, that such
presentations shall be deemed to include, without limitation, any work
papers, records, accounts or similar materials delivered to the Independent
Accounting Firm by the Purchaser or the Sellers' Representative in
connection with such presentations and any materials delivered to the
Independent Accounting Firm in response to requests by the Independent
Accounting Firm. Each of the Purchaser and the Sellers' Representative
shall use its reasonable best efforts to make its presentation as promptly
as practicable following submission to the Independent Accounting Firm of
the disputed items, and each such party shall be entitled, as part of its
presentation, to respond to the presentation of the other party and any
questions and requests of the Independent Accounting Firm. The Purchaser
and the Sellers' Representative shall instruct the Independent Accounting
Firm to deliver the Determination to the Purchaser and the Sellers'
Representative no later than thirty (30) calendar days following the date
on which the disputed items are referred to the Independent Accounting
Firm. In deciding any matter, the Independent Accounting Firm (i) shall be
bound by the provisions of this Section 1.5(c), (ii) may not assign a value
to any item greater than the greatest value for such item claimed by either
the Purchaser or the Sellers' Representative or less than the smallest
value for such item claimed by the Purchaser or the Sellers'
Representative, and (iii) shall be bound by the express terms, conditions
and covenants set forth in this Agreement, including, without limitation,
Sections 1.5(a) and (b), Sections 3.22, 3.23 and 3.26 and the definitions
in Section 8.1, including the definition of Net Working Capital contained
therein. In the absence of fraud or manifest error, the Determination shall
be conclusive and binding upon the Purchaser, the Sellers' Representative
and the Sellers. The reasonable fees and expenses of the Independent
Accounting Firm shall be shared one-half (1/2) by the Purchaser and
one-half (1/2) by the Sellers.
(d) Within five (5) days following the determination of the Closing
Net Debt and the Closing Net Working Capital in accordance with Section
1.5(c), the following adjustments to the Purchase Price and the following
payments will be made:
(i) if the Closing Net Working Capital is less than the Target
Net Working Capital, the Sellers shall pay to the Purchaser the amount
by which the Target Net Working Capital exceeds the Closing Net
Working Capital; and
(ii) if the Closing Net Debt is greater than zero, the Sellers
shall pay to the Purchaser the amount by which the Closing Net Debt
exceeds zero.
Any payment made pursuant to clauses (i) or (ii) of the preceding
sentence is referred to herein as a "Sellers' Refund." Notwithstanding
the foregoing, for the purposes of determining the amount, if any, to
be paid to the Purchaser pursuant to Section 1.5(d)(ii), the amount
payable pursuant to Section 1.5(d)(ii) shall be reduced by the amount
payable pursuant to Section 1.5(d)(i).
(e) Any Sellers' Refund to be made to the Purchaser shall be made by
wire transfer of immediately available funds to the account designated by
the Purchaser in writing to the Sellers' Representative at least three (3)
days prior to the date of payment; provided, however, the Purchaser may, in
its sole discretion, elect to be paid from the Escrow Account, whereupon
the Purchaser and the Sellers' Representative shall deliver a joint notice
to the Escrow Agent in accordance with the Escrow Agreement, instructing
the Escrow Agent to make such payment from the Escrow Account to the
Purchaser.
Article II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Sellers.
The Company and each of the Sellers, jointly andseverally, represent
and warrant to the Purchaser as follows:
(A) Organization and Qualification of the Company.
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power and authority to own,
lease and operate its properties and assets and to carry on its
business as now being, or as currently proposed by current management
to be, conducted. The Company is duly qualified to do business and is
in good standing in each jurisdiction in which the ownership or
leasing of its property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not
have a Company Material Adverse Effect (as defined below). "Company
Material Adverse Effect," as used in this Agreement, shall mean any
event, change or effect that is or would reasonably be expected to be
materially adverse to the condition (financial or otherwise),
properties, assets, liabilities, business, operations or results of
operations of the Company taken as a whole; provided, however, that
changes in general economic conditions shall not be deemed to be, or
have caused or resulted in, a Company Material Adverse Effect.
(ii) The copies of the Articles of Incorporation and By-Laws of
the Company previously delivered to the Purchaser or its counsel, in
each case as amended, are true, complete and correct. The respective
minute books, or comparable records, of the Company are accurate in
all material respects. The stock books of the Company are true,
complete and correct.
(B) Authority to Execute and Perform Agreement.
(i) Each Seller has, as the case may be, the legal capacity or
all requisite power and authority and all approvals required to enter
into, execute and deliver this Agreement, the other Transaction
Documents (as defined in Section 8.1) to which it is or will be a
party and each and every transaction contemplated hereby and thereby
and to perform fully such Seller's obligations hereunder and
thereunder. This Agreement and each of the other Transaction Documents
to which each Seller is a party have been duly executed and delivered
by such Seller. Assuming due execution and delivery hereof and thereof
by the Purchaser and the Company, and assuming the enforceability
hereof and thereof on the Purchaser and the Company, this Agreement
and each of the other Transaction Documents to which each Seller is a
party are valid and binding obligations of such Seller, enforceable
against such Seller in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting the rights and remedies of
creditors generally and to general principles of equity (regardless of
whether considered in equity or at law).
(ii) The Company has all requisite right and power and all
authority and approvals required to enter into, execute and deliver
this Agreement and each of the other Transaction Documents to which it
is or will be a party and each and every transaction contemplated
hereby and thereby and to perform fully its obligations hereunder and
thereunder. The board of directors of the Company, in accordance with
the terms of the Company's Articles of Incorporation and By-Laws, in
each case as amended, has unanimously adopted resolutions approving
and adopting this Agreement and the other Transaction Documents to
which the Company is or will be a party, and no other corporate or
other action is required for the due execution, delivery or
performance by the Company of this Agreement or such other Transaction
Documents. This Agreement and each of the other Transaction Documents
to which the Company is a party have been duly executed and delivered
by the Company. Assuming due execution and delivery hereof and thereof
by the Purchaser and each of the Sellers, and assuming the
enforceability hereof and thereof on the Purchaser and each of the
Sellers, this Agreement and each of the other Transaction Documents to
which the Company is a party are valid and binding obligations of the
Company enforceable against the Company in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
rights and remedies of creditors generally and to general principles
of equity (regardless of whether considered in equity or at law).
(iii) The Sellers' Representative has been duly appointed by the
Sellers to act as their representative and attorney-in-fact for
purposes of this Agreement and the Escrow Agreement, as described in
the Escrow Agreement. The Sellers' Representative has the legal
capacity and all requisite power and authority and all approvals
required to enter into, execute and deliver this Agreement and the
Escrow Agreement and each and every transaction contemplated hereby
and thereby and to perform fully the Sellers' Representative's
obligations hereunder and thereunder. This Agreement and the Escrow
Agreement have been duly executed and delivered by the Sellers'
Representative. Assuming due execution and delivery hereof and thereof
by the Purchaser, the Sellers and the Company, and assuming the
enforceability hereof and thereof on the Purchaser, the Sellers and
the Company, this Agreement and the Escrow Agreement are valid and
binding obligations of the Sellers' Representative, enforceable
against the Sellers' Representative in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
rights and remedies of creditors generally and to general principles
of equity (regardless of whether considered in equity or at law).
(C) Capital Stock.
(i) The authorized capital stock of the Company consists of
1,000,000 Class A Shares, no par value, of which 318,600 shares are
duly authorized and validly issued and outstanding, fully paid and
nonassessable, and 2,000,000 Class B Shares, no par value, of which
637,200 shares are duly authorized and validly issued and outstanding,
fully paid and nonassessable, and are lawfully owned beneficially and
of record by the Sellers, in the respective amounts set forth on
Schedule 2.1(C)(i), free and clear of any pledges, liens, charges,
encumbrances, voting or transfer restrictions, security interests,
restrictions and claims of any kind or other encumbrances of any
nature whatsoever (collectively, "Liens"). The Company has no other
authorized, issued or outstanding class of capital stock. There are no
existing options, rights, subscriptions, warrants, unsatisfied
preemptive rights, calls or commitments of any character relating to
(i) the authorized and unissued capital stock or treasury stock of the
Company, or (ii) any securities or obligations convertible into or
exchangeable for, or giving any Person (as defined in Section 3.16)
any right to subscribe for or acquire from the Company any shares of
capital stock of the Company, and no such convertible or exchangeable
securities or obligations are outstanding.
(ii) The Company does not directly or indirectly own any interest
in any other Person or entity.
(D) Good Title to Shares.
At the Closing, subject to the delivery in full of the Purchase Price
by the Purchaser in accordance with the terms hereof, each Seller will
deliver to the Purchaser good title to the Shares held by such Seller, free
and clear of all Liens. Each Seller has the unrestricted power and
authority to transfer the Shares to the Purchaser.
(E) Financial Statements.
(i) The balance sheets of the Company as of November 30, 1999,
November 30, 2000, November 30, 2001 and November 30, 2002, and the
related statements of income, shareholders' equity and changes in
financial position for the years then ended, including the footnotes
thereto, audited by Sellers' Auditors, which have been delivered to
the Purchaser, fairly present, in all material respects, the financial
position of the Company as at such dates and the results of operations
and changes in financial position, as the case may be, of the Company
for such respective periods, in each case in accordance with GAAP
consistently applied for the periods covered thereby. (The foregoing
financial statements are sometimes herein called the "Audited
Financials." The November 30, 2002 balance sheet included in the
Audited Financials is sometimes herein called the "Balance Sheet.")
The unaudited balance sheets of the Company as of August 31, 2001 and
August 31, 2002, and the related statements of income for the nine
months then ended, including the footnotes thereto, which have been
delivered to the Purchaser, fairly present, in all material respects,
the financial position of the Company as of such dates and the results
of operations of the Company for the nine months then ended, in each
case in conformity with GAAP, applied on a basis consistent with that
of the Audited Financials (subject to the normal year-end audit
adjustments). (The foregoing unaudited financial statements as of, and
for the nine months ended, August 31, 2002 are sometimes herein
referred to as the "Interim Financials").
(ii) Since December 1, 1999, the Company has complied with GAAP
and has maintained any and all reserves necessary to comply with GAAP,
and, except for (a) reserves for the sole purpose of paying claims
under the Company's health benefit plans, (b) reserves for the
Company's rate overruns for the Company's 2002 fiscal year and (c)
reserves for uncollectible Accounts Receivable (as defined in Section
8.1), to meet the overall reasonable business needs of the Company
during such period.
(iii) The Company has established as current liabilities on the
Balance Sheet reserves necessary to comply with GAAP in amounts equal
to (a) $360,500, which represents the amount required to pay claims
under the Company's health benefit plans, (b) $280,000 in respect of
the Company's rate overruns for the Company's fiscal year 2002, and
(c) $170,000 with respect to the uncollectibility of Accounts
Receivable.
(iv) The annual budget of the Company for calendar year 2003, a
true, complete and correct copy of which was previously delivered to
the Purchaser, was prepared by management of the Company in good faith
and based on assumptions believed by management of the Company, as of
the date of this Agreement, to be reasonable; provided, however, that
Purchaser acknowledges that achievement of the results set forth in
such annual budget are subject to risks and uncertainties that could
cause actual results to differ materially from those set forth in such
budget. Sellers expressly do not represent and warrant that the
results, performance or assumptions included within such annual budget
will be achieved by the Company and make no other representation or
warranty concerning such annual budget except as set forth in this
Section 2.1(E)(iv).
(F) Absence of Certain Changes or Events.
Except as described herein, the Audited Financials as of, and for the
year ended, November 30, 2002 or in Schedule 2.1(F), since November 30,
2002, there has been no change in the business, properties, assets,
operations or condition (financial or otherwise) of the Company which has
resulted or would reasonably be expected to result in a Company Material
Adverse Effect, and none of the Sellers or the Company has Knowledge (as
defined in Section 8.1) of any such change that is threatened, nor has
there been any damage, destruction or loss affecting the assets,
properties, business, operations or condition (financial or otherwise) of
the Company, whether or not covered by insurance which has resulted or
would reasonably be expected to result in a Company Material Adverse
Effect. Except as expressly provided in this Agreement (including, but not
limited to, Section 3.24) or as set forth on the Audited Financials as of,
and for the year ended, November 30, 2002 or in Schedule 2.1(F), since
November 30, 2002, the Company has not:
(i) purchased, agreed to purchase, retired, redeemed or called
for redemption any of its outstanding shares of capital stock, issued
or sold or purchased any options, warrants, shares, bonds or other
securities, interests or rights to acquire any of its securities or
interests, or, except for (i) the transfer by the Company to Xxxx
Xxxxx of all of the capital stock of Spectrum Health (as defined in
Section 2.1(G)(ii)) held by the Company, (ii) the bonus payment in the
amount of $300,000 paid to Xxxx Xxxxx and other salary payments due to
Xxxx Xxxxx pursuant to his employment agreement with the Company,
(iii) other benefits and perquisites due to Xxxx Xxxxx in the ordinary
course of business, consistent with past practice and (iv) payments
and health insurance benefits to Xxxxxxxxx Xxxxx in accordance with
the Xxxxxxxxx Xxxxx Support Agreement, made payment of any kind to any
stockholder of the Company, or declared or paid any dividend or
distribution on or authorized or effected any split or
recapitalization of any such securities;
(ii) made or contracted for any capital expenditures (other than
direct purchases under government contracts) in excess of $25,000 per
item and $500,000 in the aggregate, or made any other commitments or
disbursements or incurred or paid any liabilities or obligations,
except in the usual and ordinary course of business;
(iii) sold, leased, abandoned, or otherwise transferred (or
contracted to sell, lease or otherwise transfer) any of its assets or
properties, except in the usual and ordinary course of business, or
mortgaged, pledged or subjected to any Lien any of its assets;
(iv) canceled any debts or claims or waived any rights in excess
of $10,000 in the aggregate;
(v) transferred or granted any right under any lease, license,
agreement, or other valuable asset, except in the usual and ordinary
course of business and consistent with past practice;
(vi) merged with or into or consolidated with any other Person,
subdivided or in any way reclassified any shares of its capital stock
or changed or agreed to change in any manner the rights of its
outstanding capital stock or the character of its business;
(vii) entered into or amended any employment agreement, entered
into or amended any agreement with any labor union or association
representing any employee, adopted, entered into, or amended any
employee benefit plan, program, agreement or arrangement, or made any
change in the actuarial methods or assumptions used in funding any
defined benefit pension plan, or made any change in the assumptions or
factors used in determining benefit equivalencies thereunder;
(viii) except for short-term bank borrowings in the ordinary
course of business, incurred any indebtedness for borrowed money;
(ix) made any change in its accounting methods or practices or
made any change in depreciation or amortization policies or lives
adopted by it;
(x) made any wage or salary increase or bonus, or increase in any
other direct or indirect compensation, for or to any of its officers,
directors, employees, consultants, agents or other representatives, or
any accrual for or commitment or agreement to make or pay the same,
other than those made in the ordinary course of business consistent
with past practice;
(xi) made any loan or advance to any of its shareholders,
officers, directors, employees, consultants, agents or other
representatives (other than travel advances made in the ordinary
course of business), or made any other loan or advance otherwise than
in the ordinary course of business;
(xii) made any payment or commitment to pay any severance or
termination pay to any of its officers, directors, employees,
consultants, agents or other representatives, other than payments made
in the ordinary course of business to Persons other than its officers
or directors;
(xiii) except in the ordinary course of business, entered into or
amended any contract or other agreement to which it is a party, or by
or to which it or its assets or properties are bound or subject, in
each case, calling for an aggregate purchase or sale price or payments
of more than $10,000 (in one lump sum payment or in the aggregate, in
the case of installment payments), or pursuant to which it agreed to
indemnify any party or to refrain from competing with any party;
(xiv) except for inventory or equipment acquired in the ordinary
course of business and capital expenditures made in accordance with
Section 2.1(F)(ii) above, made any acquisition of all or any part of
the assets, properties, capital stock or business of any other Person;
(xv) paid, directly or indirectly, any material liability before
the same became due in accordance with its terms or otherwise than in
the ordinary course of business;
(xvi) except for contracts that have expired in accordance with
their terms in the ordinary course of business, terminated or failed
to renew, or received any written threat (that was not subsequently
withdrawn) to terminate or fail to renew, any contract or other
agreement;
(xvii) made or authorized any change in its Articles of
Incorporation or By-Laws;
(xviii) performed work on behalf of one or more customers on an
"at risk" or otherwise contractually unfunded basis that continues to
be "at risk" as of the date hereof in an amount that, as of the date
hereof, exceeds $100,000 in the aggregate; or
(xix) agreed, whether in writing or otherwise, to take any action
described in this Section 2.1(F).
(G) Litigation and Liabilities.
(i) Except as listed on Schedule 2.1(G)(i), there are no actions,
suits, demands, or claims or legal, administrative or arbitral
proceedings, hearings or investigations pending or, to the Knowledge
of the Company or any of the Sellers, threatened against or involving
the Company, any of the Sellers or any of their respective properties
or assets. Except (aa) as listed on Schedule 2.1(G)(i), Schedule
2.1(V) or any other Schedule hereto, (bb) as contained in the Audited
Financials as of, and for the year ended, November 30, 2002, or (cc)
Liabilities arising in the ordinary course of business, including, but
not limited to, Liabilities arising in the ordinary course of business
under Contracts listed on Schedule 2.1(O) or Contracts that are not
required to be listed on Schedule 2.1(O), there are no obligations or
liabilities, whether or not accrued, contingent or otherwise, or any
facts or circumstances of which the Company or any Seller has
Knowledge, including, without limitation, those relating to
environmental and occupational safety and health matters, that, alone
or in the aggregate, will result in claims against, obligations of or
liabilities to, the Company which are reasonably likely to have a
Company Material Adverse Effect. Except as set forth on Schedule
2.1(G)(i), there are no outstanding orders, judgments, injunctions,
awards or decrees of any court, governmental or regulatory body or
arbitration tribunal against or involving the Company or any of the
Sellers.
(ii) The Company has no obligations or liabilities of, or
otherwise relating to, Spectrum Health, Inc., a New Jersey corporation
("Spectrum Health"), whether or not accrued, contingent or otherwise,
and there are no facts or circumstances related to Spectrum Health,
including, without limitation, those relating to environmental and
occupational safety and health matters, that could result in claims
against, obligations of or liabilities to the Company. The business of
Spectrum Health ceased not later than December 31, 1998.
(H) Title to Properties; Absence of Liens, etc.
The Company has good and marketable title to all of its properties and
assets, free and clear of any Liens, except (i) for Permitted Liens (as
defined in Section 8.1), (ii) as reflected in the Balance Sheet, or (iii)
for such properties and assets as may have been sold since the date hereof
in the ordinary course of business or in accordance with Section 3.24. All
of the Company's properties and assets are, in all material respects, in
good operating condition and repair, subject to ordinary wear and tear.
(I) Licenses and Registrations; Compliance with Laws, etc.
The Company has all permits, authorizations, licenses, orders,
registrations and approvals of, and has made all required registrations
with, any government or political subdivision thereof, whether federal,
state, local or foreign, or any agency or instrumentality of any such
government or political subdivision, or any court or arbitrator (each a
"Governmental Body," and collectively, "Governmental Bodies") which are
necessary for the Company to carry on its business as presently conducted
or necessary for the intended use, as of the date hereof, of any properties
of the Company (collectively, "Permits"). Such Permits are in full force
and effect; no violations are or have been recorded in respect of any
Permit; and no proceeding is pending or, to the Knowledge of the Company or
any of the Sellers, threatened to revoke or limit any Permit. The Company
is in compliance in all material respects with the terms of such Permits.
Except as disclosed in Schedule 2.1(I), the business of the Company is not
being conducted, in any material respect, in conflict with, violation of or
default under any law, rule, decree, regulation, ordinance or order
applicable to its business, properties, assets or operations (including,
without limitation, those relating to wages and hours, occupational health
and safety, record keeping, customs, environmental matters, export control,
hazardous waste disposal, pollution control, possession of classified
information or zoning). Each Seller is in compliance with each, and is not
in violation of or default under any law, rule, decree, regulation,
ordinance or order, the noncompliance with, violation of or default under
which could reasonably be expected to impair or affect the validity of this
Agreement or the other Transaction Documents or the ability of such Seller
to perform his or its obligations under this Agreement or the other
Transaction Documents or the transactions contemplated hereby or thereby.
The Company has filed with the proper authorities all material statements
and reports required by all applicable laws, rules, decrees, regulations,
judgments, injunctions, awards, ordinances and orders. The Company has at
all times complied with the provisions of the Foreign Corrupt Practices Act
of 1977, as amended. The Company has not made any illegal payment to
officers or employees of any governmental or regulatory body, or made any
payment to customers for the sharing of fees or to customers or suppliers
for rebating of charges, or engaged in any other reciprocal practices, or
made any illegal payment or given any other illegal consideration to
purchasing agents or other representatives of customers in respect of the
sales made or to be made by the Company.
(J) Intellectual Property.
(i) For purposes of this Agreement, "Intellectual Property" means
all of the following as they exist in any jurisdiction throughout the
world, in each case, to the extent owned by, licensed to, or otherwise
used or held for use by the Company:
(a) patents, patent applications and the inventions, designs and
improvements described and claimed therein, patentable inventions, and
other patent rights (including any divisionals, continuations,
continuations-in-part, substitutions, or reissues thereof, whether or
not patents are issued on any such applications and whether or not any
such applications are amended, modified, withdrawn, or refiled)
(collectively, "Patents");
(b) trademarks, service marks, trade dress, trade names, brand
names, Internet domain names, designs, logos, or corporate names
(including, in each case, the goodwill associated therewith), whether
registered or unregistered, and all registrations and applications for
registration thereof (collectively, "Trademarks");
(c) copyrights, including all renewals and extensions, copyright
registrations and applications for registration, and non-registered
copyrights (collectively, "Copyrights");
(d) trade secrets, confidential business information, designs,
research or development information, processes, procedures,
techniques, technical information, specifications, operating and
maintenance manuals, engineering drawings, methods, know-how, data,
discoveries, inventions, modifications, extensions, improvements, and
other proprietary rights (whether or not patentable or subject to
copyright or trademark protection), other than any of the above that
have entered the public domain or were not created or developed as
proprietary by the Company (collectively, "Trade Secrets");
(e) computer software programs, including all source code, object
code, and documentation related thereto ("Software"); and
(f) all licenses, and sublicenses, and other agreements or
permissions related to the property described in Section 2.1(J)(i)(a)
through (e).
(ii) Disclosure.
(a) Schedule 2.1(J)(ii)(a) sets forth all United States and
foreign patents and patent applications, trademark and service xxxx
registrations and applications, Internet domain name registrations and
applications, and copyright registrations and applications owned by
the Company, specifying as to each item, as applicable: (A) the nature
of the item, including the title; (B) the jurisdictions in which the
item is issued or registered or in which an application for issuance
or registration has been filed; and (C) the issuance, registration or
application numbers and dates.
(b) Schedule 2.1(J)(ii)(b) sets forth all licenses, sublicenses
and other agreements or permissions under which the Company is a
licensee or otherwise is authorized to use or practice any
Intellectual Property ("IP Licenses") except for (A) commercial
off-the-shelf software licenses purchased by the Company, (B)
permissions to use Intellectual Property that is embedded in
equipment, vehicles or other tangible items and not subject to a
separate written license agreement ("Embedded Intellectual Property"),
(C) permissions to use data and technical information pursuant to any
contracts with the federal government ("Government Data"), and (D)
confidential information of another party provided to the Company
under a non-disclosure or confidentiality agreement for limited
purposes and without an express license ("Third Party Confidential
Information") (items (A) through (D) collectively, the "Excluded
Licenses").
(c) Schedule 2.1(J)(ii)(c) sets forth and describes the status of
any material agreements including licenses and sublicenses involving
Intellectual Property currently in negotiation or proposed ("Proposed
Intellectual Property Agreements") by the Company.
(iii) Ownership. Except as set forth on Schedule 2.1(J)(iii), the
Company owns, free and clear of all Liens (except for Permitted
Liens), has valid and enforceable rights in, and has the unrestricted
right to use, sell, license, transfer or assign (excluding, however,
limitations on licensing set forth in applicable federal acquisition
regulations, or in security requirements under government contracts),
all Intellectual Property, except for (A) the Intellectual Property
that is the subject of the IP Licenses, (B) the Intellectual Property
subject to the Excluded Licenses or (C) the Proposed Intellectual
Property Agreements; provided, that there is case law which
specifically holds the Internet domain names are not property subject
to ownership rights, and the Company has only the rights provided in
its domain name registration agreements with the applicable registrar.
(iv) Licenses. The Company has a valid and enforceable license to
Intellectual Property, including, without limitation, commercial
off-the-shelf software, that is not owned by the Company and is not
(A) Third Party Confidential Information, (B) Government Data, (C)
Embedded Intellectual Property, or (D) in the public domain or
otherwise publicly available without infringement or violation of any
third party right, assuming no misrepresentation on the part of the
licensors with respect to their ownership or authority to license such
Intellectual Property, and, to the Knowledge of the Sellers and the
Company, no such misrepresentation exists. The Company has
substantially performed all material obligations imposed on it in such
Company licenses, has made all payments required to date and is not,
nor to the Company's or any Seller's Knowledge is another party
thereto, in material breach or default thereunder in any respect, nor
is there any event which with notice or lapse of time or both would
constitute a material default thereunder. The continued exercise of
rights by the Company to the Intellectual Property that is the subject
of such Company licenses in a manner consistent with the current
exercise of rights by the Company is not restricted or prohibited by
any applicable license other than the term limitations contained in
such Company licenses. None of the Company or any of the Sellers has
Knowledge that any Person intends to terminate (whether for cause or
otherwise) or default under any such Company license.
(v) Registrations. All registrations for Copyrights, Patents and
Trademarks owned or purported to be owned by the Company are valid and
in force, and all applications to register any Copyrights, Patents and
Trademarks owned or purported to be owned by the Company that are
pending are in good standing, all without challenge to the Company's
ownership rights.
(vi) Claims.
(a) No claim or action against the Company is pending or, to the
Knowledge of the Sellers and the Company, threatened and neither the
Company nor any Seller has any Knowledge of any basis for any claim
against the Company that challenges the validity, enforceability,
ownership, or right to use, sell, license or sublicense any
Intellectual Property currently used by the Company, and no item of
Intellectual Property owned by the Company is subject to any
outstanding order, ruling, decree, stipulation, charge or agreement
restricting in any manner the use, the licensing, or the sublicensing
thereof other than restrictions on use, licensing and sublicensing
which are standard in the industry, and the limitations on licensing
set forth in the applicable federal acquisition regulations and the
limitations provided in its domain name registration agreements with
the applicable registrar.
(b) Neither the Company nor any Seller has received any written
notice that the Company has infringed upon or otherwise violated the
intellectual property rights of third parties or received any claim,
charge, complaint, demand or notice alleging any such infringement or
violation, or has Knowledge of any basis for any such claim.
(c) To the Knowledge of the Sellers and the Company, no third
party is infringing upon or otherwise violating any Intellectual
Property of the Company.
(d) The Company's products have been marked as required by the
applicable Patent statute.
(vii) No Infringement of Intellectual Property of Others. (A)
None of the Intellectual Property, products or services owned by the
Company infringes upon or otherwise violates any intellectual property
rights (other than Patents) of any third party, (B) to the Knowledge
of the Sellers and the Company, none of the Intellectual Property,
products or services owned by the Company infringes upon or otherwise
violates any Patents of any third party, and (C) to the Knowledge of
the Sellers and the Company, none of the Intellectual Property
products or services used, developed, provided, sold or licensed by
the Company to any Person infringes upon or otherwise violates any
intellectual property rights of any third party.
(viii) Administration and Enforcement. The Company has taken
commercially reasonable actions to maintain and protect the
Intellectual Property owned by it and material to its business.
(ix) Software. All Software, the intellectual property rights in
which are owned by the Company, is described in Schedule
2.1(J)(ix)(a). Except as set forth on Schedule 2.1(J)(ix)(b), (a) such
Software is not subject to any transfer, assignment, site, equipment,
or other limitations on transfer, other than as set forth in
applicable federal acquisition regulations; (b) to the Knowledge of
the Company and the Sellers, the Company has the most current copy or
release of the Software; (c) the Software documentation, if any,
includes all information sufficient to use such Software in the
conduct of the business or operations of the Company as of the date of
this Agreement; (d) there are no agreements or arrangements in effect
with respect to the marketing, distribution, licensing or promotion of
the Software owned by the Company by any third party other than
governmental rights set out in Contracts to which the Company is or
was a party, or as provided pursuant to any government regulation; and
(e) to the Knowledge of the Company and the Sellers, such Software (x)
is free from any material defect, (y) does not contain any mechanism
for viruses, worms, time bombs, or unauthorized backdoor access that
could be used to interfere with its operation, and (z) performs in
general conformance with its documentation as respects the material
functionality and purposes for which such Software is currently used
by the Company.
(x) Trade Secrets. Except as disclosed on Schedule 2.1(J)(x) or
as set forth in applicable federal acquisition regulations or as
required pursuant to the filing of any Patent application: (a) the
Company has taken commercially reasonable actions to protect its
material Trade Secrets from unauthorized use or disclosure; (b) to the
Knowledge of the Company and the Sellers, there has not been an
unauthorized use or disclosure of such Trade Secrets; (c) the Company
has, and will have on the Closing Date, the right to bring actions for
misappropriation of such material Trade Secrets owned by the Company;
(d) to the Knowledge of the Company and the Sellers, none of such
Trade Secrets infringes upon or otherwise violates valid and
enforceable intellectual property or trade secrets of others; and (e)
the Company is not, nor as a result of the execution and delivery of
this Agreement or the performance of its obligations hereunder, will
be, in violation of any agreement relating to such Trade Secrets.
(xi) Employees, Consultants and Other Persons. As of the date
hereof, each present or past employee, officer, consultant or any
other Person who developed any part of any Intellectual Property for
the Company, either: (a) is a party to an agreement that conveys or
obligates such person to convey to the Company any and all right,
title and interest in and to all Intellectual Property developed by
such Person in connection with such Person's employment with or
engagement on behalf of the Company; (b) as to copyrighted or
copyrightable material created in the course of such Person's
employment with or engagement on behalf of the Company is a party to a
"work made for hire" agreement pursuant to which the Company is deemed
to be the original owner/author of all proprietary rights in such
material; or (c) otherwise has by operation of law vested in the
Company any and all right, title and interest in and to all such
Intellectual Property developed by such Person in connection with such
Person's employment with, or engagement on behalf of, the Company,
excluding any third party materials incorporated therein, any public
domain materials, and subject to any right of joint copyright owners
set forth in Schedule 2.1(J)(xi).
(xii) Employee Breaches. To the Knowledge of the Sellers and the
Company, no employee of the Company has transferred Intellectual
Property or confidential or proprietary information to the Company or
to any third party in violation of any law or any term of any
employment agreement, Patent or invention disclosure agreement or
other contract or agreement relating to the relationship of such
employee with the Company or any prior employer.
(xiii) Related Parties; etc. The Company does not use any
Intellectual Property owned by any director, officer, employee or
consultant of the Company. At no time during the conception or
reduction to practice of any of the Intellectual Property owned by the
Company was any developer, inventor or other contributor to such
Intellectual Property operating under any grants from any Governmental
Body or subject to any employment agreement, invention assignment,
nondisclosure agreement or other contract with any Person that could
adversely affect the rights of the Company to any Intellectual
Property; excluding, however, rights of Governmental Bodies under
acquisition regulations and under government contracts.
(xiv) Transfer. The execution by the Company and the Sellers of
this Agreement will not result in the loss or impairment of the rights
of the Company to own or use any of the Intellectual Property, and the
Company is not, nor as a result of the execution and delivery of this
Agreement or the performance of its obligations hereunder will be, in
violation of any IP License.
(xv) EnviroSpectrum Intellectual Property. Except as set forth in
Schedule 2.1(J)(xv), all (i) Patents, Trademarks, Copyrights, Trade
Secrets, Software and (ii) licenses, sublicenses, and other agreements
or permissions related to the foregoing, formerly owned by, licensed
to or otherwise used or held for use by EnviroSpectrum (as defined in
Section 8.1) shall be deemed to be Intellectual Property.
(K) Non-Contravention.
(i) The execution and delivery of this Agreement by each Seller
and the execution and delivery of the other Transaction Documents
contemplated hereby by or on behalf of each Seller, and the
consummation of the transactions contemplated hereby and thereby and
the performance by each Seller of this Agreement and the other
Transaction Documents in accordance with their respective terms will
not (a) violate any provision of the Articles of Incorporation or
By-Laws (or comparable organizational instruments), in each case as
amended, of the Company or any of the Sellers or (b) except as set
forth on Schedule 2.1(K)(i), (i) violate, conflict with or result in
the breach of any material provision of, or result in a material
modification of or entitle any party to terminate, or constitute
(whether after the filing of notice or lapse of time or both) a
default (by way of substitution, novation or otherwise) under, any
contract (including task orders and delivery orders under any such
contract), agreement, indenture, note, bond, loan, instrument, lease,
conditional sales contract, mortgage, license, franchise, commitment
or other binding arrangement, whether written or oral (collectively,
the "Contracts") to which the Company or any of the Sellers is a party
or by or to which any of the Company's or any of the Sellers' assets
or properties may be bound or subject, (ii) result in the creation or
imposition of any Lien upon any of the property or assets of the
Company or any of the Sellers pursuant to any provision of any
Contract or Lien, (iii) violate any law, regulation, statute,
injunction, order, arbitration award, judgment or decree applicable
to, against, or binding upon any Seller or the Company or by which any
of the Company's or any of the Sellers' securities, business or
property is bound, or (iv) violate or result in the revocation or
suspension of any Permit.
(ii) The execution and delivery of this Agreement by the Company
and the execution of and delivery of the other Transaction Documents
contemplated hereby by or on behalf of the Company, and the
consummation of the transactions contemplated hereby and thereby and
the performance by the Company of this Agreement and the other
Transaction Documents in accordance with their respective terms will
not (a) violate any provision of the Articles of Incorporation or
By-Laws, in each case as amended, of the Company, (b) except as set
forth on Schedule 2.1(K)(ii), (i) violate, conflict with or result in
the breach of any material provision of, or result in a material
modification of or entitle any party to terminate, or constitute
(whether after the filing of notice or lapse of time or both) a
default (by way of substitution, novation or otherwise) under, any
Contract to which the Company is a party or by or to which any of the
Company's assets or properties may be bound or subject, (ii) result in
the creation or imposition of any Lien upon any of the property or
assets of the Company pursuant to any provision of any Contract or
Lien, (iii) violate any law, regulation, statute, injunction, order,
arbitration award, judgment or decree applicable to, against, or
binding upon the Company or by which any of the Company's securities,
business or property is bound or (iv) violate or result in the
revocation or suspension of any Permit.
(L) Consents and Approvals.
Except as set forth on Schedule 2.1(L), none of (a) the execution
and delivery of this Agreement or any of the other Transactions
Documents contemplated hereby by the Company or any Seller, (b) the
consummation by the Company or any Seller of any transaction
contemplated hereby or thereby or (c) compliance by the Company or any
Seller with any of the provisions hereof or thereof, will require any
consent, approval or action of, or require the Company or any Seller
to make any filing with or give notice to, any Governmental Body or
other Person other than (x) immaterial consents, approvals, actions,
filings or notices, (y) consents, approvals, actions, filings or
notices that have been obtained, made or given prior to the date
hereof and (z) consents of the landlords under Real Property Leases
(as defined in Section 2.1(W)(ii)) required to be delivered to the
Purchaser pursuant to Section 4.2(L), and no lapse of a waiting period
under any law, regulation, statute, injunction, order, arbitration
award, judgment or decree is necessary or required in connection with
the foregoing clauses (a) - (c) (as qualified by the foregoing clauses
(x), (y) and (z)), except as required by the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, and the rules and regulations
promulgated thereunder (the "HSR Act").
(M) Employee Benefit Plans; ERISA.
Set forth on Schedule 2.1(M) is a true and complete list of each
deferred compensation, executive compensation, incentive compensation,
stock purchase or other stock-based compensation plan, employment or
consulting, severance or termination pay, holiday, vacation or other
bonus plan or practice, hospitalization or other medical, life or
other insurance, supplemental unemployment benefits, profit sharing,
pension, or retirement plan, program, agreement, commitment or
arrangement, and each other employee benefit plan, program, agreement
or arrangement, including, without limitation, each "employee benefit
plan" as such term is defined under Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained or contributed to or required to be contributed to by the
Company for the benefit of any employee or terminated employee of the
Company, or with respect to which the Company has any liability,
whether direct or indirect, actual or contingent, whether formal or
informal, and whether legally binding or not (the "Plans").
(i) With respect to each Plan, there are no funded benefit
obligations for which contributions have not been made or properly
accrued and there are no unfunded benefit obligations that have not
been accounted for by reserves, or otherwise properly footnoted in
accordance with GAAP, on the Audited Financials. The Company is not
and has not in the past been a member of a "controlled group" for
purposes of Section 414(c) of ERISA, nor does the Company have any
liability with respect to any collectively-bargained for plans subject
to the provisions of ERISA.
(ii) Each Plan is in compliance in all material respects with all
applicable laws, including, without limitation, ERISA and the Internal
Revenue Code of 1986, as amended (the "Code"). Each Plan which is
intended to be "qualified" within the meaning of Section 401(a) of the
Code (a) has been determined by the Internal Revenue Service (the
"IRS") to be so qualified (or is based on a prototype plan which has
received a favorable determination letter) during the period from its
adoption to the date of this Agreement and (b) its related trust has
been determined to be exempt from taxation under Code Section 501(a)
or the Company has requested an initial favorable IRS determination of
qualification and/or exemption. None of the Company or any of the
Sellers has Knowledge of any fact which would adversely affect the
qualified status of such Plans or the exempt status of such trusts,
and the Company has received a favorable IRS determination as to the
qualified status of each such Plan with respect to the Tax Reform Act
of 1986 and subsequent amendments to the Code. The preceding sentence
does not apply to any deferred compensation plan or incentive
compensation plan, which are not intended to be and are not
"qualified" plans.
(iii) With respect to each Plan which covers any current or
former officer, director, consultant or employee (or beneficiary
thereof) of the Company, the Sellers have delivered or made available
(or have caused the Company to have delivered or made available) to
the Purchaser accurate and complete copies, if applicable, of: (a) all
Plan texts and agreements and related trust agreements or annuity
contracts; (b) all employee communications (including all summary plan
descriptions and material modifications thereto); (c) the most recent
Forms 5500, if applicable, and annual report, including all schedules
thereto; (d) the most recent annual and periodic accounting of plan
assets; (e) the most recent determination letter received from the
IRS; (f) the most recent actuarial valuation; and (g) all
communications with any Governmental Body.
(iv) With respect to each Plan: (a) no breach of fiduciary duty
has occurred; (b) no dispute is pending, or to the Knowledge of any of
the Sellers or the Company, threatened; (c) to the Knowledge of the
Company and any of the Sellers, no prohibited transaction, as defined
in Section 406 of ERISA or Section 4975 of the Code, has occurred,
excluding transactions effected pursuant to a statutory or
administration exemption; and (d) all contributions and premiums due
through the Closing Date have been made as required under ERISA or
have been fully accrued on the Company's financial statements.
(v) No Plan is a "defined benefit plan" (as defined in Code
Section 414(j)), a "multiemployer plan" (as defined in ERISA Section
3(37)) or a "multiple employer plan" (as described in Code Section
413(c)) or is otherwise subject to Title IV of ERISA or Code Section
412. No Plan will become a multiple employer plan with respect to the
Company immediately after the Closing Date.
(vi) There is no arrangement under any Plan with respect to any
employee that would result in the payment of any amount that by
operation of Code Section 280G or 162(m) would not be deductible by
the Company.
(vii) With respect to each Plan which is a "welfare plan" (as
described in ERISA Section 3(1)): (a) no such plan provides medical or
death benefits with respect to current or former employees of the
Company beyond their termination of employment (other than coverage
mandated by law, which is paid solely by such employees); and (b)
there are no reserves, assets, surplus or prepaid premiums under any
such plan.
(viii) Except as disclosed on Schedule 2.1(M)(viii) or as
provided in Sections 3.9(a), 3.9(c), 3.11 or 3.19 (in each such case,
with respect solely to clauses (a) and/or (b) below) or pursuant to
the Xxxx Xxxxx Compensation Letter, the consummation of the
transactions contemplated by this Agreement and the other Transaction
Documents will not: (a) entitle any individual to severance pay,
unemployment compensation or other benefits or compensation; (b)
accelerate the time of payment or vesting, or increase the amount of
any compensation due, or in respect of, any individual; (c) result in
or satisfy a condition to the payment of compensation that would, in
combination with any other payment, result in an "excess parachute
payment" within the meaning of Code section 280G(b)(1); or (d)
constitute or involve a prohibited transaction (as defined in ERISA
Section 406 or Code Section 4975), or constitute or involve a breach
of fiduciary responsibility within the meaning of ERISA section 502(l)
or otherwise violate Part 4 of Subtitle B of Title I of ERISA.
(ix) Except as listed on Schedule 2.1(M)(ix), for each Plan that
is intended to be qualified under Section 401(a) of the Code, the
Company has either (I) received a favorable determination letter (a
"GUST Determination Letter") from the IRS that takes into account any
change required to be made to such Plan in order to comply with the
requirements of Section 401(a) of the Code, as amended by the (i)
Retirement Protection Act of 1994, enacted as part of the Uruguay
Round Agreements Act, (ii) the Uniform Services Employment and
Reemployment Rights Act of 1994, (iii) Small Business Job Protection
Act of 1996, (iv) Taxpayer Relief Act of 1997, (v) Transportation
Revenue Act of 1998, (vi) Internal Revenue Service Restructuring and
Reform Act of 1998, and (vii) Community Renewal Tax Relief Act of 2000
(collectively referred to as "GUST") or (II) timely filed an
application for determination with the IRS requesting a determination
that such Plan meets the requirements of Section 401(a) of the Code,
as amended by GUST, and that any trust established in connection with
the Plan is exempt from federal income taxation of Section 501(a) of
the Code (hereinafter referred to as a "GUST Application for
Determination"). Except with respect to any Plan listed on Schedule
2.1(M)(ix), the Sellers have provided the Purchaser with a true and
complete copy of each GUST Determination Letter or GUST Application
for Determination received or filed by the Company with respect to
each Plan intended to be qualified under Section 401(a) of the Code.
(x) Attached hereto as Exhibit B is a true, complete and correct
copy of the Contingent Stock Agreement, dated December 31, 1998, among
the Company, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxx and Xxxxxxx Xxxx, as
amended by the First Amendment to Contingent Stock Agreement (the
"Amended Contingent Stock Agreement"), dated September 19, 2002, among
the Company, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxx and Xxxxxxx Xxxx. Attached
hereto as Exhibit C are true, complete and correct copies of those
certain Retention Agreements (the "Retention Agreements"), by and
between the Company and the employees of the Company listed on
Schedule 2.1(M)(x), providing for retention payments in the amounts
and on the dates set forth opposite such employees' names on Schedule
2.1(M)(x), provided, that the aggregate retention payments under all
such Retention Agreements shall be no less than $2,000,000. Except as
provided under the Amended Contingent Stock Agreement and the
Retention Agreements, no executive or other employee of the Company is
entitled to any amounts under any bonus or retention plan or
arrangement which plan's or arrangement's terms provide for any
payment by the Company in connection with the sale of the Company.
(N) Insurance Policies.
True and complete copies of all policies of fire, casualty,
liability, product liability, burglary, fidelity, worker's
compensation, life, vehicular and other forms of insurance held by or
on behalf of the Company have been made available to the Purchaser or
its representatives. All premiums due and payable for such insurance
have been duly paid, and such policies, or extensions, renewals or
replacements (on comparable terms, including coverage amounts, to the
extent available) thereof, are outstanding and in full force and
effect. The Company has made available to the Purchaser a brief
description (specifying the insurer and the policy number or covering
note number with respect to binders, describing each pending claim
thereunder of more than $25,000, setting forth the aggregate amounts
paid out under each such policy through the date hereof and the
aggregate limit, if any, of the insurer's liability thereunder) of all
policies or binders of fire, liability, worker's compensation,
vehicular and other insurance held by or on behalf of the Company. The
Company has made available to the Purchaser with respect to each
policy a list and brief description of all individual claims in excess
of $25,000 (exclusive of claims under medical and dental policies)
made by the Company during the Company's past two fiscal years and the
amount paid out under each policy with respect to such claims. None of
the Company or any of the Sellers has any Knowledge of any facts or of
the occurrence of any event that is reasonably likely to form the
basis for any material claim against the Company which will not be
fully covered by such policies. Except as listed on Schedule 2.1(N)
hereto, the Company has not received any written notice of termination
from any of its insurance carriers (other than a notice of termination
in the ordinary course of business and in accordance with the terms of
such insurance policy and where such terminated policy has been
replaced by the Company with an insurance policy with substantially
similar terms as such terminated policy) or any written notice that
any insurance premiums will be materially increased in the future.
(O) Agreements.
Schedule 2.1(O) hereto lists all of the following Contracts to which
the Company is a party or by or to which it or any of its assets or
properties are bound or subject: (i) Contracts with any current or former
officer, director, shareholder, Affiliate (as defined in Section 8.1),
employee, consultant, agent or other representative of the Company or with
an entity in which any of the foregoing is a contracting Person;
(ii) Contracts with any labor union or association representing
any employee;
(iii) Contracts calling for an aggregate purchase or sale price
or payments of more than $100,000 in any one case (or in the
aggregate, in the case of installment payments or any related series
of Contracts) for the purchase or sale of materials, supplies,
equipment, merchandise or services that contain an escalation,
renegotiation or redetermination clause;
(iv) Contracts calling for an aggregate purchase or sale price or
payments of more than $25,000 in any one case (or in the aggregate, in
the case of any related series of Contracts) for the sale of any of
its assets or properties other than in the ordinary course of business
and consistent with past practice or for the grant to any Person of
any preferential rights to purchase any of its assets or properties;
(v) Contracts calling for an aggregate purchase or sale price or
payments of more than $50,000 in any one case (or in the aggregate, in
the case of any related series of Contracts) that cannot be canceled
by the Company with less than ninety (90) days' notice without
incurring liability, premium or penalty;
(vi) joint venture agreements;
(vii) Contracts (other than those entered into in the ordinary
course of business and consistent with past practice) under which the
Company agrees to indemnify any party or Contracts under which the
Company agrees to share Tax (as defined in Section 8.1) liability of
any party;
(viii) Contracts with customers or suppliers for the sharing of
fees, the rebating of charges or other similar arrangements;
(ix) Contracts containing obligations or liabilities of any kind
to holders of the Company's securities as such (including, without
limitation, an obligation to register any of such securities under any
federal or state securities laws);
(x) Contracts containing covenants of the Company not to compete
in any line of business or with any Person in any geographical area or
covenants of any other Person not to compete with the Company in any
line of business or in any geographical area;
(xi) Contracts relating to the acquisition by the Company of any
operating business, substantially all of the assets of or the capital
stock of any other Person;
(xii) options for the purchase of any asset, tangible or
intangible;
(xiii) Contracts for the payment of fees or other consideration
to any officer, director or Affiliate of the Company or to any other
entity in which any of the foregoing has an interest;
(xiv) Contracts relating to the borrowing of money;
(xv) Contracts with any of the Sellers, their respective
Affiliates or any entity in which any of such Sellers or Affiliates,
individually or in the aggregate, own a controlling interest (other
than the Company) or in which any Seller is a director, officer or
employee thereof;
(xvi) any other Contract calling for an aggregate purchase price
or sale price or payments of more than $50,000 in the Company's fiscal
year 2003 or in any subsequent fiscal year of the Company;
(xvii) Contracts to which the Company is a party under which the
Company is obligated, or has the right under specified terms and
conditions, to purchase products or services from a Person for the
purpose of selling such products or services to a third Person; and
(xviii) Contracts to which the Company is a party under which the
Company leases an automobile for use by an employee of the Company.
True and complete copies of all of the foregoing, in each case as
amended to date, have been delivered to, or made available for inspection
by, the Purchaser. Contracts with respect to Government Data and Contracts
with respect to Third Party Confidential Information shall be deemed to be
listed in Schedule 2.1(O), including, without limitation, for purposes of
Section 2.1(P), and for the purposes of Sections 3.7, 3.13 and 4.2(D),
Schedule 2.1(O) shall be deemed to include all IP Licenses (other than for
Embedded Intellectual Property).
(P) Validity of Agreements.
(i) Assuming the due execution and delivery by, and binding
effect of each such Contract on, each of the parties thereto other
than the Company, all Contracts listed or required to be listed in
Schedule 2.1(O) constitute legal, valid and binding obligations of the
Company, are in full force and effect, and are enforceable against the
Company in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, and other
similar laws affecting the enforcement of creditors' rights generally
and general equitable principles (regardless of whether considered in
equity or at law). The Company has paid in full all amounts due
thereunder which are due and payable or accrued in accordance with
GAAP, all amounts due to others thereunder (and has properly
recognized revenues due from others thereunder), and has satisfied in
full or provided for all of its liabilities and obligations thereunder
which are due and payable, except amounts or liabilities disputed in
good faith by the Company for which adequate reserves have been set
aside. The Company is not in violation, breach of or default
(including, but not limited to, any violation, breach or default under
the Service Contract Act, as amended, and the regulations promulgated
by the United States Department of Labor pursuant thereto) under any
of such Contracts, nor has the Company taken or failed to take any
action that, with notice or lapse of time or both, would constitute a
violation, breach or default thereunder by the Company. To the
Knowledge of the Sellers and the Company, (i) no other party to any
such Contract or other agreement is in violation, breach or default
thereunder, (ii) no condition exists that, with notice or lapse of
time or both, would constitute a violation, breach or default
thereunder by any other Person and (iii) each such Contract has been
duly executed and delivered by each of the other parties thereto and
constitutes the legal, valid and binding obligations of each of the
other parties thereto, enforceable against each such party in
accordance with their respective terms. None of the Company or any of
the Sellers has Knowledge that any Person intends to terminate
(whether for cause or otherwise) or default under any Contract listed
or required to be listed on Schedule 2.1(O) before its stated term, if
any. Except as set forth on Schedule 2.1(P), none of the Sellers or
the Company has any Knowledge of a basis of a claim, whether actual or
threatened, by any Governmental Body or other Person under any
Contract or agreement listed or required to be listed on Schedule
2.1(O). Except as set forth on Schedule 2.1(P), none of the Sellers or
the Company has any Knowledge of any facts, circumstances or
conditions involving a Contract that, individually, or in the
aggregate, would reasonably be expected to result in (i) the amounts
to be paid to the Company in respect of such Contract to be less than
the total price of such Contract, or (ii) the Company incurring costs
(including related overhead and general and administrative expenses)
in excess of such Contract's total price. Except as separately
identified on Schedule 2.1(L), no approval or consent of any
Governmental Body or any other Person is needed in order that the
Contracts listed or required to be listed on Schedule 2.1(O) or on any
other Schedule continue in full force and effect following the
consummation of the transactions contemplated by this Agreement and
the other Transaction Documents.
(ii) The Company has not received notice that any audit or review
of any government contract, subcontract or agreement to which the
Company is a party has revealed any fact, occurrence or practice that
will result in the disallowance of, or claim for, any material amount
paid or payable to or by the Company under such contract, subcontract
or agreement, whether as a result of excess payments, excess profit
recapture or otherwise. The Company has not been terminated for
default under any government contract, subcontract or agreement since
January 1, 1999. Neither the Company nor any Seller has Knowledge of
any event, circumstance or claim that has occurred or is currently
ongoing which would reasonably be expected to result in the Company
receiving a termination for default under any currently effective
government contract, subcontract or agreement of the Company. Neither
the Company nor any Seller has Knowledge of any event, circumstance or
claim that has occurred or is currently ongoing which would reasonably
be expected to result in the Company receiving a termination for
convenience under any currently effective government contract,
subcontract or agreement of the Company.
(iii) No Seller has received notice of a default, and no Seller
is in default under, or with respect to, any Contract to which such
Seller is a party or by or to which such Seller's assets or properties
may be subject, in any respect, which individually or in the
aggregate, would reasonably be expected to impair the ability of such
Seller to perform his or its obligations under this Agreement or the
other Transaction Documents to which he or it is a party.
(Q) Taxes.
(i) All Tax Returns (as defined in Section 8.1) required to be
filed by or with respect to the Company have been properly prepared
and timely filed. All such Tax Returns are true, correct and complete
in all material respects. The Company has paid or withheld (or caused
to be paid or withheld) all Taxes shown on such Tax Returns as due and
payable.
(ii) The Company has fully and timely paid (or will fully and
timely pay or adequately reserve for in the ordinary course of
business and consistent with past practice) Taxes owed by the Company
for all taxable periods through and including the Closing Date, except
for such Taxes, if any, as are being contested in good faith.
(iii) The Company has given or otherwise made available to the
Purchaser true, correct and complete copies of all Tax Returns,
examination reports and statements of deficiencies for the Company's
fiscal years ending November 30, 1999, November 30, 2000 and November
30, 2001 or transactions consummated during any such fiscal year.
(iv) Except as set forth on Schedule 2.1(Q), the Company has made
all required estimated Tax payments sufficient to avoid any
underpayment penalties.
(v) None of the Sellers is a "foreign person" within the meaning
of Section 1445 of the Code.
(vi) Neither the Company nor its predecessor is now or has at any
time been a member of any affiliated, consolidated, combined or
unitary group as defined in Section 1504 of the Code and the Treasury
regulations promulgated thereunder.
(vii) The Company is not a party to any agreement relating to the
sharing, allocation or indemnification of Taxes, or any similar
agreement, contract or arrangement (collectively, "Tax Sharing
Agreements"), and does not have any liability for Taxes of any Person
as a transferee or successor, by contract, or otherwise.
(viii) There are no outstanding agreements, waivers or
arrangements extending the statutory period of limitations applicable
to any claim for, or the period for the collection or assessment of,
Taxes due from or with respect to the Company for any taxable period
and no request for any such waiver or extension is currently pending.
(ix) No closing agreement pursuant to Section 7121 of the Code
(or any predecessor provision) or any similar provision of any state,
local or foreign law has been entered into by or with respect to the
Company.
(x) Except as set forth in Schedule 2.1(Q), no audit or other
proceeding by any Governmental Body is pending or threatened with
respect to any Taxes due from or with respect to the Company, and the
Company has not received any notification that such an audit or
proceeding may be commenced, with respect to any Taxes due from or
with respect to the Company and all deficiencies for Taxes asserted or
assessed against the Company have been fully and timely paid, settled
or properly reflected in the Balance Sheet.
(xi) The Company has not agreed to or is required to make any
adjustment pursuant to Section 481(a) of the Code (or any predecessor
provision), there is no application pending with any Governmental Body
requesting permission for any such change in any accounting method of
the Company and no Governmental Body has proposed any such adjustment
or change in accounting method.
(xii) The Company has withheld (or will withhold) from its
employees, independent contractors, creditors, stockholders and third
parties and timely paid (or will timely pay) to the appropriate taxing
authority proper and accurate amounts in all respects for all periods
ending on or before the Closing Date in compliance with all Tax
withholding and remitting provisions of applicable laws and has
complied in all respects with all Tax information reporting provisions
of all applicable laws. Except as set forth in Schedule 2.1(Q), the
Company is not, nor has it received any notice that it is, in
violation (or with notice will be in violation) of any applicable law
relating to the payment or withholding of Taxes.
(xiii) There is no contract, agreement, plan or arrangement
covering any Person that, individually or collectively, could give
rise to the payment of any amount that would not be deductible by the
Company by reason of Section 280G of the Code.
(xiv) The Company has not filed a consent under Section 341(f) of
the Code.
(xv) The Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified Section 897(c)(1)(A)(ii)
of the Code.
(xvi) There are no Liens for Taxes upon the assets or properties
of the Company, except for statutory Liens for current Taxes not yet
due, and the Sellers and the Company have no Knowledge of any claim
relating to Taxes that, if adversely determined, would result in any
Lien on any of the assets or properties of the Company.
(xvii) The Company has not entered into a transaction that is
being accounted for under the installment method of Section 453 of the
Code or similar provision of state, local or foreign law.
(xviii) No property owned by the Company (a) is property required
to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954,
as amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986, (b) constitutes "tax-exempt use property" within
the meaning of Section 168(h)(1) of the Code or (c) is "tax-exempt
bond financed property" within the meaning of Section 168(g)(5) of the
Code.
(xix) The Company does not owe any "corporate acquisition
indebtedness" within the meaning of Section 279 of the Code.
(xx) No power of attorney has been granted by any of the Sellers
or the Company with respect to any matter relating to Taxes of the
Company, which power of attorney is currently in force.
(xxi) Any adjustment of Taxes of the Company made by the IRS,
which adjustment is required to be reported to the appropriate state,
local, or foreign taxing authorities, has been so reported.
(R) Disclosure.
The representations and warranties made by the Company and each Seller
in this Agreement and the other Transaction Documents, and the statements
made by the Company and each Seller in any certificate, exhibit, schedule
or document referred to in Article IV and which are furnished or to be
furnished in connection with the transactions herein contemplated, do not
contain any untrue statement of a material fact or omit to state, when read
in conjunction with all of the information contained in this Agreement, the
Schedules hereto and the other Transaction Documents, any material fact
necessary to make such representations, warranties or statements, in light
of the circumstances under which they were made, not misleading.
(S) Environmental Matters.
Except as disclosed on Schedule 2.1(S):
(i) there are no past or present events, conditions,
circumstances, activities, practices, incidents, agreements, actions
or plans (relating to actions or omissions by the Company or, to the
Knowledge of the Company or any of the Sellers, any of its
contractors, subcontractors or agents acting on the Company's behalf,
or, to the Knowledge of the Company or any of the Sellers, by any
other Person) which have given rise to or will give rise to any
liability on the part of the Company under any Environmental Law (as
defined below) or principles of common law relating to pollution,
protection of the environment or health and safety;
(ii) no real property currently owned or operated by the Company
contains, and no real property formerly owned or operated by the
Company contained, at the time of the Company's ownership or operation
thereof, any Hazardous Substances (as defined below) in quantities or
concentrations that will give rise to liability on the part of the
Company under any Environmental Law (including, without limitation,
liability associated with any non-discretionary obligation to
remediate the Hazardous Substances in accordance with applicable
remediation standards);
(iii) no judicial or administrative proceeding is pending or, to
the Knowledge of any of the Sellers or the Company, threatened
relating to any material liability on the part of the Company for any
off-site disposal or contamination;
(iv) the Company is in material compliance with all Environmental
Laws; and
(v) the Company has not received any claims or notices alleging
liability under any Environmental Law, and the Company and the Sellers
have no Knowledge of any circumstances that could reasonably result in
such claims.
Schedule 2.1(S) lists all contracts and agreements to which the
Company is a party or, to the Knowledge of the Company or any of the
Sellers, by which its assets or properties may be subject, which involve
the use, handling, storage, transport or disposal of any Hazardous
Substance. "Environmental Law" means any applicable federal, state, foreign
or local law, regulation, code, order, decree, judgment, injunction or
judicial opinion or other agency requirement having the force and effect of
law and relating to pollution, health and safety, noise, odor, Hazardous
Substance or the protection of the environment. "Hazardous Substance" means
any toxic or hazardous substance that is regulated by or under authority of
any Environmental Law.
(T) Accounts and Notes Receivable.
Schedule 2.1(T) sets forth a true and complete list of Accounts
Receivable as of the date hereof, including the amount, the account debtor,
job number and the date that such payment of each such Account Receivable
is due or was invoiced or the age in days of such Account Receivable or,
with respect to unbilled work, job number and job description relating to
such matter. All accounts and notes receivable reflected on the Balance
Sheet, and all accounts and notes receivable arising subsequent to November
30, 2002, (i) have arisen in the ordinary course of business of the Company
and represent valid obligations due to the Company and (ii) have been
collected or, to the Knowledge of the Sellers and the Company, are
collectible in the ordinary course of business of the Company (as the case
may be) in the aggregate recorded amounts thereof, less the reserve thereof
referred to in Section 2.1(E)(iii)(c) (as such reserve shall be increased
prior to or concurrent with the date of delivery of the Estimated Closing
Statement in accordance with Section 3.26), in accordance with their terms.
(U) Potential Conflicts of Interest.
Except as set forth on Schedule 2.1(U), to the Knowledge of the
Sellers and the Company, (i) no Seller, (ii) no officer listed under the
definition of "Knowledge" in Section 8.1, director or Affiliate of the
Company or any Seller, (iii) no relative or spouse (or relative of such
spouse) of any such officer, director or Affiliate or of any Seller, and
(iv) no entity controlled by any one or more of the foregoing: (a) owns,
directly or indirectly, any interest in (excepting not more than 1% stock
holdings for investment purposes in securities of publicly held and traded
companies), or is an officer, director, employee or consultant of, any
Person or entity which is, or is engaged in business as, a competitor,
lessor, lessee, customer, distributor, sales agent, or supplier of the
Company; (b) owns, directly or indirectly, in whole or in part, any
tangible or intangible property that the Company uses or the use of which
is necessary for or material to the conduct of its business; (c) has any
cause of action or other claim whatsoever against, or owes any amount to,
the Company, except for claims in the ordinary course of business, such as
for accrued vacation pay, accrued benefits under employee benefit plans,
and similar matters and agreements existing on the date hereof; or (d) on
behalf of the Company, has made any payment or commitment to pay any
commission, fee or other amount to, or purchase or obtain or otherwise
contract to purchase or obtain any goods or services from, any corporation
or other Person of which any officer listed under the definition of
"Knowledge" in Section 8.1, director or Affiliate of the Company, or a
relative of any of the foregoing, is a partner or stockholder (excepting
stock holdings solely for investment purposes in securities of publicly
held and traded companies).
(V) Liabilities.
As of November 30, 2002, the Company did not have any direct or
indirect indebtedness, liability, claim, loss, damage, deficiency or
obligation or responsibility, fixed or unfixed, xxxxxx or inchoate,
liquidated or unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise, whether or not of a kind required by GAAP to be
set forth on a financial statement or in the notes thereto ("Liabilities"),
that were not fully and adequately reflected or reserved against on the
Balance Sheet or described on any Schedule or in the notes to the Audited
Financials and that individually or in the aggregate, would result in a
Company Material Adverse Effect. Neither the Company, nor any of the
Sellers has any Knowledge of any circumstance, condition, event or
arrangement that would reasonably be expected to give rise hereafter to any
Liabilities of the Company, except Liabilities (i) arising in the ordinary
course of business, including, but not limited to, Liabilities arising in
the ordinary course of business under Contracts listed on Schedule 2.1(O)
or Contracts that are not required to be listed on Schedule 2.1(O), (ii)
reflected or reserved against on the Balance Sheet, (iii) disclosed on any
Schedule hereto, or (iv) otherwise set forth on Schedule 2.1(V).
(W) Real Property.
(i) The Company does not own, nor has the Company agreed to
purchase, any real property.
(ii) Schedule 2.1(W) is a true, correct and complete schedule of
all leases, subleases, licenses and other agreements (collectively,
the "Real Property Leases") under which the Company uses or occupies
or has the right to use or occupy, now or in the future, any real
property (the land, buildings and other improvements covered by the
Real Property Leases being herein called the "Leased Property"), which
Schedule 2.1(W) sets forth the date of and parties to each Real
Property Lease, the date of and parties to each amendment,
modification and supplement thereto, the term and renewal terms
(whether or not exercised) thereof and a brief description of the
Leased Property covered thereby. The Sellers have heretofore made
available or delivered to, or caused the Company to have heretofore
made available or delivered to, the Purchaser true, correct and
complete copies of all Real Property Leases (including all
modifications, amendments and supplements). Each Real Property Lease
is valid, binding and in full force and effect, all rent and other
sums and charges payable by the Company as tenant thereunder are
current, no notice of default or termination under any Real Property
Lease is outstanding, no termination event or condition or uncured
default of a material nature on the part of the Company or, to the
Knowledge of the Sellers and the Company, the landlord, exists under
any Real Property Lease, and to the Knowledge of the Sellers and the
Company, no event has occurred and no condition exists which, with the
giving of notice or the lapse of time or both, would constitute such a
default or termination event or condition. Except as set forth on
Schedule 2.1(W)(1), there is no underlying mortgage, deed of trust,
lease, grant of term or other estate in or interest affecting any
Leased Real Property which is superior to the interest of the Company,
as tenant under the applicable Real Property Lease. Except for the
matters listed on Schedule 2.1(W)(2), the Company holds the leasehold
estate under and interest in each Real Property Lease free and clear
of all Title Defects (as defined in Section 8.1), except for such
Title Defects that are not material in nature or that do not have a
material adverse effect on the Company's rights with respect to the
Leased Property. The Sellers and the Company have no ownership,
financial or other interest in the landlord under any Real Property
Lease.
(iii) Neither any Seller nor the Company owns or holds, or is
obligated under or a party to, any option, right of first refusal or
other contractual right to purchase, acquire, sell or dispose of the
Leased Property or any portion thereof or interest therein.
(iv) The Sellers and the Company have not received any written
notice, and have no Knowledge of, any pending, threatened or
contemplated condemnation proceeding affecting the Leased Property or
any part thereof or of any sale or other disposition of the Leased
Property or any part thereof in lieu of condemnation.
(v) During the period of the Company's tenancy therein, no
portion of the Leased Property has suffered any material damage by
fire or other casualty which has not heretofore been completely
repaired and restored to its original condition. To the Knowledge of
the Sellers and the Company, no portion of the Leased Property is
located in a special flood hazard area as designated by federal
governmental authorities.
(vi) The Sellers and the Company have no Knowledge of any pending
or contemplated reassessment of any parcel included in the Leased
Property, other than pursuant to the terms of the Real Property Lease
covering such Leased Property, which would result in a change in the
rent, additional rent or other sums and charges payable by the Company
under the Real Property Lease covering such Leased Property.
(vii) Except as set forth in Schedule 2.1(W)(vii), the Company
does not owe any money to any architect, contractor, subcontractor or
materialman for labor or materials performed, rendered or supplied to
or in connection with any Leased Property within the past year. Except
as set forth in Schedule 2.1(W)(vii), there is no work being done at
or materials being supplied to any parcel of Leased Property as of the
date hereof other than routine maintenance projects having an
aggregate cost through completion of not more than $10,000.
(X) Labor Matters. Except as set forth on Schedule 2.1(X), the
Company is not now, and has not been in the last five years, bound by
or party to any collective bargaining agreement and, to the Knowledge
of the Sellers and the Company, no application for certification of a
collective bargaining agent is pending. The Company is in material
compliance with all applicable laws affecting employment practices and
terms and conditions of employment. The Company has not incurred any
liability or obligation under the Worker Adjustment and Retraining
Notification Act (Pub. L. 100-379 Stat. 890 (1988)), as amended, or
similar applicable state law, and the Company has not taken any action
prior to the Closing Date which could result in any such liability or
obligation to the Company within the six-month period immediately
following the Closing Date if, during such six-month period, only
terminations of employment in the normal course of operations occur.
To the Knowledge of the Sellers and the Company, the Company does not
and has not employed any illegal aliens.
(Y) Suppliers and Customers.
Schedule 2.1(Y) lists, by dollar volume paid for the twelve (12)
months ended on November 30, 2002, the twenty (20) largest suppliers and
the ten (10) largest customers of the Company. Except as set forth on
Schedule 2.1(Y), the relationships of the Company with such suppliers and
customers are, to the Knowledge of the Company and the Sellers, good
commercial working relationships and (i) to the Knowledge of the Company or
any of the Sellers, no Person listed on Schedule 2.1(Y) within the last
twelve (12) months has threatened to cancel or otherwise terminate, or
intends to cancel or otherwise terminate, any relationships of such Person
with the Company, (ii) no such Person has during the last twelve (12)
months decreased materially, or to the Knowledge of the Company or any of
the Sellers, has threatened to decrease or limit materially or intends to
modify materially its relationships with the Company or intends to decrease
or limit materially its services or supplies to the Company or its usage or
purchase of the services or products of the Company and (iii) to the
Knowledge of the Company or any of the Sellers, the acquisition by the
Purchaser of the Shares and the consummation of the transactions
contemplated in this Agreement and the other Transaction Documents (alone
and without regard to any other cause, including, but not limited to,
general business and/or economic conditions, legislation or regulatory
matters, the federal government budgetary or procurement process or
national or international events, including, but not limited to, war or
acts of terrorism) will not affect the relationship of the Company with any
supplier or customer listed on Schedule 2.1(Y).
2.2 Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Sellers as follows:
(A) Organization of the Purchaser.
The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, with all requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as now being, or as currently proposed
to be, conducted.
(B) Authority to Execute and Perform Agreement.
The Purchaser has all requisite power and authority and all approvals
required to enter into, execute and deliver this Agreement, the other
Transaction Documents to which it is or will be a party and to perform
fully its obligations hereunder and thereunder. This Agreement and each of
the other Transaction Documents to which the Purchaser is a party have been
duly executed and delivered by the Purchaser. Assuming due execution and
delivery hereof and thereof by the Company and the Sellers, and assuming
the enforceability hereof and thereof on the Company and the Sellers, this
Agreement and each of the other Transaction Documents to which the
Purchaser is a party are valid and binding obligations of the Purchaser
enforceable against the Purchaser in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting the rights and remedies
of creditors generally and to general principles of equity (regardless of
whether considered in equity or at law).
(C) Consents and Approvals.
None of (i) the execution and delivery of this Agreement or any of the
other Transaction Documents contemplated hereby by the Purchaser, (ii) the
consummation by the Purchaser of any transaction contemplated hereby or
thereby or (iii) compliance by the Purchaser with any of the provisions
hereof or thereof, will require any consent, approval or action of, or
require the Purchaser to make any filing with or give notice to, any
Governmental Body other than (x) immaterial consents, approvals, actions,
filings or notices, (y) consents, approvals, actions, filings or notices
that have been obtained, made or given prior to the date hereof, and (z) as
required by the HSR Act.
(D) Non-Contravention.
The execution and delivery of this Agreement by the Purchaser and the
execution and delivery of the other Transaction Documents contemplated
hereby by the Purchaser, and the consummation of the transactions
contemplated hereby and thereby and the performance by the Purchaser of
this Agreement and each of the other Transaction Documents in accordance
with their respective terms will not (i) violate any provision of the
Articles of Incorporation or By-Laws (or comparable organizational
instruments), in each case as amended, of the Purchaser or (ii) violate any
law, regulation, statute, injunction, order, arbitration award, judgment or
decree applicable to, against, or binding upon, the Purchaser or by which
any of the Purchaser's securities, business or property is bound.
(E) Compliance with Laws.
The Purchaser is in compliance with each, and is not in violation of
or default under, any law, rule, decree, regulation, ordinance or order,
the noncompliance with, violation of or default under which could
reasonably be expected to impair or affect the validity of this Agreement
or the other Transaction Documents or the ability of the Purchaser to
perform its obligations under this Agreement or the other Transaction
Documents or the transactions contemplated hereby or thereby.
(F) Litigation.
There are no actions, suits, demands, or claims or legal,
administrative or arbitral proceedings, hearings or investigations pending
or, to the Knowledge of the Purchaser, threatened against or involving the
Purchaser or any of its properties or assets, which, if adversely decided,
could reasonably be expected to impair or affect the validity of this
Agreement or prevent the consummation of the transactions contemplated
hereby. There are no outstanding orders, judgments, injunctions, awards or
decrees of any court, governmental or regulatory body or arbitration
tribunal against or involving the Purchaser, which could reasonably be
expected to impair or affect the validity of this Agreement or prevent the
consummation of the transactions contemplated hereby.
(G) Experience of the Purchaser.
The Purchaser has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
the transactions contemplated hereby.
(H) No Other Representations.
The Purchaser acknowledges that, except for the representations and
warranties of the Company and the Sellers contained in this Agreement and
the Exhibits and Schedules hereto and made a part hereof, (i) neither the
Company nor any Seller makes any representations or warranties, express or
implied and (ii) neither the Company nor any Seller makes any
representations and warranties with respect to (A) any projections,
predictions, forecasts, estimates or budgets (including the reasonableness
of the assumptions underlying such projections, predictions, forecasts,
estimates or budgets) made available to the Purchaser or its legal counsel,
accountants or advisors by any means or media (including, without
limitation, in connection with management presentations or any information
memoranda) or (B) information or documents (financial or otherwise) made
available to the Purchaser or its legal counsel, accountants or advisors
with respect to the Company.
Article III
ADDITIONAL AGREEMENTS OF THE PARTIES
3.1 Tax Return Filing.
(A) (i) From the date hereof to the Closing Date, the Sellers shall
cause the Company to (A) prepare, and the Company shall prepare, in a
manner consistent with past practices, and timely file all Tax Returns
required or intended to be filed by the Company with any Tax authority
prior to the Closing Date for Tax periods ending on or before the
Closing Date, (B) permit the Purchaser to review, no later than ten
(10) calendar days prior to the date (including extensions) on which
such Tax Return is required or intended to be filed, and comment on
each such Tax Return within such ten (10) calendar day period
(provided that if the Closing is scheduled to occur pursuant to
Section 1.4 prior to the end of such ten (10) calendar day period,
then the Sellers' Representative or the Purchaser shall be entitled to
delay the Closing until the end of such ten (10) calendar day period
by delivering notice thereof to the other party), and shall make such
revisions to such Tax Returns as are reasonably requested by the
Purchaser to the extent reasonably approved by the Sellers'
Representative, and (C) fully and timely pay all Taxes due and payable
in respect of such Tax Returns that are so filed.
(ii) Following the Closing Date, the Sellers shall (A) prepare,
or cause to be prepared, in a manner consistent with past practices,
all Tax Returns not otherwise filed pursuant to the Section 3.1(A)(i)
that are required to be filed by the Company with any Tax authority
following the Closing Date for Tax periods ending on or before the
Closing Date, (B) permit the Purchaser to review, no later than
fifteen (15) Business Days prior to the date (including extensions) on
which such Tax Return is required to be filed, and comment on each
such Tax Return, and shall make such revisions to such Tax Returns as
are reasonably requested by the Purchaser to the extent reasonably
approved by the Sellers' Representative, and (C) transmit to the
Purchaser for filing by the Purchaser each such revised Tax Return no
later than two (2) Business Days prior to the date (including
extensions) on which such Tax Return is required to be filed. The
Purchaser shall timely file all such Tax Returns as prepared by the
Sellers and the Purchaser shall fully and timely pay, or cause to be
fully and timely paid, all Taxes shown on such Tax Returns.
(iii) The Purchaser and the Company shall prepare and timely file
or cause to be prepared and timely filed any Tax Returns for the
Company for Tax periods that begin before the Closing Date and end
after the Closing Date and fully and timely pay, or cause to be fully
and timely paid, all Taxes owed by the Company for such periods. The
Purchaser and the Company shall permit the Sellers and their advisors
to review, no later than fifteen (15) Business Days prior to the date
(including extensions) on which such Tax Return is required to be
filed, and comment on each such Tax Return and shall make such
revisions to such Tax Returns as are reasonably requested by the
Sellers to the extent reasonably approved by the Purchaser.
(B) The Sellers shall cause the Company to properly reserve (and
reflect such reserve in its books and records and financial
statements), in accordance with past practice and in the ordinary
course of business, for all Taxes payable by the Company for which no
Tax Return is due on or before the Closing Date.
(C) The Sellers shall cause the Company to promptly notify the
Purchaser of any federal, state or foreign income or franchise and any
other suit, claim, action, investigation, proceeding or audit
(collectively, "Actions") pending against or with respect to the
Company in respect of any Tax matter, including, without limitation,
Tax liabilities and refund claims, and not settle or compromise any
such Tax matter or Action without the Purchaser's prior consent.
(D) The Sellers shall cause the Company not to make or revoke any
Tax election or adopt or change a tax accounting method without the
Purchaser's prior consent.
(E) The Sellers shall cause the Company not to amend any Tax
Return without the Purchaser's prior consent.
(F) The Sellers shall cause the Company to terminate all Tax
Sharing Agreements to which the Company is a party such that there is
no further Tax liability thereunder.
(G) The Purchaser, the Company, their Affiliates and the Sellers
shall cooperate fully, as and to the extent reasonably requested by
any other party hereto, in connection with the filing of Tax Returns
of the Company pursuant to this Section 3.1 and any audit, litigation
or other proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon such party's reasonable 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
Purchaser, the Company and their Affiliates agree (A) to retain all
books and records with respect to Tax matters pertinent to the Company
relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and any extensions
thereof) of the respective taxable periods, and to abide by all record
retention agreements entered into with any taxing authority, and (B)
to give the Sellers' Representative reasonable written notice prior to
transferring, destroying or discarding any such books and records and
if the Sellers' Representative so requests, the Purchaser, the Company
or their Affiliates, as the case may be, shall allow the Sellers'
Representative to take possession of such books and records.
(H) The Purchaser and the Sellers further agree, upon request, to
use their reasonable efforts to obtain any certificate or other
document from any Governmental Body or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including with respect to the transactions contemplated
hereby) provided, that, by requesting or obtaining any such
certificate or document any such Tax that could be imposed on the
Purchaser, the Company or the Sellers is not increased.
(I) All transfer, documentary, sales, use, stamp, registration
and other such Taxes and fees (including any penalties and interest)
incurred in connection with this Agreement, shall be paid one-half by
the Purchaser and one-half by the Sellers when due, and the party
required by applicable law will file all necessary Tax Returns and
other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and, if
required by applicable law, the other party or parties will join in
the execution of any such Tax Returns and other documentation. The
expense of such filings shall be paid one-half by the Purchaser and
one-half by Sellers.
3.2 Further Assurances.
At any time and from time to time after the Closing, each of the
parties agrees to cooperate with each other and to execute and deliver such
other documents, instruments of transfer or assignment, files, books and
records and do all such further acts and things as may be reasonably
required to carry out the transactions contemplated by this Agreement and
the other Transaction Documents.
3.3 Access to Records.
Prior to the Closing Date, the Purchaser shall be entitled, through
its employees, agents or authorized representatives, including, without
limitation, its counsel and accountants, to make such investigation of the
assets, properties, business, customers and operations of the Company, and
such examination of the books, records and financial condition of the
Company as the Purchaser deems appropriate. Any such investigation and
examination shall be conducted at reasonable times, with prior notice to,
and approval having been given by, the Company (such approval not to be
unreasonably withheld) and under reasonable circumstances and each Seller
shall, and shall cause the Company to, cooperate fully therein. No
investigation by the Purchaser shall diminish or obviate any of the
representations, warranties, covenants or agreements of the Company or any
Seller contained in this Agreement. In order that the Purchaser may have
full opportunity to make such business, accounting and legal review,
examination or investigation as it deems appropriate of the business and
affairs of the Company from the date hereof through the Closing Date, the
Sellers (i) shall furnish, and shall cause the Company to furnish, the
representatives of the Purchaser during such period with all such
information and copies of such documents concerning the affairs of the
Company as such representatives may reasonably request, (ii) shall provide
access, or cause the Company to provide access, to (A) the employees of the
Company who are in charge of the following functions (or the employees
designated by such employees): Contracts, Corporate Information Systems,
Human Resources, Legal, Finance, Tax and Accounting, and (B) such other
employees of the Company, as such representatives reasonably request,
provided that, in the case of this clause (B), the Purchaser or its
representatives shall provide the Sellers' Representative with email
notification of the time and place of any such discussion or meeting with
such other employees at least 24 hours prior to the time of such discussion
or meeting, the Sellers' Representative shall have promptly consented to
such discussion or meeting (such consent not to be unreasonably withheld or
delayed), and (iii) subject to clause (ii) above, shall cause the Company's
officers, employees, consultants, agents, accountants and attorneys to
cooperate fully with such representatives in connection with such review
and examination and to use reasonable best efforts to fully and completely
comply with all information requests by the Purchaser. The Sellers'
Representative or its designee(s), if requested by the Sellers'
Representative, may participate in any discussion or meeting contemplated
by clause (ii) of this Section 3.3, provided, however, that no such
discussion or meeting shall be delayed, postponed or cancelled other than
by the Purchaser if the Sellers' Representative or its designee(s) do not
elect to participate in such discussion or meeting at the time and place
specified in prior notice required to be given by the Purchaser with
respect to such discussion or meeting under Section 3.3(B). From the date
hereof, at the Purchaser's request, each Seller shall give the Purchaser
and its authorized representatives full access, during regular business
hours, to such Seller's records related to the Company located other than
in the possession of the Company, and shall permit the Purchaser to make
copies of any such documents as the Purchaser may reasonably request.
3.4 Preservation of Records.
Subject to Section 3.1(G), the Purchaser agrees that it shall preserve
and keep the books and records (hard copy, electronic or otherwise) of the
Sellers and the Company (including any successors thereto) related to the
Company and in the possession of the Company immediately following the
Closing for, a period of no less than five (5) years from the Closing Date
and shall make such records available to the Sellers' Representative at
reasonable times and under reasonable circumstances upon prior written
notice to the Purchaser, and allow the Sellers' Representative to make such
extracts and copies thereof, at the sole cost and expense of the Sellers,
as may be reasonably required by the Sellers in connection with (i) any
legal proceedings against or governmental investigations or audits of the
Sellers or any Tax examination of the Sellers, (ii) the verification by the
Sellers of any representations or warranties contained herein, or (iii)
indemnifying, defending or holding harmless the Purchaser in accordance
with the applicable provisions hereof. In the event the Purchaser wishes to
destroy such records after such five (5) year period, it shall first give
thirty (30) days prior written notice to the Sellers' Representative and
the Sellers' Representative shall have the right, upon prior written notice
given to the Purchaser within said thirty (30) day period, to take
possession, at the sole expense of the Sellers, of said records within
sixty (60) days after the date of the Sellers' Representative's notice to
the Purchaser hereunder. If the Sellers' Representative fails to take
possession of said records within such sixty (60) day period, the Purchaser
may destroy such records.
3.5 Confidentiality.
(a) From and after the date of this Agreement, in the event of
the consummation of the transaction contemplated hereby, each Seller
shall keep any and all information relating to the Company, its
business operations and prospects (including, but not limited to,
customer lists and related information), services and know-how
confidential and shall not disclose such information to any Person;
provided, however, such Seller may disclose such information that (a)
is or becomes publicly available other than by disclosure by any
Seller or any agent thereof, (b) such Seller is required to disclose
by law, government regulation or court order or in order to enforce
the terms of this Agreement, provided that in such a case, such Seller
will give the Purchaser adequate advance notice so that the Purchaser
may seek a protective order or take other reasonable actions to
preserve the confidentiality of such information or (c) in the case of
Xxxx Xxxxx only, is necessary for the performance of his duties as an
employee of the Company and/or the Purchaser following the Closing and
during the course of such employment; provided, that such disclosure
is consistent with the Purchaser's confidentiality policies. The
Confidentiality Agreement, dated March 22, 2002, between the Company,
the Sellers and the Purchaser (the "Confidentiality Agreement"), shall
continue to apply in full force and effect in accordance with the
terms thereof until the Closing, whereupon the Confidentiality
Agreement shall terminate.
(b) Notwithstanding anything herein to the contrary, to the
extent required by applicable law, any party to this Agreement (and
any employee, representative, or other agent of any party to this
Agreement) may disclose to any and all Persons, without limitation of
any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement, and all materials of any kind
(including opinions or other tax analyses) related to such tax
treatment and tax structure; provided, that this sentence shall not
permit any Person to disclose the name of, or other information that
would identify, any party to such transactions or to disclose
confidential commercial information regarding such transactions;
provided further, that this sentence shall not be effective with
respect to any Person until the earliest of (i) the date of a public
announcement (if any) of discussions relating to any such transaction
involving such Person, (ii) the date of a public announcement (if any)
of any such transaction involving such Person and (iii) the date of
the execution of a definitive agreement to enter into any such
transaction involving such Person, it being understood that there are
no limits at any time on the ability of any party to consult its own
independent tax advisor regarding the tax treatment or tax structure
of the transaction.
3.6 Efforts; Consents.
The Purchaser, the Company and each Seller agree to use all
reasonable efforts to take or cause to be taken all actions necessary,
proper or advisable to consummate the transactions contemplated in
this Agreement and the other Transaction Documents, and agree to make
a good faith effort to effect the Closing by the Closing Date
contemplated in Section 1.4. Without limiting the generality of the
foregoing, each of the parties hereto shall use all reasonable efforts
to obtain the authorizations, consents, Orders and approvals of any
Governmental Body or other Person, including without limitation,
approval under the HSR Act, that may be or become necessary for the
performance of its obligations pursuant to this Agreement and the
other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby and will cooperate fully in promptly
seeking to obtain such authorizations, consents, Orders and approvals
as may be necessary for the performance of their respective
obligations pursuant to this Agreement and the other Transaction
Documents; provided further that, with respect to filings required
under the HSR Act, the Purchaser, the Company and the Sellers agree to
use reasonable efforts to submit such filings within five (5) Business
Days of the date hereof but in no event shall such filings be
submitted later than ten (10) Business Days from the date hereof. None
of the parties hereto will take any action which will have the effect
of delaying, impairing or impeding the receipt of any required
regulatory approvals, including, without limitation, any approval
under the HSR Act, and each party hereto will use its reasonable
efforts to secure such approvals as promptly as possible. All fees and
expenses related to obtaining such authorizations, consents, Orders
and approvals shall be paid and apportioned in accordance with Section
5.2.
3.7 Ordinary Course of Business.
From the date hereof until the Closing Date, unless otherwise
agreed to by the Purchaser, the Company shall, and each Seller agrees
that it shall cause the Company to, (i) conduct the Company's business
and operations in the ordinary course and in substantially the same
manner in which the same have heretofore been conducted, (ii) to
preserve intact the business organization of the Company, and (iii)
use its reasonable best efforts to keep available the services of the
present officers, employees, consultants and agents of the Company and
maintain the present suppliers and customers of the Company and
preserve their goodwill. Without limiting the generality of the
foregoing, except as contemplated by this Agreement (including, but
not limited to, Section 3.24), during the period from the date of this
Agreement to the Closing Date, without the prior written consent of
the Purchaser, the Company shall not, and the Sellers shall cause the
Company not to:
(a) sell, lease, transfer, mortgage, encumber or otherwise
dispose of any material properties or assets, real, personal or mixed
(except in the ordinary course of business and consistent with past
practice);
(b) increase the rate of compensation of, or pay or agree to pay
any benefit to, officers or employees of the Company, except in the
ordinary course of business and consistent with past practice or as
may be required by any existing plan, agreement or arrangement,
including, without limitation, any Plan;
(c) except for the compensation (other than bonuses) to be paid
to Xxxx Xxxxx pursuant to his employment agreement with the Company
and amounts or benefits to be provided under the Xxxxxxxxx Xxxxx
Support Agreement, declare or make any distributions to any Seller,
whether in the form of dividend payments, bonus compensation or
otherwise;
(d) enter into, adopt or amend any Plan, or employment or
severance agreement relating to the Company, except in the ordinary
course of business and consistent with past practice or as required by
law, government regulation or court order;
(e) create or incur any indebtedness or liability other than in
the ordinary course of business and consistent with past practice, or
guarantee any debt or other liability of any other Person;
(f) alter the procedures of the Company regarding the collection
of Accounts Receivable or the payment of accounts or otherwise pay
accounts payable of the Company other than when due except in the
ordinary course of business and consistent with past practice;
(g) make any change, other than in the ordinary course of
business and consistent with past practice, with respect to accounting
policies or procedures of the Company;
(h) make any commitments for, make or authorize any capital
expenditures (other than direct purchases under contracts or
subcontracts) relating to the Company other than in amounts less than
$20,000 individually and $100,000 in the aggregate;
(i) settle, compromise, waive, release or assign any material
rights or claims whether concerning, affecting or relating to any
property, asset, Contract or otherwise to the Company;
(j) terminate or, other than in the ordinary course of business
and consistent with past practice, materially amend or modify any
Contract listed, or required to be listed, on Schedule 2.1(O) hereof;
(k) terminate, amend or modify the Amended Contingent Stock
Agreement or any Retention Agreement;
(l) undertake any action that would cause the representations set
forth in Section 2.1(F) to become untrue or incorrect; or
(m) agree, directly or indirectly, whether in writing or
otherwise, to do any of the foregoing.
Notwithstanding the foregoing provisions of this Section 3.7, the
Company shall, and each Seller agrees that it shall cause the Company,
to transfer to the Sellers prior to the Closing Date (i) the life
insurance policy for which Xxxx Xxxxx is the named insured and Xxxxx
Xxxxx is the named beneficiary, (ii) the life insurance policy for
which Xxxxxxxxx Xxxxx is the named insured and Xxxx Xxxxx is the named
beneficiary, (iii) the Avenel Golf Club membership, and (iv) all of
the Company's interest in Spectrum Health.
3.8 Insurance Proceeds; Litigation Rights.
In the event that any property owned or leased by the Company
suffers any damage, destruction or other casualty loss, and the
Closing occurs in accordance with the terms hereof, the Sellers shall
surrender to the Company and the Purchaser (a) all insurance proceeds,
if any, received by the Sellers with respect to such damage or loss
and (b) all rights, if any, of the Sellers with respect to any causes
of action, whether or not litigation has commenced on the Closing
Date, in connection with such damage or loss; provided, however, that
no Seller shall be required to surrender any insurance proceeds or
rights with respect to any such damage or loss incurred by such Seller
under any insurance policy owned by and paid for by such Seller.
Nothing in this Section 3.8 shall be construed to limit or prejudice
the Purchaser's rights and remedies under this Agreement, including,
without limitation, the Purchaser's right not to consummate the
transactions contemplated hereby if all of the conditions set forth in
Section 4.2 are not satisfied or waived, in the sole discretion of the
Purchaser.
3.9 Benefit Plans.
(a) Schedule 3.9(a) sets forth the names of those employees of
the Company whose employment shall be terminated by the Company at or
prior to the Closing Date other than in the ordinary course of
business. The Company shall pay each such employee in connection with
such employee's separation from employment an amount that is the
greater of (i) such amounts the Company is obligated to pay such
employee, as and when due, under any Retention Agreement with the
employee, and (ii) such amounts as may be payable to such employee
under the Company's standard severance policy.
(b) The Purchaser agrees that individuals who are employed by the
Company immediately prior to the Closing Date (other than the
individuals listed on Schedule 3.9(a)) shall remain employees of the
Company as of the Closing Date (each such employee, a "Company
Employee"); provided, however, that nothing contained herein shall
confer upon any Company Employee the right to continued employment by
the Company for any period of time after the Closing Date which is not
otherwise required by law or contract.
(c) The Purchaser agrees that the Company Employees shall receive
for a six (6) month period beginning on the Closing Date benefits that
are, in the aggregate, no less favorable than those benefits received
by the Company Employees immediately prior to the date hereof
(including, but not limited to, with respect to pre-existing
conditions under medical plans); provided, however, that nothing
contained herein shall confer upon any Company Employee the right to
continued participation in any particular Plan for any period of time
after the Closing Date which is not otherwise required by law or
contract.
3.10 Reporting.
For any Plan that is disclosed or required to be disclosed on
Schedule 2.1(M), the Sellers shall cause the Company to, and the
Company shall, prior to the Closing Date, (a) file any report,
schedule or other information that is or was required to be filed with
any Governmental Body on behalf of any such Plan prior to the Closing
Date, and (b) deliver to the Purchaser copies of all reports,
schedules or other information that is required to be filed by the
Company pursuant to this Section 3.10.
3.11 Employee Arrangements.
Subject to Section 3.9 hereof, to the extent that any Company
Employees are moved by the Purchaser to any employee benefit plan
maintained by the Purchaser, the Purchaser shall, or shall cause the
Company to, give such Company Employees full credit solely for the
purposes of eligibility and vesting (but not benefit accrual) under
such employee benefits plans for such Company Employee's service with
the Company or any Affiliate thereof to the same extent recognized
immediately prior to the Closing Date. Such full credit described in
the foregoing sentence shall include, but not be limited to, the
waiver of any pre-existing conditions under any such employee benefit
plans maintained by the Purchaser, if applicable, but only to the
extent such pre-existing conditions were satisfied under the plan in
which such Company Employee participated as of the Closing Date.
3.12 Litigation.
From the date hereof through the Closing Date, the Sellers shall
cause the Company to, and the Company shall, notify promptly the
Purchaser of any actions or proceedings of the type described in
Section 2.1(G)(i) that from the date hereof are commenced or, to the
Knowledge of any Seller or the Company, threatened against the Company
or any officer, director, employee, consultant, agent, shareholder or
other representative of the Company.
3.13 Agreements.
From the date hereof through the Closing Date, the Sellers shall
cause the Company to, and the Company shall, notify promptly the
Purchaser of any evidence of which the Sellers or the Company have
Knowledge that any party to a Contract listed, or required to be
listed, in Schedule 2.1(O) has terminated, diminished the scope of, or
failed to renew or intends to terminate, diminish the scope of or fail
to renew any such Contract or that any party has asserted or intends
to assert any claim under any such Contract.
3.14 Continued Effectiveness of Representations and
Warranties.
From the date hereof through the Closing Date, each of the Sellers
shall, and shall cause the Company to, conduct its business or affairs, as
the case may be, in such a manner so that the representations and
warranties contained in Section 2.1 shall continue to be true and correct
on and as of the Closing Date as if made on and as of the Closing Date;
provided, however, that any event, condition or circumstance (i) occurring
from the date hereof through the Closing Date, (ii) outside of the
reasonable control of the Sellers and the Company, and (iii) resulting in
any representations and warranties contained in Section 2.1 not continuing
to be true and correct on the Closing Date as if made on and as of the
Closing Date, shall not constitute a violation or breach by the Sellers and
the Company of this sentence. From the date hereof through the Closing
Date, the Sellers shall, and shall cause the Company to, promptly give
notice to the other parties of any event, condition or circumstance
occurring from the date hereof through the Closing Date that would
constitute a violation or breach by it or such other parties of this
Agreement. Notwithstanding the immediately preceding sentences, from the
date hereof through the Closing Date, the Company and the Sellers may
update the following Schedules for actions taken by the Company or events
occurring in the ordinary course of the Company's business, consistent with
past practices, and not violating the provisions of Section 3.7: Schedules
2.1(J)(ii)(a), 2.1(J)(ii)(b), 2.1(J)(ii)(c), 2.1(J)(ix)(a), 2.1(J)(xi),
2.1(J)(xv), 2.1(O), 2.1(S) (as it pertains to the first sentence of the
final paragraph thereof) and 2.1(W). The Company and the Sellers shall use
reasonable best efforts to promptly provide any such updated Schedule to
the Purchaser following the change(s) requiring such update.
3.15 Satisfaction of Conditions Precedent.
During the term of this Agreement, the parties hereto will use all
reasonable efforts to satisfy (or cause to be satisfied) all the conditions
precedent to their respective obligations. Without limiting the generality
of the foregoing, (i) Xxxx Xxxxx and the Purchaser shall, and the Purchaser
shall cause Anteon (as defined in Section 4.1(G)) to, execute and deliver
the Non-Competition Agreement (as defined in Section 4.1(G) below) at or
prior to the Closing, (ii) the Sellers shall cause the Company to, and the
Company shall, prior to the Closing, liquidate, dissolve and wind-up
EnviroSpectrum and (iii) the Sellers shall cause Xxxxxxxxx Xxxxx to execute
and deliver the letter referred to in Section 4.2(v).
3.16 Exclusivity.
As an inducement to the Purchaser to enter into this Agreement, and in
consideration of the time and expense which it has devoted and will devote
to the transactions contemplated hereby during such period, subsequent to
the execution of this Agreement and until the earlier of (a) the Closing
Date and (b) the termination of this Agreement in accordance with Article
VI, none of the Sellers nor the Company nor any of their respective
representatives (including, without limitation, any investment banker,
attorney or accountant retained or acting on behalf of the Company, any
Seller or any director, officer, shareholder or employee of the Company)
will, directly or indirectly, (i) initiate, solicit, encourage or respond
(other than a negative response) to any inquiry or proposal with respect to
a merger, consolidation, share exchange, business combination, liquidation,
dissolution or sale of all or a portion of the assets of the Company (other
than a sale of assets in the ordinary course of business and consistent
with past practice, as permitted by the terms of this Agreement or a sale
of Accounts Receivable in accordance with Section 3.24) or any purchase of
any of the outstanding shares of its capital stock (an "Acquisition
Proposal"), or (ii) enter into any discussions, negotiations or agreements
concerning an Acquisition Proposal with, or disclose any information
concerning the Company, its businesses or properties or afford any access
to its properties, books and records to, or otherwise assist or facilitate
any effort relating to an Acquisition Proposal, by any corporation,
individual, partnership, limited liability company, association, trust,
person or other entity or group (each, a "Person"). The Sellers and the
Company will immediately cease any existing discussions with any Persons
concerning any Acquisition Proposal.
3.17 Related Parties.
Except as otherwise contemplated by this Agreement (including, without
limitation, by Section 3.19) and disclosed on Schedule 3.17: (a) the
Sellers shall, immediately prior to the Closing, cancel, pay or cause to be
paid to the Company all amounts owed to the Company by the Sellers, their
relatives or any of their respective Affiliates, including any notes
receivable held by the Company; and (b) at and as of the Closing, any
amounts owed by the Company to any of the Sellers, their relatives or any
of their respective Affiliates shall be canceled or paid. The parties agree
that in connection with the Closing, each of the Sellers, on the one hand,
and the Company, on the other hand, shall execute and deliver the mutual
release, substantially in the form attached hereto as Exhibit F (the
"Mutual Release").
3.18 Termination of Agreements.
(a) Except as otherwise contemplated by this Agreement
(including, without limitation, by Section 3.19) and disclosed on
Schedule 3.18, the Sellers shall, prior to the Closing, terminate or
cause to be terminated all contracts or other agreements between the
Company, on the one hand, and the Sellers, their relatives or any of
their respective Affiliates, on the other hand, including, without
limitation, the Employment Agreement (the "Xxxx Xxxxx Employment
Agreement"), dated May 1, 2000, between the Company and Xxxx Xxxxx and
the Agreement (the "Xxxxxxxxx Xxxxx Support Agreement"), dated May 11,
1994, between the Company and Xxxxxx Xxxxx which provides for monthly
payments to Xxxxxxxxx Xxxxx in the amount of $12,500, and the Company
shall retain no obligations under such contracts or other agreements.
Additionally, as of or prior to Closing, the Sellers and the Company
shall cause to be terminated the consulting agreement or arrangement
between the Company and Xxx Xxxx (the "Xxx Xxxx Consulting
Arrangement") which provides for monthly payments to Xxx Xxxx in the
amount of $1,000, and the Company shall retain no obligations under
such agreement or arrangement.
(b) The Purchaser shall cause the Company to continue to offer
Xxxx Xxxx COBRA benefits under the Company's health benefit plan from
and after the Closing Date through December 31, 2004 on the same terms
that the Company currently offers such COBRA health benefits to Xxxx
Xxxx and Sellers shall have no obligations relating to such matter.
3.19 Payment of Bonuses.
Except as otherwise provided for herein, at or before the Closing, the
Sellers shall make a capital contribution to the Company, in the form of
cash or promissory notes (which promissory notes shall be paid in full by
the Sellers at the Closing) in the amount equal to the sum of (a)
$3,100,000, which constitutes the aggregate of all amounts due to
executives of the Company under the Amended Contingent Stock Agreement, and
(b) $1,730,000, which constitutes a portion of all amounts due to
executives or other employees of the Company under the Retention
Agreements, provided, however, that the Sellers will not be obligated to
provide to the Company $500,000 of the amounts due to Xxxx Xxxxxx under his
Retention Agreement with the Company, which $500,000 payable to Xxxx Xxxxxx
is to be paid out of the Company's working capital. The Company (and not
the Sellers) shall pay, and the Purchaser shall cause the Company to pay,
on the first anniversary of the Closing Date for its own account, the
balance of the retention payments due on such date under the Retention
Agreements (including, without limitation, the balance of the retention
payments due to Xxxx Xxxxxx under his Retention Agreement, such balance not
to exceed $650,000), the aggregate amount of such payments on the first
anniversary of the Closing Date not to exceed $1,500,000.
3.20 Shareholder Approval.
Prior to the Closing, the Sellers shall approve a resolution of the
shareholders of the Company, approving any agreement which provides for any
bonus payment to an executive or other employee of the Company, as the case
may be. Such approval of all such agreements is intended to exclude all
payments made under such agreements from the application of Section 280G of
the Code, and shall be made in accordance with the shareholder approval
provisions of Section 280G of the Code and the proposed regulations issued
thereunder.
3.21 SEC Compliance.
From and after the date hereof, the Sellers shall, and shall cause the
Company to, provide reasonable support with respect to any Securities and
Exchange Commission filing requirements with which the Purchaser may need
to comply, or prepare for compliance, on or before the Closing Date, such
support to include, but not be limited to, granting Purchaser and its
representatives reasonable access to the Company's books and records in
accordance with Section 3.3 hereof, and engaging Sellers' Auditors, at the
Purchaser's sole cost and expense, to provide such services as the
Purchaser may reasonably request.
3.22 Reserve for Health Benefit Plan Claims.
From and after the date hereof through the date of delivery of the
Estimated Closing Statement, the Sellers may increase the amount of the
reserve recorded on the books of the Company for health benefit plan claims
(as set forth in Section 2.1(E)(iii)(a)) in a manner consistent with the
basis upon which the amount of such reserve was established in the Balance
Sheet, provided, that such increase reflects the operations of the Company
from the date hereof through the date of delivery of the Estimated Closing
Statement and Sellers' Auditors issue the Agreed Upon Procedures Report
related to the establishment of such reserve.
3.23 Reserve for Rate Overruns.
From and after the date hereof through the date of delivery of the
Estimated Closing Statement, the Sellers may increase the amount of the
reserve recorded on the books of the Company for rate overruns (as set
forth in Section 2.1(E)(iii)(b)) in a manner consistent with the basis upon
which the amount of such reserve was established in the Balance Sheet,
provided, that such increase reflects the operations of the Company from
the date hereof through the date of delivery of the Estimated Closing
Statement and Sellers' Auditors issue the Agreed Upon Procedures Report
related to the establishment of such reserve.
3.24 Sale of Accounts Receivable.
From the date hereof through the Closing Date, the Company may sell,
transfer or assign on a non-recourse basis its Accounts Receivable solely
for the purpose of eliminating, and to the extent necessary to eliminate,
any and all Debt of the Company as of the Closing Date. The terms and
conditions of any such sale, transfer or assignment on a non-recourse basis
of Accounts Receivable shall be subject to and consistent with the terms
and conditions set forth in the commitment letter obtained by the Company
on or prior to the date hereof, a true, complete and correct copy of which
has been previously delivered to, and found reasonably acceptable by, the
Purchaser.
3.25 Stock Options for Company Senior Executives.
At the first regularly scheduled meeting of the board of directors of
the Purchaser following the Closing, or at the second regularly scheduled
meeting of the board of directors of the Purchaser following the Closing,
as is designated on Schedule 3.25, senior management of the Purchaser shall
recommend to such board of directors grants of stock options to purchase
the common stock of the Purchaser to the key employees of the Company
listed on Schedule 3.25.
3.26 Accounts Receivable Reserve.
The parties agree that, prior to the date of delivery of the Estimated
Closing Statement, the Company shall increase the amount of the reserve
recorded on the books of the Company with respect to the uncollectibility
of Accounts Receivable (as set forth in Section 2.1(E)(iii)(c)) to
$500,000.
3.27 Escrow Agreement Fees and Expenses.
The Sellers agree to pay the Purchaser one-half (1/2) of all the fees
and expenses payable by the Purchaser under and in accordance with the
Escrow Agreement promptly upon receipt of an invoice therefor from the
Purchaser.
Article IV
CONDITIONS TO CLOSING
4.1 Conditions to Obligations of the Sellers.
The obligations of the Sellers to consummate the transactions
contemplated by this Agreement, including without limitation, the sale of
Shares to be sold hereunder are, at the option of the Sellers'
Representative, subject to the fulfillment or waiver, prior to or on the
Closing Date, of each of the following conditions:
(A) Regulatory Authorizations.
All authorizations, consents, orders and approvals of federal and
state regulatory bodies and officials necessary for the consummation by the
Sellers of the sale and purchase of the Shares hereunder shall have been
obtained, and there shall be in effect no preliminary or permanent
injunction or other order of a court or governmental or regulatory agency
of competent jurisdiction directing that any of the transactions
contemplated herein not be consummated (collectively, an "Order").
(B) Representations and Warranties; Covenants and Agreements.
The representations and warranties of the Purchaser contained in this
Agreement that are qualified by materiality shall be true and correct, and
the representations and warranties of the Purchaser, contained in this
Agreement that are not so qualified shall be true and correct in all
material respects, in each case, at the date hereof (except to the extent
cured to the Sellers' Representative's reasonable satisfaction prior to the
Closing Date) and at and as of the Closing Date, with the same force and
effect as if made at and as of the Closing Date, except to the extent such
representations and warranties are expressly given as of a particular date
and relate solely to a particular date or period, and the Purchaser shall
have performed or complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by
it on or prior to the Closing Date.
(C) Certificate.
The Purchaser shall have delivered to the Sellers' Representative a
certificate, dated the Closing Date, duly executed by an officer of the
Purchaser to the effect that the conditions specified in paragraphs (A) and
(B) of this Section 4.1 have been satisfied.
(D) HSR Act Filing.
Any Person required in connection with the contemplated transactions
to file a notification and report form in compliance with the HSR Act shall
have filed such form and the applicable waiting period with respect to each
such form (including any extension thereof by reason of a request for
additional information) shall have expired or been terminated.
(E) Escrow Agreement.
The Purchaser and the Escrow Agent shall have executed and delivered
to the Sellers' Representative the Escrow Agreement.
(F) Payment of Closing Payment.
The Purchaser shall have delivered the Purchase Price in accordance
with Section 1.2.
(G) Xxxx Xxxxx Non-Competition Agreement.
Anteon Corporation, a Virginia corporation ("Anteon") and a
wholly-owned subsidiary of the Purchaser, shall have executed and delivered
the non-competition agreement (the "Non-Competition Agreement"), by and
between Anteon and Xxxx Xxxxx, substantially in the form attached hereto as
Exhibit D, and the Purchaser or Anteon shall have made any payments to Xxxx
Xxxxx that are required to be made as of the Closing Date under the
Non-Competition Agreement.
(H) Xxxx Xxxxx Compensation Letter.
The Purchaser shall have executed and delivered a letter (the "Xxxx
Xxxxx Compensation Letter"), substantially in the form attached hereto as
Exhibit E, setting forth the salary to be paid to and the target bonus to
be established for Xxxx Xxxxx by the Company from and after the Closing
Date, and the number of options to purchase common stock of the Purchaser
that the senior management of the Purchaser will recommend to the board of
directors of the Purchaser, at its next regularly scheduled meeting
following the Closing, to grant to Xxxx Xxxxx on the date of such meeting.
(I) Reimbursement of Expenses.
The Purchaser shall have reimbursed the Company for (a) all reasonable
costs and expenses incurred by the Company in connection with Sellers'
Auditors' review of the Interim Financials and (b) $8,008 in connection
with certain expenses incurred by the Company in connection with Sellers'
Auditors' review of the Audited Financials for the Company's fiscal year
2002.
4.2 Conditions to Obligation of the Purchaser.
The obligation of the Purchaser to consummate the transactions
contemplated by this Agreement, including, without limitation, the purchase
of the Shares hereunder is subject, at its option, to the fulfillment or
waiver, prior to or on the Closing Date, of each of the following
conditions:
(A) Regulatory Authorizations.
All authorizations, consents, orders and approvals of federal and
state and regulatory bodies and officials necessary for the performance by
the Purchaser of this Agreement and the consummation of the sale and
purchase of the Shares hereunder shall have been obtained and there shall
be no Order in effect.
(B) Representations and Warranties; Covenants and Agreements.
The representations and warranties of the Company and each Seller
contained in this Agreement that are qualified by materiality (including,
without limitation, by a Company Material Adverse Effect requirement) shall
be true and correct, and the representations and warranties of the Company
and each Seller contained in this Agreement that are not so qualified by
materiality (including, without limitation, by a Company Material Adverse
Effect requirement) shall be true and correct in all material respects, in
each case, at the date hereof (except to the extent cured to the
Purchaser's reasonable satisfaction prior to the Closing Date) and at and
as of the Closing Date (taking into account any update, in accordance with
Section 3.14, of any applicable Schedules), with the same force and effect
as if made at and as of the Closing Date, except to the extent such
representations and warranties are expressly given as of a particular date
and relate solely to a particular date or period, and the Company and the
Sellers shall have performed or complied in all material respects with all
covenants and agreements required by this Agreement to be performed or
complied with by any of them on or prior to the Closing Date.
(C) HSR Act Filing.
Any Person required in connection with the contemplated transactions
to file a notification and report form in compliance with the HSR Act shall
have filed such form and the applicable waiting period with respect to each
such form (including any extension thereof by reason of a request for
additional information) shall have expired or been terminated.
(D) Consents.
(i) All consents, permits and approvals from parties to Contracts with
the Company or with any Seller (a) that may be required in connection with
the performance by the Company or any Seller of their respective
obligations under this Agreement or the other Transaction Documents and,
with respect to consents, permits and approvals from parties to Contracts
with the Company listed or required to be listed on Schedule 2.1(O), the
continuance of such Contracts after the Closing in accordance with the
terms of such Contracts or (b) with respect to consents, permits and
approvals from parties to Contracts with the Sellers or parties to
Contracts with the Company listed or required to be listed on Schedule
2.1(O), the failure to obtain would violate, conflict with or result in the
breach of any of the material terms and conditions of, result in a material
modification of the effect of, otherwise cause the termination of or give
any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default under, any such
Contract, shall have been obtained and be in full force and effect, and the
Purchaser shall have been furnished with evidence reasonably satisfactory
to it that such consents, permits and approvals have been obtained and are
in full force and effect.
(ii) The approval of the shareholders of the Company required by
Section 3.20 shall have been obtained, and the Purchaser shall have been
furnished with evidence reasonably satisfactory to it that such approval
and any other approvals of such shareholders or the board of directors of
the Company necessary for the consummation of the transactions contemplated
by this Agreement and the other Transaction Documents have been obtained.
(E) No Company Material Adverse Effect.
There shall not have been (i) any Company Material Adverse Effect or
(ii) other than war or acts of terrorism, any event, change or effect that
is or could reasonably be expected to be materially adverse to the
Government information technology services industry in which the Purchaser
or the Company conducts its business from the date hereof to the Closing
Date. However, any decline in the stock market valuation of the Purchaser
that is not the result of any event, change or effect that is or could
reasonably be expected to be materially adverse to the Government
information technology services industry in which the Purchaser conducts
its business shall not be, or be deemed to be, a Company Material Adverse
Effect.
(F) Certificate.
The Company and the Sellers shall each have delivered to the Purchaser
a certificate, dated the Closing Date, duly executed by such Person or an
officer of such Person, to the effect that the conditions specified in
paragraphs (A) through (E) of this Section 4.2 have been satisfied.
(G) Opinion of Counsel to the Sellers and the Company.
The Purchaser shall have received the opinion of Holland & Knight LLP,
counsel to the Company and the Sellers, dated the date of the Closing,
addressed to the Purchaser, substantially in the form attached hereto as
Exhibit G. (H) Delivery of Stock Certificates. The Sellers shall have
delivered to the Purchaser at the Closing stock certificates representing
all of the Shares free and clear of all Liens and restrictive legends, duly
endorsed in blank or accompanied by stock powers duly executed in blank, in
proper form for transfer.
(I) Resignations and Appointments.
The resignations of the directors of the Company except for Xxxx Xxxxx
shall have been delivered to the Purchaser (such resignations to be effective
immediately upon the Closing), and the individuals designated by the Purchaser
in writing to the Sellers' Representative no less than two (2) Business Days
prior to the Closing Date shall have been elected, effective immediately upon
the Closing, to the board of directors of the Company. The resignations of such
officers of the Company which have been previously requested in writing by the
Purchaser to the Sellers' Representative no less than two (2) Business Days
prior to the Closing Date shall have been delivered to the Purchaser (such
resignations to be effective immediately upon the Closing).
(J) Escrow Agreement.
The Sellers, the Sellers' Representative and the Escrow Agent shall have
duly executed and delivered the Escrow Agreement.
(K) Termination of Agreements.
The Purchaser shall have received evidence satisfactory to it of the
termination of all Contracts required to be terminated pursuant to Sections 3.17
and 3.18, including, without limitation, the Xxxx Xxxxx Employment Agreement,
and the Xxxxxxxxx Xxxxx Support Agreement, and of the release of any obligations
of the Company under such Contracts. In addition, the Purchaser shall have
received evidence that the Company has provided notice to Xxx Xxxx terminating
the Xxx Xxxx Consulting Arrangement.
(L) Landlord Consents.
With respect to each Real Property Lease set forth on Schedule 4.2(L), the
Purchaser shall have received any consent of the landlord required under such
Real Property Lease in connection with the consummation of the transactions
contemplated herein.
(M) FIRPTA Affidavit.
At the Closing, the Purchaser shall have received an affidavit from each
Seller, sworn to under penalty of perjury, setting forth such Seller's name,
address and federal tax identification number and stating that such Seller is
not a "foreign person" within the meaning of Section 1445 of the Code. If, on or
before the Closing, the Purchaser shall not have received such affidavit, the
Purchaser may withhold from the Initial Payment at Closing to the Sellers
pursuant hereto such sums as are required to be withheld therefrom under Section
1445 of the Code.
(N) Bonus Payments.
Prior to the Closing, the Sellers shall have made to the Company (from the
Sellers' account and not from that of the Company) the capital contribution
required to be made by the Sellers pursuant to Section 3.19, and the Purchaser
shall have been furnished with evidence reasonably satisfactory to it that such
capital contribution has been made (and in the event such capital contribution
was in the form of promissory notes, that such promissory notes have been paid
in full at or prior to the Closing) and that the payments under the Amended
Contingent Stock Agreement and the Retention Agreements required to be made at
or prior to the Closing have been or are being made.
(O) Xxxx Xxxxx Non-Competition Agreement.
Xxxx Xxxxx shall have duly executed and delivered the Non-Competition
Agreement.
(P) Increase in Reserve for Health Benefit Plan Claims.
The Company shall have delivered to the Purchaser evidence reasonably
satisfactory to the Purchaser to confirm any increase in accordance with Section
3.22 of the amount of the reserve recorded on the books of the Company for
health benefit plan claims (as set forth in Section 2.1(E)(iii)(a)); it being
agreed and acknowledged by the Purchaser that the inclusion of such increase on
the Estimated Closing Statement accompanied by the Agreed Upon Procedures Report
from Sellers' Auditors related to the increase in such reserve shall constitute
evidence reasonably satisfactory to the Purchaser.
(Q) Increase in Reserve for Rate Overruns.
The Company shall have delivered to the Purchaser evidence reasonably
satisfactory to the Purchaser to confirm any increase in accordance with Section
3.23 of the amount of the reserve recorded on the books of the company for rate
overruns (as set forth in Section 2.1(E)(iii)(b)); it being agreed and
acknowledged by the Purchaser that the inclusion of such increase on the
Estimated Closing Statement accompanied by the Agreed Upon Procedures Report
from Sellers' Auditors related to the increase in such reserve shall constitute
evidence reasonably satisfactory to the Purchaser.
(R) Increase in Accounts Receivable Reserve.
The Company shall have delivered to the Purchaser evidence reasonably
satisfactory to the Purchaser to confirm the increase in accordance with Section
3.26 of the amount of the reserve recorded on the books of the Company with
respect to the uncollectibility of Accounts Receivable (as set forth in Section
2.1(E)(iii)(c)); it being agreed and acknowledged by the Purchaser that the
inclusion of such increase on the Estimated Closing Statement shall constitute
evidence reasonably satisfactory to the Purchaser.
(S) Liquidation, Dissolution and Winding-Up of EnviroSpectrum.
The Company shall have delivered to the Purchaser evidence reasonably
satisfactory to the Purchaser confirming the liquidation, dissolution and
winding-up of EnviroSpectrum.
(T) Spectrum Health.
The Sellers shall have delivered to the Purchaser reasonably satisfactory
evidence to the Purchaser that all the capital stock of Spectrum Health held by
the Company has been transferred to Xxxx Xxxxx.
(U) Liens.
The Sellers shall have made available to the Purchaser such documents and
instruments as may reasonably be required to demonstrate that, effective as of
the Closing Date, all of the properties and assets of the Company are released
from any and all Liens, other than (i) Liens for Taxes not yet due and payable
and (ii) Liens that do not materially interfere with the use of the properties
or assets by the Company and which do not impair the value of such properties or
assets, but excluding any Liens relating to Debt.
(V) Beneficiary Letter.
The Sellers shall have delivered to the Purchaser a letter, dated the
Closing Date, duly executed by Xxxx and Xxxxxxxxx Xxxxx and addressed to the
Purchaser, pursuant to which Xxxx and Xxxxxxxxx Xxxxx acknowledge and agree, as
the sole beneficiaries of the Xxxxxxxxx Xxxxx ISI Trust and the sole
beneficiaries of the Credit Equivalent Trust who are entitled to receive stock
of the Company and the proceeds therefrom, to (i) the allocation of the Purchase
Price among the Sellers, as set forth in Schedule 1.2, (ii) the allocation of
the Purchase Price to the Escrow Account and (iii) the indemnification
obligations of the Sellers pursuant to this Agreement and the Escrow Agreement,
such letter to be in form and substance reasonably satisfactory to the
Purchaser.
Article V
FEES RELATING TO THIS TRANSACTION
5.1 Brokerage Fees .
Except for the commission and fees of the Windsor Group LLC which will be
paid by the Sellers, the Sellers and the Company represent and warrant to the
Purchaser that no broker, finder, agent or similar intermediary has acted on
behalf of the Company or any Seller in connection with this Agreement or the
transactions contemplated hereby, and that there are no brokerage commissions,
finders' fees or similar fees or commissions payable in connection therewith
based on any agreement, arrangement or understanding with the Company or any of
the Sellers, or any action taken by the Company or any of the Sellers. The
Purchaser represents and warrants to the Sellers that no broker, finder, agent
or similar intermediary has acted on behalf of the Purchaser in connection with
this Agreement or the transactions contemplated hereby, and that there are no
brokerage commissions, finders' fees or similar fees or commissions payable in
connection therewith based on any agreement, arrangement or understanding with
the Purchaser or any action taken by the Purchaser. Each such party agrees to
indemnify and save the other harmless from any claim or demand for commission or
other compensation by any broker, finder, agent or similar intermediary claiming
to have been employed by or on behalf of such party, and to bear the cost of
legal expenses incurred in defending against any such claim.
5.2 Other Fees and Expenses.
Except as otherwise provided in this Agreement, the parties to this
Agreement shall bear their respective fees and expenses incurred in connection
with the preparation, execution and performance of this Agreement and the
transactions contemplated hereby, including, without limitation, all fees and
expenses of attorneys, consultants, investment bankers, auditors and other third
party advisors incurred in connection with the preparation, execution and
performance of this Agreement and the transactions contemplated hereby,
provided, however, the filing fee for any filing under the HSR Act will be paid
one-half (1/2) by the Purchaser and one-half (1/2) by the Sellers at the time
such filing is made and provided, further that the Purchaser shall reimburse the
Company (i) for all reasonable costs and expenses incurred by the Company in
connection with Sellers' Auditors' review of the Interim Financials and (ii)
$8,008 in connection with certain expenses incurred by the Company in connection
with Sellers' Auditors' review of the Audited Financials for the Company's
fiscal year 2002 within thirty (30) days of the Purchaser's receipt of an
invoice from the Company therefor, but in any event on or before the Closing.
For purposes of clarifying the foregoing, expenses of the Sellers and the
Company shall be paid by the Sellers out of the proceeds of the sale for the
Sellers' own account and not otherwise charged or expensed to, or paid by, the
Company; provided, however, that the Sellers may cause the Company to pay
transactional expenses solely of the type described herein in an aggregate
amount not to exceed $250,000, and any such excess amount shall be borne solely
by the Sellers and not otherwise charged or expensed to the Company. For further
clarification, all reasonable costs and expenses incurred by the Company in
connection with any audit, review or preparation of any Tax Return of the
Company or other Tax filing of the Company relating to (i) the Company's fiscal
year ending November 30, 2002 and (ii) the period beginning December 1, 2002 and
ending on the Closing Date shall be borne by the Company and not the Sellers and
shall not be subject to the limitation set forth in the previous sentence.
Article VI
TERMINATION
6.1 Termination.
Notwithstanding anything in this Agreement to the contrary, this Agreement
may be terminated prior to the Closing as follows:
(a) by the mutual written consent of the parties to this
Agreement;
(b) by the Sellers' Representative, or the Purchaser, by notice
to the other, if, for any reason, the Closing has not
occurred prior to 11:59 p.m. on June 15, 2003 other than by
reason of a material breach of this Agreement by any Seller
or the Company, with respect to a termination by the
Sellers' Representative, or by the Purchaser, with respect
to a termination by the Purchaser;
(c) at the election of the Sellers' Representative, if the
Purchaser has breached any representation, warranty,
covenant or agreement contained in this Agreement that is
qualified by materiality, or if the Purchaser has breached
in any material respect any representation, warranty,
covenant or agreement contained in this Agreement that is
not so qualified, which breach has not been cured on or
prior to ten (10) days following delivery of written notice
of such breach by the Sellers' Representative to the
Purchaser;
(d) at the election of the Purchaser, if any Seller or the
Company has breached any representation, warranty, covenant
or agreement contained in this Agreement that is qualified
by materiality (including, without limitation, by a Company
Material Adverse Effect requirement), or if any Seller or
the Company has breached in any material respect any
representation, warranty, covenant or agreement contained in
this Agreement that is not so qualified, which breach has
not been cured on or prior to ten (10) days following
delivery of written notice of such breach by the Purchaser
to the Sellers' Representative; provided, however, that in
no event shall any update of any Schedule hereto permitted
under Section 3.14 be deemed to be or have caused any breach
of the representation or warranty contained herein to which
such updated Schedule relates;
(e) at the election of the Purchaser, if, between the date
hereof and the Closing Date, there has been a Company
Material Adverse Effect; or
(f) at the election of the Purchaser or the Sellers'
Representative, if any legal proceeding is commenced or
threatened by any Governmental Body directed against the
consummation of the transactions contemplated under this
Agreement and the Purchaser or the Sellers' Representative
reasonably and in good xxxxx xxxxx it impractical or
inadvisable to proceed in view of such legal proceeding or
threat thereof.
If this Agreement so terminates, it shall become null and void and have no
further force or effect except as provided in Section 6.2.
6.2 Effect of Termination; Expenses.
In the event of the termination of this Agreement pursuant to Section 6.1,
this Agreement shall thereafter become void and have no further force or effect,
except that the obligations provided for in this Section 6.2, Article V, the
confidentiality provision contained in the final sentence of Section 3.5(a) and
the Confidentiality Agreement referred to in such Section shall survive any such
termination of this Agreement. Except as provided herein, none of the parties
hereto shall have any liability in respect of the termination of this Agreement
except to the extent that the failure of a party to satisfy the conditions of
Article IV results from the material breach or violation of the representations,
warranties, covenants or agreements of such party under this Agreement, in which
case, except as otherwise set forth in this Section 6.2, the termination of this
Agreement will not prejudice any legal rights of any party whether those rights
arise under this Agreement or otherwise. Subject to the following proviso, to
the extent the failure of a party to satisfy the conditions of Article IV
results from the material breach or violation of the representations,
warranties, covenants or agreements of such party under this Agreement, the
breaching party's liability for damages in respect of the termination of this
Agreement shall be limited to actual compensatory damages and such breaching
party shall have no liability for any consequential, exemplary or punitive
damages; provided, however, to the extent the failure of a party to satisfy the
conditions of Article IV results from the willful breach or violation of the
representations, warranties, covenants or agreements of such party under this
Agreement, the termination of this Agreement will not prejudice any legal rights
of any other party under applicable law whether those rights arise under this
Agreement or otherwise, including, without limitation, the right to actual
compensatory damages and consequential, exemplary and punitive damages, to the
extent recoverable under applicable law. Notwithstanding the foregoing, the
consummation by any party of the transactions contemplated by this Agreement
shall not prejudice its rights to indemnification under Article V or VII.
Notwithstanding the foregoing, in the event of the termination of this
Agreement pursuant to Section 6.1(d) due solely to the non-fulfillment of the
condition set forth in clause (ii) of Section 4.2(E), the Purchaser shall
reimburse the Sellers and the Company for the actual reasonable costs and
expenses incurred by the Sellers and the Company in connection with this
Agreement and the transactions contemplated hereby; provided, that the amount of
such costs and expenses reimbursed to the Company and the Sellers shall not
exceed, in the aggregate, $350,000.
Article VII
INDEMNIFICATION
7.1 Indemnification by the Sellers.
The Sellers, jointly and severally, agree to indemnify, defend and hold
harmless the Purchaser and the Company (and their respective directors,
officers, employees, Affiliates, successors and assigns) (collectively, the
"Purchaser Parties") against, and hold the Purchaser Parties harmless from and
in respect of, any and all losses, liabilities, damages, deficiencies, costs,
expenses (including, without limitation, expenses of investigation and defense
and reasonable fees, disbursements and expenses of counsel incurred by the
Purchaser Parties in any action or proceeding (including, without limitation, an
action or proceeding to enforce the rights of the Purchaser Parties hereunder)
between the Purchaser Parties and the Sellers or between the Purchaser Parties
and any third party or otherwise), claims, Liens or other obligations of any
nature whatsoever (collectively, "Losses"), based upon, arising out of, or
otherwise in respect of or which are incurred by virtue of or result from (a)
(i) the inaccuracy in or breach of any representation or warranty made by the
Sellers or the Company, or (ii) the non-fulfillment by the Company or the
Sellers prior to the Closing and by the Sellers from and after the Closing, of
any unwaived covenant or agreement, in the case of (i) and (ii) above, as
contained in this Agreement or in any of the other Transaction Documents or in
any document or instrument delivered at the Closing pursuant hereto or thereto
or (b) enforcing the indemnification provided for hereunder.
7.2 Indemnification by the Purchaser.
The Purchaser agrees to indemnify the Sellers against and hold each Seller
harmless from and in respect of any and all Losses which are incurred by virtue
of or result from (a) (i) the inaccuracy in or breach of any representation or
warranty, or (ii) the non-fulfillment of any unwaived covenant or agreement, in
each case as made by or on behalf of the Purchaser in this Agreement or in any
of the other Transaction Documents or in any document or instrument delivered at
the Closing pursuant hereto or thereto or (b) enforcing the indemnification
provided for hereunder. The Purchaser shall have no right to seek contribution
from the Sellers with respect to all or any part of any of the Purchaser's
indemnification obligations under this Section 7.2.
7.3 Supplemental Indemnification by Each Seller.
(A) Supplemental ERISA Indemnification.
Each Seller, jointly and severally, agrees to indemnify and hold harmless
the Purchaser Parties with respect to any Losses incurred by any of the
Purchaser Parties based upon, arising out of or otherwise in respect of, the
Company's being affiliated prior to the date hereof, directly or indirectly,
under Code Section 414 or ERISA Section 4001 or any similar foreign law, with
the Sellers or any of their Affiliates. In addition, each Seller, jointly and
severally, agrees to indemnify and hold harmless the Purchaser Parties and their
Plans with respect to any and all Losses arising out of or otherwise in respect
of (i) any Plan that is not disclosed on Schedule 2.1(M), or any violation of
any reporting and disclosure rules or regulations, including, without
limitation, the failure to timely file any report, schedule, application for
determination, or any other information required to be reported, under ERISA or
the Code in respect of any Plan that is not disclosed on Schedule 2.1(M), (ii)
any violation of any reporting and disclosure rules or regulations, including,
without limitation, the failure to timely file any report, schedule, application
for determination, or any other information required to be reported, under ERISA
or the Code in respect of any Plan that is disclosed on Schedule 2.1(M) and
(iii) any failure to amend, within the time period required under the Code, any
Plan that is a tax-qualified retirement plan to qualify under Section 401(a) of
the Code. Notwithstanding anything to the contrary in Section 7.4, the
indemnification obligations set forth in clauses (ii) and (iii) of the second
sentence of this Section 7.3(A) shall be treated as ERISA Claims (as defined in
Section 7.4) for purposes of the survival provisions of Section 7.4, and the
indemnification obligations set forth in clause (i) of the second sentence of
this Section 7.3(A) shall survive the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and shall not be
subject to any time limitation. Notwithstanding anything to the contrary in
Section 7.5, the indemnification obligations set forth in clauses (ii) and (iii)
of the second sentence of this Section 7.3(A) shall be subject to the dollar
limitation in Section 7.5(a), the indemnification obligations set forth in
clause (i) of the second sentence of this Section 7.3(A) shall not be subject to
the dollar limitation in Section 7.5(a) and all indemnification obligations in
this Section 7.3(A) shall be subject to the dollar limitation in Section 7.5(c).
(B) Supplemental Contract Indemnification.
Each Seller, jointly and severally, agrees to indemnify and hold harmless
the Purchaser Parties with respect to any Losses incurred by any of the
Purchaser Parties based upon, arising out of or otherwise in respect of, any
government disallowance of incurred Direct Contract Costs (as defined in Section
8.1) and/or Indirect Costs (as defined in Section 8.1), including, without
limitation, any Losses arising out of DCAA (as defined in Section 8.1) incurred
cost audits of the Company for the Company's fiscal years 2001 and 2002. The
Purchaser agrees to make a good faith effort to cause the DCAA audits with
respect to the Company's fiscal years 2001 and 2002 to be conducted by DCAA's
Southern New Jersey branch office. Notwithstanding anything to the contrary in
Sections 7.4 and 7.5, all indemnification obligations in this Section 7.3(B)
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, and shall not be subject to any time
limitation, but shall be subject to the dollar limitations in Sections 7.5(a)
and 7.5(c).
(C) Supplemental Tax Indemnification.
(i) Each Seller, jointly and severally, agrees to indemnify the
Purchaser Parties for any liability for any Taxes imposed on the Company
(including without limitation, any underpayment penalties, as described in
Section 2.1(Q)(iv) or Schedule 2.1(Q) relating thereto and any Taxes
imposed by any foreign taxing authority on the employees of the Company)
pursuant to federal, state, local or foreign law attributable to any
periods or portions thereof ending on or before the Closing Date
("Pre-Closing Taxes") in excess of Taxes which are included as current
liabilities for purposes of computing Closing Net Working Capital.
In addition, if any Seller makes an indemnity payment of any amount
due under this Section 7.3(C)(i) (including, but not limited to, payments
made on the Sellers' behalf pursuant to the Escrow Agreement) and if the
Company or any of the Purchaser Parties actually realizes a reduction of
any Taxes imposed pursuant to federal, state, local or foreign law for any
periods after the Closing Date ("Post-Closing Taxes") as a direct result of
the circumstances giving rise to the Pre-Closing Taxes in respect of which
such indemnity payment is made, then the Purchaser shall pay the relevant
Seller(s) an amount equal to the lesser of (i) the amount of such actual
reduction in Post-Closing Taxes (which reduction for any period shall be an
amount equal to the excess, if any, of the aggregate Tax liability of the
Company or the applicable Purchaser Party if such circumstances did not
exist, over the aggregate Tax liability of the Company or the applicable
Purchaser Party taking such circumstances into account) and (ii) the
aggregate amount of all indemnification payments made under this Section
7.3(C)(i) less the amount of all prior payments made by the Purchaser under
this paragraph. The Purchaser agrees that it will cause the Company or the
applicable Purchaser Party to promptly give written notice to the Sellers
in the event that the Company or the applicable Purchaser Party realizes a
reduction that would give rise to a payment obligation under this
paragraph, which notice will describe in reasonable detail the computation
of such reduction. The parties agree to use their reasonable efforts to
negotiate in good faith an overall settlement that takes into account the
anticipated reduction of Post-Closing Taxes expected to be realized by the
Company or any Purchaser Party at the time that any claim respecting a
payment under this Section 7.3(C)(i) is made; provided, that neither party
shall be obligated to enter into such an overall settlement.
(ii) For purposes of this Agreement, in the case of any Taxes of the
Company that are payable with respect to any Tax period that begins before
and ends after the Closing Date (a "Straddle Period"), the portion of any
such Taxes that constitutes Pre-Closing Taxes shall: (i) in the case of
Taxes that are either (x) based upon or related to income or receipts, or
(y) imposed in connection with any sale, transfer or assignment or any
deemed sale, transfer or assignment of property (real or personal, tangible
or intangible) be deemed equal to the amount that would be payable if the
Tax year or period ended on the Closing Date; and (ii) in the case of Taxes
(other than those described in clause (i) above) that are imposed on a
periodic basis with respect to the business or assets of the Company or
otherwise measured by the level of any item, be deemed to be the amount of
such Taxes for the entire Straddle Period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the
immediately preceding Tax period) multiplied by a fraction the numerator of
which is the number of calendar days in the portion of the Straddle Period
ending on the Closing Date and the denominator of which is the number of
calendar days in the entire Straddle Period. For purposes of clause (i) of
the preceding sentence, any exemption, deduction, credit or other item that
is calculated on an annual basis shall be allocated to the portion of the
Straddle Period ending on the Closing Date on a pro rata basis determined
by multiplying the total amount of such item allocated to the Straddle
Period times a fraction, the numerator of which is the number of calendar
days in the portion of the Straddle Period ending on the Closing Date and
the denominator of which is the number of calendar days in the entire
Straddle Period. In the case of any Tax based upon or measured by capital
(including net worth or long-term debt) or intangibles, any amount thereof
required to be allocated under this Section 7.3(C) shall be computed by
reference to the level of such items on the Closing Date. All
determinations necessary to give effect to the foregoing allocations shall
be made in a manner consistent with past practice of the Company. The
parties hereto will, to the extent permitted by applicable law, elect with
the relevant Tax authority to treat a portion of any Straddle Period as a
short taxable period ending as of the close of business on the Closing
Date.
(iii) All indemnification obligations set forth in this Section 7.3(C)
shall be treated as Tax Claims (as defined in Section 7.4) for purposes of
the survival provisions of Section 7.4 and shall not be subject to any
dollar limitation, including, without limitation, those set forth in
Section 7.5.
(D) Township of Middletown, New Jersey Claim.
Each Seller, jointly and severally, agrees to indemnify and hold
harmless the Purchaser Parties with respect to any Losses incurred by any
of the Purchaser Parties arising out of or in connection with the claim
filed against the Company by the Township of Middletown, New Jersey with
the American Arbitration Association on November 5, 2001. Notwithstanding
anything to the contrary in Section 7.4 and 7.5, all indemnification
obligations in this Section 7.3(D) shall survive the execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby, and shall not be subject to any time or dollar limitation.
(E) Supplemental Health Benefit Plans Indemnification.
Each Seller, jointly and severally, agrees to indemnify and hold
harmless the Purchaser Parties with respect to any Losses incurred by any
of the Purchaser Parties based upon, arising out of or in connection with
any claims under the Company's health benefit plans arising from covered
services and treatments by appropriate medical providers that were provided
and performed prior to the Closing Date and any expenses related thereto,
to the extent that such Losses exceed the reserves therefor set forth in
Section 2.1(E)(iii)(a) (as such reserves may be increased prior to the date
of delivery of the Estimated Closing Statement in accordance with Section
3.22). Notwithstanding anything to the contrary in Section 7.4 and 7.5, all
indemnification obligations in this Section 7.3(E) shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and shall not be subject to any time
limitation, but shall be subject to the dollar limitations described in the
immediately preceding sentence and in Section 7.5(a) (to the extent such
Losses exceed the reserves therefor set forth in Section 2.1(E)(iii)(a), as
such reserves may be increased prior to the date of delivery of the
Estimated Closing Statement in accordance with Section 3.22) and Section
7.5(c).
(F) Supplemental Rate Overruns Indemnification.
Each Seller, jointly and severally, agrees to indemnify and hold
harmless the Purchaser Parties with respect to any Losses incurred by any
of the Purchaser Parties based upon, arising out of or in connection with
the Company's rate overruns for the Company's fiscal year 2002, to the
extent that such Losses exceed the reserves therefor set forth in Section
2.1(E)(iii)(b) (as such reserves may be increased prior to the date of
delivery of the Estimated Closing Statement in accordance with Section
3.23). Notwithstanding anything to the contrary in Section 7.4 and 7.5, all
indemnification obligations in this Section 7.3(F) shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and shall not be subject to any time
limitation, but shall be subject to the dollar limitations described in the
immediately preceding sentence and in Section 7.5(a) (to the extent such
Losses exceed the reserves therefor set forth in Section 2.1(E)(iii)(b), as
such reserves may be increased prior to the date of delivery of the
Estimated Closing Statement in accordance with Section 3.23) and Section
7.5(c).
(G) Supplemental Patent Infringement Indemnification.
Each Seller, jointly and severally, agrees to indemnify and hold
harmless the Purchaser Parties with respect to any Losses incurred by any
of the Purchaser Parties based upon, arising out of or otherwise in respect
of, the patent infringement claim referred to in paragraph 5 of Schedule
2.1(G)(i). Notwithstanding anything to the contrary in Sections 7.4 and
7.5, all indemnification obligations in this Section 7.3(G) shall survive
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and shall not be subject to any time
limitation or dollar limitations (including, without limitation, Section
7.5(a)) other than the dollar limitation in Section 7.5(c).
7.4 Survival of Representations and Warranties of the Sellers.
Notwithstanding any right of the Purchaser fully to investigate the
affairs of the Company and the Sellers and notwithstanding any knowledge of
facts determined or determinable by the Purchaser pursuant to such
investigation or right of investigation, the Purchaser has the right to
rely fully upon the representations and warranties of each of the Sellers
and the Company contained in this Agreement. All representations and
warranties of the parties hereto contained in this Agreement shall survive
the execution and delivery hereof and the Closing hereunder, and, except
for the representations and warranties made in Sections 2.1(A), 2.1(B),
2.1(C), 2.1(D), 2.2(A), 2.2(B) and 5.1 which shall survive without limit,
(a) with respect to any General Claim (as defined below), shall terminate
on the second (2nd) anniversary of the Closing, (b) with respect to any Tax
Claim, shall terminate on the later of (i) sixty (60) days following the
date upon which the liability to which any such Tax Claim may relate is
barred by all applicable statutes of limitation and (ii) sixty (60) days
following the date upon which any claim for refund or credit related to
such Tax Claim is barred by all applicable statutes of limitations, (c)
with respect to any ERISA Claim, shall terminate sixty (60) days following
the date upon which the liability to which any such ERISA Claim may relate
is barred by all applicable statutes of limitation, and (d) with respect to
any Environmental Claim (as defined below), shall terminate on the fifth
(5th) anniversary of the Closing Date, unless, in the case of clauses (a),
(b), (c) and (d) above, the party asserting such claim shall have given
notice on or prior to such date, to the party against which such claim is
asserted.
As used in this Agreement, the following terms have the following
meanings: (a) "General Claim" means any claim (other than a Tax Claim, an
ERISA Claim, an Environmental Claim or claim based upon, arising out of or
otherwise in respect of, Sections 2.1(A), 2.1(B), 2.1(C), 2.1(D) and 5.1)
based upon, arising out of or otherwise in respect of, any inaccuracy in or
any breach of any representation or warranty of any Sellers or the Company
contained this Agreement or any breach of any covenant or agreement of the
Sellers and the Company contained in Section 3.7, (b) "Tax Claim" means any
claim based upon, arising out of or otherwise in respect of, any inaccuracy
in or any breach of any representation or warranty of any Sellers or the
Company contained in this Agreement related to Taxes, including, without
limitation, Section 2.1(Q) and any claim for Losses pursuant to Section
7.3(C), (c) "ERISA Claim" means any claim based upon, arising out of or
otherwise in respect of, any inaccuracy in or any breach of any
representation or warranty of any Sellers or the Company contained in this
Agreement related to any Plan, including, without limitation, Section
2.1(M) and any claim for Losses pursuant to clauses (ii) and (iii) of the
second sentence of Section 7.3(A), and (d) "Environmental Claim" means any
claim based upon, arising out of or otherwise in respect of, any inaccuracy
in or any breach of any representation or warranty of any Seller contained
in Section 2.1(S). Except as otherwise expressly provided herein, the
covenants and agreements contained in this Agreement shall survive the
execution and delivery hereof and the consummation of the transactions
contemplated hereby.
7.5 Certain Limitations on Indemnification Obligations.
(a) The Purchaser Parties shall not be entitled to receive any
indemnification payments under:
(i) Section 7.1(a) in connection with the inaccuracy in or breach
of any representation or warranty, except those based upon, arising
out of or otherwise in respect of Sections 2.1(A), 2.1(B), 2.1(C),
2.1(D), 2.1(G)(ii), 2.1(Q) and 5.1 (the "Basket Exclusions"); and
(ii) clauses (ii) and (iii) of the second sentence of Section
7.3(A) and Sections 7.3(B), 7.3(E) and 7.3(F),until the aggregate
amount of Losses incurred by the Purchaser Parties, exclusive of the
Basket Exclusions, equal $600,000 (the "Basket Amount"), whereupon the
Purchaser shall be entitled to receive in full indemnity payments in
excess of the Basket Amount; provided, however, that solely for
purposes of determining whether the amount of the Sellers'
indemnification obligations exceeds the Basket Amount, a breach of the
Sellers' and the Company's representations or warranties shall be
determined without regard to any limitation or qualification as to
materiality or Company Material Adverse Effect (or similar concept)
set forth in such representation or warranty.
(b) Notwithstanding the provisions of Section 7.5(a), the Purchaser
Parties shall be entitled to receive any indemnification payments in
respect of the Basket Exclusions without regard to the individual or
aggregate amounts thereof and without regard to whether the aggregate of
all other indemnification payments shall have exceeded, in the aggregate,
the Basket Amount.
(c) The maximum amount of indemnification payments under Section
7.1(a) to which the Purchaser Parties shall be entitled to receive in
connection with the inaccuracy in or breach of any representation or
warranty (excluding those based upon, arising out of or otherwise in
respect of, the Basket Exclusions) and under Sections 7.3(A), 7.3(B),
7.3(E), 7.3(F) and 7.3(G), shall not exceed $24,000,000, in the aggregate,
including any amounts paid out under the Escrow Agreement.
7.6 Defense of Claims.
In the case of any claim for indemnification under Section 7.1, 7.2 or
7.3 arising from a claim of a third party (including the IRS or any
governmental agency), an indemnified party shall give prompt written notice
and, subject to the following sentence, in no case later than twenty (20)
days after the indemnified party's receipt of notice of such claim, to the
indemnifying party (and, if the indemnifying party is any of the Sellers,
to the Sellers' Representative and the Escrow Agent) of any claim, suit or
demand of which such indemnified party has Knowledge and as to which it may
request indemnification hereunder. The failure to give such notice shall
not, however, relieve the indemnifying party of its indemnification
obligations except to the extent that the indemnifying party is actually
harmed thereby. The indemnifying party shall have the right to defend and
to direct the defense against any such claim, suit or demand (including,
without limitation, ERISA claims, tax claims and claims relating to
Sections 7.3(B) and 7.3(F)), in its name and at its expense, and with
counsel selected by the indemnifying party unless such claim, suit or
demand seeks an injunction or other equitable relief against the
indemnified party; provided, however, the indemnifying party shall not have
the right to defend or direct the defense of any such claim, suit or demand
if it refuses to acknowledge fully its obligations to the indemnified party
or contests, in whole or in part, its indemnification obligations therefor.
If the indemnifying party elects, and is entitled, to compromise or defend
such claim, it shall within 30 days (or sooner, if the nature of the claim
so requires) notify the indemnified party of its intent to do so, and the
indemnified party shall, at the request and expense of the indemnifying
party, cooperate in the defense of such claim, suit or demand. If the
indemnifying party elects not to compromise or defend such claim, fails to
notify the indemnified party of its election as herein provided or refuses
to acknowledge or contests its obligation to indemnify under this
Agreement, the indemnified party may pay, compromise or defend such claim.
Except as set forth in the immediately preceding sentence, the indemnifying
party shall have no indemnification obligations with respect to any such
claim, suit or demand which shall be settled by the indemnified party
without the prior written consent of the indemnifying party (which consent
shall not be unreasonably withheld or delayed); provided, however, that
notwithstanding the foregoing, the indemnified party shall not be required
to refrain from paying any claim which has matured by a court judgment or
decree, unless an appeal is duly taken therefrom and exercise thereof has
been stayed, nor shall it be required to refrain from paying any claim
where the delay in paying such claim would result in the foreclosure of a
lien upon any of the property or assets then held by the indemnified party
or where any delay in payment would cause the indemnified party material
economic loss. The indemnifying party's right to direct the defense shall
include the right to compromise or enter into an agreement settling any
claim by a third party; provided that no such compromise or settlement
shall obligate the indemnified party to agree to any settlement which
requires the taking of any action by the indemnified party other than the
delivery of a release, except with the consent of the indemnified party
(such consent to be withheld or delayed only for a good faith reason).
Notwithstanding the indemnifying party's right to compromise or settle in
accordance with the immediately preceding sentence, the indemnifying party
may not settle or compromise any claim over the objection of the
indemnified party; provided, however, that consent by the indemnified party
to settlement or compromise shall not be unreasonably withheld or delayed.
The indemnified party shall have the right to participate in the defense of
any claim, suit or demand with counsel selected by it subject to the
indemnifying party's right to direct the defense. The fees and
disbursements of such counsel shall be at the expense of the indemnified
party; provided, however, that, in the case of any claim, suit or demand
which seeks injunctive or other equitable relief against the indemnified
party, the fees and disbursements of such counsel shall be at the expense
of the indemnifying party.
7.7 Non-Third Party Claims.
Any claim which does not result in a third party claim shall be
asserted by a written notice to the other party or parties. The recipient
of such notice shall have a period of forty-five (45) days after receipt of
such notice within which to respond thereto. If the recipient does not
respond within such forty-five (45) days, the recipient shall be deemed to
have accepted responsibility for the Losses set forth in such notice and
shall have no further right to contest the validity of such notice. If the
recipient responds within such forty-five (45) days after the receipt of
the notice and rejects such claim in whole or in part, the party delivering
shall be free to pursue such remedies as may be available to it under
contract or applicable law.
7.8 Claims Against the Escrow Agent.
Any indemnification obligations of the Seller shall be satisfied from
any amounts held by the Escrow Agent pursuant to the Escrow Agreement prior
to the Purchaser exercising any other remedy, offset or action (other than
(i) any action seeking equitable remedies, (ii) the payment of any Sellers'
Refund, provided that the Purchaser may elect to receive such payment from
the Escrow Account in accordance with Section 1.5(e), and (iii) if and to
the extent the amounts, if any, then held by the Escrow Agent are
insufficient to satisfy such indemnification obligations) to seek recovery
of amounts payable pursuant to the Sellers' obligations under this Article
VII.
7.9 Liability of the Company.
The Purchaser shall not after the Closing make any claim against the
Company in respect of any representation, warranty, covenant or any other
obligation of the Company to the Purchaser hereunder or under any other
Transaction Document to which the Company is a party. The Purchaser shall
not make any claim against any Seller in respect of any non-fulfillment
after the Closing by the Company of any covenant hereunder or under any
other Transaction Document to which the Company is a party. Notwithstanding
anything herein to the contrary, the Purchaser retains, and nothing
contained in this Section 7.9 shall in any way waive or limit, its rights
to bring claims against the Sellers in respect of a breach of any
representation or warranty of the Company or any Seller contained herein or
in any other Transaction Document or the non-fulfillment by the Company or
any Seller prior to the Closing, and by any Seller from and after the
Closing, of any covenant or agreement contained herein or in any other
Transaction Document.
7.10 No Double Recovery; Insurance.
Notwithstanding anything herein to the contrary, no party shall be
entitled to indemnification or reimbursement under any provision of this
Agreement for any amount to the extent such party has been indemnified or
reimbursed for such amount under any other provision of this Agreement.
Furthermore, in the event any Loss related to a claim by the Purchaser is
covered by third party insurance, the Purchaser agrees to use commercially
reasonable efforts to seek recovery under such third party insurance and no
Purchaser Party shall be entitled to recovery from any Seller (and shall
refund amounts received up to the amount of indemnification actually
received) with respect to such Loss to the extent that such Purchaser Party
receives any insurance payment under such third party insurance with
respect to such Loss (net of any cost or expense of obtaining such
payment).
7.11 Subrogation.
Upon making any indemnity payment pursuant to this Agreement with
respect to a third party claim, the indemnifying party will, to the extent
of such payment, be subrogated to all rights of the indemnified party
against any third party in respect of the Losses to which the payment
relates, and the indemnifying party shall enforce such rights in a
commercially reasonable manner so as not to impair or otherwise adversely
affect the business of the Company. The indemnifying party and the
indemnified party shall duly execute upon request all instruments
reasonably necessary to evidence and perfect the subrogation rights
described above.
7.12 Tax Treatment.
Unless otherwise required by applicable law, all indemnification
payments shall constitute adjustments to the Purchase Price for all Tax
purposes, and no party shall take any position inconsistent with such
characterization.
7.13 Exclusive Remedy.
The foregoing indemnification provisions in this Article VII shall be
the exclusive remedy from and after the Closing of the Purchaser against
the Sellers and of the Sellers against the Purchaser for Losses under
Sections 7.1, 7.2 and 7.3, provided that nothing contained in this
Agreement (i) is intended to waive any claims for fraud to which a party
may be entitled, or shall relieve or limit the liability of any party or
any officer or director of such party from any liability arising out of or
resulting from fraud in connection with the transactions contemplated by
this Agreement or in connection with the delivery of any of the documents
referred to herein and (ii) is intended to waive any equitable remedies to
which a party may be entitled.
7.14 Reasonable Actions.
Each party agrees to act in good faith and in a commercially
reasonable manner with respect to any Losses for which indemnification is
sought under this Agreement.
7.15 No Right of Contribution.
The Sellers shall have no right to seek contribution from the Company
or the Purchaser with respect to all or any part of any of the Sellers'
indemnification obligations under this Article VII, provided that the
Sellers may seek contribution from the Company prior to the Closing with
respect to all or any part of any of the Sellers' indemnification
obligations under Section 7.1 if this Agreement is terminated pursuant to
Section 6.1.
Article VIII
MISCELLANEOUS
8.1 Certain Definitions.
---------------------
As used herein, the following terms shall have the meanings herein
specified (to be equally applicable to both the singular and plural forms
of the terms defined):
"Accounts Receivable" shall mean all of the Company's right, title and
interest in and to all accounts receivable (including any security or
collateral for such accounts receivable and including both billed and
unbilled work) relating to the business of the Company.
"Acquisition Proposal" shall have the meaning as defined in Section
3.16 hereto.
"Actions" shall have the meaning as defined in Section 3.1(c) hereto.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended.
"Agreed Upon Procedures Report" shall have the meaning as defined in
Section 1.5(a) hereto.
"Agreement" shall have the meaning as set forth in the preamble to
this Agreement.
"Amended Contingent Stock Agreement" shall have the meaning as defined
in Section 2.1(M)(x) hereto.
"Anteon" shall have the meaning as defined in Section 4.1(G) hereto.
"Audited Financials" shall have the meaning as defined in Section
2.1(E)(i) hereto.
"Balance Sheet" shall have the meaning as defined in Section 2.1(E)(i)
hereto.
"Basket Amount" shall have the meaning as defined in Section 7.5(a)
hereto.
"Basket Exclusions" shall have the meaning as defined in Section
7.5(a) hereto.
"Business Day" means any day other than Saturday or Sunday or any
other day on which banks in the Commonwealth of Virginia are permitted or
obligated to be closed for business.
"Cash" means, as of the date of determination, the difference of (a)
the aggregate amount of cash and cash equivalents held as of 10:00 a.m.
(New York City time) in the bank accounts, including money market accounts,
of the Company, as verified by such banks to the Purchaser by telephone,
facsimile, electronic mail, or other means reasonably acceptable to the
Purchaser minus (b) the aggregate balance of all outstanding checks written
against such accounts.
"Class A Shares" shall have the meaning as set forth in the recitals
to this Agreement.
"Class B Shares" shall have the meaning as set forth in the recitals
to this Agreement.
"Closing" shall have the meaning as defined in Section 1.4 hereto.
"Closing Date" shall have the meaning as defined in Section 1.4
hereto.
"Closing Net Debt" shall have the meaning as defined in Section 1.5(b)
hereto.
"Closing Net Working Capital" shall have the meaning as defined in
Section 1.5(b) hereto.
"Closing Statement" shall have the meaning as defined in Section
1.5(b) hereto.
"Code" shall have the meaning as defined in Section 2.1(M)(ii) hereto.
"Company" shall have the meaning as set forth in the preamble to this
Agreement.
"Company Employee" shall have the meaning as defined in Section 3.9(b)
hereto.
"Company Material Adverse Effect" shall have the meaning as defined in
Section 2.1(A)(i) hereto.
"Confidentiality Agreement" shall have the meaning as defined in
Section 3.5(a) hereto.
"Contracts" shall have the meaning as defined in Section 2.1(K)(i)
hereto. "Copyrights" shall have the meaning as defined in Section
2.1(J)(i)(c) hereto.
"DCAA" means the Defense Contract Audit Agency of the United States
federal government.
"Debt" means, as of any date, (without duplication) with respect to
any Person, any indebtedness outstanding, secured or unsecured, contingent
or otherwise, which is for borrowed money (whether or not the recourse of
the lender is to the whole of the assets of such Person or only to a
portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (excluding, without limitation, any balances that
constitute trade payables) and shall also include, to the extent not
otherwise included (a) any capital lease obligations determined in
accordance with GAAP, (b) obligations of Persons other than such Person
secured by a Lien to which the property or assets owned or held by such
Person is subject, whether or not the obligation or obligations secured
thereby shall have been incurred or assumed by such Person, (c) all
indebtedness of others of the types described in the other clauses of this
definition (including all dividends of other Persons) the payment of which
is guaranteed, directly or indirectly, by such Person or that is otherwise
its legal liability or which such Person has agreed to purchase or
repurchase or in respect of which such Person has agreed contingently to
supply or advance funds (whether or not such items would appear upon the
balance sheet of the guarantor), (d) all obligations for the reimbursement
of any obligation or on any letter of credit, banker's acceptance or
similar credit transaction, and (e) obligations under any currency or
interest rate swap, hedge or similar protection device of any such Person.
The amount of Debt of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above
and, with respect to contingent obligations referred to in clause (c)
above, the maximum liability upon the occurrence of the contingency giving
rise to the obligation, provided, however, that (i) the amount outstanding
at any time of any Debt issued with original issue discount is the
principal amount of such Debt less the remaining unamortized portion of the
original issue discount of such Debt at such time as determined in
conformity with GAAP, and (ii) Debt shall not include any liability for
federal, state, local or other taxes. Notwithstanding any other provision
of the foregoing definition, (x) any trade payable arising from the
purchase of goods or materials or for services obtained in the ordinary
course of business, and (y) any salaries and related employment taxes
accrued in the ordinary course of business shall not be deemed to be "Debt"
for purposes of this definition.
"Determination" shall have the meaning as defined in Section 1.5(c)
hereto.
"Direct Contract Costs" means, with respect to any period, the
aggregate amounts of labor and other direct expenses, including, without
limitation, expenses for materials, subcontracts, consultants and travel.
"Embedded Intellectual Property" shall have the meaning as defined in
Section 2.1(J)(ii)(b) hereto.
"Environmental Claim" shall have the meaning as defined in Section 7.4
hereto.
"Environmental Laws" shall have the meaning as defined in Section
2.1(S) hereto.
"EnviroSpectrum" means EnviroSpectrum, Inc., a Maryland corporation.
"ERISA" shall have the meaning as defined in Section 2.1(M) hereto.
"ERISA Claim" shall have the meaning as defined in Section 7.4 hereto.
"Escrow Account" shall have the meaning as defined in Section 1.2(b)
hereto.
"Escrow Agent" shall have the meaning as defined in Section 1.2(b)
hereto.
"Escrow Agreement" shall have the meaning as defined in Section 1.2(b)
hereto.
"Estimated Closing Net Debt" shall have the meaning as defined in
Section 1.5(a) hereto.
"Estimated Closing Net Working Capital" shall have the meaning as
defined in Section 1.5(a) hereto.
"Estimated Closing Statement" shall have the meaning as defined in
Section 1.5(a) hereto.
"Excluded Licenses" shall have the meaning as defined in Section
2.1(J)(ii)(b) hereto.
"GAAP" means generally accepted accounting principles in the United
States.
"General Claim" shall have the meaning as defined in Section 7.4
hereto.
"Xxxxxxxxx Xxxxx Support Agreement" shall have the meaning as defined
in Section 3.18(a) hereto.
"Government Data" shall have the meaning as defined in Section
2.1(J)(ii)(b) hereto.
"Governmental Body" and "Governmental Bodies" shall have the meanings
as defined in Section 2.1(I) hereto.
"GUST" shall have the meaning as defined in Section 2.1(M)(ix) hereto.
"GUST Application for Determination" shall have the meaning as defined
in Section 2.1(M)(ix) hereto.
"GUST Determination Letter" shall have the meaning as defined in
Section 2.1(M)(ix) hereto.
"Hazardous Substances" shall have the meaning as defined in Section
2.1(S) hereto.
"HSR Act" shall have the meaning as defined in Section 2.1(L) hereto.
"Independent Accounting Firm" shall mean Ernst & Young LLP or such
other nationally recognized accounting firm having no relationship with the
Sellers, the Company and the Purchaser and mutually agreed upon by the
Purchaser and the Sellers' Representative.
"Indirect Costs" means any fringe benefits, general and administrative
expenses and overhead expenses.
"Intellectual Property" shall have the meaning as defined in Section
2.1(J)(i) hereto.
"Initial Payment" shall have the meaning as defined in Section 1.2(a)
hereto.
"Interim Financials" shall have the meaning as defined in Section
2.1(E)(i) hereto.
"IP Licenses" shall have the meaning as defined in Section
2.1(J)(ii)(b) hereto.
"IRS" shall have the meaning as defined in Section 2.1(M)(ii) hereto.
"Knowledge" means, with respect to any Person (other than the
Company), the actual knowledge of such Person and, with respect to the
Company, the actual knowledge of each of Xxxx Xxxxx, Xxxx Xxxxxx, Xxxxx
Xxxxxx, Xxxxxxxxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxx
Xxxxx, Xxxxx Xxxxxxxxxxx and Xxxxxxx Xxxxx.
"Leased Property" shall have the meaning as defined in Section
2.1(W)(ii) hereto.
"Liabilities" shall have the meaning as defined in Section 2.1(V)
hereto.
"Liens" shall have the meaning as defined in Section 2.1(C)(i) hereto.
"Losses" shall have the meaning as defined in Section 7.1 hereto.
"Xxxx Xxxxx Employment Agreement" shall have the meaning as defined in
Section 3.18(a) hereto.
"Xxxx Xxxxx Compensation Letter" shall have the meaning as defined in
Section 4.1(H) hereto.
"Mutual Release" shall have the meaning as defined in Section 3.17
hereto.
"Net Debt" shall mean, on a consolidated basis, the total amount of
the Company's Debt, less the sum of its Cash and marketable securities as
of the Closing Date.
"Net Working Capital" shall mean the Company's current assets
(including Cash) minus current liabilities as of the Closing Date. For
purposes of calculating the Net Working Capital under this Agreement, the
parties agree that:
(a) current assets shall be deemed to include (i) the Company's
"Pre-paid Project Expenses" as of the Closing presented in a manner
consistent with the balance sheet contained in the Interim Financials and
provided to the Purchaser on or about July 2, 2002, (ii) any Tax asset
(including, but not limited to, any Tax deduction or loss carry back to
prior years) that will result from those payments made by the Company from
the Sellers' $4,830,000 capital contribution as described in Section 3.19
and any other transactions, actions or payments of the Company prior to the
Closing; provided, however, that any Tax asset resulting solely from the
payment by the Company, prior to or on the Closing Date, of $500,000 from
the Company's working capital to Xxxx Xxxxxx under his Retention Agreement
with the Company shall be excluded from current assets, (iii) to the extent
that Net Working Capital would otherwise be reduced if such costs and
expenses were not included as current assets, the costs and expenses
incurred by the Company (including, without limitation, any applicable
discounts and fees) in connection with any sale, transfer or assignment of
Accounts Receivable pursuant to Section 3.24, (iv) any promissory notes
contributed by the Sellers pursuant to Section 3.19 (to the extent that the
related liabilities for (x) all amounts payable by the Company to
executives of the Company at or before the Closing under the Amended
Contingent Stock Agreement, as more fully described in Section 3.19, and
(y) the retention payments payable by the Company to certain key employees
at or before the Closing pursuant to the Retention Agreements, as more
fully described in Section 3.19, are included as current liabilities for
purposes of calculating the Net Working Capital), and (v) the amount of
Sellers' Auditors' fees reimbursed by the Purchaser pursuant to Section 5.2
(to the extent that the related liability for payment of such amount is
included as a current liability for purposes of calculating Net Working
Capital or such amount has been paid in cash by the Company prior to the
Closing);
(b) current assets shall be deemed to exclude (i) the life insurance
policy for which Xxxx Xxxxx is the named insured and Xxxxx Xxxxx is the
named beneficiary, (ii) the life insurance policy for which Xxxxxxxxx Xxxxx
is the named insured and Xxxx Xxxxx is the named beneficiary, and (iii) the
reserve for Accounts Receivable set forth in Section 2.1(E)(iii)(c), as
such reserve shall be increased prior to the date of delivery of the
Estimated Closing Statement in accordance with Section 3.26;
(c) current liabilities shall be deemed to exclude (i) amounts that
the Company has historically included in current liabilities in respect of
deferred revenue and the Company's Debt, (ii) the retention payments
payable by the Company to certain key employees on the first anniversary of
the Closing pursuant to the Retention Agreements, as more fully described
in Section 3.19, (iii) the reserve for health benefit plan claims set forth
in Section 2.1(E)(iii)(a), as such reserve may be increased prior to the
date of delivery of the Estimated Closing Statement in accordance with
Section 3.22, and (iv) the reserve for rate overruns set forth in Section
2.1(E)(iii)(b), as such reserve may be increased prior to the date of
delivery of the Estimated Closing Statement in accordance with Section
3.23; and
(d) current liabilities shall be deemed to include Tax liabilities of
the Company for all periods prior to the Closing, including, without
limitation, Tax liabilities of the Company incurred during or otherwise
related to the period from December 1, 2002 through the Closing Date.
"Non-Competition Agreement" shall have the meaning as defined in
Section 4.1(G) hereto.
"Objection Notice" shall have the meaning as defined in Section 1.5(c)
hereto.
"Order" shall have the meaning as defined in Section 4.1(A) hereto.
"Patents" shall have the meaning as defined in Section 2.1(J)(i)(a)
hereto.
"Permits" shall have the meaning as defined in Section 2.1(I) hereto.
"Permitted Liens" shall mean (i) Liens for Taxes not yet due and
payable, (ii) Liens that do not materially interfere with the use of the
properties or assets by the Company and which do not impair the value of
such properties or assets, but excluding any Liens relating to Debt and
(iii) Liens as of the date hereof set forth on Schedule 2.1(H).
"Person" shall have the meaning as defined in Section 3.16 hereto.
"Plans" shall have the meaning as defined in Section 2.1(M) hereto.
"Pre-Closing Taxes" shall have the meaning as defined in Section
7.3(C)(i) hereto.
"Post-Closing Taxes" shall have the meaning as defined in Section
7.3(C)(i) hereto.
"Proposed Intellectual Property Agreements" shall have the meaning as
defined in Section 2.1(J)(ii)(c) hereto.
"Purchase Price" shall have the meaning as defined in Section 1.1
hereto.
"Purchaser" shall have the meaning as set forth in the preamble to
this Agreement.
"Purchaser Parties" shall have the meaning as defined in Section 7.1
hereto.
"Real Property Leases" shall have the meaning as defined in Section
2.1(W)(ii) hereto. "Retention Agreements" shall have the meaning as defined
in Section 2.1(M)(x) hereto.
"Seller" and "Sellers" shall have the meanings as set forth in the
preamble to this Agreement.
"Sellers' Auditors" shall mean Xxxxx Xxxxxxxx LLP, or such other
independent nationally recognized accounting firm retained by the Sellers
and reasonably acceptable to the Purchaser.
"Sellers' Refund" shall have the meaning as defined in Section 1.5(d)
hereto.
"Sellers' Representative" shall have the meaning as set forth in the
preamble to this Agreement.
"Settlement Agreement" shall have the meaning as defined in Section
1.5(c) hereto.
"Shares" shall have the meaning as set forth in the recitals to this
Agreement.
"Software" shall have the meaning as defined in Section 2.1(J)(i)(e)
hereto.
"Xxx Xxxx Consulting Arrangement" shall have the meaning as defined in
Section 3.18 hereto.
"Spectrum Health" shall have the meaning as defined in Section
2.1(G)(ii) hereto.
"Straddle Period" shall have the meaning as defined in Section 7.3(C)
hereto.
"Target Net Working Capital" shall have the meaning as defined in
Section 1.5(a) hereto.
"Tax" or "Taxes" means (a) any and all federal, state, provincial,
local, foreign and other taxes, levies, fees, imposts, duties, and similar
governmental charges (including any interest, fines, assessments, penalties
or additions to tax imposed in connection therewith or with respect
thereto) including, without limitation, taxes imposed on, or measured by,
income, franchise, profits or gross receipts, ad valorem, value added,
capital gains, sales, goods and services, use, real or personal property,
capital stock, license, branch, payroll, estimated withholding, employment,
social security (or similar), unemployment, compensation, utility,
severance, production, excise, stamp, occupation, premium, windfall
profits, transfer and gains taxes, and customs duties, and (b) any
transferee liability in respect of any items described in clause (a) above.
"Tax Claim" shall have the meaning as defined in Section 7.4 hereto.
"Tax Return" or "Tax Returns" means any and all reports, returns,
declarations, claims for refund, elections, disclosures, estimates,
information reports or returns or statements required to be supplied to a
taxing authority in connection with Taxes, including any schedule or
attachment thereto or amendment thereof.
"Tax Sharing Agreements" shall have the meaning as defined in Section
2.1(Q)(vii) hereto.
"Third Party Confidential Information" shall have the meaning as
defined in Section 2.1(J)(ii)(b) hereto.
"Title Defects" shall mean and include any mortgage, deed of trust,
lien, pledge, security interest, claims, lease, change, option, right of
first refusal, easement, restrictive covenant, encroachment or other survey
defect, encumbrance or other restriction or limitation whatsoever.
"Trademarks" shall have the meaning as defined in Section 2.1(J)(i)(b)
hereto.
"Trade Secrets" shall have the meaning as defined in Section
2.1(J)(i)(d) hereto.
"Transaction Documents" means this Agreement, the Escrow Agreement,
the Retention Agreements, the Xxxx Xxxxx Non-Competition Agreement, the
Xxxx Xxxxx Compensation Letter, the Amended Contingent Stock Agreement and
the Mutual Release.
8.2 Waivers and Amendments; Non-Contractual Remedies; Preservation of
Remedies.
This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the Purchaser and the Sellers' Representative or, in the case of
a waiver, by or on behalf of the party waiving compliance (provided that
the Sellers' Representative shall be entitled to waive the terms hereof on
behalf of the Sellers). No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof. Nor
shall any waiver on the part of any party of any such right, power or
privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any further exercise thereof or the exercise of any
other such right, power or privilege. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies
that any party may otherwise have at law or in equity. The rights and
remedies of any party based upon, arising out of or otherwise in respect of
any inaccuracy in or breach of any representation, warranty, covenant or
agreement contained in this Agreement or any document delivered pursuant to
this Agreement shall in no way be limited by the fact that the act,
omission, occurrence or other state of facts upon which any claim of any
such inaccuracy or breach is based may also be the subject matter of any
other representation, warranty, covenant or agreement contained in this
Agreement or any document delivered pursuant to this Agreement (or in any
other agreement between the parties) as to which there is no inaccuracy or
breach.
8.3 Public Disclosure.
Each of the parties to this Agreement hereby agrees with the other
parties that, except as may be required to comply with the requirements of
applicable law, no press release or similar public announcement or
communication will be made or caused to be made concerning the execution or
performance of this Agreement or the other Transaction Documents or the
transactions contemplated hereby or thereby unless specifically approved in
advance by the Purchaser and the Sellers' Representative, such approval not
to be unreasonably withheld, conditioned or delayed. If any announcement is
required by law to be made by any party hereto, prior to making such
announcement such party will deliver a draft of such announcement to the
other parties and shall give the other parties an opportunity to comment
thereon. Notwithstanding the foregoing, the parties hereto hereby
acknowledge and agree that, upon the execution of this Agreement, the
Purchaser may issue a press release in the form previously agreed to by the
Sellers' Representative and the Purchaser.
8.4 GOVERNING LAW.
THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL
BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS
OF THE COMMONWEALTH OF VIRGINIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE AND EACH SELLER AND THE PURCHASER
IRREVOCABLY AGREE THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT
LOCATED IN FAIRFAX COUNTY, COMMONWEALTH OF VIRGINIA OR THE EASTERN DISTRICT
OF VIRGINIA AND EACH PARTY AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY SUCH ACTION, SUIT OR PROCEEDING, ANY CLAIM
THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF SUCH COURT, THAT
ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE
ACTION, SUIT OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE ACTION, SUIT OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT
OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND
HEREBY AGREES NOT TO CHALLENGE SUCH JURISDICTION OR VENUE BY REASON OF ANY
OFFSETS OR COUNTERCLAIMS IN ANY SUCH ACTION, SUIT OR PROCEEDING. ANY AND
ALL SERVICE OF PROCESS AND ANY OTHER NOTICE IN ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE EFFECTIVE AGAINST ANY PARTY IF GIVEN PERSONALLY OR BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY ANY OTHER
MEANS OF MAIL THAT REQUIRES A SIGNED RECEIPT, POSTAGE PREPAID. NOTHING
HEREIN CONTAINED SHALL BE DEEMED TO AFFECT THE RIGHT OF ANY PARTY TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST ANY OTHER PARTY IN ANY JURISDICTION OTHER THAN
VIRGINIA.
8.5 Notices.
Any notices or other communications required under this Agreement
shall be in writing and be effective upon delivery if given by hand
delivery or confirmed (by telephone conversation), facsimile transmission
or on the next Business Day after given if delivered by overnight courier
and shall be given at the addresses or facsimile numbers set forth below,
with copies provided as follows:
(A) if to the Sellers or the Sellers' Representative:
Information Spectrum, Inc.
0000 Xxxxxx Xxxxx Xxxxxxxx
Xxxxx 000 Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
(with a copy to (which shall constitute notice):
Holland & Knight LLP
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(B) if to the Company:
Information Spectrum, Inc.
0000 Xxxxxx Xxxxx Xxxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
(with a copy to (which shall constitute notice):
Holland & Knight LLP
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(C) if to the Purchaser:
Anteon International Corporation
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
Senior Vice President and General Counsel
Facsimile: (000) 000-0000
(with a copy to (which shall constitute notice):
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
or at such other place or places or to such other Person or Persons as
shall be designated in writing by the parties to this Agreement in the
manner herein provided.
8.6 Section Headings.
The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
8.7 Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
8.8 Assignments.
This Agreement may not be assigned, by operation of law or otherwise,
without the prior written consent of the Purchaser and the Sellers'
Representative, except that, with prior written notice to the Sellers'
Representative, the Purchaser may assign its rights under this Agreement to
its Affiliates and financing sources without the consent of the Sellers'
Representative. Any assignment in contravention of this Section 8.8 shall
be void. This Agreement shall be binding upon and inure to the benefit of
successors and legal representatives of the parties hereto.
8.9 Entire Agreement, Enforceability and Miscellaneous.
This Agreement including the Exhibits and Schedules attached hereto
and the other documents referred to herein (including, without limitation,
the other Transaction Documents) constitute the entire agreement among the
parties with respect to the transactions contemplated hereby and except as
set forth in Section 3.5, supersede all prior agreements and
understandings, both written and oral, among the parties, with respect to
the subject matter thereof. This Agreement shall be binding upon, and is
solely for the benefit of, each of the parties herein and nothing in this
Agreement (except as expressly provided by Sections 7.1, 7.2 and 7.3) is
intended to confer upon any other Persons any rights or remedies of any
nature whatsoever hereunder or by reason of this Agreement. In case any
provision in this Agreement shall be or shall be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
8.10 Construction of Agreement.
This Agreement has been negotiated by the respective parties hereto
and their attorneys and the language hereof will not be construed for or
against either party. A reference to a Section or an Exhibit or Schedule
will mean a Section in, or Exhibits or Schedule to, this Agreement unless
otherwise explicitly set forth.
8.11 Schedules.
The disclosure of any matter or document in the Schedules hereto shall
not imply any warranty or representation not expressly given in this
Agreement or the Schedules, nor shall any such disclosure be taken as
extending the scope of the representations and warranties or any other
obligation under this Agreement or the Schedules.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Stock
Purchase Agreement to be duly executed as of the date first above written.
PURCHASER:
ANTEON INTERNATIONAL CORPORATION
By:_______________________________
Name:
Title:
COMPANY:
INFORMATION SPECTRUM, INC.
By:_________________________________
Name:
Title:
SELLERS:
THE XXXXXXXXX XXXXX ISI TRUST
By:_________________________________
Name:
Title: Trustee
CREDIT EQUIVALENT TRUST
By:_________________________________
Name: A. Xxxx Xxxxxxxxxx
Title: Trustee
By:
_________________________________
Name: Xxxx Xxxxx
Title: Trustee
_________________________________
Xxxx Xxxxx
SELLERS' REPRESENTATIVE:
_________________________________
Xxxx Xxxxx
EXECUTION COPY
===============================================================================
STOCK PURCHASE AGREEMENT
by and among
ANTEON INTERNATIONAL CORPORATION,
INFORMATION SPECTRUM, INC.,
THE SHAREHOLDERS OF INFORMATION SPECTRUM, INC.
and
XXXX XXXXX, as Sellers' Representative
--------------------------------
Dated as of April __, 2003
--------------------------------
================================================================================
TABLE OF CONTENTS
Page
Article I PURCHASE AND SALE OF SHARES....................................................................1
1.1 Purchase and Sale of Shares..........................................................1
1.2 Payment of Purchase Price............................................................1
1.3 Deliveries at Closing................................................................2
1.4 Closing; Closing Date................................................................2
1.5 Purchase Price Adjustments...........................................................2
Article II REPRESENTATIONS AND WARRANTIES................................................................5
2.1 Representations and Warranties of the Sellers........................................5
(A) Organization and Qualification of the Company........................................5
(B) Authority to Execute and Perform Agreement...........................................6
(C) Capital Stock........................................................................7
(D) Good Title to Shares.................................................................7
(E) Financial Statements.................................................................7
(F) Absence of Certain Changes or Events.................................................9
(G) Litigation and Liabilities..........................................................11
(H) Title to Properties; Absence of Liens, etc..........................................12
(I) Licenses and Registrations; Compliance with Laws, etc...............................12
(J) Intellectual Property...............................................................13
(K) Non-Contravention...................................................................17
(L) Consents and Approvals..............................................................18
(M) Employee Benefit Plans; ERISA.......................................................19
(N) Insurance Policies..................................................................21
(O) Agreements..........................................................................22
(P) Validity of Agreements..............................................................24
(Q) Taxes...............................................................................25
(R) Disclosure..........................................................................28
(S) Environmental Matters...............................................................28
(T) Accounts and Notes Receivable.......................................................29
(U) Potential Conflicts of Interest.....................................................29
(V) Liabilities.........................................................................30
(W) Real Property.......................................................................30
(X) Labor Matters.......................................................................31
(Y) Suppliers and Customers.............................................................32
2.2 Representations and Warranties of the Purchaser.....................................32
(A) Organization of the Purchaser.......................................................32
(B) Authority to Execute and Perform Agreement..........................................32
(C) Consents and Approvals..............................................................33
(D) Non-Contravention...................................................................33
(E) Compliance with Laws................................................................33
(F) Litigation..........................................................................33
(G) Experience of the Purchaser.........................................................34
(H) No Other Representations............................................................34
Article III ADDITIONAL AGREEMENTS OF THE PARTIES........................................................34
3.1 Tax Return Filing...................................................................34
3.2 Further Assurances..................................................................36
3.3 Access to Records...................................................................36
3.4 Preservation of Records.............................................................37
3.5 Confidentiality.....................................................................38
3.6 Efforts; Consents...................................................................39
3.7 Ordinary Course of Business.........................................................39
3.8 Insurance Proceeds; Litigation Rights...............................................41
3.9 Benefit Plans.......................................................................41
3.10 Reporting...........................................................................42
3.11 Employee Arrangements...............................................................42
3.12 Litigation..........................................................................42
3.13 Agreements..........................................................................42
3.14 Continued Effectiveness of Representations and Warranties...........................42
3.15 Satisfaction of Conditions Precedent................................................43
3.16 Exclusivity.........................................................................43
3.17 Related Parties.....................................................................44
3.18 Termination of Agreements...........................................................44
3.19 Payment of Bonuses..................................................................44
3.20 Shareholder Approval................................................................45
3.21 SEC Compliance......................................................................45
3.22 Reserve for Health Benefit Plan Claims..............................................45
3.23 Reserve for Rate Overruns...........................................................45
3.24 Sale of Accounts Receivable.........................................................45
3.25 Stock Options for Company Senior Executives.........................................46
3.26 Accounts Receivable Reserve.........................................................46
3.27 Escrow Agreement Fees and Expenses..................................................46
Article IV CONDITIONS TO CLOSING........................................................................46
4.1 Conditions to Obligations of the Sellers............................................46
(A) Regulatory Authorizations...........................................................46
(B) Representations and Warranties; Covenants and Agreements............................46
(C) Certificate.........................................................................47
(D) HSR Act Filing......................................................................47
(E) Escrow Agreement....................................................................47
(F) Payment of Closing Payment..........................................................47
(G) Xxxx Xxxxx Non-Competition Agreement................................................47
(H) Xxxx Xxxxx Compensation Letter......................................................47
(I) Reimbursement of Expenses...........................................................47
4.2 Conditions to Obligation of the Purchaser...........................................48
(A) Regulatory Authorizations...........................................................48
(B) Representations and Warranties; Covenants and Agreements............................48
(C) HSR Act Filing......................................................................48
(D) Consents............................................................................48
(E) No Company Material Adverse Effect..................................................49
(F) Certificate.........................................................................49
(G) Opinion of Counsel to the Sellers and the Company...................................49
(H) Delivery of Stock Certificates......................................................49
(I) Resignations and Appointments.......................................................49
(J) Escrow Agreement....................................................................50
(K) Termination of Agreements...........................................................50
(L) Landlord Consents...................................................................50
(M) FIRPTA Affidavit....................................................................50
(N) Bonus Payments......................................................................50
(O) Xxxx Xxxxx Non-Competition Agreement................................................50
(P) Increase in Reserve for Health Benefit Plan Claims..................................51
(Q) Increase in Reserve for Rate Overruns...............................................51
(R) Increase in Accounts Receivable Reserve.............................................51
(S) Liquidation, Dissolution and Winding-Up of EnviroSpectrum...........................51
(T) Spectrum Health. ..................................................................51
(U) Liens. ............................................................................51
(V) Beneficiary Letter. ...............................................................51
Article V FEES RELATING TO THIS TRANSACTION.............................................................52
5.1 Brokerage Fees......................................................................52
5.2 Other Fees and Expenses.............................................................52
Article VI TERMINATION..................................................................................53
6.1 Termination.........................................................................53
6.2 Effect of Termination; Expenses.....................................................54
Article VII INDEMNIFICATION.............................................................................55
7.1 Indemnification by the Sellers......................................................55
7.2 Indemnification by the Purchaser....................................................55
7.3 Supplemental Indemnification by Each Seller.........................................55
(A) Supplemental ERISA Indemnification..................................................55
(B) Supplemental Contract Indemnification...............................................56
(C) Supplemental Tax Indemnification....................................................56
(D) Township of Middletown, New Jersey Claim............................................58
(E) Supplemental Health Benefit Plans Indemnification...................................58
(F) Supplemental Rate Overruns Indemnification..........................................58
(G) Supplemental Patent Infringement Indemnification....................................59
7.4 Survival of Representations and Warranties of the Sellers...........................59
7.5 Certain Limitations on Indemnification Obligations..................................60
7.6 Defense of Claims...................................................................61
7.7 Non-Third Party Claims..............................................................62
7.8 Claims Against the Escrow Agent.....................................................62
7.9 Liability of the Company............................................................62
7.10 No Double Recovery; Insurance.......................................................63
7.11 Subrogation.........................................................................63
7.12 Tax Treatment.......................................................................63
7.13 Exclusive Remedy....................................................................63
7.14 Reasonable Actions..................................................................63
7.15 No Right of Contribution............................................................63
Article VIII MISCELLANEOUS..............................................................................64
8.1 Certain Definitions.................................................................64
8.2 Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies..........72
8.3 Public Disclosure...................................................................73
8.4 GOVERNING LAW.......................................................................73
8.5 Notices.............................................................................74
8.6 Section Headings....................................................................75
8.7 Counterparts........................................................................75
8.8 Assignments.........................................................................75
8.9 Entire Agreement, Enforceability and Miscellaneous..................................75
8.10 Construction of Agreement...........................................................76
8.11 Schedules...........................................................................76
EXHIBITS
Exhibit A - Form of Escrow Agreement Exhibit B - Amended Contingent Stock
Agreement Exhibit C - Retention Agreements Exhibit D - Form of Non-Competition
Agreement Exhibit E - Form of Xxxx Xxxxx Compensation Letter Exhibit F - Form of
Mutual Release Exhibit G - Form of Opinion of Holland & Knight LLP
SCHEDULES
Schedule 1.2 - Allocation of Purchase Price Schedule 2.1(C)(i) - Capital Stock
Schedule 2.1(F) - Absences of Certain Changes or Events Schedule 2.1(G)(i) -
Litigation and Liabilities Schedule 2.1(H) - Permitted Liens Schedule 2.1(I) -
Compliance with Laws Schedule 2.1(J)(ii)(a) - Intellectual Property Schedule
2.1(J)(ii)(b) - IP Licenses
Schedule 2.1(J)(ii)(c) - Proposed Intellectual Property Agreements Schedule
2.1(J)(iii) - Ownership of Intellectual Property Schedule 2.1(J)(ix)(a) -
Software Schedule 2.1(J)(ix)(b) - Software Exceptions Schedule 2.1(J)(x) - Trade
Secrets Schedule 2.1(J)(xi) - Employees, Consultants and Other Persons Schedule
2.1(J)(xv) - EnviroSpectrum Intellectual Property Exceptions Schedule 2.1(K)(i)
- Non-Contravention of the Sellers Schedule 2.1(K)(ii) - Non-Contravention of
the Company Schedule 2.1(L) - Consents and Approvals Schedule 2.1(M) - Employee
Benefit Plans Schedule 2.1(M)(viii) - Certain ERISA Matters Schedule 2.1(M)(ix)
- GUST Schedule 2.1(M)(x) - Retention Agreements Schedule 2.1(N) - Insurance
Policies Schedule 2.1(O) - Agreements Schedule 2.1(P) - Validity of Agreements
Schedule 2.1(Q) - Taxes Schedule 2.1(S) - Environmental Matters Schedule 2.1(T)
- Accounts Receivable Schedule 2.1(U) - Potential Conflicts of Interest Schedule
2.1(V) - Liabilities Schedule 2.1(W) -Real Property Leases Schedule 2.1(W)(1) -
Interests Affecting Leased Property Schedule 2.1(W)(2) - Title Defects Schedule
2.1(W)(vii) - Amounts Owed in Connection with Leased Property Schedule 2.1(X) -
Labor Matters Schedule 2.1(Y) - Suppliers and Customers Schedule 3.9(a) -
Terminated Employees Schedule 3.17 - Related Parties Schedule 3.18 - Termination
of Agreements Schedule 3.25 - Stock Options for Company Senior Executives
Schedule 4.2(L) - Modifications to Real Property Leases
