CACI INTERNATIONAL INC. CACI, INC. — FEDERAL DAGGER ACQUISITION CORPORATION AMERICAN MANAGEMENT SYSTEMS, INCORPORATED CGI GROUP INC. CGI VIRGINIA CORPORATION ASSET PURCHASE AGREEMENT
EXECUTION COPY
CACI INTERNATIONAL INC.
TABLE OF CONTENTS
Article 1 Definitions | 1 | |||
1.1
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Certain Matters of Construction | 1 | ||
1.2
|
Cross References | 2 | ||
1.3
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Certain Definitions | 3 | ||
Article 2 The Purchase And Sale of Assets | 6 | |||
2.1
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Purchase and Sale of Assets | 6 | ||
2.2
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Excluded Assets | 7 | ||
2.3
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Assumption of Specified Obligations | 7 | ||
2.4
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Purchase Price | 8 | ||
2.5
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Closing | 8 | ||
2.6
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Instruments of Transfer | 8 | ||
2.7
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Additional Actions | 8 | ||
2.8
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Adjustment to Purchase Price | 9 | ||
2.8.1 Preparation of Closing Balance Sheet | 9 | |||
2.8.2 Review of Closing Balance Sheet | 9 | |||
2.8.3 Disputes | 9 | |||
2.8.4 Final Closing Balance Sheet | 9 | |||
2.8.5 Adjustments to the Purchase Price | 10 | |||
Article 3 Representations And Warranties of Arrow | 10 | |||
Article 4 Representations And Warranties Of Parent, Federal and Acquisition Sub | 10 | |||
Article 5 Conduct Prior To The Closing Date | 10 | |||
5.1
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Conduct of Business of Arrow | 10 | ||
5.2
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Conduct of Business of Parent | 12 | ||
Article 6 Additional Agreements | 12 | |||
6.1
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Non-Solicitation and Superior Proposals | 12 | ||
6.1.1 Superior Offers | 12 | |||
6.1.2 No Solicitation | 12 | |||
6.2
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Transition of Employees and Consultants | 12 | ||
6.3
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Expenses | 13 | ||
6.4
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Access and Information | 13 | ||
6.5
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Public Disclosure | 13 | ||
6.6
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Further Assurances | 13 | ||
6.6.1 Generally | 13 | |||
6.6.2 Novation of Contracts; Subcontracting; Maintenance of Corporate Existence of Arrow | 14 | |||
6.7
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Tax Matters | 14 | ||
6.7.1 Allocation of Purchase Price | 14 | |||
6.7.2 Responsibility for Filing Tax Returns for Periods through Closing Date | 14 | |||
6.7.3 Audits | 14 | |||
6.7.4 Cooperation on Tax Matters | 14 | |||
6.7.5 Certain Taxes | 15 | |||
6.8
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Notification | 15 | ||
6.9
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Accounts Receivable | 15 | ||
6.10
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Preservation of Goodwill | 15 | ||
6.11
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Assistance in Preparation of Financial Statements | 16 | ||
6.12
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Regulatory Filings and Consents; Best Efforts | 16 | ||
6.12.1 Regulatory Filings | 16 | |||
6.12.2 Exchange of Information | 16 | |||
6.12.3 Notification | 16 | |||
6.12.4 Best Efforts | 17 |
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6.12.5 Limitation on Divestiture | 17 | |||
Article 7 Conditions Precedent | 17 | |||
7.1
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Conditions Precedent to the Obligations of Each Party | 17 | ||
7.1.1 No Illegality; Consents | 17 | |||
7.1.2 No Injunction | 17 | |||
7.2
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Conditions Precedent to Obligation of Parent, Federal and Acquisition Sub to Consummate the Transaction | 18 | ||
7.2.1 Representations and Warranties | 18 | |||
7.2.2 Agreements and Covenants | 18 | |||
7.2.3 Certain Conditions to the Merger Agreement | 18 | |||
7.2.4 Legal Opinions | 18 | |||
7.2.5 Ancillary Agreements | 18 | |||
7.2.6 Closing Documents | 18 | |||
7.2.7 Material Adverse Effect | 19 | |||
7.3
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Conditions to Obligations of Arrow to Consummate the Transaction | 19 | ||
7.3.1 Representations and Warranties | 19 | |||
7.3.2 Agreements and Covenants | 19 | |||
7.3.3 Closing Documents | 19 | |||
7.3.4 Successful Acquisition | 19 | |||
7.3.5 Payment of Purchase Price | 19 | |||
Article 8 Other Provisions | 19 | |||
8.1
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Termination Events | 19 | ||
8.2
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Notice and Effect of Termination | 20 | ||
8.3
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Break-up Fee | 21 | ||
8.4
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Notices | 21 | ||
8.5
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Entire Agreement; Amendment | 22 | ||
8.6
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Assignability | 23 | ||
8.7
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Validity | 23 | ||
8.8
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Specific Performance | 23 | ||
8.9
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Governing Law | 23 | ||
8.10
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Counterparts | 23 | ||
8.11
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Non-Survival of Representations, Warranties and Covenants | 23 | ||
8.12
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No Third Party Beneficiaries | 23 | ||
8.13
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No Waiver | 23 |
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This ASSET PURCHASE AGREEMENT, dated as of March 10, 2004 (the “Agreement”), is made by and among CACI International Inc, a Delaware corporation (“Parent”), CACI, INC. — FEDERAL, a Delaware corporation and wholly-owned subsidiary of Parent (“Federal”), Dagger Acquisition Corporation (“Acquisition Sub”), a Delaware corporation and wholly-owned subsidiary of Federal, American Management Systems, Incorporated, a Delaware corporation (“Arrow”), CGI Group Inc., a Québec corporation (“Crossbow”) and CGI Virginia Corporation, a Delaware corporation and wholly-owned subsidiary of Crossbow (“Merger Sub”).
ARTICLE 1
DEFINITIONS
1.1 Certain Matters of Construction. A reference to an article, section, exhibit or schedule shall mean an Article of, a Section in, or Exhibit or Schedule to, this Agreement unless otherwise expressly stated. The titles and headings herein are for reference purposes only and shall not in any manner limit the construction of this Agreement which shall be considered as a whole. The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” All terms defined
1.2 Cross References. The following terms defined elsewhere in this Agreement in the Sections set forth below shall have the respective meanings therein defined:
Term | Definition | |
Acquisition Group
|
Section 6.2 | |
Acquisition Sub
|
Preamble | |
Action of Divestiture
|
Section 6.12.5 | |
Active Government Contract
|
Appendix A, Section A22.1 | |
Agreement
|
Preamble | |
Ancillary Agreements
|
Recitals | |
Arrow
|
Preamble | |
Arrow Disclosure Schedule
|
Article 3 | |
Auditor
|
Section 2.8.3 | |
Balance Sheet Date
|
Appendix A, Section A5 | |
Business
|
Recitals | |
Closing Balance Sheet
|
Section 2.8.1 | |
Closing Date
|
Section 2.5 | |
Closing
|
Section 2.5 | |
Confidentiality Agreements
|
Section 6.5 | |
Crossbow
|
Preamble | |
Dagger Assets
|
Section 2.1 | |
Dagger Balance Sheet
|
Appendix A, Section A4 | |
Dagger Company
|
Appendix A, Section A2 | |
Dagger Completed Engagements
|
Section 2.1.2 | |
Dagger Contracts
|
Section 2.1.3 | |
Dagger Engagements
|
Section 2.1.1 | |
Dagger Financial Statements
|
Appendix A, Section A4 | |
Dagger Government Contract
|
Appendix A, Section A22.2 | |
Dagger Insurance Contracts
|
Appendix A, Section A18 | |
Dagger Leases
|
Section 2.1.4 | |
Dagger Obligations
|
Section 2.3 | |
Dagger Proprietary Rights
|
Section 5.1(c) | |
Dagger Receivables
|
Section 2.1.9 | |
Dagger Subsidiary
|
Appendix A, Section A2 | |
Dagger Subsidiary Plans
|
Appendix A, Section A10.4(a) | |
Dagger Subsidiary Shares
|
Section 2.1.14 | |
Dagger Tangible Assets
|
Section 2.1.8 |
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Term | Definition | |
Dagger Work-In-Process
|
Section 2.1.9 | |
Employee List
|
Appendix A, Section A11.2 | |
Excluded Assets
|
Section 2.2 | |
FAR
|
Appendix A, Section A22.3 | |
Federal
|
Preamble | |
Final Closing Balance Sheet
|
Section 2.8.4 | |
Final Date
|
Section 8.1(g) | |
GAAP
|
Section 2.8.1 | |
Governmental Entity
|
Appendix A, Section A3.2 | |
HSR Act
|
Appendix A, Section A3.2 | |
Intellectual Property Agreement
|
Section 2.1.6 | |
Merger Sub
|
Preamble | |
Objections
|
Section 2.8.2 | |
Parent
|
Preamble | |
Pension Plans
|
Appendix A, Section A10.1 | |
Permits
|
Appendix A, Section A7 | |
Purchase Price
|
Section 2.4 | |
Reported Business
|
Appendix A, Section A4 | |
Representatives
|
Section 6.1.2 | |
Retained Operations
|
Recitals | |
Transaction
|
Recitals | |
Welfare Plan
|
Appendix A, Section A10.4(g) |
1.3 Certain Definitions. As used herein, the following terms shall have the following meanings:
Affiliate: with respect to any Person, any Person which, directly or indirectly, Controls, is Controlled by, or is under common Control with, such Person. | |
Affiliated Group: any affiliated group within the meaning of Code section 1504(a). | |
COBRA: the provisions of Section 4980B of the Code and Part 6 of Title I of ERISA. | |
Code: the United States Internal Revenue Code of 1986, as amended from time to time. | |
Contract: any contract, subcontract, basic ordering agreement, blanket purchase agreement, task order, letter contract or purchase order of any kind, including all amendments, modifications and options thereunder or relating thereto, but excluding any Employee Benefit Plan. | |
Control: (including with correlative meaning, Controlled by and under common Control with): as used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. | |
Dagger Consultant: any Person listed on Schedule 1.3A, any Person retained to replace such scheduled Person, and any new consultant that Parent and Crossbow agree shall constitute a Dagger Consultant, but excluding any pre-Closing terminations. | |
Dagger Employee: any person listed on Schedule 1.3B, any person hired to replace such scheduled person, and any newly hired person who Parent and Crossbow agree is a Dagger Employee, but excluding any pre-Closing terminations. | |
Dagger Facilities: the physical locations subject to the Dagger Leases. |
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Dagger Material Adverse Effect: any materially adverse change in or effect on the financial condition, business, operations, assets (including intangible assets), properties, results of operations, prospects or liabilities of the Business (including any act by the Central Intelligence Agency or the Defense Security Service to invalidate, terminate, suspend or revoke any facilities security clearance under National Industrial Security Program Operating Manual related to the Business), when taken as a whole, from the state of the Business as and to the extent represented in Annex A hereto as of the date hereof, other than any change, effect, event, occurrence, state of facts or development (a) relating to or resulting from economic or geopolitical conditions in general (except to the extent such change or effect has a disproportionate impact on the Business relative to other business entities engaged in the same line or lines of business as the Business), (b) relating to or resulting from changes in legal or regulatory conditions (except to the extent such change or effect has a disproportionate impact on the Business relative to other business entities engaged in the same line or lines of business as the Business), (c) resulting from the execution or announcement of this Agreement, (d) resulting from any actions taken by Parent, Federal, Acquisition Sub or any of their Affiliates after the date hereof and prior to the Closing Date that relate to, or affect, the business of Arrow and the Dagger Subsidiaries, (e) resulting from compliance by Arrow and the Dagger Subsidiaries with the terms of this Agreement or (f) resulting from any liability, cost or expense associated with, relating to or arising from the transactions contemplated by this Agreement or the Merger Agreement (including legal, accounting and financial advisory fees and disbursements). | |
Dagger Material Contract: any Dagger Engagement or any contract to which any Dagger Subsidiary is a party (a) pursuant to which a Dagger Company is providing or has committed to provide in the future services and/or products on a fixed price basis, or (b) pursuant to which a Dagger Company is providing or has committed to provide in the future services and/or products in exchange for compensation to the Dagger Company in excess of $1,000,000. Notwithstanding the foregoing, the term Dagger Material Contract shall not include any contracts to which Karcher Group, Inc. is a party. | |
Employee Benefit Plan: any “employee pension benefit plan” (as defined in Section 3(2) of ERISA), “employee welfare benefit plan” (as defined in Section 3(1) of ERISA), and any other plan, agreement or arrangement involving direct or indirect compensation, including without limitation insurance coverage, severance benefits, disability benefits, deferred compensation, bonuses, stock options, stock purchase, phantom stock, stock appreciation or other forms of incentive compensation or post-retirement compensation. | |
Environmental Claim: any actual notice from a Governmental Entity or other third party alleging potential liability (including potential liability for investigatory costs, cleanup costs, response or remediation costs, natural resources damages, property damages, personal injuries, fines or penalties) arising out of, based on or resulting from (a) the presence, or release of any Material of Environmental Concern at any location, or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. | |
Environmental Laws: any and all Federal, state, local or foreign statutes, regulations, ordinances and common law relating to the protection of public health, safety or the environment in effect on the Closing Date and that are binding on any Dagger Company. | |
ERISA Affiliate: with respect to a party, any member (other than that party) of a controlled group of corporations, group of trades or businesses under common control or affiliated service group that includes that party (as defined for purposes of Section 414(b), (c) and (m) of the Code). | |
ERISA: the Employee Retirement Income Security Act of 1974, as amended. | |
Exchange Act: the Securities Exchange Act of 1934, as amended. | |
Government Contract: any prime contract with the United States Government and any contract with a prime contractor or higher-tier subcontractor under a prime contract with the United States Government. |
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Knowledge of Arrow: shall mean the actual, current knowledge of any of the following employees of Arrow: Xxxxxx X. Xxxxxxx, Chairman and Chief Executive Officer; Xxxxx X. Xxxxxxxx, Executive Vice President, General Counsel, Chief Risk Officer and Secretary; Xxxxx Xxxxxxxxx, Executive Vice President and Chief Human Resources Officer; Wick Xxxxxxx, Senior Vice President and Chief Technology Officer, Xxxxx Xxxxx, Executive Vice President, Public Sector Group; Xxxxx X. Xxxxxx, Executive Vice President and Chief Financial Officer; Xxxxx Xxxxxxx, Senior Vice President of Corporate Development; Xxxx Xxxxxx, Senior Vice President, Public Sector Group; Xxxxxxx Xxxxxx, Vice President, Public Sector Group; Xxx Xxxxxxx, Vice President, Public Sector Group; and Xxxxxxxx Xxxxx, Vice President and Corporate Controller. | |
Legal Requirement: any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, order, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity. | |
Liability: any liability or obligation, known or unknown, asserted or unasserted, accrued or unaccrued, absolute or contingent, liquidated or unliquidated, or otherwise, and whether due or to become due, including any liability for Taxes. | |
Materials of Environmental Concern: petroleum and its by-products and any and all other substances or constituents to the extent that they are regulated by, or form the basis of liability under, any Environmental Law. | |
Merger: the merger of Arrow and Merger Sub pursuant to the Merger Agreement. | |
Merger Agreement: That certain Agreement and Plan of Merger, dated as of the date hereof, by and among Arrow, Crossbow and Crossbow’s wholly-owned subsidiary. | |
Net Tangible Asset Value: The net value as of the Closing Date of the sum of (a) the total current assets of the Business (excluding (i) intercompany accounts and (ii) assets of X.X. Xxxxxxxxxx & Co. that do not relate to the Business), (b) the net fixed assets and net purchased software, of the Business and (c) the other non-current assets of the Business (excluding net developed software, net intangibles, and goodwill); less the total liabilities of the Business, each as determined in accordance with GAAP. | |
Permitted Encumbrances: (a) Security Interests for current taxes, water and sewer charges and other statutory liens and trusts not yet due and payable or that are being contested in good faith, (b) Security Interests incurred in the ordinary course of business, such as carriers’, warehousemen’s, landlords’ and mechanics’ liens and other similar liens arising in the ordinary course of business, (c) Security Interests on personal property leased under operating leases, (d) Security Interests, pledges or deposits incurred or made in connection with workmen’s compensation, unemployment insurance and other social security benefits, or securing the performance of bids, tenders, leases, contracts (other than for the repayment of borrowed money), statutory obligations, progress payments, surety and appeal bonds and other obligations of like nature, in each case incurred in the ordinary course of business, (e) pledges of or Security Interests on manufactured products as security for any drafts or bills of exchange drawn in connection with the importation of such manufactured products in the ordinary course of business, (f) Security Interests or other claims arising under Article 2 of the Uniform Commercial Code that are special property interests in goods identified as goods to which a contract refers, (g) Security Interests arising under Article 9 of the Uniform Commercial Code that are purchase money security interests, (h) any Security Interest, right, restriction, encumbrance or limitation imposed or created by or arising under any Ancillary Agreement, (i) as to any Dagger Lease or Dagger Facilities, those Security Interests and other restrictions affecting the interest of the lessor thereof, (j) those Security Interests and restrictions created by or arising under the terms of any Dagger Lease and (k) such Security Interests or other imperfections or minor defects of title, easements, rights-of-way and other similar restrictions (if any) as are insubstantial in character, amount or extent, do not materially detract from the value or interfere with the present or proposed use of the properties or assets of the party subject thereto or |
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affected thereby, and do not otherwise materially adversely affect or impair the business or operations of such party. | |
Person: an individual, a corporation, an association, a partnership, an estate, a trust or any other entity or organization. | |
Securities Act: the Securities Act of 1933, as amended. | |
Security Interest: any mortgage, pledge, lien, encumbrance, charge, or other security interest. | |
Subsidiary: With respect to any corporation, association, or other business entity, any corporation, association, or other business entity a majority (by number of votes on the election of directors or persons holding positions with similar responsibilities) of the shares of capital stock (or other voting interests) of which are owned, beneficially or of record, by the first corporation, association, or other business entity. | |
Tax Return: any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. | |
Tax: any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. | |
Treasury Regulation: a regulation promulgated by the United States Treasury Department under one or more provisions of the Code. | |
United States Government: the government of the United States or any agency, department, division, subdivision or office thereof. |
ARTICLE 2
THE PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale of Assets. Upon and subject to the terms and conditions hereof, at the Closing, Arrow shall sell, transfer and assign to Acquisition Sub, and Acquisition Sub shall purchase and acquire from Arrow, all right, title and interest in and to the assets utilized in connection with the performance and technical and administrative support of the Business, including the following assets (the “Dagger Assets”), in each case free and clear of all Security Interests, except Permitted Encumbrances:
2.1.1 all contracts and other arrangements relating to the Business pursuant to which Arrow is providing goods and/or services, and all proposals, bids and offers for future such contracts and arrangements, including the contracts and other arrangements, proposals, bids and offers listed on Schedule 2.1.1 (the “Dagger Engagements”); | |
2.1.2 all contracts and other arrangements pursuant to which Arrow formerly provided goods and/or services relating to the Business, excluding the contracts and other arrangements listed on Schedule 2.1.2 (the “Dagger Completed Engagements”); | |
2.1.3 all other contracts relating to the Business and to which Arrow is a party, including employment agreements, nondisclosure agreements, teaming agreements, joint ventures, joint marketing agreements, consulting agreements and subcontracts (the “Dagger Contracts”), but excluding the Dagger Leases, regardless of whether Arrow has obtained any necessary consents to the assignment of such Dagger Contracts; | |
2.1.4 all of the leases, subleases, licenses or other agreements for the use of physical locations listed on Schedule 2.1.4 (the “Dagger Leases”); |
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2.1.5 all prepaid expenses, deposits, advances, other prepayments and related rights paid or obtained by Arrow relating to the Business, (other than those, if any, which constitute Excluded Assets under Section 2.2) that exist as of the Closing; | |
2.1.6 all of the rights in or relating to intellectual property described in the Ancillary Agreement relating to intellectual property, the form of which is attached as Exhibit A (the “Intellectual Property Agreement”); | |
2.1.7 all of Arrow’s training materials, speaking materials and sales or promotional materials that relate to the Business; | |
2.1.8 all of Arrow’s tangible assets primarily relating to the Business (other than those tangible assets, if any, which constitute Excluded Assets under Section 2.2), including all furniture, fixtures, machinery, office and other equipment and leasehold improvements relating to the Business and all other tangible assets as materially listed on Schedule 2.1.8 (the “Dagger Tangible Assets”); | |
2.1.9 all of Arrow’s accounts receivable and unbilled accounts receivable and work-in-process that relate to the Business (the “Dagger Receivables” and the “Dagger Work-In-Process,” respectively); | |
2.1.10 all books, papers, ledgers, documents and records relating to the Dagger Assets, including all records and documents relating to the Dagger Engagements, the Dagger Contracts, the Dagger Receivables, the Dagger Work-In-Process and the Dagger Obligations (provided that Arrow may retain copies of such books, papers, ledgers, documents and records), as well as complete copies of all other books, papers, ledgers, documents and records relating to the Dagger Assets. | |
2.1.11 all inventory and supplies related to the Business; | |
2.1.12 all Permits relating to the Business or the Dagger Facilities, including the permits listed on Schedule 2.1.12, to the extent the same may be transferred; and | |
2.1.13 all of Arrow’s other tangible and intangible assets related to the Business. | |
2.1.14 all of Arrow’s capital stock and other voting interests in the Dagger Subsidiaries (collectively, the “Dagger Subsidiary Shares”). |
2.2 Excluded Assets. Notwithstanding Section 2.1, no interest of Arrow in or to the assets listed on Schedule 2.2 (the “Excluded Assets”) is being sold, assigned or otherwise transferred to Acquisition Sub.
2.3 Assumption of Specified Obligations . At the Closing, Acquisition Sub shall agree to assume and perform after the Closing when and as they become due the obligations and liabilities of Arrow related to the Business, including the following (the “Dagger Obligations”):
2.3.1 Arrow’s accounts payable, accrued expenses and deferred revenue relating to the Business through the Closing Date, such amounts to be calculated in a manner consistent with the Dagger Balance Sheet for the Reported Business, except that such amounts shall be for the Business. | |
2.3.2 Arrow’s obligations after the Closing under the Dagger Engagements, the Dagger Completed Engagements, the Dagger Contracts and the Dagger Leases; and | |
2.3.3 Arrow’s liabilities to Dagger Employees that are not covered by insurance held by Arrow or Crossbow, whether or not such persons actually become employees of Acquisition Sub. |
Except for the Dagger Obligations, Acquisition Sub is assuming no liabilities or obligations of Arrow in connection with this transaction, including (a) any liability or obligation of Arrow to any of its Subsidiaries or Affiliates (b) any liability or obligation of Arrow to any director, officer, employee or other agent of Arrow (other than the Dagger Employees), (c) any liability or obligation of Arrow under any contract, agreement or arrangement relating to the Business or the conduct thereof other than the Dagger Engagements, the Dagger Completed Engagements, the Dagger Contracts and the Dagger Leases, (d) any trade or practice liabilities or obligations of Arrow, (e) any liability or obligation of Arrow to any current, former or deceased employee of Arrow or any of its Subsidiaries or Affiliates (other than the Dagger Subsidiaries), other than the Dagger
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The parties to this Agreement intend that any Liability of Arrow that is based on, or arises out of, facts or circumstances that existed prior to the Closing Date and is not primarily related to the Business shall not be assumed by Acquisition Sub and shall not be or become a Dagger Obligation except as expressly set forth herein. Without limiting the generality of the foregoing, no Liability of Arrow that is not primarily related to the Business shall be allocated or divided between the Business, on the one hand, and the business and operations being acquired by Crossbow and Merger Sub, on the other hand, unless expressly provided herein.
The parties understand that Arrow will not assume the liabilities of the Dagger Subsidiaries, but that such liabilities shall be retained by the Dagger Subsidiaries.
2.4 Purchase Price. The purchase price (the “Purchase Price”) to be paid by Acquisition Sub for the Dagger Assets shall be Four Hundred Fifteen Million Dollars ($415,000,000), subject to adjustment as provided below in Section 2.8. The payment of the Purchase Price shall be made in immediately available funds wired to one or more accounts designated by Arrow or by such other method as may be agreed by Arrow and Acquisition Sub.
2.5 Closing. The closing of the purchase and sale of the Dagger Assets (the “Closing”) shall take place at the offices of Xxxxxx & Xxxxxx LLP in McLean, Virginia, commencing at 9 a.m. local time on such date that is the first business day immediately following the satisfaction or waiver of all conditions to the obligations of the parties to consummate the transactions contemplated hereby (the “Closing Date”).
2.6 Instruments of Transfer. Arrow shall effect the transfer of the Dagger Assets and the Dagger Obligations to Acquisition Sub at the Closing by such bills of sale, assignments, assumptions and other instruments of transfer as Acquisition Sub or its counsel deem necessary or appropriate to transfer full legal and beneficial title to the Dagger Assets free and clear of all Security Interests whatsoever except Permitted Encumbrances, and to transfer full responsibility for the Dagger Obligations. As appropriate, such documents shall contain customary warranties and covenants of title and shall be in form and substance acceptable to Acquisition Sub and its counsel.
2.7 Additional Actions. At any time and from time to time after the Closing Date, (a) at the reasonable request of Acquisition Sub, Arrow shall execute and deliver to Acquisition Sub such other instruments of transfer, conveyance, assignment and confirmation and take such action as Acquisition Sub may reasonably deem necessary or desirable in order to transfer, convey and assign to Acquisition Sub and to confirm Acquisition Sub’s title to any of assets primarily utilized in connection with the performance and technical and administrative support of the Business inadvertently left in the control or possession of Arrow and all instruments, undertakings or other documents and take such other action as Acquisition Sub may reasonably deem necessary or desirable in order to have Arrow fully assume and be liable for any Liabilities of Arrow that are not Dagger Obligations and that were inadvertently assumed by Acquisition Sub, and (b) at the reasonable request of Arrow, Acquisition Sub shall execute and deliver to Arrow such other instruments of transfer, conveyance, assignment and confirmation and take such action as Arrow may reasonably deem necessary or desirable in order to transfer, convey and assign to Arrow and to confirm Arrow’s title to any of the Excluded Assets inadvertently transferred to Acquisition Sub and all instruments, undertakings or other documents and take such other action as Arrow may reasonably deem necessary or desirable in order to have Acquisition Sub fully assume and be liable for any Dagger Obligations that were inadvertently retained by Arrow.
Prior to the first anniversary of the Closing Date, if either Crossbow or Acquisition Sub shall determine that an asset or liability of the Business was inappropriately included in or excluded from the definition of either the Dagger Assets or the Dagger Obligations, the party that makes such determination shall so advise
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If a dispute arises under this Section 2.7, then within three (3) business days after a written request by either party, Federal’s President and Crossbow’s President of U.S. Operations shall promptly confer to resolve the dispute. If such persons cannot resolve such dispute, or either one of them determines that they are not making reasonable progress toward resolution of the dispute within the five (5) business day period immediately following the delivery of the written notice described above, then such dispute shall be settled by arbitration in the City of New York in accordance with the Rules of the American Arbitration Association by a single arbitrator, who shall be an attorney expert in the area of mergers and acquisitions, selected by Crossbow and Acquisition Sub (or, if the parties are unable to agree on the arbitrator within five (5) business days of commencing arbitration, such an expert selected by the Association). Judgment upon the award rendered under any such arbitration may be entered in any Court having jurisdiction thereof.
2.8 Adjustment to Purchase Price
2.8.1 Preparation of Closing Balance Sheet. As soon as reasonably practicable after the Closing Date (but not later than 60 days thereafter), Arrow shall prepare or cause to be prepared and shall deliver to Acquisition Sub a Closing Balance Sheet for the Business as of the opening of business on the Closing Date (the “Closing Balance Sheet”). The Closing Balance Sheet shall be prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”).
2.8.2 Review of Closing Balance Sheet. Acquisition Sub, upon receipt of the Closing Balance Sheet, shall (a) review the Closing Balance Sheet and (b) to the extent Acquisition Sub may deem necessary, make reasonable inquiry of Arrow and its accountants, relating to the preparation of the Closing Balance Sheet. Acquisition Sub and its employees and advisors shall have full access upon prior written notice and during normal business hours to the books, papers and records of Arrow and its accountants (if any are used), relating to the preparation of the Closing Balance Sheet in connection with such inquiry and the preparation of any objections thereto (“Objections”). The Closing Balance Sheet shall be binding and conclusive upon, and deemed accepted by, Acquisition Sub unless Acquisition Sub shall have notified Arrow in writing of any Objections thereto within 30 days after receipt of the Closing Balance Sheet. Acquisition Sub shall make the Dagger Employees and books and records of the Business available to Arrow as necessary for Arrow to prepare the Closing Balance Sheet.
2.8.3 Disputes. In the event of Objections, Arrow shall have 20 days to review and respond to such Objections, and Acquisition Sub and Arrow shall attempt to resolve the differences underlying such Objections within 20 days following completion of Arrow’s review of such Objections. Disputes between Acquisition Sub and Arrow which cannot be resolved by them within such 20-day period shall be referred no later than such 20th day for decision to PricewaterhouseCoopers LLP or to a nationally recognized independent public accounting firm mutually selected by the Acquisition Sub and Arrow (the “Auditor”) (which firm shall not be any of (a) the independent public accountants of Parent, Federal and Acquisition Sub, (b) the independent public accountants used by Arrow prior to the Closing Date and (c) the independent public accountants of Crossbow), who shall act as arbitrator and determine, based solely on presentations by Acquisition Sub and Arrow and only with respect to the remaining differences so submitted, whether and to what extent, if any, the Closing Balance Sheet requires adjustment. The Auditor shall deliver its written determination to Acquisition Sub and Arrow no later than the 30th day after the remaining differences underlying such Objections are referred to the Auditor, or such longer period of time as the Auditor reasonably determines is necessary. The Auditor’s determination shall be conclusive and binding upon the parties. The fees and disbursements of the Auditor shall be allocated equally between Acquisition Sub and Arrow. Acquisition Sub and Arrow shall make readily available to the Auditor all relevant information, books and records and any work papers relating to the Closing Balance Sheet and all other items reasonably requested by the Auditor. In no event may the Auditor’s resolution of any difference be for an amount which is outside the range of Acquisition Sub’s and Arrow’s disagreement.
2.8.4 Final Closing Balance Sheet. The Closing Balance Sheet shall become final and binding upon the parties upon the earliest of (a) Acquisition Sub’s failure to object thereto within the period permitted
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2.8.5 Adjustments to the Purchase Price. As soon as practicable (but not more than five business days) after the date on which the Final Closing Balance Sheet shall have been determined in accordance with this Section 2.8, (a) Arrow shall pay to Acquisition Sub in immediately available funds the amount, if any, by which the Net Tangible Asset Value on the Final Closing Balance Sheet is less than $50,000,000 (Fifty Million Dollars), or (b) Acquisition Sub shall pay to Arrow in immediately available funds the amount, if any, by which the Net Tangible Asset Value on the Final Closing Balance Sheet is greater than $60,000,000 (Sixty Million Dollars); provided, that no payment made pursuant to this Section 2.8.5 shall exceed the amount of $10,000,000 (Ten Million Dollars). Any payment made pursuant to this Section 2.8.5 shall constitute an immediate adjustment of the Purchase Price in such amount. For the avoidance of doubt, the existence or possible existence of any adjustment to the Purchase Price, Objection, pendency or resolution of any dispute pursuant to this Section 2.8 or any issue pertaining to the Closing Balance Sheet shall not in any way impact, hinder, prevent or otherwise delay Crossbow’s obligation to consummate the transactions contemplated in the Merger Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ARROW
Arrow represents and warrants to Parent, Federal and Acquisition Sub as set forth in Appendix A, subject to those exceptions disclosed in writing in the disclosure schedules supplied by Arrow to the Parent on or before the date hereof, and certified by a duly authorized officer of Arrow (the “Arrow Disclosure Schedule”). For purposes of the representations and warranties of Arrow contained herein, each exception set forth in the Arrow Disclosure Schedule and each other response to this Agreement set forth in the Arrow Disclosure Schedule is identified by reference to, or has been grouped under a heading referring to, a specific individual section of this Agreement, and disclosure in any section of the Arrow Disclosure Schedule of any facts or circumstances shall be deemed to be adequate response and disclosure of such facts or circumstances with respect to all representations and warranties by Arrow calling for disclosure of such information if it is reasonably apparent on the face of the Arrow Disclosure Schedules that such disclosure is applicable; provided, however, that Arrow represents and warrants that it has made a good faith effort to include cross-references to other portions thereof where applicable. Arrow has not made and is not making any disclosures of classified information except to Parent personnel with proper security clearances. The inclusion of any information in any section of the Arrow Disclosure Schedule or other document delivered by Arrow pursuant to this Agreement shall not be deemed to be an admission or evidence of the materiality of such item, nor shall it establish a standard of materiality for any purpose whatsoever. All references in Appendix A to a Schedule not otherwise provided for in this Agreement shall be a reference to the comparable section of the Arrow Disclosure Schedule.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT, FEDERAL AND ACQUISITION SUB
Parent, Federal and Acquisition Sub, jointly and severally, represent and warrant to Arrow as set forth in Appendix B.
ARTICLE 5
CONDUCT PRIOR TO THE CLOSING DATE
5.1 Conduct of Business of Arrow. During the period from the date hereof and continuing until the earlier of (x) the termination of this Agreement pursuant to its terms or (y) the Closing Date, Arrow shall,
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(a) take any action or make any omission that would require the consent of Crossbow under clauses (i) to (xix), inclusive, of Section 5.1(b) of the Merger Agreement, it being understood that such clauses shall be applicable herein, for the benefit of Parent, to the same extent as if fully set forth herein, it being further understood that, unless the context otherwise requires, capitalized terms used in such clauses but not defined therein shall have the respective meanings ascribed to them in the Merger Agreement, and cross-references used in such clauses shall be to the referenced sections of the Merger Agreement; | |
(b) pay, discharge or satisfy any claim, obligation or Liability in excess of $200,000 in any one case, other than the payment, discharge or satisfaction in the ordinary course of business of obligations reflected on or reserved against in the Dagger Balance Sheet, or incurred since the date of the Dagger Balance Sheet in the ordinary course of business consistent with past practices or in connection with this transaction; | |
(c) dispose of, permit to lapse, or otherwise fail to preserve its rights to use the Dagger Proprietary Rights (as defined in the Intellectual Property Agreement; hereinafter the “Dagger Proprietary Rights”) or enter into any settlement regarding the breach or infringement of, any Dagger Proprietary Rights, or modify any existing rights with respect thereto, other than in the ordinary course of business consistent with past practices, and other than any such disposal, lapse, failure, settlement or modification that does not have and could not reasonably be expected to have a Dagger Material Adverse Effect or would affect the accuracy, as of time (past, present or future) of the representations set forth in the Intellectual Property Agreement, other than as otherwise expressly contemplated by this Agreement; | |
(d) sell, or grant any right to exclusive use of, all or any part of the Dagger Proprietary Rights; | |
(e) enter into any contract or commitment or take any other action that is not in the ordinary course of its business or could reasonably be expected to have an adverse impact on the transactions contemplated hereunder or that would have or could reasonably be expected to have a Dagger Material Adverse Effect; | |
(f) amend in any material respect any agreement to which it is a party, the amendment of which will have or could reasonably be expected to have a Dagger Material Adverse Effect; | |
(g) waive, release, transfer or permit to lapse any claim or right (i) that has a value, or involves payment or receipt by it, of more than $200,000 (except in the ordinary course of business and insofar as the foregoing relate to the Business) or (ii) the waiver, release, transfer or lapse of which would have or could reasonably be expected to have a Dagger Material Adverse Effect; | |
(h) enter into agreements with third party integrators to assist Arrow with implementation of Arrow proprietary software except to the extent terminable on less than 30 days’ notice without cost; | |
(i) except in the ordinary course of business and insofar as the following relates to the Business, pay, discharge or satisfy any claims, obligations or Liabilities; waive, release, transfer or permit to lapse any claims or rights; or make any loans, advances or capital contributions to, or investments in, any other Person (other than as permitted pursuant to Section 5.1(b)(x)(A) or (B) of the Merger Agreement), |
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where the amount of such claims, rights, obligations, Liabilities, loans, advances, capital contributions and investments in the aggregate exceeds $2,000,000; or | |
(j) agree, whether in writing or otherwise, to take any action described in this Section 5.1. |
5.2 Conduct of Business of Parent. Between the date of this Agreement and the Closing Date or the date, if any, on which this Agreement is earlier terminated pursuant to its terms, none of Parent, Federal or Acquisition Sub shall, except to the extent that Arrow shall otherwise consent in writing (such consent not to be unreasonably withheld), take any action that would materially impair Acquisition Sub’s ability to pay the Purchase Price or otherwise to perform its obligations under this Agreement. Further, between the date of this Agreement and the Closing Date or the date, if any, on which this Agreement is earlier terminated pursuant to its terms, Parent, Federal and Acquisition Sub shall, except to the extent that Arrow shall otherwise consent in writing (such consent not to be unreasonably withheld) promptly notify Arrow of any event, occurrence, act or omission that would, individually or in the aggregate, prevent, or materially hinder or delay, the Closing.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Non-Solicitation and Superior Proposals
6.1.1 Superior Offers. Arrow shall comply with the terms and conditions of Section 6.1 of the Merger Agreement and shall provide Parent copies of any notice sent by Arrow to Crossbow pursuant to Section 6.1 of the Merger Agreement.
6.1.2 No Solicitation. Each of Crossbow and Parent agrees that prior to the one-year anniversary of the date hereof, neither it nor any of its Subsidiaries nor any of their respective officers, directors, advisors, agents, accountants, consultants, employees, investment bankers and legal counsel (collectively, “Representatives”) shall directly or indirectly: (i) solicit, initiate, or knowingly encourage, facilitate or induce any inquiry with respect to, or the making, submission or announcement of, any acquisition proposal to purchase all or substantially all of the Business or the business and operations being acquired by Crossbow and Merger Sub, as the case may be; (ii) participate in any discussions or negotiations regarding, or furnish to any Person any nonpublic information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes or may reasonably be expected to lead to, any such acquisition proposal; (iii) engage in discussions with any Person with respect to any such acquisition proposal, except as to the existence of these provisions; (iv) approve, endorse or recommend any such acquisition proposal; or (v) enter into any letter of intent or similar document or any contract agreement or commitment contemplating or otherwise relating to any acquisition proposal or any transaction contemplated thereby. Crossbow or Parent, as the case may be, shall immediately terminate, and shall cause each of its Subsidiaries and its and their Representatives to immediately terminate, all activities, discussions or negotiations, if any, with any third party with respect to, or any that could reasonably be expected to lead to or contemplate the possibility of, an acquisition proposal. Crossbow or Parent, as the case may be, shall promptly request that each person which has heretofore executed a confidentiality agreement with Crossbow or Parent, as the case may be, or any of its Affiliates or Subsidiaries or any of its or their Representatives with respect to such Person’s consideration of a possible acquisition proposal to promptly return or destroy (which destruction Crossbow or Parent, as the case may be, shall request be certified in writing by such person) all confidential information heretofore furnished by Crossbow or Parent, as the case may be, or any of its Affiliates or Subsidiaries or any of its or their Representatives to such person or any of its Affiliates or Subsidiaries or any of its or their Representatives.
6.2 Transition of Employees and Consultants. Within five (5) days prior to Closing, Arrow shall provide an updated Employee List, containing the name of each employee of the Business, and each person’s level title, role, starting date, annual salary and target bonus, together with a listing of the level of security clearance for such employees. Parent, Federal, Acquisition Sub or one of their Affiliates shall offer to employ or retain as a consultant effective as of 12:00 A.M. on the date immediately following the Closing Date each Dagger Employee and each Dagger Consultant employed by (or providing consulting to) Arrow as of the Closing Date. Arrow shall cooperate with Parent to facilitate meetings (to occur at mutually agreed upon
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6.3 Expenses. Each party hereto shall be responsible for its own costs and expenses in connection with the Transaction, including fees and disbursements of consultants, brokers, finders, investment bankers and other financial advisors, counsel and accountants.
6.4 Access and Information. The Dagger Companies shall afford to Parent, Federal, Acquisition Sub and to a reasonable number of their respective officers, employees, accountants, counsel and other authorized representatives full and complete access as may be reasonably requested, upon reasonable advance telephone notice, during regular business hours, throughout the period prior to the earlier of the Closing Date or the termination of this Agreement pursuant to its terms, to the Dagger Companies’ offices, properties, books and records, and the Dagger Companies shall use reasonable efforts to cause their representatives and independent public accountants to furnish to Acquisition Sub such additional financial and operating data and other information as to their businesses, customers, vendors and properties as Acquisition Sub may from time to time reasonably request. Notwithstanding the foregoing, all visits to any office of any Dagger Company will be coordinated and conducted so as to not be disruptive to the operations of such Dagger Company and to preserve the confidentiality of the Transaction. In addition, Arrow will facilitate meetings between Parent, Federal and Acquisition Sub and the Dagger Companies’ significant customers so as to permit Parent, Federal and Acquisition Sub to discuss the announced Transaction with such customers.
6.5 Public Disclosure. Immediately following the execution of this Agreement, Parent, Arrow and Crossbow each shall disseminate the press releases attached as Exhibit B. Except as otherwise required by law (including disclosures necessary or advisable to ensure compliance with applicable securities laws), no party hereto shall make any other public disclosure of information regarding the transactions contemplated herein prior to the Closing without the consent of each of Parent, Arrow and Crossbow, each of which consents shall not be unreasonably withheld or delayed. The parties acknowledge that Parent and Crossbow have previously executed a Confidentiality Agreement dated as of December 16, 2003 and that Parent and Arrow have previously executed a letter agreement regarding confidentiality dated January 7, 2004 (collectively, the “Confidentiality Agreements”), which Confidentiality Agreements shall continue in full force and effect in accordance with their respective terms notwithstanding any termination or abandonment of this Agreement or the Merger.
6.6 Further Assurances
6.6.1 Generally. Subject to terms and conditions herein provided and to the fiduciary duties of the board of directors and officers or representatives of any party, each of the parties agrees to use its commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective this Agreement and the transactions contemplated hereby. In case at any time any further action, including, without limitation, the obtaining of waivers and consents under any agreements, material contracts or leases and the execution and delivery of any licenses or sublicenses for any software, is necessary, proper or advisable to carry out the purposes of this Agreement, the proper officers and directors or representatives of each party to this Agreement are hereby directed and authorized to use commercially reasonable efforts to effectuate all required action, except to the extent that greater efforts are required pursuant to Section 6.12.
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6.6.2 Novation of Contracts; Subcontracting; Maintenance of Corporate Existence of Arrow. Each party agrees to use commercially reasonable efforts to effect the novation of, or change of name with respect to, each Dagger Government Contract that may require novation or a change of name under its terms or under applicable laws or regulations, and further agrees to provide all documentation necessary to effect each such novation or change of name, including all instruments, certifications, requests, legal opinions, audited financial statements, and other documents required by Part 42 of the Federal Acquisition Regulation to effect a novation of any contract with the United States Government. In particular and without limiting the generality of the foregoing, Arrow shall continue to communicate with responsible officers of the United States Government from time to time as may be appropriate and permissible, to request speedy action on any and all requests for consent to novation or change of name. Notwithstanding the foregoing, Arrow makes no representation or warranty that any such novation of, or change of name with respect to, any Dagger Government Contract will in fact be obtained.
With respect to each Dagger Government Contract that requires novation or a change of name, prior to such novation or change of name, Arrow will engage Acquisition Sub as subcontractor under such contract, agree to take all reasonable instruction from Acquisition Sub as Arrow’s conduct under such contract and promptly pay to Acquisition Sub the full amount of its receipts under such contract.
Arrow shall not terminate its existence until all of the Government Contracts of the Dagger Companies have either terminated or duly transferred to Acquisition Sub.
6.7 Tax Matters
6.7.1 Allocation of Purchase Price. Acquisition Sub and Arrow agree that the Purchase Price and the liabilities of Arrow assumed by Acquisition Sub to which the Dagger Assets are subject (plus other relevant items) will be allocated to the Dagger Assets for all purposes (including Tax and financial accounting purposes) as shown on Schedule 6.7.1. Acquisition Sub and Arrow shall have prepared such allocation schedule in accordance with Code section 1060 and the Treasury regulations thereunder. Parent, Acquisition Sub and Arrow will file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with such allocation schedule.
6.7.2 Responsibility for Filing Tax Returns for Periods through Closing Date. Arrow shall include the income of the Dagger Subsidiaries (including any deferred items triggered into income by Reg. § 1.1502-13 and any excess loss account taken into income under Reg. § 1.1502-19) on Arrow’s consolidated federal income Tax Returns for all periods through the Closing Date and pay any federal income Taxes attributable to such income. For all taxable periods ending on or before the Closing Date, Arrow shall cause the Dagger Subsidiaries to join in Arrow’s consolidated federal income tax return and, in jurisdictions requiring separate reporting from Arrow, to file separate company state and local income tax returns. All such Tax Returns shall be prepared and filed in a manner consistent with prior practice, except as required by a change in applicable law.
6.7.3 Audits. Arrow shall allow Parent and its counsel to participate, at Parent’s expense, in any audit of Arrow’s consolidated federal income Tax Returns to the extent that such returns related to any Dagger Subsidiary. Arrow shall not settle any such audit in a manner which would adversely affect any Dagger Subsidiary after the Closing Date without the prior written consent of Parent, which consent shall not unreasonably be withheld.
6.7.4 Cooperation on Tax Matters
(a) Acquisition Sub and Arrow shall cooperate fully, as and to the extent reasonably requested by any party, in connection with the filing of Tax Returns and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon another party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis, at no cost to any Parent, Federal or Acquisition Sub, to provide additional information and explanation of any material provided hereunder. Arrow and Crossbow agree (i) to retain all books and records with respect to Tax matters pertinent to Arrow relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations
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(b) Acquisition Sub and Arrow further agree, upon request, to use commercially reasonable efforts to obtain any certificate or other document from any governmental authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby).
(c) Acquisition Sub and Arrow further agree, upon request, to provide any other party with all information that either party may be required to report pursuant to section 6043 of the Code and all Treasury Department Regulations promulgated thereunder.
6.7.5 Certain Taxes. All transfer, documentary, sales, use, stamp, registration (and any penalties or interest relating thereto) incurred in connection with this Agreement shall be paid by Parent when due, and all other Taxes and fees (and any penalties or interest relating thereto) shall be paid by Arrow or Crossbow when due. To the extent that Arrow and Crossbow are required by law to remit sales taxes to any Governmental Entity, Parent shall pay to Arrow or Crossbow all sales taxes (and any penalties or interest relating thereto) incurred in connection with this Agreement when due, which Arrow or Crossbow, as the case may be, shall remit timely to the appropriate Government Entities. Should any Government Entity adjust the sales tax (or any penalties or interest relating thereto) incurred in connection with this Agreement by any means, including by audit or assessment, Parent shall pay to Arrow or Crossbow such adjustment when due, which Arrow or Crossbow, as the case may be, shall remit to the appropriate Government Entities. Parent will, at its own expense, prepare and file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration taxes, and Crossbow and Arrow will, at their own expense, prepare and file all necessary Tax Returns and other documentation with respect to all other Taxes and fees, and, if required by applicable law, each party hereto will (and will cause its Affiliates to) join in the execution of any such Tax Returns and other documentation.
6.8 Notification. From the date hereof until the Closing Date, Arrow shall promptly disclose to Parent and Acquisition Sub in writing any material changes or variances from the representations and warranties contained in Article 3 promptly upon discovery thereof, in the form of “Updated Schedules” delivered to Parent, Federal and Acquisition Sub. From the date hereof until the Closing Date, Parent, Federal and Acquisition Sub shall promptly disclose to Arrow in writing any material variances from Parent’s, Federal’s and Acquisition Sub’s representations and warranties contained in Article 4.
6.9 Accounts Receivable. Effective as of the Closing, Arrow hereby irrevocably constitutes and appoints Acquisition Sub its true and lawful attorney-in-fact, with full power of substitution, in its name, place and stead to endorse the name of Arrow on any checks and other remittances received on account of the Dagger Receivables and the Dagger Work-In-Process and to perform all other acts necessary or desirable to xxxx and collect the Dagger Receivables and amounts received with respect to the Dagger Work-In-Process for the account of Acquisition Sub. Arrow agrees that it shall, forthwith after receipt after the Closing, transfer and deliver to Acquisition Sub any cash or other property that Arrow may receive in respect of such Dagger Receivables or on account of the Dagger Work-In-Process, and any mail, checks or other documents received by Arrow relating to any of the Dagger Assets or Dagger Obligations transferred to Acquisition Sub hereunder, such cash, property, mail, checks and documents to be delivered in the form and condition in which received, except for the opening of any envelope or package. Arrow shall use commercially reasonable efforts to assist Acquisition Sub in the collection of the Dagger Receivables and all amounts receivable on account of the Dagger Work-In-Process after the Closing to the extent requested by Acquisition Sub to do so.
6.10 Preservation of Goodwill. To the extent required by this Agreement, Arrow shall aid Acquisition Sub in its assumption of ownership and operation of the Business and, in connection therewith, shall endeavor in good faith to maintain its goodwill and reputation (and the goodwill and reputation of the Dagger Subsidiaries) with the suppliers, clients and creditors of the Dagger Companies and any others having business relations with them and in the business community generally.
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6.11 Assistance in Preparation of Financial Statements. It being understood that Parent shall be required to make disclosures following the Closing on Form 8-K pursuant to Item 7 thereof, Crossbow and Arrow shall provide Parent and its independent auditors reasonable access during normal business hours to their respective facilities and employees as Parent and its auditors reasonably request in advance in connection with their preparation and review of audited historical financial statements for the Business.
6.12 Regulatory Filings and Consents; Best Efforts
6.12.1 Regulatory Filings. Each of the parties hereto shall coordinate and cooperate with one another and shall each use best efforts to comply with, and shall each refrain from taking any action that would impede compliance with, all Legal Requirements, and, as promptly as practicable after the date hereof, each of the parties hereto shall make all filings, notices, petitions, statements, registrations, submissions of information, application or submission of other documents required by any Governmental Entity in connection with the Transaction and the transactions contemplated hereby, as well as the Merger and the transactions contemplated in connection therewith, including, without limitation: (a) Notification and Report Forms with the United States Federal Trade Commission and the Antitrust Division of the United States Department of Justice as required by the HSR Act (it being understood that Parent shall bear the full cost of the fees relating to such filing), with the Committee on Foreign Investment in the United States as may be deemed appropriate under the Exon-Xxxxxx Amendment to Section 721 of the Defense Production Act of 1950, (b) any other filing or registration necessary to obtain any material consent, authorization or approval or otherwise required or advisable to consummate the Transaction or any of the transactions contemplated hereby, or the Merger or any of the transactions contemplated in connection therewith, (c) filings under any other comparable pre-merger notification forms required by the merger notification or control laws of any applicable jurisdiction, as agreed by the parties hereto, and (d) any filings required under the Securities Act, the Exchange Act, any applicable state or securities or “blue sky” laws and the securities laws of any foreign country, or any other Legal Requirement relating to the Transaction. Each party shall cause all documents that it is responsible for filing with any Governmental Entity under this Section 6.12.1 to comply in all material respects with all applicable Legal Requirements.
6.12.2 Exchange of Information. Each of the parties hereto shall promptly supply the others with any information which may be required in order to effectuate any filings or application pursuant to Section 6.12.1. Except where prohibited by applicable Legal Requirements, and subject to the Confidentiality Agreements, each of the parties hereto shall consult with the other parties hereto prior to taking a position with respect to any such filing, shall permit the other to review and discuss in advance, and consider in good faith the views of the other in connection with any analyses, appearances, presentations, memoranda, briefs, white papers, arguments, opinions and proposals before making or submitting any of the foregoing to any Governmental Entity by or on behalf of any party hereto in connection with any investigations or proceedings in connection with this Agreement or the transactions contemplated hereby, or the Merger or any of the transactions contemplated in connection therewith (including under any antitrust or fair trade Legal Requirement), coordinate with the other in preparing and exchanging such information and promptly provide the other (and its counsel) with copies of all filings, presentations or submissions (and a summary of any oral presentations) made by such party with any Governmental Entity in connection with this Agreement or the transactions contemplated hereby, or the Merger or any of the transactions contemplated in connection therewith; provided, that with respect to any such filing, presentation or submission, no party need supply the other (or its counsel) with copies (or in case of oral presentations, a summary) to the extent that applicable Legal Requirements require such party to restrict or prohibit access to any such properties or information.
6.12.3 Notification. Each of the parties hereto will notify the other promptly upon the receipt of: (a) any comments from any officials of any Governmental Entity in connection with any filings made pursuant hereto and (b) any request by any officials of any Governmental Entity for amendments or supplements to any filings made pursuant to, or information provided to comply in all material respects with, any applicable Legal Requirement. Whenever any event occurs that is required to be set forth in an amendment or supplement to any filing made pursuant to Section 6.12.1 the Parent, the Acquisition Sub or Arrow, as the case may be, will promptly inform the other of such occurrence and cooperate in filing with the applicable Governmental Entity such amendment or supplement.
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6.12.4 Best Efforts. Each of the parties agrees to use best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Transaction and the transactions contemplated hereby, as well as the Merger and the transactions contemplated in connection therewith, including using best efforts to accomplish the following: (a) the taking of all reasonable acts necessary to cause the conditions set forth in Article 7 to be satisfied; (b) the obtaining of all necessary actions or nonactions, waivers, consents, approvals, orders and authorizations from Governmental Entities and the making of all necessary registrations, declarations and filings with Governmental Entities, if any, and the taking of all reasonable steps as may be necessary to avoid any suit, claim, action, investigation or proceeding by any Governmental Entity; (c) the obtaining of all necessary consents, approvals or waivers from third parties to the extent the failure to obtain any such consent, approval or waiver would prevent or materially hinder or delay any party’s ability to consummate the Transaction or any of the transactions contemplated hereby, or the Merger or any of the transactions contemplated in connection therewith; (d) the defending of any suits, claims, actions, investigations or proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed (it being understood that the costs of such defense shall be borne equally by Parent and Arrow); and (e) the execution or delivery of any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement.
6.12.5 Limitation on Divestiture. Notwithstanding anything in this Agreement to the contrary, nothing contained in this Agreement shall be deemed to require the Parent or Arrow or any Subsidiary or affiliate thereof to take or agree to take any Action of Divestiture. For purposes of this Agreement, an “Action of Divestiture” shall mean making proposals, executing or carrying out agreements or submitting to Legal Requirements providing for the license, sale or other disposition or holding separate (through the establishment of a trust or otherwise) of any assets or categories of assets that are material to the Parent and its Subsidiaries or to the Business, each taken as a whole, or the holding separate of stock or assets or imposing or seeking to impose any limitation on the ability of the Parent, Arrow or any of its Subsidiaries, to conduct their respective businesses or own such assets or to acquire, hold or exercise full rights of ownership of the Business except to the extent not material to the Parent and its Subsidiaries, or the Business, each taken as a whole.
ARTICLE 7
CONDITIONS PRECEDENT
7.1 Conditions Precedent to the Obligations of Each Party. The obligations of the parties hereto to effect the Transaction shall be subject to the fulfillment at or prior to the Closing of the following conditions, any of which conditions may be waived in writing prior to Closing by the party for whose benefit such condition is imposed:
7.1.1 No Illegality; Consents. There shall not have been any action taken, and no statute, rule or regulation shall have been enacted, by any state, federal or other (including foreign) government agency, including under the HSR Act or the Exon-Xxxxxx Amendment to Section 721 of the Defense Production Act of 1950, since the date of this Agreement that would prohibit or materially restrict the Transaction or any other material transaction contemplated hereby. | |
7.1.2 No Injunction. No injunction or restraining or other order issued by a court of competent jurisdiction that prohibits or materially restricts the consummation of the Transaction contemplated hereby shall be in effect (each party agreeing to use all reasonable efforts to have any injunction or other order immediately lifted), and no action or proceeding shall have been commenced or threatened in writing seeking any injunction or restraining or other order that seeks to prohibit, restrain, invalidate or set aside consummation of the transactions contemplated hereby; provided, that to the extent a Governmental Entity is not a party to the suit, action or proceeding, Parent believes that such suit, action or proceeding has a reasonable likelihood of success. |
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7.2 Conditions Precedent to Obligation of Parent, Federal and Acquisition Sub to Consummate the Transaction. The obligation of Parent, Federal and Acquisition Sub to consummate the Transaction shall be subject to the fulfillment at or prior to the Closing of the following additional conditions, any of which conditions may be waived in writing by Parent, Federal or Acquisition Sub prior to Closing:
7.2.1 Representations and Warranties. (a) The representations and warranties of Arrow set forth in this Agreement and the representations and warranties of Arrow set forth in the Intellectual Property Agreement, taken as a whole, were true to the Knowledge of Arrow when made in all material respects, and (b) the representations and warranties of Arrow contained in Sections A1, A2, A3 and A23 of Appendix A shall be true and correct in all material respects as of the Closing Date, with the same force and effect as if made on and as of the Closing Date; and Arrow shall have delivered to Parent a certificate to that effect, dated the Closing Date and signed on behalf of Arrow by each of the (a) Chairman and Chief Executive Officer and (b) Chief Financial Officer of Arrow. | |
7.2.2 Agreements and Covenants. Arrow shall have performed in all material respects all of its agreements and covenants set forth herein that are required to be performed at or prior to the Closing Date, such that Acquisition Sub’s ability to assume the Business as of the Closing date shall not be impaired in any material respect; and Arrow shall have delivered to Parent a certificate to that effect, dated as of the Closing Date and signed on behalf of Arrow by each of the (a) Chairman and Chief Executive Officer and (b) Chief Financial Officer of Arrow. | |
7.2.3 Certain Conditions to the Merger Agreement. None of the following shall have occurred since the date of this Agreement and be continuing such that consummation of the Transaction is impracticable: (a) any general suspension of trading in, or limitation on prices for, securities on the Toronto Stock Exchange, the New York Stock Exchange or the Nasdaq Stock Market, (b) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or Canada (whether or not mandatory), (c) a material adverse change in or material disruption of conditions in the market for syndicated bank credit facilities that would materially impair the ability to syndicate loans by banks or other financial institutions, including any limitation (whether or not mandatory) by any Governmental Entity on the extension of credit generally by banks or other financial institutions in the United States or Canada, or (d) a commencement or, if already commenced, a material worsening, of a war, armed hostilities or other national or international calamity directly or indirectly involving the United States or Canada or any terrorist activities which materially and adversely affects (i) Crossbow, (ii) Arrow, or (iii) Parent and the Business, taken as a whole, or (e) changes in legal or regulatory conditions to the extent such changes have a material, adverse and disproportionate impact on Parent relative to other business entities engaged in substantially the same line or lines of business; | |
7.2.4 Legal Opinions. Parent, Federal, Acquisition Sub and Bank of America, N.A. shall have received an opinion from Xxxxxx & Xxxxxx LLP, counsel to Arrow, in substantially the form attached as Exhibit C and an opinion from Xxxxxxxx, Xxxxxx & Finger, P.A., counsel to Arrow, in substantially the form attached as Exhibit D. | |
7.2.5 Ancillary Agreements. Each of the Ancillary Agreements shall have been duly executed by each party thereto. | |
7.2.6 Closing Documents. Arrow shall have delivered to Parent the closing certificate described hereafter in this paragraph and such closing documents as the Parent shall reasonably request (other than additional opinions of counsel). The closing certificate, dated as of the Closing Date, duly executed by Arrow’s secretary, shall certify as to (a) the signing authority, incumbency and specimen signature of the signatories of this Agreement and other documents signed on behalf of Arrow in connection herewith, (b) the resolutions adopted by the board of directors of Arrow authorizing and approving the execution, delivery and performance of this Agreement and the other documents executed in connection herewith and the consummation of the transactions contemplated hereby and thereby and state that such resolutions have not been modified, amended, revoked or rescinded and remain in full force and effect, and (c) the charter documents and by-laws of Arrow. |
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7.2.7 Material Adverse Effect. Arrow shall not have suffered a Dagger Material Adverse Effect since the date of this Agreement or, if not disclosed or reflected in any Schedule to this Agreement delivered on the date hereof, since the Balance Sheet Date. |
7.3 Conditions to Obligations of Arrow to Consummate the Transaction. The obligation of Arrow to consummate the Transaction shall be subject to the fulfillment at or prior to the Closing of the following additional conditions, any of which may be waived in writing by Arrow prior to Closing:
7.3.1 Representations and Warranties. The representations and warranties of Parent, Federal and Acquisition Sub contained in Appendix B shall be true and correct in all material respects on and as of the Closing Date, with the same force and effect as if made on and as of the Closing Date; and Parent shall have delivered to Arrow a certificate to that effect, dated the date of the Closing and signed on behalf of Parent by each of the (a) Chairman of the Board, President and Chief Executive Officer and (b) Chief Financial Officer of Parent. | |
7.3.2 Agreements and Covenants. Parent, Federal and Acquisition Sub shall have performed in all material respects all of their agreements and covenants set forth herein that are required to be performed at or prior to the Closing Date; and Parent shall have delivered to Arrow a certificate to that effect, dated as of the Closing Date and signed on behalf of Parent by each of the (a) Chairman of the Board, President and Chief Executive Officer and (b) Chief Financial Officer of Parent. | |
7.3.3 Closing Documents. Parent, Federal and Acquisition Sub shall have delivered to Arrow closing certificates of Parent, Federal and Acquisition Sub and such other closing documents as Arrow shall reasonably request (other than additional opinions of counsel). Each of the closing certificates of Parent, Federal and Acquisition Sub, dated as of the Closing Date, duly executed by the secretary of Parent, Federal and Acquisition Sub, respectively, shall certify as to (a) the signing authority, incumbency and specimen signature of the signatories of this Agreement and other documents signed on behalf of Parent, Federal and Acquisition Sub in connection herewith, (b) the resolutions adopted by the board of directors of Parent, Federal and Acquisition Sub authorizing and approving the execution, delivery and performance of this Agreement and the other documents executed in connection herewith and the consummation of the transactions contemplated hereby and thereby and state that such resolutions have not been modified, amended, revoked or rescinded and remain in full force and effect, and (c) the Certificate of Incorporation and By-Laws of Parent, the Certificate of Incorporation and By-Laws of Federal and the Certificate of Incorporation and By-Laws of Acquisition Sub. | |
7.3.4 Successful Acquisition. All Offer Conditions (as defined in the Merger Agreement) shall have been satisfied and/or waived, and Crossbow or its Merger Sub shall have, on or before Closing, taken up and become unconditionally obligated to pay for the shares of common stock of Arrow tendered to Crossbow or Merger Sub in the Offer (as defined in the Merger Agreement). | |
7.3.5 Payment of Purchase Price. Parent shall have tendered the Purchase Price to Arrow pursuant to the provisions of Section 2.4 hereof. |
ARTICLE 8
OTHER PROVISIONS
8.1 Termination Events. This Agreement may be terminated and the Transaction abandoned at any time prior to the Closing Date:
(a) by mutual written consent of Parent, Arrow and Crossbow; | |
(b) by Parent, if (i) the representations and warranties of Arrow set forth in this Agreement and the representations and warranties of Arrow set forth in the Intellectual Property Agreement, taken as a whole, were to the Knowledge of Arrow materially untrue when made, (ii) any representation or warranty of Arrow set forth in this Agreement shall have become untrue such that the condition set forth in Section 7.2.1(b) would be incapable of being satisfied by the Final Date; provided, that none of Parent, |
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Federal and Acquisition Sub have breached any of their respective representations, warranties and obligations hereunder in any material respect; or (iii) there shall have been a breach by Arrow of any of its covenants or agreements hereunder such that the condition set forth in Section 7.2.2 would be incapable of being satisfied by the Final Date, and Arrow has not cured such breach within ten (10) business days after notice by Parent, Federal or Acquisition Sub thereof; provided that none of Parent, Federal and Acquisition Sub have breached any of their respective representations, warranties and obligations hereunder in any material respect; and, provided, further, that no cure period shall be required for a breach which by its nature cannot be cured; | |
(c) by Arrow, if (i) any representation or warranty of Parent, Federal or Acquisition Sub set forth in this Agreement shall have been materially untrue when made (ii) any representation or warranty of Parent, Federal or Acquisition Sub set forth in this Agreement shall have become untrue such that the condition set forth in Section 7.3.1 would be incapable of being satisfied by the Final Date; provided, that Arrow has not breached any of its representations, warranties and obligations hereunder in any material respect; or (iii) there shall have been a breach by Parent, Federal or Acquisition Sub of any of their respective covenants or agreements hereunder such that the condition set forth in Section 7.3.2 would be incapable of being satisfied by the Final Date, and Parent, Federal or Acquisition Sub, as the case may be, has not cured such breach within ten (10) business days after notice by Arrow thereof; provided that Arrow has not breached any of its representations, warranties and obligations hereunder in any material respect; and, provided, further, that no cure period shall be required for a breach which by its nature cannot be cured; | |
(d) by Arrow, if Parent, Federal or Acquisition Sub shall have withdrawn, modified or amended in any material respect its approval of this Agreement or the Transaction, or taken any public position inconsistent with its approval; provided, that Arrow has not breached any of its representations, warranties and obligations hereunder in any material respect; | |
(e) by any party hereto, if the Merger Agreement shall have been terminated in accordance with its terms; | |
(f) by either Parent or Arrow if: (i) there shall be a final, non-appealable order of a federal or state court in effect preventing consummation of the Transaction; (ii) there shall be any final action taken, or any statute, rule, regulation or order enacted, promulgated or issued or deemed applicable to the Transaction by any Governmental Entity which would make consummation of the Transaction illegal or which would prohibit Parent’s, Federal’s, Acquisition Sub’s or any of their respective Subsidiaries’ or Affiliates’ ownership or operation of all or any portion of the Business, the Dagger Assets or the assets and properties of the Dagger Subsidiaries, or compel Parent, Federal, Acquisition Sub or their respective Subsidiaries or Affiliates to dispose of or hold separate all or any material portion of their businesses, taken as a whole, as a result of the Transaction; or | |
(g) by either Parent or Arrow if the Transaction shall not have been consummated by the 75th day following the commencement of the Offer (as defined in and pursuant to the Merger Agreement) (the “Final Date”); provided, that the right to terminate this Agreement under this Section 8.1(g) shall not be available to any party whose failure to fulfill any material obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing Date to occur on or before such date. |
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To Parent, Federal and Acquisition Sub: | |
CACI International Inc | |
0000 Xxxxx Xxxxx Xxxx | |
Xxxxxxxxx, Xxxxxxxx 00000 | |
Attention: Dr. J. P. London, Chairman of the Board, | |
President and Chief Executive Officer | |
Facsimile: (000) 000-0000 | |
with copies to: | |
Xxxxxxx X. Xxxxxxxx | |
Executive Vice President, General Counsel and Secretary | |
CACI International Inc | |
0000 Xxxxx Xxxxx Xxxx | |
Xxxxxxxxx, Xxxxxxxx 00000 | |
Facsimile: (000) 000-0000 | |
and | |
Xxxx X. Xxxxxx | |
Xxxxx Xxxx LLP | |
000 Xxxxxxx Xxxxxxxxx | |
Xxxxxx, Xxxxxxxxxxxxx 00000 | |
Facsimile: (000) 000-0000 |
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To Arrow before the Closing: | |
American Management Systems, Incorporated | |
0000 Xxxxxx Xxxx | |
00xx Xxxxx | |
Xxxxxxx, XX 00000 | |
Attention: Xxxxxx X. Xxxxxxx | |
Chairman and Chief Executive Officer | |
Facsimile: (000) 000-0000 | |
with copies to: | |
Xxxxx X. Xxxxxxxx | |
Executive Vice President, General Counsel, Chief Risk Officer and | |
Secretary | |
American Management Systems, Incorporated | |
0000 Xxxxxx Xxxx | |
00xx Xxxxx | |
Xxxxxxx, XX 00000 | |
Facsimile: (000) 000-0000 | |
and | |
Xxxxx X. Xxxxx | |
Xxxxxx & Xxxxxx | |
0000 Xxxxxx Xxxxxxxxx | |
Xxxxx 000 | |
XxXxxx, Xxxxxxxx 00000 | |
Facsimile: (000) 000-0000 | |
To Crossbow and Merger Sub, and after the Closing, Arrow: | |
CGI Group Inc. | |
0000 Xxxxxxxxxx Xxxxxx Xxxx | |
0xx Xxxxx | |
Xxxxxxxx, Xxxxxx X0X 0X0 | |
Attention: Xxxxx Xxxxx | |
Chairman of the Board and Chief Executive Officer | |
Facsimile: (000) 000-0000 | |
with a copy to: | |
Xxxx-Xxxx Xxxxxxxx | |
XxXxxxxx Xxxxxxxx LLP | |
Le Windsor | |
0000 Xxxx Xxxxxx | |
0xx Xxxxx | |
Xxxxxxxx, Xxxxxx X0X 0X0 | |
Facsimile: (000) 000-0000 |
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herein (including the Ancillary Agreements). This Agreement, and such other agreements among the parties contemplated by or referred to herein (including the Ancillary Agreements) may not be amended, except in a writing, signed by all parties to this Agreement, whether or not such party to this Agreement is a party to such other agreement. Arrow may not waive any of its rights hereunder without the written consent of Crossbow, which consent shall not be unreasonably withheld or delayed. No party hereto shall amend the Merger Agreement without the consent of Parent, which consent shall not be unreasonably withheld or delayed. |
8.9 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its principles of conflicts of laws.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have duly executed this Asset Purchase Agreement under seal as of the date first above written.
CACI INTERNATIONAL INC |
By: | /s/ J. P. LONDON |
|
|
J. P. London, Chairman of the Board, | |
President and Chief Executive Officer | |
CACI, INC. — FEDERAL |
By: | /s/ J. P. LONDON |
|
|
J. P. London, Chairman of the Board, | |
President and Chief Executive Officer | |
DAGGER ACQUISITION CORPORATION |
By: | /s/ J. P. LONDON |
|
|
J. P. London, Chairman of the Board, | |
President and Chief Executive Officer | |
AMERICAN MANAGEMENT SYSTEMS, INCORPORATED |
By: | /s/ XXXXXX X. XXXXXXX |
|
|
Xxxxxx X. Xxxxxxx | |
Chairman and Chief Executive Officer |
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CGI GROUP INC. |
By: | /s/ XXXXX XXXXX |
|
|
Xxxxx Xxxxx | |
Chairman of the Board | |
and Chief Executive Officer | |
CGI VIRGINIA CORPORATION |
By: | /s/ XXXXX XXXXX |
|
|
Xxxxx Xxxxx | |
Chairman of the Board | |
and Chief Executive Officer |
[Signature Page to Asset Purchase Agreement]
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APPENDIX A
A1 Corporate Status. Arrow is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with the requisite corporate power to own, operate and lease its properties and to carry on its business as now being conducted. Except as set forth on Schedule A1, Arrow is duly qualified or licensed to do business as a foreign corporation and is in good standing in all jurisdictions in which the character of the properties owned or held under lease by it or the nature of the business transacted by it makes qualification necessary, except where failure to be so qualified would be immaterial. Schedule A1 provides a list of the states and other jurisdictions in which (i) any Dagger Subsidiary is qualified to conduct business, (ii) any Dagger Facility is located or (iii) any Dagger Employee conducts business on behalf of the Business (excluding any conduct of business or performance of services at client locations).
A2 Subsidiaries. X.X. Xxxxxxxxxx & Co. and Karcher Group, Inc. constitute all of Arrow’s Subsidiaries involved with the Business (each a “Dagger Subsidiary,” and, collectively, the “Dagger Subsidiaries”). Arrow owns all of the capital stock and other equity interests of the Dagger Subsidiaries, and the date on which Arrow acquired or organized each such entity is listed opposite the name of such entity on such schedule. There are no outstanding subscriptions, options, warrants, conversion rights or other rights, securities, agreements or commitments obligating any Dagger Subsidiary to issue, sell or otherwise dispose of shares of its capital stock or other equity interests, or any securities or obligations convertible into, or exercisable or exchangeable for, any shares of its capital stock or other equity interests. There are no voting trusts or other agreements or understandings to which any of Arrow or any Dagger Subsidiary (Arrow and each Dagger Subsidiary each individually a “Dagger Company,” and, collectively, the “Dagger Companies”) is a party with respect to the voting of the shares of the capital stock or other equity interests of any Dagger Subsidiary and no Dagger Subsidiary is a party to, or bound by, any outstanding restrictions, options or other obligations, agreements or commitments to sell, repurchase, redeem or acquire any of its securities. Except as set forth on Schedule A2, each Dagger Subsidiary is duly qualified or licensed to do business as a foreign corporation and is in good standing in all jurisdictions in which the character of the properties owned or held under lease by it or the nature of the business transacted by it makes qualification necessary, except where failure to be so qualified would be immaterial.
A3 Authority for Agreement; Noncontravention
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A4 Financial Statements. Attached as Schedule A4 are a consolidated balance sheet for the Reported Business as of December 31, 2003 and statement of operations for the year then ended. Collectively, the financial statements referred to in the immediately preceding sentence are sometimes referred to herein as the “Dagger Financial Statements” and the Reported Business’s balance sheet as of December 31, 2003 is referred to herein as the “Dagger Balance Sheet.” The Dagger Balance Sheet (including any related notes) fairly presents in all material respects the Reported Business’s financial position as of its date, and the statement of operations included in the Dagger Financial Statements (including any related notes) fairly presents in all material respects the Reported Business’s results of operations for the period therein set forth, each having been prepared and compiled in accordance with GAAP, it being understood that the Dagger Financial Statements have been prepared on a pro forma basis, reflecting the separation of the Reported Business from Arrow. “Reported Business” means the “Defense and Intelligence Group” of Arrow (excluding any business performed in Canada by a Dagger Company) together with the business of the Dagger Subsidiaries (including any federal civilian, state and local engagements of such Dagger Subsidiaries) on a consolidated basis. To the Knowledge of Arrow, there are no significant deficiencies or material weaknesses in the design or operation of Arrow’s internal controls which could adversely affect Arrow’s ability to record, process, summarize and report financial data relating to the Business. To the Knowledge of Arrow, there is no fraud relating to the Business, whether material or not, that involves management or other employees who have a significant role in Arrow’s internal controls.
A5 Absence of Material Adverse Changes. Except as set forth on Schedule A5, since December 31, 2003 (the “Balance Sheet Date”), Arrow has not suffered a Dagger Material Adverse Effect, and, to the Knowledge of Arrow, there has not occurred or arisen any event, condition or state of facts of any character that would reasonably be expected to result in a Dagger Material Adverse Effect.
A6 Absence of Undisclosed Liabilities. Except as set forth on Schedule A6, the Reported Business has no Liabilities that are not fully reflected or provided for on, or disclosed in the notes to, the balance sheets included in the Dagger Financial Statements, except (a) Liabilities incurred in the ordinary course of business since the Balance Sheet Date, none of which individually or in the aggregate has had or could reasonably be expected to be material, (b) Liabilities permitted or contemplated by this Agreement, (c) Liabilities not within the Knowledge of Arrow that are not required to be disclosed by Arrow under GAAP, (d) Liabilities for future performance under contracts, and (e) Liabilities expressly disclosed on the Schedules delivered hereunder.
A7 Compliance with Applicable Law, Charter and By-Laws. Each Dagger Company has all requisite licenses, permits and certificates from all Governmental Entities necessary to conduct the Business as currently conducted, and to own, lease and operate their respective properties used in the Business in the manner currently held and operated (collectively, “Permits”), except as set forth on Schedule A7 and except for any Permits the absence of which, either singly or in the aggregate, is immaterial and would not reasonably be expected to have a material effect or prevent or materially delay the Closing. All of such Permits are in full force and effect. Each Dagger Company is in compliance in all material respects with the terms and conditions related to such Permits. There are no proceedings in progress, pending or, to the Knowledge of Arrow, threatened, which may result in revocation, cancellation, suspension, or any materially adverse modification of any of such Permits. The Business is not being, and has not been, conducted in violation of any applicable law, statute, ordinance, regulation, rule, judgment, decree, order, Permit, concession, grant or other authorization
A-2
A8 Litigation and Proceedings. Except for any claim, action, suit or proceeding set forth on Schedule A8, (a) there is no investigation by any Governmental Entity with respect to the Business pending or, to the Knowledge of Arrow, threatened, nor has any Governmental Entity notified any Dagger Company an intention to conduct the same; (b) there is no claim, action, suit, arbitration or proceeding pending or, to the Knowledge of Arrow, threatened against or involving any Dagger Company and involving the Business, any of the Dagger Assets or any of the assets or properties of any Dagger Subsidiary, at law or in equity, or before any arbitrator or Governmental Entity; and (c) there are no judgments, decrees, injunctions or orders of any Governmental Entity or arbitrator outstanding against any Dagger Company (i) affecting the Business, the Dagger Assets or the assets or properties of any Dagger Subsidiary or (ii) which create a Dagger Obligation in each case to the extent that the resolution of such dispute or claim will be binding on Acquisition Sub or a Dagger Subsidiary or give rise to a Dagger Obligation.
A-3
A9.8 No Changes in Accounting, Closing Agreement, Installment Sale. No Dagger Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) beginning after the Closing Date as a result of any (a) change in method of accounting for a taxable period ending on or prior to the Closing Date under Code section 481(c) (or any corresponding or similar provision of state, local or foreign income Tax law), other than any such change required as a result of the transactions occurring at Closing pursuant to this Agreement; (b) “closing agreement” as described in Code section 7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (c) deferred intercompany gain or any excess loss account described in Treasury Regulations under Code section 1502 (or any corresponding or similar provision of state, local or foreign income Tax law); (d) installment sale or open transaction disposition made on or prior to the Closing Date; or (e) prepaid amount received on or prior to the Closing Date.
A10 Employee Benefit Plans
A-4
A10.4 Dagger Subsidiaries’ Plans
(a) Schedule A10.4(a) lists each material Employee Benefit Plan that (i) is sponsored, maintained, administered, contributed to or required to be contributed to by any of Dagger Subsidiaries or to which any of the Dagger Subsidiaries is a party, (ii) covers any current or former Dagger Employee, any director of any Dagger Subsidiary or any person formerly associated with the Business, and (iii) will continue to be sponsored, maintained or administered by a Dagger Subsidiary immediately following Closing (collectively, the “Dagger Subsidiary Plans”).
(b) Arrow has made available to Parent (i) accurate and complete copies of all Dagger Subsidiary Plan documents and all amendments thereto, and (if applicable) all current documents establishing or constituting any related trust, annuity contract, insurance contract or other funding instruments, and the most recent summary plan descriptions (if any) relating to such Dagger Subsidiary Plans, (ii) accurate and complete copies of the most recent financial statements and actuarial reports with respect to all Dagger Subsidiary Plans for which financial statements or actuarial reports are required or have been prepared, (iii) accurate and complete copies of all annual reports and summary annual reports for all Dagger Subsidiary Plans (for which annual reports are required) for the three most recent plan years, and (iv) its employee policies and procedures. Except as disclosed on Schedule A10.4(b), none of the Dagger Subsidiaries maintains or contributes to any Dagger Subsidiary Plan subject to Title IV of ERISA, nor does any Dagger Subsidiary have a current or contingent obligation to contribute to any multiemployer plan (as defined in Section 3(37) of ERISA).
(c) None of the Dagger Subsidiaries nor any ERISA Affiliate thereof has engaged in or been a party to any “prohibited transaction” as defined in Section 4975 of the Code and Section 406 of ERISA that could subject any Dagger Subsidiary or any ERISA Affiliate thereof to any material tax or penalty on “prohibited transactions” imposed by Section 4975 of the Code.
(d) Except as specifically provided in this Agreement or as set forth in Schedule A10.4(d), no Dagger Employee will become entitled to any material bonus, severance or similar benefit (including acceleration of vesting or exercise of an incentive award) that is contingent upon the occurrence of the transactions contemplated by this Agreement.
A-5
(e) To the Knowledge of Arrow, there are no pending or threatened actions, suits, proceedings, or claims against or relating to any Dagger Subsidiary Plans other than routine benefit claims by persons entitled to benefits thereunder, nor is any Dagger Subsidiary Plan the subject of any pending or, to the Knowledge of Arrow, threatened investigation or audit by the Internal Revenue Service, Department of Labor or the Pension Benefit Guaranty Corporation.
(f) All employee contributions, including elective deferrals, to any Dagger Subsidiary’s 401(k) plan have been segregated from the Dagger Subsidiary’s general assets and deposited into the trust established pursuant to the 401(k) plan in a timely manner in accordance with the “plan asset” regulations of the Department of Labor.
(g) With respect to any Dagger Subsidiary Plan that is an employee welfare benefit plan (within the meaning of Section 3(1) of ERISA (a “Welfare Plan”), (i) each Welfare Plan for which contributions are claimed by any Dagger Subsidiary as deductions under any provision of the Code is in material compliance with all applicable requirements pertaining to such deduction, (ii) with respect to any welfare benefit fund (within the meaning of Section 419 of the Code) related to a Welfare Plan, there is no disqualified benefit (within the meaning of Section 4976(b) of the Code) that would result in the imposition of a material tax under Section 4976(a) of the Code to any Dagger Subsidiary, and (iii) any Dagger Subsidiary Plan that is a group health plan (within the meaning of Section 4980B(g)(2) of the Code) materially complies with the applicable material requirements of COBRA, the Family and Medical Leave Act of 1993, the Health Insurance Portability and Accountability Act of 1996, the Women’s Health and Cancer Rights Act of 1996, the Newborns’ and Mothers’ Health Protection Act of 1996, or any similar provisions of applicable state law applicable to employees of Arrow or any of its Subsidiaries.
(h) Except as set forth on Schedule A10.4(h), (i) none of the Dagger Subsidiary Plans promises or provides retiree medical or other retiree welfare benefits to any person except as required by applicable law, and neither Arrow nor any Dagger Subsidiary has represented, promised or contracted to provide such retiree benefits to any employee, former employee, director, consultant or other person, except to the extent required by applicable law, and (ii) no Dagger Subsidiary Plan or employment agreement provides health benefits that are not insured through an insurance contract. Each Dagger Subsidiary Plan is amendable and terminable unilaterally by the Dagger Subsidiary at any time subject to applicable Legal Requirements and no Dagger Subsidiary Plan, plan documentation or agreement, summary plan description or other written communication distributed generally to Dagger Employees by its terms prohibits the Dagger Subsidiary from amending or terminating any such Dagger Subsidiary Plan.
A11 A11 Employment-Related Matters
A11.2 Employee and Consultant Lists
(a) Arrow has heretofore delivered to Acquisition Sub a list (the “Employee List”) dated as of March 9, 2004 containing the name of each Dagger Employee, and each such person’s level title, role, starting date, annual salary, target bonus, together with a list of such employees and their respective level of security clearance. No third party has asserted to Arrow any claim that either the continued employment by, or
A-6
(b) Schedule 1.3A provides a materially accurate and complete list of the Dagger Consultants used in the Business. To the Knowledge of Arrow, the Dagger Consultants identified on Schedule 1.3A qualify as “independent contractors” under applicable laws.
A12 Environmental
A-7
A13 No Undisclosed Broker’s or Finder’s Fees. Except as set forth on Schedule A13, no Dagger Company has paid or become obligated to pay any fee or commission to any broker, finder, financial advisor or intermediary in connection with the transactions contemplated by this Agreement.
A14 Assets Other Than Real Property
A15.1 Dagger Real Property. No Dagger Company owns any real property used in the Business.
A-8
A16 Agreements, Contracts and Commitments
A17 Employee Agreements. Except as set forth on Schedule A17, each Dagger Employee has executed the AMS Employee Confidentiality and Intellectual Property Rights Agreement in substantially the forms attached as Exhibit E, and to the Knowledge of Arrow, no Dagger Employee or Dagger Consultant in the course of the performance of his or her duties to Arrow is in violation of any term of any employment or consulting contract, proprietary information and inventions agreement, non-competition agreement, or any other contract or agreement relating to the relationship of any such employee, officer or consultant with any Dagger Company or any previous employer.
A19 Banking Relationships. Schedule A19 shows the names and locations of all banks and trust companies in which any Dagger Subsidiary has accounts, lines of credit or safety deposit boxes or Arrow has accounts in each case where associated exclusively with Dagger Engagements, and, with respect to each such account, line of credit or safety deposit box, the names of all Persons authorized to draw thereon or to have access thereto, as well as the account and other numbers of designation thereof.
A20 Absence of Certain Relationships. Except as set forth on Schedule A20, none of (a) any Dagger Company, (b) any officer of any Dagger Company, or (c) any member of the immediate family of any Person listed in clause (b) of this sentence, has any financial or employment interest in any subcontractor, supplier, or customer of any Dagger Company (other than holdings in publicly held companies of less than one percent (1%) of the outstanding capital stock of any such publicly held company) relating to the Business.
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A22.5 Sanctions. To the Knowledge of Arrow, neither the United States Government nor any prime contractor or higher-tier subcontractor under a Government Contract nor any other Person has notified any Dagger Company, in writing, of any actual or alleged violation or breach of any statute, regulation, representation, certification, disclosure obligation, contract term, condition, clause, provision or specification except where such violation or breach would reasonably be expected to be immaterial. No Dagger Company has received any show cause, cure, deficiency, default or similar notices relating to any Dagger Government Contract except where such violation or breach would reasonably be expected to be immaterial. No Dagger Company or any director, officer, employee, consultant or Affiliate thereof has been or is not now suspended, debarred, or proposed for suspension or debarment from government contracting, and to the Knowledge of Arrow, no facts exist which could cause or give rise to such suspension or debarment, or proposed suspension or debarment. No determination of non-responsibility has ever been issued against any Dagger Company with respect to any quotation, bid or proposal for a Government Contract.
A22.6 Terminations. Except as described in Schedule A22.6, no Government Contract of any Dagger Company relating to the Business has been terminated for default within 24 months prior to the date of this Agreement. Except as described in Schedule A22.6, no Dagger Company has received any notice in writing, terminating or indicating an intent to terminate any Active Government Contract for convenience.
A22.7 Assignments. Except as described in Schedule A22.7, no Dagger Company has made any assignment of any Dagger Government Contract or of any interest in any Dagger Government Contract to any Person other than one of the Dagger Companies. Except as described in Schedule A22.7, no Dagger Company
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A22.8 Property. Arrow is in compliance with all applicable Legal Requirements with respect to the possession and maintenance of all government furnished property (as defined in the FAR), and to the Knowledge of Arrow, the Dagger Subsidiaries are in compliance with such Legal Requirements.
A23 Additional Liabilities. None of Parent, Federal, Acquisition Sub or any of their respective Affiliates, directors, officers or employees as a consequence of the terms of this Agreement or the occurrence of the Transaction shall become subject to any obligation other than the Dagger Obligations and the other obligations explicitly described in this Agreement or any of the Ancillary Agreements.
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APPENDIX B
B1 Corporate Status of Parent, Federal and Acquisition Sub. Each of Parent, Federal and Acquisition Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with the requisite corporate power to own, operate and lease its properties and to carry on its business as now being conducted.
B2 Authority for Agreement; Noncontravention
B2.1 Authority. Each of Parent, Federal and Acquisition Sub has the corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the boards of directors of Parent, Federal and Acquisition Sub and no other corporate proceedings on the part of Parent, Federal or Acquisition Sub are necessary to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. This Agreement and the other agreements contemplated hereby to be signed by Parent, Federal or Acquisition Sub have been duly executed and delivered by Parent, Federal and/ or Acquisition Sub, as the case may be, and constitute valid and binding obligations of Parent, Federal and/ or Acquisition Sub, as the case may be, enforceable against Parent, Federal and/ or Acquisition Sub in accordance with their terms, subject to the qualifications that enforcement of the rights and remedies created hereby and thereby are subject to (a) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other laws of general application affecting the rights and remedies of creditors, (b) general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law) and (c) the availability of specific performance or other equitable or legal remedies specified herein.
B2.2 No Conflict. Neither execution and delivery of this Agreement by Parent, Federal or Acquisition Sub, nor the performance by Parent, Federal or Acquisition Sub of its obligations hereunder, nor the consummation by Parent, Federal or Acquisition Sub of the transactions contemplated hereby will (a) conflict with or result in a violation of any provision of the Certificate of Incorporation or by-laws of Parent, Federal or Acquisition Sub, or (b) with or without the giving of notice or the lapse of time, or both, conflict with, or result in any violation or breach of, or constitute a default under, or result in any right to accelerate or result in the creation of any lien, charge or encumbrance pursuant to, or right of termination under, any provision of any note, mortgage, indenture, lease, instrument or other agreement, Permit, concession, grant, franchise, license, judgment, order, decree, statute, ordinance, rule or regulation to which Parent, Federal, Acquisition Sub or any of Parent’s other Subsidiaries is a party or by which any of them or any of their assets or properties is bound or which is applicable to any of them or any of their assets or properties. Except for filings that may be required under the HSR Act, no authorization, consent or approval of, or filing with or notice to, any Governmental Entity is necessary for the execution and delivery of this Agreement by Parent, Federal or Acquisition Sub or the consummation by Parent, Federal or Acquisition Sub of the transactions contemplated hereby, except for such consents, authorizations, filings, approvals and registrations which if not obtained or made would not, individually or in the aggregate, prevent or materially delay the consummation of the Transaction by Parent, Federal or Acquisition Sub.
B3 Financing. Parent has entered into a $350,000,000 term loan and a $200,000,000 revolving credit facility to permit Acquisition Sub to consummate the Transaction.
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LIST OF EXHIBITS AND SCHEDULES
Exhibit | Description | |||
A | Intellectual Property Agreement | |||
B | Press Releases | |||
C | Form of Opinion of Counsel to American Management Systems, Incorporated (Xxxxxx & Xxxxxx LLP) | |||
D | Form of Opinion of Counsel to American Management Systems, Incorporated (Xxxxxxxx, Xxxxxx & Finger, P.A.) | |||
E | Forms of Arrow Employee Confidentiality and Intellectual Property Rights Agreement |
Schedule | ||||
1.3A | Dagger Consultants | |||
1.3B | Dagger Employees | |||
2.1.1 | Dagger Engagements | |||
2.1.2 | Dagger Completed Engagements | |||
2.1.4 | Dagger Leases | |||
2.1.8 | Dagger Tangible Assets | |||
2.1.12 | Permits | |||
2.2 | Excluded Assets | |||
5.1 | Conduct of Business of Arrow | |||
6.7.1 | Tax Matters — Allocation of Purchase Price | |||
A1 | Corporate Status | |||
A2 | Dagger Subsidiaries | |||
A3.2 | No Conflict | |||
A4 | Financial Statements | |||
A5 | Absence of Material Adverse Changes | |||
A6 | Absence of Undisclosed LiabilitiesA9.5 | |||
A7 | Compliance with Applicable Law, Charter and By-Laws | |||
A8 | Litigation and | |||
A9.1 | Tax Matters — Filing of Returns | |||
A9.5 | Collapsible Corporations, Golden Parachutes, Real Property Holding Corporations | |||
A10.1 | Employee Benefit Plans — List of Plans/ Plan Determinations | |||
A10.4(a) | Employee Benefit Plans — Dagger Subsidiaries’ Plans — List of Plans | |||
A10.4(b) | Employee Benefit Plans — Dagger Subsidiaries’ Plans — Multiemployer Plans | |||
A10.4(d) | Employee Benefit Plans — Dagger Subsidiaries’ Plans — Acceleration of Rights | |||
A10.4(h) | Employee Benefit Plans — Dagger Subsidiaries’ Plans — Retiree Benefits | |||
A11.1 | Employment-Related Matters — Labor Relations | |||
A12.1 | Environmental — Environmental Laws | |||
A12.2 | Environmental — Environmental Claims | |||
A12.3 | Environmental — No Basis for Claims | |||
A13 | No Undisclosed Broker’s or Finder’s Fee | |||
A14.1 | Assets Other Than Real Property — Title | |||
A14.2 | Assets Other Than Real Property — Accounts Receivable | |||
A15.2 | Real Property — Dagger Leases | |||
A16.1 | Agreements, Contracts and Commitments — Dagger Agreements | |||
A16.2 | Agreements, Contracts and Commitments — Validity |
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Schedule | Description | |||
A17 | Employee Agreements | |||
A19 | Banking Relationships | |||
A20 | Absence of Certain Relationships | |||
A22.1 | Government Contracts — Generally | |||
A22.3 | Government Contracts — Compliance with Law and Regulation and Contractual Terms; Inspection and Certification | |||
A22.4 | Government Contracts — Disputes, Claims and Litigation | |||
A22.6 | Government Contracts — Terminations | |||
A22.7 | Government Contracts — Assignments | |||
5.1 | Conduct of Business of Arrow | |||
6.7.1 | Tax Matters — Allocation of Purchase Price |
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