Exhibit 2.2
PURCHASE AGREEMENT
dated as of December 10, 1998
by and among
CONDOR TECHNOLOGY SOLUTIONS, INC.,
GLOBAL CORE STRATEGIES, INC.,
and
The Sole Stockholder of GLOBAL CORE STRATEGIES, INC.
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made as of December 10,
1998 by and among CONDOR TECHNOLOGY SOLUTIONS, INC., a Delaware corporation
("CONDOR"), GLOBAL CORE STRATEGIES, INC., a Connecticut corporation ("GLOBAL"),
and XXXXX XXXX, the sole stockholder of GLOBAL ("XXXX").
WHEREAS, CONDOR desires to purchase, and GLOBAL desires to sell,
certain assets of GLOBAL, including the goodwill and all assets necessary for
the operation of GLOBAL's business, on the terms and conditions set forth in
this Agreement; and
WHEREAS, in consideration of the direct and indirect benefits accruing
to XXXX as the sole stockholder of GLOBAL, XXXX has agreed to join in GLOBAL's
representations, warranties and covenants hereunder in order to induce CONDOR to
enter into this Agreement, without which inducement CONDOR would not have
entered into this Agreement;
WHEREAS, CONDOR shall have the right to assign its rights hereunder to
GLOBAL SUB (as hereinafter defined);
WHEREAS, unless the context otherwise requires, capitalized terms used
in this Agreement or in any schedule or exhibit attached hereto and not
otherwise defined herein shall have the following meanings for all purposes of
this Agreement:
"Affiliate" means a Person that directly or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, a specified Person. For the purposes hereof, the term "control" (including
the terms "controlling," "controlled by" and "under common control with") means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Balance Sheet Date" means September 30, 1998.
"Benefit Plan" means any Plan, existing at the Closing Date or prior
thereto, established or to which contributions have at any time been made by
GLOBAL, any ERISA Affiliate, or any predecessor of any of the foregoing, under
which any employee or former employee of GLOBAL, or any beneficiary thereof, is
covered, is eligible for coverage or has benefit rights.
"CONDOR" has the meaning set forth in the first paragraph of this
Agreement.
"CONDOR Charter Documents" has the meaning set forth in Section 3.1.
"CONDOR's Closing Documents" has the meaning set forth in Section
1.7(b)
"CONDOR Stock" means the common stock, par value $.01 per share, of
CONDOR.
"Closing" means the consummation of the transactions contemplated by
this Agreement on the Closing Date.
"Closing Date" has the meaning set forth in Section 1.6.
"Code" means the Internal Revenue Code of 1986, as amended.
"Earnout Price" has the meaning set forth in Section 1.4.
"Earnout Payment Date" has the meaning set forth in Section 1.4(c).
"Environmental Requirements" has the meaning set forth in Section 2.10.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Person who is, or at any time was, a member
of a controlled group (within the meaning of Section 412(n)(6) of the Code) that
includes, or at any time included, GLOBAL or any predecessor of GLOBAL.
"Expiration Date" has the meaning set forth in Section 2.
"GAAP" means generally accepted accounting principles of the United
States.
"GLOBAL Charter Documents" has the meaning set forth in Section 2.1(a).
"GLOBAL Closing Documents" has the meaning set forth in Section 1.7(a).
"GLOBAL Interim Balance Sheet" is a statement which fairly presents
GLOBAL's financial condition, assets and liabilities, and owners' equity as of
September 30, 1998, and which is attached hereto as Schedule 1.
"GLOBAL Stock" means the common stock, without par value, of GLOBAL.
"GRANITE" means Granite Complete Solutions, LLC, a Connecticut limited
liability company of which XXXX is a member.
"Governmental Authority" means any governmental, regulatory or
administrative body, agency, subdivision or authority, any court or judicial
authority, or any public, private or industry regulatory authority, whether
national, federal, state, local or otherwise.
"Hazardous Materials" has the meaning set forth in Section 2.10(b).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (15 U.S.C. Section 18a) and the rules and regulations
promulgated thereunder.
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"Intellectual Property" means all trademarks, service marks, trade
dress, trade names, patents and copyrights and any registration or application
for any of the foregoing, and any trade secret, invention, process, know-how,
computer software or technology systems, and all of a party's rights thereto.
"Knowledge," "knowledge," "the best knowledge of," "known to" or words
of similar import used herein with respect to GLOBAL and XXXX shall mean the
actual knowledge of XXXX, as the sole stockholder and chief executive officer of
GLOBAL, together with the knowledge a reasonable business person in XXXX'x
position would have obtained after making reasonable inquiry and after
exercising reasonable diligence with respect to the matters at hand.
"Laws" has the meaning set forth in Section 2.18.
"Management Agreement" has the meaning set forth in Section 1.7.
"Material Adverse Effect" means, with respect to any Person, any event
or occurrence which would have a material adverse effect on such Person's
business, condition (financial or other), properties, financial results, or to
the knowledge of XXXX and GLOBAL, business prospects.
" Material Contract" means any lease, instrument or agreement set forth
on Schedule 2.9, 2.10, 2.11, 2.12, 2.13, 2.15 or 2.16.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1933 Act" means the Securities Act of 1933, as amended.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any natural person, corporation, limited liability
company, partnership, proprietorship, other business organization, trust, union,
association or Governmental Authority.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, or whether for the benefit of a single
individual or more than one individual including, but not limited to, any
"employee benefit plan" within the meaning of Section 3(3) of ERISA.
"Price Determination Period" has the meaning set forth in Section
1.3(b).
"Returns" has the meaning set forth at the end of Section 2.19.
"Schedule" means each Schedule attached hereto, which shall reference
the relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
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"SEC" means the United States Securities and Exchange Commission.
"Statutory Liens" has the meaning set forth in Section 4.3(e).
"Tax" or "Taxes" has the meaning set forth at the end of Section 2.19.
"Taxing Authority" has the meaning set forth at the end of Section
2.19.
"Third Person" has the meaning set forth in Section 8.3.
"XXXX" has the meaning set forth in the first paragraph of this
Agreement.
"Year 2000 Compliant" means, with respect to GLOBAL's information
technology (including computer software, computer firmware, and computer
hardware, as well as similar or related items of automated, computerized or
software systems that are used or relied on by GLOBAL in the conduct of its
business), that such information technology is designed to be used prior to,
during and after the calendar Year 2000 A.D., and the information technology
used during each such time period will accurately receive, provide and process
date/time data (including, but not limited to, calculating, comparing and
sequencing) from, into and between the 20th and 21st centuries, including the
years 1999 and 2000, and leap year calculations, and will not malfunction, cease
to function, or provide invalid or incorrect results as a result of date/time
data.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1. SALE AND TRANSFER OF GLOBAL ASSETS; CLOSING
1.1 The GLOBAL Assets.
(a) At the Closing, GLOBAL will sell, convey, transfer and
deliver to CONDOR, and CONDOR will purchase and receive from GLOBAL, all of the
assets, rights, and tangible and intangible property of GLOBAL owned by GLOBAL
and used in GLOBAL's business on the Closing Date (the "Purchased Assets"). The
Purchased Assets shall include all property and assets owned by GLOBAL and/or
used in its business, of every kind and description, wherever located, including
all property, tangible or intangible, real, personal or mixed, accounts
receivable, securities, deposits on contractual obligations or otherwise, claims
and rights under contracts, GLOBAL's right to use the names "Global Core
Strategies" and "Global Core Software" any derivatives or combinations thereof,
and any other trade names previously used by GLOBAL, any logo or xxxx used by
GLOBAL, and all books and records of GLOBAL relating to its business, all as the
same shall exist on the Closing Date, including, without limitation, the assets
and property listed or described in the Xxxx of Sale attached hereto as Exhibit
1.1 (the "Xxxx of Sale"), but excluding any and all assets listed or described
on Schedule B to the Xxxx of Sale.
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(b) As soon after the Closing as practicable, GLOBAL shall
take all actions required (including filing appropriate charter amendments with
the Connecticut Secretary of State and executing assignments of trademarks and
tradenames for filing with the Patent and Trademark Office) to enable CONDOR or
CONDOR's wholly-owned subsidiary which will conduct GLOBAL's business with the
Purchased Assets after the Closing ("GLOBAL SUB") to use the names "Global Core
Strategies" and "Global Core Software" and any derivative or combination thereof
that it may elect, and GLOBAL shall make no further use of any of such names.
1.2 Purchase Price. The purchase price (the "Purchase Price") for the
Purchased Assets will be equal to (a) the "Closing Price," as defined below,
plus (b) the "Earnout Price" as defined in Section 1.4, minus (c) the "Net Worth
Adjustment," as defined in Section 1.5, plus (d) the amount of liabilities
assumed by CONDOR pursuant to the Assignment and Assumption Agreement attached
hereto as Exhibit 1.2 (the "Assumption Agreement"). The Closing Price shall be
Thirty Two Million Dollars ($32,000,000). The consideration described in this
Section 1.2 shall be allocated among the Purchased Assets in a manner to be set
forth in a Schedule 1.2 reasonably acceptable to the parties and to be appended
hereto as soon after the Closing as practicable.
1.3 Payment of the Closing Price. The Closing Price shall be paid as
follows:
(a) An amount equal to Twenty One Million Five Hundred
Thousand Dollars ($21,500,000) shall be payable at Closing by cashier's or
certified check or wire transfer of same day funds to GLOBAL.
(b) CONDOR shall deliver to GLOBAL shares of CONDOR Stock
valued at Eight Million Dollars ($8,000,000). The value of CONDOR Stock shall be
determined based on the average of the closing price per share for CONDOR Stock
for the ten (10) trading days immediately preceding the date which is three (3)
trading days immediately prior to the Closing Date, the Earnout Payment Date, or
other payment date, as applicable, as reported on the Nasdaq National Market.
The foregoing ten (10) day period shall be referred to as the "Price
Determination Period." In the event that there shall be no trade on any trading
day within the Price Determination Period, or if the Nasdaq National Market
shall fail to report a closing price on any such day, the closing price for such
day shall be the average of the closing bid price and the closing asked price as
reported by the Nasdaq National Market. In the event of a dividend payable in
shares of CONDOR Stock, or the combination or subdivision of CONDOR Stock, the
calculation for determining the value per share of CONDOR Stock shall be
appropriately adjusted to reflect such event.
(c) An amount equal to Two Million Five Hundred Thousand
Dollars ($2,500,000) (the "Escrowed Funds") shall be retained in escrow by
CONDOR pursuant to an Escrow Agreement in the form attached hereto as Exhibit
1.3(c) (the "Escrow Agreement"), subject to preparation of the Closing Date
Balance Sheet and any Net Worth Adjustment to the Purchase Price determined and
effectuated in accordance with Section 1.5 of this Agreement, and subject to
GLOBAL's and XXXX'x indemnity obligations hereunder.
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1.4 Earnout Price.
(a) The Earnout Price shall be determined as follows: For the
twelve (12) month period ending December 31, 1999, the Earnout Price shall be
the lesser of $9,000,000 or Six (6) times the amount of the "Pre-tax Earnings"
(as defined in Section 1.4(b) below) that exceeds $5,000,000 but is less than
$6,500,000, if any, for 1999.
(b) For purposes of this Agreement, "Pre-tax Earnings" shall
mean, as to each fiscal year or portion thereof, the earnings attributable to
GLOBAL's business, as conducted by GLOBAL SUB, after interest, depreciation and
amortization, but before federal and state taxes, calculated in accordance with
GAAP, subject to the following adjustments:
(i) No effect shall be given to any intercompany
costs or charges imposed by CONDOR for services provided with respect to GLOBAL
SUB (other than charges for services provided by CONDOR that were previously
arranged for and independently paid by GLOBAL);
(ii) No effect shall be given to the amortization of
intangible assets resulting from the transactions contemplated by this
Agreement;
(iii) The amount of management fees paid by GRANITE
to GLOBAL SUB pursuant to the Management Agreement referenced in Section 1.7
below, shall be included in the amount determined in Subsection 1.4(b) above;
and
(iv) Pre-tax Earnings for the twelve (12) month
period ending December 31, 1999 shall reflect all costs or other charges imposed
for services or products provided by CONDOR to GLOBAL SUB for use in connection
with the servicing of GLOBAL's customers.
Pre-tax Earnings shall be determined by GLOBAL in accordance with GAAP as
reported on financial statements prepared at the direction of XXXX and shall be
subject to review and audit by CONDOR or its representatives (at CONDOR's
expense and without charge to Pre-tax Earnings) if there are any questions which
cannot be resolved directly between CONDOR and GLOBAL management personnel.
(c) The Earnout Price, if any, payable for 1999 shall be paid
ninety (90) days after the end of 1999 (the "Earnout Payment Date") and shall be
paid as follows: (i) Twenty Five Percent (25%) of the Earnout Price shall be
paid by CONDOR by cashier's or certified check or wire transfer, and (ii)
Seventy Five Percent (75%) of the Earnout Price shall be paid by CONDOR's
delivery of CONDOR Stock valued with respect to the Earnout Payment Date as set
forth in Section 1.3(b).
(d) CONDOR agrees that it shall, through December 31, 1999,
vest in GLOBAL SUB the assets and business of GLOBAL, and continue the operation
of GLOBAL SUB as a wholly-owned subsidiary of CONDOR owning the assets and
continuing the business of GLOBAL, and that it shall not voluntarily cause the
dissolution or termination of GLOBAL SUB's corporate existence.
1.5. Net Worth Adjustment. The "Net Worth Adjustment" shall be the
amount, if any, by which Four Million Dollars ($4,000,000) exceeds GLOBAL's "Net
Worth" (defined below).
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(a) For the purposes hereof, "Net Worth" shall be determined
based upon the balance sheets prepared for GLOBAL as of the Closing Date (the
"Closing Date Balance Sheet") and shall be equal to GLOBAL's stockholders'
equity (within the meaning of GAAP) as of the Closing Date. Closing Date Net
Worth shall be determined by GLOBAL in accordance with GAAP as reported on the
Closing Date Balance Sheet prepared at the direction of XXXX within fifteen (15)
days after the Closing, and shall be subject to review and audit by CONDOR or
its representatives (at CONDOR's expense and without charge to Pre-tax Earnings)
if there are any questions which cannot be resolved directly between CONDOR and
GLOBAL management personnel. CONDOR shall complete such audit within thirty (30)
days after receipt of the Closing Date Balance Sheet.
(b) CONDOR shall deduct the Net Worth Adjustment determined
in accordance with Section 1.5(a) above, if any, from the Escrowed Funds,
provided that if the amount paid to the Escrow Agent is less than the Net Worth
Adjustment after final determination thereof, GLOBAL shall, upon demand, pay the
amount of the shortfall to CONDOR.
1.6. Closing. The purchase and sale (the "Closing") provided for in
this Agreement will take place on December 9, 1998, or such other date as the
parties shall mutually determine (the "Closing Date").
1.7 Closing Obligations. At the Closing:
(a) GLOBAL and XXXX shall deliver or cause to be delivered to
CONDOR the following ("GLOBAL Closing Documents"):
(i) The Xxxx of Sale;
(ii) The Assumption Agreement;
(iii) Assignments of Lease, signed by each of
GLOBAL's landlords, in the form of Exhibit 1.7(a)(iii) attached hereto (the
"Lease Assignments"); provided that CONDOR may elect to proceed with Closing
notwithstanding GLOBAL's inability to obtain GLOBAL's landlords' consents to the
Lease Assignments, it being understood and agreed that CONDOR's election will
not have the effect of excusing GLOBAL's and XXXX'x obligation to provide
indemnity for such failure pursuant to Section 8.1(e);
(iv) A Management Services Agreement in the form of
Exhibit 1.7(a)(iv) executed by GRANITE and GLOBAL SUB (the "Management
Agreement");
(v) A Consulting Agreement between CONDOR and XXXX in
the form of Exhibit 1.7(a)(v), executed by XXXX (the "Consulting Agreement");
(vi) Employment agreements in the form of Exhibit
1.7(a)(vi), executed by such key employees of GLOBAL and/or GRANITE as shall be
identified by CONDOR and XXXX and listed on Schedule 1.7(a)(vi) hereto
(collectively, the "Employment Agreements");
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(vii) The Escrow Agreement, executed by GLOBAL and
XXXX;
(viii) If XXXX identifies such employees prior to the
Closing, one or more option grant certificates in the form of Exhibit
1.7(a)(viii) hereto (the "Stock Option Agreements") pursuant to which CONDOR
shall grant to those employees of GLOBAL SUB identified on Schedule 1.7(a)(viii)
hereto (including XXXX) non-qualified stock options under the CONDOR Stock
Option Plan, exercisable for an aggregate of One Hundred Thousand (100,000)
shares of CONDOR Stock, executed by the employees identified on Schedule
1.7(a)(viii) hereto. The options referenced herein shall be exercisable in three
(3) annual installments at an exercise price equal to the market value of the
CONDOR Stock as of the date of grant;
(ix) A certificate executed by GLOBAL and XXXX to the
effect that (A) except as otherwise stated in such certificate, GLOBAL's and
XXXX'x representations and warranties in this Agreement were accurate in all
respects as of the date of this Agreement and are accurate in all respects as of
the Closing Date as if made on the Closing Date; and (B) GLOBAL and XXXX have
performed and complied with all covenants and conditions required to be
performed or complied with by GLOBAL and/or XXXX prior to or at the Closing; and
(x) A Certificate of Existence for GLOBAL as of a
recent date from the Connecticut Secretary of State.
(b) CONDOR shall deliver or cause to be delivered to GLOBAL
and XXXX the following ("CONDOR's Closing Documents"):
(i) A certificate executed by CONDOR to the effect
that (A) except as otherwise stated in such certificate, CONDOR's
representations and warranties in this Agreement were accurate in all material
respects as of the date of this Agreement and are accurate in all material
respects as of the Closing Date as if made on the Closing Date; (B) CONDOR has
performed and complied with all covenants and conditions required to be
performed or complied with by it prior to or at the Closing; and (C) attesting
to the incumbency of officers executing documents on behalf of CONDOR;
(ii) The portions of the Purchase Price described in
Sections 1.3(a) and 1.3(b);
(iii) The Escrowed Funds to the Escrow Agent in
accordance with Section 1.3(c), together with the Escrow Agreement executed by
CONDOR and the Escrow Agent;
(iv) The Xxxx of Sale, Assumption Agreement, and
Lease Assignments;
(v) The Consulting Agreement and the Employment
Agreements executed by CONDOR;
(vi) The Stock Option Agreements executed by CONDOR;
and
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(vii) A good standing certificate for CONDOR from the
State of Delaware.
(c) CONDOR on the one hand, and GLOBAL and XXXX on the other
hand, shall also deliver such other documents, instruments, certificates, and
opinions as may be required by this Agreement or as otherwise necessary to
consummate the transactions contemplated hereby.
1.8. GLOBAL Employees. CONDOR shall, through GLOBAL SUB, employ all of
GLOBAL's employees, and all of such employees shall be hired at initial salaries
or wage rates of not less than the salaries or wages paid to them by GLOBAL as
of the Closing Date. The GLOBAL employees so employed by CONDOR shall be subject
to GLOBAL SUB's and CONDOR's personnel management and administrative policies,
procedures and guidelines. Unless a GLOBAL employee has an Employment Agreement
specifying different terms, each GLOBAL employee so hired shall be an employee
"at will." For periods after the Closing Date, CONDOR shall continue the
employee benefits provided by GLOBAL to its employees, subject to the following:
(a) GLOBAL SUB shall assume GLOBAL's liabilities arising after
the Closing Date under its 401(k) Plan, which shall be amended (i) to exclude
participation by GRANITE employees, and (ii) to exclude the plan's application
to all of GLOBAL's and GLOBAL SUB's ERISA Affiliates;
(b) GLOBAL SUB shall not assume any liability or
responsibility under GLOBAL's medical reimbursement plan; and
(c) CONDOR and GLOBAL SUB shall have the right, after January
1, 1999, to substitute CONDOR's employee benefits package for the benefits
previously provided by GLOBAL.
2. REPRESENTATIONS AND WARRANTIES OF GLOBAL AND XXXX
GLOBAL and XXXX, jointly and severally, represent and warrant to CONDOR
that all of the following representations and warranties in this Section 2 are
true and correct at the date of this Agreement. The parties agree that such
representations and warranties shall survive the Closing Date for a period of
eighteen (18) months (the last day of such period being the "Expiration Date"),
except that (a) the representations and warranties set forth in Section 2.19
hereof shall survive until such time as the statute of limitations period has
run for all tax periods ended on or prior to the Closing Date, which shall be
deemed to be the Expiration Date for Section 2.19, and (b) any representations
and warranties relating to potential claims of NgaiOn Young (the "Young Claims")
shall survive until such time as the statute of limitations for such claims has
run, which shall be deemed the Expiration Date for the Young Claims.
2.1 Due Organization. GLOBAL is a corporation duly incorporated and
validly existing under the laws of its state of its incorporation, and is duly
authorized and qualified in such state to do business under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places in such state and in the manner as now conducted, to own
or hold under lease the properties and assets in such state it now owns or holds
under lease, and to perform all of its obligations under the Material Contracts,
except where the absence of any of the foregoing would not have a Material
Adverse Effect. True, complete and correct copies of the Certificate or Articles
of Incorporation and By-laws, each as amended, of GLOBAL (the "GLOBAL Charter
Documents") will be delivered to CONDOR pursuant to
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Section 6.4 hereof. The minute books and stock records of GLOBAL, as heretofore
made available to CONDOR, are correct and complete in all material respects.
2.2 Authorization. XXXX has the power, capacity and authority, and
GLOBAL has the corporate power and authority, to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by GLOBAL and the consummation of the
transactions contemplated on its part have been authorized by its Board of
Directors and sole stockholder. No other corporate proceedings on the part of
GLOBAL are necessary to authorize the execution and delivery of this Agreement
by it or the consummation by it of the transactions contemplated on its part
hereby. This Agreement has been duly executed and delivered by GLOBAL and XXXX
and is a valid and binding agreement of each of GLOBAL and XXXX, enforceable in
accordance with its terms, subject to the operation and effect of applicable
bankruptcy, insolvency, moratorium, reorganization, receivership or other
similar laws, statutes or rules now or hereafter in effect affecting the rights
of creditors generally, and subject to the fact that enforceability of certain
provisions of this Agreement may require the application of certain principles
of equity which lie within the discretion of a court and which may be
unavailable. No present or former stockholder or other stakeholder in GLOBAL has
any claims against XXXX or GLOBAL which would result from or arise out of the
transactions contemplated hereby.
2.3 GLOBAL Stock. The authorized capital stock of GLOBAL is as set
forth in Schedule 2.3. All of the issued and outstanding shares of capital stock
of GLOBAL are owned by XXXX, free and clear of all liens, security interests,
pledges, charges, voting trusts, restrictions, encumbrances and claims of every
kind, other than those arising under applicable federal and state securities
laws. None of such shares were issued in violation of the preemptive rights of
any past or present stockholders.
2.4 Title to Purchased Assets. Except for leased property (in which it
holds a valid leasehold interest), and except as set forth on Schedule 2.4,
GLOBAL owns good and marketable title, free and clear of all liens and
encumbrances, to all of the material properties and assets shown on the GLOBAL
Financial Statements (defined below), or acquired thereafter, except to the
extent that such properties and assets have been disposed of for fair value in
the ordinary course of business consistent with past practice, and except for
such imperfections of title and encumbrances, if any, as are not substantial in
character, amount or extent and do not detract from the value, or interfere with
the present use, of the property subject thereto, or otherwise impair its
business operations.
2.5 [INTENTIONALLY OMITTED].
2.6 Financial Statements. XXXX has delivered to CONDOR copies of the
following financial statements: Balance Sheets and Income Statements, at and for
each of the years ended December 31, 1995, 1996 and 1997 and for the nine-month
period ended September 30, 1998 prepared by or on behalf of GLOBAL (the "GLOBAL
Financial Statements"). Each of the GLOBAL Financial Statements is consistent
with the books and records of GLOBAL (which, in turn, are accurate and complete
in all material respects) and fairly presents GLOBAL's financial condition,
assets and liabilities as of their respective dates and the results of
operations and cash flows for the periods related thereto in compliance with
GAAP, consistently applied among the periods which are the subject of the GLOBAL
Financial Statements.
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2.7 Liabilities and Obligations. XXXX and GLOBAL have delivered to
CONDOR an accurate list (which is set forth on Schedule 2.7) as of the Balance
Sheet Date of (i) all liabilities of GLOBAL in excess of $10,000 which are not
reflected in the GLOBAL Financial Statements at the Balance Sheet Date, and (ii)
all loan agreements, indemnity or guaranty agreements, bonds, mortgages, liens,
pledges or other security agreements to which GLOBAL is a party. To XXXX'x and
GLOBAL's knowledge, GLOBAL is Year 2000 Compliant. Except as set forth on
Schedule 2.7, since the Balance Sheet Date, GLOBAL has not incurred any material
liabilities of any kind, character and description, whether accrued, absolute,
secured or unsecured, contingent or otherwise, other than liabilities incurred
in the ordinary course of business. XXXX and GLOBAL have also set forth on
Schedule 2.7, in the case of those contingent liabilities related to pending or
threatened litigation, or other liabilities which are not fixed or are being
contested, the following information:
(a) a summary description of the liability, together with: (i)
copies of all relevant documentation relating thereto; (ii) amounts claimed and
any other action or relief sought; and (iii) the name of claimant(s) and all
other parties to the claim, suit or proceeding;
(b) the name of each court or agency before which such claim,
suit or proceeding is pending;
(c) the date such claim, suit or proceeding was instituted;
and
(d) a good faith and reasonable estimate of the maximum
amount, if any, which is likely to become payable with respect to each such
liability. If no estimate is provided, the estimate shall for purposes of this
Agreement be deemed to be zero.
2.8 Accounts and Notes Receivable. XXXX and GLOBAL have delivered to
CONDOR an accurate list (which is set forth on Schedule 2.8) of the accounts and
notes receivable of GLOBAL as of October 31, 1998, and including receivables
from and advances to employees and XXXX. Except to the extent reflected on
Schedule 2.8 or as otherwise disclosed to CONDOR in writing, the accounts, notes
and other receivables shown on Schedule 2.8 are and shall be, and XXXX and
GLOBAL have no reason to believe that any such account receivable is not or
shall not be, collectible in the amounts shown (in the case of the accounts and
notes receivable set forth on Schedule 2.8, net of reserves reflected in the
balance sheet calculated consistent with the reserves as of the Balance Sheet
Date).
2.9 Intellectual Property; Permits and Intangibles.
(a) GLOBAL owns or has licenses to all Intellectual Property
the absence of any of which would have a Material Adverse Effect on GLOBAL, and
GLOBAL has delivered to CONDOR an accurate list (which is set forth on Schedule
2.9(a)) of all material Intellectual Property owned by GLOBAL (other than
processes or know-how). Each item of material Intellectual Property owned by or
licensed by GLOBAL is valid and in full force and effect. Except as set forth on
Schedule 2.9(a), all right, title and interest in and to each item of
Intellectual Property owned by GLOBAL is not subject to any license or royalty
arrangement. To XXXX'x and GLOBAL's knowledge, and except as set forth on
Schedule 2.9(a), none of the Intellectual Property owned by or licensed by
GLOBAL nor any product sold or licensed by GLOBAL, infringes any Intellectual
Property right of any other entity and to XXXX'x and GLOBAL's
11
knowledge, no material Intellectual Property owned by GLOBAL is infringed upon
by any other entity, in each such case, except such infringement as would not
have a Material Adverse Effect. Except as specifically provided in Schedule
2.9(a) or 2.9(b), the transactions contemplated by this Agreement will not (i)
to XXXX'x and GLOBAL's knowledge, result in the infringement by GLOBAL of any
Intellectual Property right of any other entity, (ii) infringe any Intellectual
Property listed on Schedule 2.9(a), or (iii) result in a default under or a
breach or violation of, or adversely affect the rights and benefits afforded to
GLOBAL by, any licenses, franchises, permits or government authorizations listed
on Schedule 2.9(b).
(b) GLOBAL has delivered to CONDOR an accurate list and
description (which is set forth on Schedule 2.9(b)) of all material governmental
licenses, franchises, permits and other governmental authorizations, including
material permits, titles, licenses, franchises and certificates (it being
understood that a list of all environmental permits and other environmental
approvals is set forth on Schedule 2.10). The licenses, franchises, permits and
other governmental authorizations listed on Schedule 2.9(b) are valid, and
GLOBAL has not received any notice that any Governmental Authority intends to
cancel, terminate or not renew any such license, franchise, permit or other
governmental authorization, except for such cancellation, terminations or
failures to renew as would not have a Material Adverse Effect.
2.10 Environmental Matters.
(a) Except as set forth on Schedule 2.10:
(i) GLOBAL is and at all times has been in compliance
in all material respects with all Environmental Requirements, and
(ii) GLOBAL possesses all material permits, licenses
and certificates required by all Environmental Requirements, and has filed all
notices or applications required thereby.
As used herein, "Environmental Requirements" shall mean all applicable federal,
state and local laws, rules, regulations, ordinances and requirements relating
to pollution and protection of the environment, all as amended to date.
(b) Except as disclosed on Schedule 2.10 or as would not have
a Material Adverse Effect:
(i) GLOBAL has not been subject to, or received any
notice of any private, administrative or judicial action, or notice of any
intended private, administrative or judicial action relating to the presence or
alleged presence of Hazardous Materials in, under or upon any real property
currently or formerly owned, leased or used by (A) GLOBAL or (B) any other
Person that has, at any time, disposed of Hazardous Materials on behalf of
GLOBAL;
(ii) XXXX has no knowledge of any basis on which such
notice would be received by, or such action would be brought against, GLOBAL;
and
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(iii) There are no pending or, to the knowledge of
XXXX and GLOBAL, threatened actions or proceedings (or notices of potential
actions or proceedings) from any Governmental Authority or any other entity
regarding any matter relating to health, safety or protection of the environment
against GLOBAL.
"Hazardous Materials" for purposes of this Agreement shall include, without
limitation: (A) hazardous materials, hazardous substances, extremely
hazardous substances or hazardous wastes, as those terms are defined by the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq. ("CERCLA"), the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq. ("RCRA"), and any other
Environmental and Safety Requirements; (B) petroleum, including, without
limitation, crude oil or any fraction thereof which is liquid at standard
conditions of temperature and pressure (60 degrees Fahrenheit and 14.7 pounds
per square inch absolute); (C) any radioactive material, including, without
limitation, any source, special nuclear, or by-product material as defined in
42 U.S.C. Section 2011 et seq.; and (D) asbestos in any form or condition.
(c) XXXX does not have any knowledge of any past or present
events, conditions, circumstances, activities, practices, incidents or actions
which could reasonably be expected to interfere with or prevent continued
compliance with any material Environmental Requirements, give rise to any legal
obligation or liability, or otherwise form the basis of any claim, action, suit,
proceeding, hearing or investigation against or involving GLOBAL under any
Environmental Requirements or related common law theories which would have a
Material Adverse Effect except as identified on Schedule 2.10.
2.11 Personal Property. GLOBAL and XXXX have delivered to CONDOR an
accurate list (which is set forth on Schedule 2.11) of (a) all personal property
with a fair market value individually in excess of $10,000 which is included (or
that will be included) in "furniture, fixtures and equipment" (or similarly
named line item) on the balance sheet of GLOBAL as of the Balance Sheet Date,
(b) all other personal property owned by GLOBAL with a value individually in
excess of $10,000 (i) as of the Balance Sheet Date and (ii) acquired since the
Balance Sheet Date and (c) all leases and agreements in respect of personal
property with a value individually in excess of $10,000, including, in the case
of each of (a), (b) and (c), (1) true, complete and correct copies of all such
leases which have been provided to CONDOR's counsel, and (2) a listing of the
capital costs of all such assets which are subject to capital leases. Except as
set forth on Schedule 2.11, (i) all personal property with a value individually
in excess of $10,000 used by GLOBAL in its business is either owned by GLOBAL or
leased by GLOBAL pursuant to a lease included on Schedule 2.11, (ii) all of the
personal property listed on Schedule 2.11 is in good working order and
condition, ordinary wear and tear excepted, other than such property, the
condition of which would not have a Material Adverse Effect, and (iii) all
leases and agreements included on Schedule 2.11 are in full force and effect and
constitute valid and binding agreements of GLOBAL, and to XXXX'x and GLOBAL's
knowledge, of the other parties (and their successors) thereto in accordance
with their respective terms, except such agreements the invalidity of which
would not have a Material Adverse Effect.
2.12 Significant Customers; Material Contracts and Commitments. GLOBAL
has delivered to CONDOR an accurate list (which is set forth on Schedule 2.12)
of all of its significant customers, it being understood and agreed that a
"significant customer," for purposes of this Section 2.12, means a customer (or
Person or entity) representing 5% or more of GLOBAL's annual revenues as of the
Balance Sheet Date. Except to the extent set forth on Schedule 2.12, none of
GLOBAL's significant customers has
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canceled or substantially reduced or, to the knowledge of XXXX and GLOBAL, is
currently attempting or threatening to cancel, a contract or substantially
reduce utilization of the services provided by GLOBAL.
Except as listed or described on Schedule 2.12, as of or on the date
hereof, GLOBAL is not a party to or bound by, nor do there exist any, contracts
relating to or in any way affecting the operation or ownership of GLOBAL's
business that are of a type described below:
(a) any collective bargaining arrangement with any labor union
or any such agreement currently in negotiation or proposed;
(b) any contract for capital expenditures or the acquisition
or construction of fixed assets for or in respect of real property in excess of
$10,000, other than in GLOBAL's ordinary course of business;
(c) any contract, written or otherwise, for the purchase,
maintenance, or acquisition of services materials, supplies, merchandise,
machinery, equipment, parts or other property which requires aggregate future
payments by GLOBAL of greater than $10,000;
(d) any contract, written or otherwise, for the sale or
furnishing of services, materials, supplies, merchandise, machinery, equipment,
parts or other property which entitles GLOBAL to receive payments of greater
than $10,000;
(e) any contract relating to the borrowing of money, or the
guaranty of another Person's borrowing of money, including, without limitation,
all notes, mortgages, indentures and other obligations, agreements and other
instruments for or relating to any lending or borrowing, including assumed
indebtedness;
(f) any contract granting any Person a lien on any of the
assets of GLOBAL, in whole or in part;
(g) any contract for the cleanup, abatement or other actions
in connection with Hazardous Materials (as defined in Section 2.10), the
remediation of any existing environmental liabilities or relating to the
performance of any environmental audit or study;
(h) any contract granting to any Person a first-refusal,
first-offer or similar preferential right to purchase or acquire any of the
assets of GLOBAL's business other than in the ordinary course of business;
(i) any contract under which GLOBAL is
(i) a lessee or sublessee of any machinery,
equipment, vehicle or other tangible personal property or real property, or
(ii) a lessor of any real property or tangible
personal property owned by GLOBAL,
14
in either case having an original value in excess of $10,000;
(j) any contract providing for the indemnification of any
officer, director, employee or other Person, where such indemnification may
exceed the sum of $10,000;
(k) any joint venture or partnership contract; and
(l) any other contract with a term in excess of one year,
whether or not made in the ordinary course of business, which involves payments
in excess of $10,000.
GLOBAL has provided CONDOR with a true and complete copy of each
written Material Contract, including all amendments or other modifications
thereto. Except as set forth on Schedule 2.12 or as would not have a Material
Adverse Effect, each Material Contract is a valid and binding obligation of
GLOBAL, enforceable against GLOBAL in accordance with its terms, and is in full
force and effect. Except as set forth on Schedule 2.12, GLOBAL has performed all
material obligations required to be performed by it under each Material Contract
and neither GLOBAL nor, to the knowledge of XXXX and GLOBAL, any other party to
any Material Contract, are (with or without the lapse of time or the giving of
notice or both) in breach or default in any material respect thereunder; and
there exists no condition which, to the knowledge of XXXX and GLOBAL, would
constitute a breach or default thereunder. GLOBAL has not been notified that any
party to any Material Contract intends to cancel, terminate, not renew or
exercise an option under any Material Contract, whether in connection with the
transactions contemplated hereby or otherwise. No Material Contract is in an
"overrun" (as defined in Section 8.1(c) below) position.
2.13 Real Property.
(a) GLOBAL owns no real property.
(b) Schedule 2.13(b) includes an accurate list of real
property leases to which GLOBAL is a party. Counsel to CONDOR has been provided
with true, complete and correct copies of all leases and agreements in respect
of such real property leased by GLOBAL. Except as set forth on Schedule 2.13(b),
all of such leases included on Schedule 2.13(b) are in full force and effect and
constitute valid and binding agreements of GLOBAL and, to XXXX'x and GLOBAL's
knowledge, of the parties (and their successors) thereto in accordance with
their respective terms.
2.14 Insurance.
(a) GLOBAL has delivered to CONDOR:
(i) true and complete copies of all policies of
insurance to which GLOBAL is a party or under which GLOBAL, or any director or
officer of GLOBAL (in his capacity as a director or officer), is or has been
covered at any time within two (2) years preceding the date of this Agreement;
(ii) true and complete copies of all pending
applications for policies of insurance; and
15
(iii) any statement by the auditor of GLOBAL's
financial statements with regard to the adequacy of such entity's coverage or of
the reserves for claims.
(b) Schedule 2.14(b) describes:
(i) any formal self-insurance arrangement by or
affecting GLOBAL, including any reserves established thereunder; any contract or
arrangement, other than a policy of insurance, for the transfer or sharing of
any risk by GLOBAL; and
(ii) all material obligations of GLOBAL to third
parties with respect to insurance (including such obligations under leases and
service agreements), and identifies the policy under which such coverage is
provided.
(c) Schedule 2.14(c) sets forth, by year, for the current
policy year and each of the preceding two (2) policy years:
(i) a summary of the loss experience under each
policy;
(ii) a statement describing each claim under an
insurance policy for an amount in excess of $5,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by
insurer, type of insurance and
period of coverage; and
(C) the amount and a brief description
of the claim; and
(iii) a statement describing the loss experience for
all claims that were self-insured, including the number and aggregate cost of
such claims.
(d) Except as set forth on Schedule 2.14(d) or as would not
have a Material Adverse Effect::
(i) All policies to which GLOBAL is a party or that
provide coverage to GLOBAL:
(A) are valid, outstanding and
enforceable;
(B) taken together (including formal
self-insurance, if any), provide in
all material respects customary
insurance for the assets and the
operations of GLOBAL for all risks
normally insured against by a Person
carrying on the same business or
businesses of GLOBAL;
(C) are sufficient for compliance with
all legal requirements and Material
Contracts to which GLOBAL is a party
or by which it is bound; and
(D) will continue in full force and
effect following the Closing in
accordance with their respective
terms;
16
(ii) GLOBAL has not received:
(A) any refusal of coverage or any
notice that a defense will be
afforded with reservation of rights,
or
(B) any notice of cancellation or any
other indication that any insurance
policy is no longer in full force or
effect or will not be renewed or
that the issuer of any policy is not
willing or able to perform its
obligations thereunder;
(iii) GLOBAL has paid all premiums due, and has
otherwise performed all of its obligations, under each policy to which it is a
party or that provides coverage to it or any director thereof; and
(iv) GLOBAL has given notice to the insurer of all
claims known by it to be insured thereby.
2.15 Compensation; Employment Agreements; Organized Labor Matters.
(a) GLOBAL has delivered to CONDOR an accurate list (which is
set forth on Schedule 2.15) showing all officers, directors, and employees of
GLOBAL receiving annual compensation in excess of Forty Thousand Dollars
($40,000), listing all employment agreements with all officers, directors and
employees and the rate of compensation (and the portions thereof attributable to
salary, bonus and other compensation, respectively) of each of such Persons as
of (i) the Balance Sheet Date, and (ii) if different, the date hereof. GLOBAL
has provided to CONDOR true, complete and correct copies of any employment
agreements for Persons listed on Schedule 2.15. Since the Balance Sheet Date,
there have been no increases in the compensation payable or any special bonuses
to any officer, director, key employee or other employee, except ordinary salary
increases implemented on a basis consistent with past practices.
(b) Except as set forth on Schedule 2.15, there is no, and
within the last three (3) years GLOBAL has not experienced any, strike,
picketing, boycott, work stoppage or slowdown, other labor dispute, union
organizational activity, allegation, charge or complaint of unfair labor
practice, employment discrimination or other matters relating to the employment
of labor, pending or, to XXXX'x and GLOBAL's knowledge, threatened against
GLOBAL; nor is there, to the knowledge of XXXX and GLOBAL, any basis for any
such allegation, charge or complaint. There is no request directed to GLOBAL for
union or similar representation pending and, to XXXX'x and GLOBAL's knowledge,
no question concerning representation has been raised. To XXXX'x and GLOBAL's
knowledge, except as contemplated by Section 1.8 hereof, no key employee and no
group of employees has any plans to terminate employment with GLOBAL. GLOBAL has
complied in all material respects with all applicable laws relating to the
employment of labor, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the payment of social security and
other taxes, except where the failure to do so would not have a Material Adverse
Effect. GLOBAL is not liable for any arrearages of wages or any taxes or
penalties for failure to comply with any such laws, ordinances or regulation.
17
2.16 Employee Plans. GLOBAL has delivered to CONDOR an accurate listing
(which is set forth on Schedule 2.16) showing all Benefit Plans of GLOBAL,
together with true, complete and correct copies of such Benefit Plans,
agreements and any trusts related thereto, and classifications of employees
covered thereby as of the Balance Sheet Date. GLOBAL is not required to
contribute to any Benefit Plan pursuant to the provisions of any collective
bargaining agreement establishing the terms and conditions of employment of any
of GLOBAL's employees.
2.17 Compliance with ERISA. All Benefit Plans that are intended to
qualify under Section 401(a) of the Code have been determined by the Internal
Revenue Service to be qualified in form, and copies of such determination
letters (or, in the case of a standardized prototype plan, opinions) have been
delivered to CONDOR's counsel. Except as set forth on Schedule 2.17, all reports
and other documents required to be filed with any Governmental Authority or
distributed to plan participants or beneficiaries (including, but not limited
to, actuarial reports, audits or tax returns) have been timely filed or
distributed, and copies thereof have been provided to CONDOR. Neither XXXX, any
such Benefit Plan, GLOBAL, nor any "disqualified person" or "party in interest"
as such terms are defined in Section 4975 of the Code or Section 3(14) of ERISA
has engaged in any non-exempt transaction prohibited under the provisions of
Section 4975 of the Code or Section 406 of ERISA. No Benefit Plan has incurred
an accumulated funding deficiency, as defined in Section 412(a) of the Code and
Section 302(1) of ERISA, and GLOBAL has not incurred any liability for excise
tax or penalty due to the Internal Revenue Service nor any liability to the
PBGC. XXXX further represents that, except as set forth on Schedule 2.17:
(a) There have been no terminations, partial terminations or
discontinuance of contributions to any such Benefit Plan intended to qualify
under Section 401 (a) of the Code without notice to and approval by the Internal
Revenue Service;
(b) No such Benefit Plan subject to the provisions of Title IV
of ERISA has been terminated;
(c) There have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any Benefit Plan;
(d) GLOBAL has not incurred liability under Section 4062 of
ERISA;
(e) No circumstances exist pursuant to which GLOBAL could have
any direct or indirect liability whatsoever (including, but not limited to, any
liability to any multi-employer plan or the PBGC under Title IV of ERISA or to
the Internal Revenue Service for any excise tax or penalty, or being subject to
any statutory lien to secure payment of any such liability) with respect to any
Benefit Plan now or heretofore maintained or contributed to by any ERISA
Affiliate;
(f) GLOBAL is not now, nor can it as a result of its past
activities become, liable to the PBGC or to any multi-employer employee pension
benefit plan under the provisions of Title IV of ERISA;
18
(g) All Benefit Plans and the administration thereof are in
substantial compliance with their terms and all applicable provisions of ERISA
and the regulations issued thereunder, as well as with all other applicable
federal, state and local statutes, ordinances and regulations;
(h) All accrued contribution obligations of GLOBAL with
respect to any Benefit Plan have either been fulfilled in their entirety or are
fully reflected on the balance sheet of GLOBAL as of the Balance Sheet Date.
(i) No claim, lawsuit, arbitration or other action has been
threatened, asserted, or instituted against any Benefit Plan or related trust,
any trustee or fiduciaries thereof, GLOBAL, or any director, officer or employee
thereof;
(j) No Benefit Plan is under audit or investigation by any
Governmental Authority and no such completed audit, if any, has resulted in the
imposition of any tax or penalty;
(k) Each Benefit Plan intended to meet requirements for
tax-favored treatment under Sections 79, 105, 106, 117, 120, 125, 127, 129, 132
or 401(a) of the Code is in material compliance with applicable requirements
under the Code;
(l) With respect to each Benefit Plan that is funded fully or
partially through an insurance policy, GLOBAL has no liability in the nature of
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring on or
before the Balance Sheet Date;
(m) The consummation of the transactions contemplated by this
Agreement will not give rise to any liability, including, without limitation,
liability for severance pay, unemployment compensation or termination pay, or
accelerate the time of payment or vesting or increase the amount of compensation
or benefits due to any current, former, or retired employee or their
beneficiaries solely by reason of such transactions;
(n) Neither GLOBAL nor any ERISA Affiliate, maintains,
contributes to, or in any way provides for any benefits of any kind whatsoever
(other than under Section 4980B of the Code or Title I, Subtitle B, Part 6 of
ERISA, the federal Social Security Act or a plan qualified under Section 401(a)
of the Code) to any current or future retiree or terminated employee;
(o) Neither GLOBAL nor any officer or employee of GLOBAL, has
made any promises or commitments, whether legally binding or not, to create any
additional plan, agreement or arrangement, or to modify or change any existing
Benefit Plan; and
(p) GLOBAL has complied in all material respects with the
requirements of Section 4980B of the Code and Title I, Subtitle B, Part 6 of
ERISA.
2.18 Conformity with Law; Litigation. Except as set forth on Schedule
2.10 or Schedule 2.18, or as would not have a Material Adverse Effect, GLOBAL
has complied with all laws, rules, regulations, writs, injunctions, decrees, and
orders applicable to it or to the operation of its business
19
(collectively, "Laws") and has not received any notice of any alleged claim or
threatened claim, violation of, liability or potential responsibility under, any
such Law which has not heretofore been cured and for which there is no remaining
liability other than, in each case, those not having a Material Adverse Effect
on GLOBAL. Without limiting the generality of the foregoing, GLOBAL has complied
with all applicable federal, state and local Laws relating to antitrust and
trade regulations.
Except to the extent set forth on Schedule 2.7 or Schedule 2.10 or as
set forth on Schedule 2.18 (which shall disclose the parties to, nature of, and
relief sought for each matter to be disclosed on Schedule 2.18):
(a) There is no suit, action, proceeding, claim, order or, to
XXXX'x and GLOBAL's knowledge, investigation pending or, to XXXX'x and GLOBAL's
knowledge, threatened against either GLOBAL or any Benefit Plan, or any
fiduciary of any such Benefit Plan or, to the knowledge of XXXX and GLOBAL,
pending or threatened against any of the officers, directors or employees of
GLOBAL with respect to GLOBAL's business or proposed business activities or to
which GLOBAL is otherwise a party, which would have a Material Adverse Effect on
GLOBAL, before any court, or before any Governmental Authority (collectively,
"Claims"); nor, to XXXX'x and GLOBAL's knowledge, is there any basis for any
such Claims.
(b) GLOBAL is not subject to any judgment, order or decree of
any court or Governmental Authority; GLOBAL has not received any opinion or
memorandum from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage which may be material to its
business. GLOBAL is not engaged in any legal action to recover monies due it or
for damages sustained by it.
(c) Except as set forth on Schedule 2.18, GLOBAL's current
insurance is adequate to cover all pending or threatened Claims, GLOBAL has
given all required notice of such Claims to its appropriate insurance
carrier(s), and/or all such claims have been fully reserved for on the GLOBAL
Financial Statements. Schedule 2.18 lists the insurer for each Claim covered by
insurance or designates each Claim, or portion of each Claim, as uninsured and
the individual and aggregate policy limits for the insurance covering each
insured Claim and the applicable policy deductibles for each insured Claim.
Schedule 2.18 sets forth all closed litigation matters to which GLOBAL was a
party during the three (3) years preceding the Closing, the date such litigation
was commenced and concluded, and the nature of the resolution thereof (including
amounts paid in settlement or judgment).
2.19 Taxes. Except as set forth on Schedule 2.19:
(a) All material Returns required to have been filed by or
with respect to GLOBAL have been duly filed, and each such Return correctly and
completely reflects the Tax liability and all other information required to be
reported thereon in all material respects. All Taxes with respect to items or
periods covered by all such Returns (whether or not shown on any Return) owed by
GLOBAL have been paid.
20
(b) The provisions for Taxes due by GLOBAL in the GLOBAL
Financial Statements are sufficient for all unpaid Taxes, being current taxes
not yet due and payable, of GLOBAL.
(c) GLOBAL is not a party to any agreement extending the time
within which to file any Return. No claim has ever been made by any Taxing
Authority in a jurisdiction in which GLOBAL does not file Returns that it is or
may be subject to taxation by that jurisdiction that is unresolved or if
adversely determined would have a Material Adverse Effect on GLOBAL.
(d) GLOBAL has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party.
(e) There is no dispute or claim concerning any Tax liability
of GLOBAL either (i) claimed or raised by any Taxing Authority or (ii) otherwise
known to GLOBAL. No issues have been raised in any examination by any Taxing
Authority with respect to GLOBAL which, by application of similar principles,
reasonably could be expected to result in a proposed deficiency for any other
period not so examined. Schedule 2.19(e) lists all federal, state, local and
foreign income Tax Returns filed by GLOBAL for all taxable periods ended on or
after January 1, 1991, indicates those Returns, if any, that have been audited,
and indicates those Returns that currently are the subject of audit. GLOBAL has
delivered to CONDOR complete and correct copies of all federal, state, local and
foreign income Tax Returns filed by, and all Tax examination reports and
statements of deficiencies assessed against or agreed to by, GLOBAL since
January 1, 1991.
(f) GLOBAL has not waived any statute of limitations, the
waiver of which remains in effect on the date hereof, in respect of Taxes or
agreed to any extension of time with respect to any Tax assessment or
deficiency.
(g) GLOBAL has not made any payments, is not obligated to make
any payments, and is not a party to any agreement that under certain
circumstances could require it to make any payments, that are not deductible (i)
under Section 280G of the Code or (ii) as compensation under Section 162(m) of
the Code or any similar provision under state and/or local law.
(h) GLOBAL is not a party to any Tax allocation or sharing
agreement.
(i) GLOBAL is not a party to any joint venture, partnership or
other arrangement that is treated as a partnership for federal income Tax
purposes.
(j) To GLOBAL's and XXXX'x knowledge, the Internal Revenue
Service has not proposed or threatened accounting method changes of GLOBAL that
could give rise to an adjustment under Section 481 of the Code for periods after
the Closing Date.
(k) GLOBAL has not received any written ruling of a Taxing
Authority related to Taxes or entered into any written and legally binding
agreement with a Taxing Authority relating to Taxes.
21
(l) GLOBAL has disclosed (in accordance with Section
6662(d)(2)(B)(ii) of the Code) on its federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of federal
income Tax within the meaning of Section 6662(d) of the Code.
(m) GLOBAL is a "small business corporation" within the meaning
of Subchapter S of the Code and has maintained a valid election to be an "S
corporation" under Subchapter S of the Code and the equivalent provisions of all
applicable state income tax statutes since July 19, 1991.
For purposes of this Section 2.19, the following definitions
shall apply:
"Returns" means any returns, reports or statements (including
any information returns) required to be filed for purposes of a particular Tax
with any Taxing Authority or Governmental Authority.
"Tax" or "Taxes" means all federal, state, local or foreign
net or gross income, gross receipts, net proceeds, sales, use, ad valorem, value
added, franchise, bank shares, withholding, payroll, employment, excise,
property, deed, stamp, alternative or add-on minimum, environmental or other
taxes, assessments, duties, fees, levies or other governmental charges similar
to taxes, whether disputed or not, together with any interest, penalties,
additions to tax or additional amounts with respect thereto.
"Taxing Authority" means any Governmental Authority, board,
bureau, body, department or authority of any United States federal, state or
local jurisdiction or any foreign jurisdiction, having jurisdiction with respect
to any Tax.
2.20 No Violations. GLOBAL is not in violation of the GLOBAL Charter
Documents, and GLOBAL is not in default under any Material Contract. Except as
set forth on Schedule 2.20, (a) the rights and benefits of GLOBAL under the
Material Contracts will not be adversely affected by the transactions
contemplated hereby, and (b) the execution of this Agreement and the performance
by XXXX and GLOBAL of their obligations hereunder and the consummation by XXXX
and GLOBAL of the transactions contemplated hereby will not (i) result in any
violation or breach of, or constitute a default under, any of the terms or
provisions of the Material Contracts or the GLOBAL Charter Documents, or (ii)
require the consent, approval, waiver of any acceleration, termination or other
right or remedy or action of or by, or make any filing with or give any notice
to, any other party. Except as set forth on Schedule 2.20, none of the Material
Contracts requires notice to, or consent or approval of, any Governmental
Authority or other third party with respect to any of the transactions
contemplated hereby in order to remain in full force and effect and consummation
of the transactions contemplated hereby will not give rise to any right to
termination, cancellation or acceleration or loss of any material right or
benefit. Except as set forth on Schedule 2.20, none of the Material Contracts
prohibits or restricts GLOBAL from freely providing services to any other
customer or potential customer of GLOBAL.
2.21 Government Contracts. Except as set forth on Schedule 2.21, GLOBAL
is not a party to any governmental contract subject to price redetermination or
renegotiation.
2.22 Business Conduct. Except as set forth on Schedule 2.22, since the
Balance Sheet Date, GLOBAL has conducted its business only in the ordinary
course consistent with past custom and practices
22
and has incurred no liabilities other than in the ordinary course of business
consistent with past custom and practices. Except as forth on Schedule 2.22,
since the Balance Sheet Date, there has not been any:
(a) Material adverse change in GLOBAL's operations, condition
(financial or otherwise), operating results, assets, liabilities, employee,
customer or supplier relations or, to XXXX'x and GLOBAL's knowledge, business
prospects;
(b) Damage, destruction or loss of any property owned by
GLOBAL or used in the operation of the business, whether or not covered by
insurance, having a replacement cost or fair market value in excess of $10,000
affecting GLOBAL's property, financial status or business;
(c) Voluntary or involuntary sale, transfer, surrender,
abandonment or other disposition of any kind by GLOBAL of any assets or property
rights (tangible or intangible), having a replacement cost or fair market value
in excess of $10,000, except in each case the sale of inventory and collection
of accounts in the ordinary course of business consistent with past custom and
practices, other than the distributions to XXXX contemplated by Section 4.10;
(d) Loan or advance by GLOBAL to any party other than sales to
customers on credit in the ordinary course of business consistent with past
custom and practices;
(e) Except as specifically contemplated by Section 4.10, any
declaration, setting aside, or payment of any dividend or other distribution in
respect to GLOBAL's capital stock or ownership interests, any direct or indirect
redemption, purchase, or other acquisition of such stock, or the payment of
principal or interest on any note, bond, debt instrument or debt to any
Affiliate;
(f) Incurrence of debts, liabilities or obligations except
current liabilities incurred in connection with or for services rendered or
goods supplied in the ordinary course of business consistent with past custom
and practices, liabilities on account of taxes and governmental charges but not
penalties, interest or fines in respect thereof, and obligations or liabilities
incurred by virtue of the execution of this Agreement;
(g) Issuance by GLOBAL of any notes, bonds, or other debt
securities or any equity securities or securities convertible into or
exchangeable for any equity securities;
(h) Cancellation, waiver or release by GLOBAL of any material
debts, rights or claims, except in each case in the ordinary course of business
consistent with past custom and practices;
(i) Amendment of the GLOBAL Charter Documents;
(j) Amendment or termination of any Material Contract, other
than expiration of such contract in accordance with its terms;
(k) Change in accounting principles, methods or practices
(including, without limitation, any change in depreciation or amortization
policies or rates) utilized by GLOBAL;
23
(l) Discharge or satisfaction of any material liability,
encumbrance or payment of any material obligation or liability, other than
current liabilities paid in the ordinary course of business consistent with past
custom and practices or cancellation of any debts or claims;
(m) Sale or assignment by GLOBAL of any material tangible
assets other than in the ordinary course of business;
(n) Capital expenditures or commitments therefor by GLOBAL
other than in the ordinary course of business in excess of $10,000 in the
aggregate;
(o) Charitable contributions or pledges by GLOBAL in excess of
$5,000 in the aggregate;
(p) Mortgage, pledge or other encumbrance of any asset of
GLOBAL other than in the ordinary course of business;
(q) Adoption, amendment or termination of any Benefit Plan;
(r) Increase in the benefits provided under any Benefit Plan;
or
(s) An occurrence or event not included in clauses (a) through
(r) that has resulted in or might be expected to have a Material Adverse Effect
on GLOBAL, other than as permitted by clauses (a) through (r).
2.23 Deposit Accounts; Powers of Attorney. GLOBAL has delivered to
CONDOR an accurate schedule (which is set forth on Schedule 2.23) as of the date
of this Agreement of:
(a) the name of each financial institution in which GLOBAL has
accounts or safe deposit boxes;
(b) the names in which the accounts or boxes are held;
(c) the type of account and account number; and
(d) the name of each Person authorized to draw thereon or have
access thereto.
Schedule 2.23 also sets forth the name of each Person, corporation, firm or
other entity holding a general or special power of attorney from GLOBAL and a
description of the terms of such power of attorney.
2.24 Relations with Governments. GLOBAL has not made, offered or agreed
to offer anything of value to any governmental official, political party or
candidate for government office nor has it otherwise taken any action which
would cause GLOBAL to be in violation of the Foreign Corrupt Practices Act of
1977, as amended, or any law of similar effect.
24
2.25 Disclosure. The representations and warranties of XXXX and GLOBAL
contained in this Agreement, the Schedules to this Agreement provided by XXXX
and GLOBAL, the certificates and the other documents furnished by XXXX and
GLOBAL to CONDOR pursuant hereto, taken as a whole, present fairly the business
and operations of GLOBAL for the time periods with respect to which such
information was requested. GLOBAL's rights under the documents delivered
pursuant hereto would not be materially adversely affected by, and no statement
made herein would be rendered untrue in any material respect by, any other
document to which GLOBAL is a party, or to which its properties are subject, or
by any other fact or circumstance regarding GLOBAL (which fact or circumstance
was, or should reasonably, after due inquiry, have been known to XXXX and
GLOBAL) that is not disclosed pursuant hereto or thereto.
2.26 Prohibited Activities. Except as set forth on Schedule 2.26,
GLOBAL has not, between the Balance Sheet Date and the date hereof, taken any of
the actions set forth in Section 4.3.
2.27 Affiliate Transactions. Schedule 2.27 sets forth the parties to
and the date, nature and amount of (a) each transaction or series of similar
transactions (other than payments of salary and bonus which are reflected as
line items in the GLOBAL Financial Statements) involving the transfer of any
cash, property or rights in which the amount involved individually or
collectively exceeded $5,000 to or from GLOBAL, from, to, or for the benefit of
XXXX, a former stockholder, Affiliate or former Affiliate of GLOBAL ("GLOBAL
Affiliate Transactions") during the period commencing January 1, 1994 through
the date hereof, and (b) any existing commitments of GLOBAL to engage in the
future in any GLOBAL Affiliate Transactions. Each GLOBAL Affiliate Transaction
was effected on terms equivalent to those which would have been established in
an arm's-length negotiation, except as disclosed on Schedule 2.27.
2.28 HSR Compliance. GLOBAL is not engaged in manufacturing, has less
than $10 million in total assets, and has less than $100 million in annual
revenues (all as determined in accordance with the HSR Act).
2.29 Misrepresentation. None of the representations and warranties set
forth in this Agreement, the certificates and the other documents furnished to
CONDOR pursuant hereto, taken as a whole, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
Any disclosure on any Schedule attached hereto may be deemed to be incorporated
and disclosed on any other Schedule unless such additional disclosure could not
reasonably be concluded from the context of the actual disclosure. No disclosure
of any matter on any Schedule shall constitute a representation or admission by
XXXX or GLOBAL that such matter is "material" or would have a Material Adverse
Effect.
3. REPRESENTATIONS OF CONDOR
CONDOR represents and warrants to XXXX and GLOBAL that all of the
following representations and warranties in this Section 3 are true and correct
at the date of this Agreement, and that such representations and warranties
shall survive the Closing Date for a period of eighteen (18) months.
25
3.1 Due Organization. CONDOR is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
and is duly authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted, to own or hold under
lease the properties and assets it now owns or holds under lease, and to perform
all of its obligations under any material agreement to which it is a party or by
which its properties are bound. True, complete and correct copies of the
Certificate of Incorporation and By-Laws, each as amended, of CONDOR (the
"CONDOR Charter Documents") are attached to the Secretary's Certificate
delivered to XXXX in accordance with Section 5.6 hereof.
3.2 Authorization. The representatives of CONDOR executing this
Agreement have the authority to execute and deliver this Agreement and to bind
CONDOR to perform its obligations hereunder. The execution and delivery of this
Agreement by CONDOR and the performance by CONDOR of its obligations under this
Agreement and the consummation by CONDOR of the transactions contemplated hereby
have been, or will have been on or before the date of the Closing, duly
authorized by all necessary corporate action in accordance with applicable law
and the Certificate of Incorporation and By-Laws of CONDOR. Each share of CONDOR
Stock to be issued to XXXX on the Closing Date will be duly and validly
authorized and issued, free and clear of all liens, claims and other
encumbrances and fully paid and nonassessable. This Agreement constitutes the
valid and binding obligation of CONDOR, enforceable in accordance with its
terms.
3.3 Transaction Not a Breach. Neither the execution and delivery of
this Agreement by CONDOR nor its performance will violate, conflict with, or
result in a breach of any provision of any Law, rule, regulation, order, permit,
judgment, injunction, decree or other decision of any court or other tribunal or
any Governmental Authority binding on CONDOR or conflict with or result in the
breach of any of the terms, conditions or provisions of the Certificate of
Incorporation or the By-Laws of CONDOR or of any contract, agreement, mortgage
or other instrument or obligation of any nature to which CONDOR is a party or by
which CONDOR is bound.
3.4. Delivery of Documents; Securities Law Matters. CONDOR has made
available to XXXX its (a) 1997 Annual Report on Form 10-K, (b) Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998, and (c) S-1
Registration Statement effective June 4, 1998 (collectively, the "CONDOR
Commission Reports"). As of their respective dates, the CONDOR Commission
Reports do not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Since February 5, 1998, CONDOR has filed all forms,
reports and documents with the SEC required to be filed by it pursuant to the
1933 Act and the 1934 Act and the rules and regulations promulgated
thereunder, each of which complied as to form, at the time such form,
document or report was filed, in all material respects with the applicable
requirements of the 1933 Act and the 1934 Act and the applicable rules and
regulations promulgated thereunder.
3.5. Misrepresentation. None of the representations and warranties set
forth in this Agreement or in any of the certificates, schedules, exhibits,
lists, documents, exhibits, or other instruments delivered, or to be delivered,
to XXXX as contemplated by any provision hereof, contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.
26
4. COVENANTS PRIOR TO CLOSING
4.1 Access and Cooperation; Due Diligence.
(a) Between the date of this Agreement and the Closing Date,
GLOBAL will afford to the officers and authorized representatives of CONDOR
access during business hours upon reasonable prior notice to all of GLOBAL's
sites, properties, books and records and will furnish CONDOR with such
additional financial and operating data and other information as to the business
and properties of GLOBAL as CONDOR may from time to time reasonably request.
XXXX and GLOBAL will cooperate with CONDOR and its representatives, including
CONDOR's auditors and counsel, in the preparation of any documents or other
materials which may be required in connection with the transactions contemplated
by this Agreement. CONDOR and XXXX will treat all information obtained in
connection with the negotiation and performance of this Agreement as
confidential in accordance with the provisions of Section 10.
(b) CONDOR will cooperate with GLOBAL and XXXX, and their
representatives, auditors and counsel, in the preparation of any documents or
other material which may be required in connection with the transactions
contemplated by this Agreement. XXXX and GLOBAL will cause all information
obtained in connection with the negotiation and performance of this Agreement to
be treated as confidential in accordance with the provisions of Section 10.
4.2 Conduct of Business Pending Closing. Between the date of this
Agreement and the Closing Date, GLOBAL will:
(a) carry on its business in the ordinary course substantially
as conducted heretofore and not introduce any new method of management,
operation or accounting;
(b) maintain its properties and facilities, including those
held under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(c) perform in all material respects its obligations under
agreements relating to or affecting its assets, properties or rights;
(d) keep in full force and effect present insurance policies
or other comparable insurance coverage;
(e) maintain and preserve its respective business
organizations intact and use its best efforts to retain present key employees
and relationships with suppliers, customers and others having business relations
with GLOBAL;
(f) maintain compliance with all permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar Governmental Authorities; and
(g) maintain present debt and lease instruments in accordance
with their respective terms and not enter into new or amended debt or lease
instruments, provided that debt and/or lease
27
instruments may be replaced if such replacement instruments are on terms at
least as favorable to GLOBAL as the instruments being replaced.
4.3 Prohibited Activities. Between the date hereof and the Closing
Date, except as specifically contemplated hereby, GLOBAL will not, without the
prior written consent of CONDOR:
(a) make any change in the GLOBAL Charter Documents;
(b) grant or issue any securities, options, warrants, calls,
conversion rights or commitments of any kind relating to securities of any kind;
(c) except as set forth in Section 4.10 below, declare or pay
any dividend, or make any distribution, whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any of the GLOBAL
Stock;
(d) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditure, except if it is in the
ordinary course of business (consistent with past practice) or involves an
amount not in excess of $5,000, and except for payment of legal fees and other
transaction expenses which GLOBAL reasonably believes would not reduce GLOBAL's
Net Worth substantially below Four Million Dollars ($4,000,000), it being
understood and agreed that: (i) for the purposes of this Section 4.3(d),
"substantially below" means a variance of more than One Hundred Thousand Dollars
($100,000), and (ii) any deficiency shall be addressed via the Net Worth
Adjustment);
(e) create, assume or permit to exist any mortgage, pledge or
other lien or encumbrance upon any assets or properties whether now owned or
hereafter acquired, except (i) with respect to purchase money liens incurred in
connection with the acquisition of equipment with an aggregate cost not in
excess of $5,000 necessary or desirable for the conduct of the business of
GLOBAL, (ii)(A) liens for Taxes either not yet due or being contested in good
faith and by appropriate proceedings (and for which adequate reserves have been
established and are being maintained) or (B) materialmen's, mechanics',
workers', repairmen's, employees' or other like liens arising in the ordinary
course of business (the liens set forth in clause (ii) being referred to herein
as "Statutory Liens"), or (iii) liens set forth on Schedule 2.7 and 2.12 hereto;
(f) sell, assign, lease or otherwise transfer or dispose of
any property or equipment except in the ordinary course of business;
(g) negotiate for the acquisition of any business or the
start-up of any new business;
(h) merge or consolidate or agree to merge or consolidate with
or into any other entity;
(i) waive any material right or claim of GLOBAL, provided that
GLOBAL may negotiate and adjust bills in the course of good faith disputes with
customers in a manner consistent with past practice, provided, further, that
such adjustments shall not be deemed to be included on Schedule 2.8 unless
specifically listed thereon;
28
(j) commit a material breach, materially amend or terminate
any Material Contract;
(k) except as specifically contemplated by this Agreement,
enter into any other transaction outside the ordinary course of its business or
prohibited hereunder; or
(l) except in the ordinary course of business or as required
by Law or contractual obligations, GLOBAL will not (i) increase in any manner
the base compensation of, or enter into any new bonus or incentive agreement or
arrangement with, any of the employees engaged in GLOBAL's business, (ii) pay or
agree to pay any additional pension, retirement allowance or other employee
benefit to any such employee, whether past or present, (iii) enter into any new
employment, severance, consulting, or other compensation agreement with any
existing employee engaged in GLOBAL's business, (iv) amend or enter into a new
Plan (except as required by Law) or amend or enter into a new collective
bargaining agreement, or (v) engage in any GLOBAL Affiliate Transaction.
4.4 No Shop. In consideration of the substantial expenditure of time,
effort and expense undertaken by CONDOR in connection with its due diligence
review and the preparation and execution of this Agreement, XXXX and GLOBAL
agree that neither they nor their representatives, agents, employees or
Affiliates will, after the execution of this Agreement until the earlier of (a)
the termination of this Agreement, or (b) the Closing, directly or indirectly,
solicit, encourage, negotiate or discuss with any third party (including by way
of furnishing any information concerning GLOBAL) any acquisition proposal
relating to or affecting GLOBAL or any part of it, or any direct or indirect
interests in GLOBAL, whether by purchase of assets or stock, purchase of
interests, merger or other transaction ("Acquisition Transaction"), and that
XXXX will promptly advise CONDOR of the terms of any communications XXXX or
GLOBAL may receive or become aware of relating to any bid for all or any part of
GLOBAL.
4.5 Notification of Certain Matters. XXXX shall give prompt notice to
CONDOR of (a) the occurrence or non-occurrence of any event of which GLOBAL or
XXXX have knowledge, the occurrence or non-occurrence of which would cause any
representation or warranty of XXXX contained herein to be untrue or inaccurate
in any material respect at Closing, and (b) any material failure of XXXX to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied hereunder. CONDOR shall give prompt notice to XXXX of (a) the
occurrence or non-occurrence of any event of which CONDOR has knowledge, the
occurrence or non-occurrence of which would cause any representation or warranty
of CONDOR contained herein to be untrue or inaccurate in any material respect at
or prior to the Closing, and (b) any material failure of CONDOR to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder. The delivery of any notice pursuant to this Section 4.5 shall
not be deemed to (a) modify the representations or warranties hereunder of the
party delivering such notice, which modification may only be made pursuant to
Section 4.6, (b) modify the conditions set forth in Sections 5 and 6, or (c)
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
4.6 Amendment of Schedules. Each party hereto agrees that, with respect
to the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until the Closing Date to
supplement or amend promptly the Schedules hereto with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
29
Agreement, would have been required to be set forth or described in the
Schedules; provided, however, that supplements and amendments to Schedules 2.7,
2.8, 2.11, and 2.12 shall only have to be delivered at the Closing Date, unless
such Schedule is to be amended to reflect an event occurring other than in the
ordinary course of business. No supplement or amendment to a Schedule shall be
deemed to cure any breach of any representation and warranty by either party
made in this Agreement, provided that if the party to whom a supplemental or
amending disclosure was made proceeds to Closing, that party shall be deemed to
have waived such breach of representation and warranty and any remedies which
might have been available with respect thereto.
4.7 Prospectus; Registration Statement. CONDOR has delivered to XXXX
and GLOBAL a Prospectus with respect to the shares of CONDOR Stock to be issued
to GLOBAL as part of the Purchase Price. CONDOR shall take any action required
to be taken under state blue sky or securities laws in connection with the
issuance of the CONDOR Stock as part of the Purchase Price. CONDOR and GLOBAL
will furnish each other with all information concerning themselves, their
subsidiaries, directors, officers and stockholders or shareholders and such
other matters as may be necessary or advisable for any filings under any Blue
Sky laws and any other statement or application made by or on behalf of CONDOR
or GLOBAL to any governmental body in connection with the transactions
contemplated by this Agreement.
4.8 The Nasdaq Stock Market Additional Shares Notification. CONDOR will
file an additional shares notification with The Nasdaq Stock Market to approve
for listing, subject to official notice of its issuance, the shares of CONDOR
Stock to be issued in connection herewith. CONDOR shall exercise reasonable good
faith efforts to cause the shares of CONDOR Stock to be issued as part of the
Purchase Price to be approved for listing on The Nasdaq Stock Market, subject to
official notice of issuance, prior to the Closing Date.
4.9. Further Assurances. The parties hereto agree to execute and
deliver, or cause to be executed and delivered, such further instruments or
documents or take such other action as may be reasonably necessary or convenient
to carry out the transactions contemplated hereby.
4.10. Certain Distributions to XXXX. Before the Closing, GLOBAL shall
be permitted to make distributions of property consisting of GLOBAL's rights to
accounts receivable (other than ordinary course accounts receivable) owed by
GRANITE to GLOBAL, which shall be converted to a 10-year promissory note,
subject to such limitations on payment as may be set forth in the Management
Agreement) to XXXX, to an extent which GLOBAL reasonably believes will not
reduce GLOBAL's Net Worth substantially below Four Million Dollars ($4,000,000),
it being understood and agreed that: (a) for the purposes of this Section 4.10,
"substantially below" means a variance of more than One Hundred Thousand Dollars
($100,000), and (b) any deficiency shall be addressed via the Net Worth
Adjustment).
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXX AND GLOBAL
The obligations of XXXX and GLOBAL with respect to actions to be taken
on the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the conditions set forth in this Section 5. As of the
Closing Date, all conditions not satisfied as to which XXXX or GLOBAL has notice
shall be deemed to have been waived by XXXX and GLOBAL unless either of them has
objected
30
by notifying CONDOR in writing of such objection on or before the consummation
of the transactions on the Closing Date.
5.1 Representations and Warranties. All representations and warranties
of CONDOR contained in the Agreement shall be true and correct in all material
respects as of the Closing Date as though such representations and warranties
had been made on and as of that date; and a certificate to the foregoing effect
dated the Closing Date and signed by the President or any Vice President of
CONDOR shall have been delivered to XXXX and GLOBAL.
5.2 Performance of Obligations. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by CONDOR on or
before the Closing Date shall have been duly complied with and performed in all
material respects on or before the Closing Date; and certificates to the
foregoing effect dated on the Closing Date and signed by the President or any
Vice President of CONDOR shall have been delivered to XXXX and GLOBAL.
5.3 No Litigation. No action or proceeding before a court or any other
Governmental Authority or body shall have been instituted or threatened to
restrain or prohibit the performance of this Agreement or the consummation of
the transactions contemplated herein.
5.4 Consents and Approvals. All necessary consents of and filings
required to be obtained or made by CONDOR with any Governmental Authority or
agency relating to the consummation of the transactions contemplated herein
shall have been obtained and made.
5.5 Good Standing Certificates. CONDOR shall have delivered to XXXX and
GLOBAL a certificate, dated as of a date no earlier than 10 days prior to the
Closing Date, duly issued by the Delaware Secretary of State, showing that
CONDOR is in good standing.
5.6 Secretary's Certificate. XXXX and GLOBAL shall have received a
certificate or certificates, dated the Closing Date and signed by the corporate
secretary of CONDOR, certifying the truth and correctness of attached copies of
the CONDOR's Certificate of Incorporation (including amendments thereto),
By-Laws (including amendments thereto), and resolutions of the board of
directors approving CONDOR's entering into this Agreement and the consummation
of the transactions contemplated hereby.
5.7 CONDOR's Closing Documents. CONDOR shall have executed and
delivered CONDOR's Closing Documents.
5.8 Registration Statement. The Registration Statement under which the
CONDOR Stock is registered shall be effective under the 1933 Act and no stop
order suspending the effectiveness of the Registration Statement shall be in
effect and no proceedings for such purpose shall be pending before or threatened
by the SEC. All applicable state securities laws shall have been complied with
in connection with the issuance of CONDOR Stock to be issued pursuant hereto,
and no stop order suspending the effectiveness of any qualification or
registration of such CONDOR Stock under such state securities laws shall have
been issued and pending or threatened by the authorities of any such state.
31
5.9 Nasdaq Stock Market Additional Shares Notification. The CONDOR
Stock to be issued pursuant to this Agreement shall have been approved for
listing on the Nasdaq National Market, subject only to official notice of
issuance by CONDOR.
5.10 Opinion of Counsel. XXXX and GLOBAL shall have received an opinion
from counsel to CONDOR, dated the Closing Date, substantially in the form
attached hereto as Exhibit 5.10.
5.11 No Material Adverse Change. As of the Closing Date, no event or
circumstance shall have occurred with respect to CONDOR which would constitute a
Material Adverse Effect on CONDOR, and CONDOR shall not have suffered any
material loss or damages to any of its properties or assets, whether or not
covered by insurance, which change, loss or damage materially affects or impairs
the ability of CONDOR to conduct its business.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF CONDOR
The obligations of CONDOR with respect to actions to be taken on the
Closing Date, are subject to the satisfaction or waiver on or prior to the
Closing Date, as the case may be, of all of the conditions set forth in this
Section 6. As of the Closing Date all conditions not satisfied as to which
CONDOR has notice shall be deemed to have been waived by CONDOR unless it has
objected by notifying XXXX in writing of such objection on or before the
consummation of the transactions on the Closing Date.
6.1 Representations and Warranties. All the representations and
warranties of XXXX and GLOBAL contained in this Agreement shall be true and
correct in all material respects as of the Closing Date; and XXXX and GLOBAL
shall have delivered to CONDOR certificates dated the Closing Date and signed by
them to such effect.
6.2 Performance of Obligations. All of the terms, covenants and
conditions of this Agreement to be complied with or performed by XXXX and GLOBAL
on or before the Closing Date shall have been duly performed or complied with in
all material respects on or before the Closing Date and XXXX shall have
delivered to CONDOR certificates dated the Closing Date and signed by him to
such effect.
6.3 No Litigation. No action or proceeding before a court or any other
Governmental Authority or body shall have been instituted or threatened to
restrain or prohibit the performance of this Agreement or the consummation of
the transactions contemplated herein.
6.4 Secretary's Certificate. CONDOR shall have received a certificate
or certificates, dated the Closing Date and signed by the corporate secretary of
GLOBAL, certifying the truth and correctness of attached copies of GLOBAL's
Certificate of Incorporation (including amendments thereto), By-Laws (including
amendments thereto), and resolutions of the board of directors approving
GLOBAL's entering into this Agreement and the consummation of the transactions
contemplated hereby.
6.5 No Material Adverse Change. As of the Closing Date, no event or
circumstance shall have occurred with respect to GLOBAL which would constitute a
Material Adverse Effect on GLOBAL, and
32
GLOBAL shall not have suffered any material loss or damages to any of its
properties or assets, whether or not covered by insurance, which change, loss or
damage materially affects or impairs the ability of GLOBAL to conduct its
business.
6.6 Opinion of Counsel. CONDOR shall have received an opinion from
Counsel to XXXX and GLOBAL, dated the Closing Date, substantially in the form
attached hereto as Exhibit 6.6.
6.7 Consents and Approvals. All necessary consents of and filings with
any Governmental Authority relating to the consummation of the transactions
contemplated herein shall have been obtained and made and all necessary consents
and approvals of third parties, including those listed on Schedule 2.20, as well
as the consent any of GLOBAL's lenders and SAP America, Inc., shall have been
obtained.
6.8 Existence. XXXX shall have delivered to CONDOR a certificate, dated
as of a date no earlier than ten (10) days prior to the Closing Date, duly
issued by the appropriate Governmental Authority in GLOBAL's state of
incorporation or organization.
6.9 GLOBAL Closing Documents. XXXX and/or GLOBAL shall have executed
and/or delivered GLOBAL Closing Documents.
6.10 Satisfaction. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall have been approved by counsel to CONDOR.
7. COVENANTS OF CONDOR, GLOBAL AND XXXX AFTER CLOSING
7.1. Additional Options. To the extent not granted at the Closing
pursuant to Section 1.7 hereof, CONDOR shall make available to GLOBAL SUB
non-qualified stock options under the CONDOR Stock Option Plan, exercisable for
an aggregate of One Hundred Thousand (100,000) (less any issued pursuant to
Section 1.7) shares of CONDOR Stock, for grant to such employees of GLOBAL SUB
as shall be mutually designated by CONDOR and senior management of GLOBAL SUB.
7.2. Restrictions on CONDOR Stock. Notwithstanding the fact that the
CONDOR Stock delivered to GLOBAL shall be registered, GLOBAL and XXXX agree
that, except as specifically set forth herein, for a period of one (1) year
after the delivery of CONDOR Stock, neither GLOBAL nor XXXX will transfer, or
permit the transfer of, any CONDOR Stock. For the purposes of this Section 7.2,
"transfer" shall mean any voluntary or involuntary act by which GLOBAL or XXXX
makes, or attempts or purports to make, or suffers to occur, any gift, sale,
mortgage, pledge, assignment, hypothecation, encumbrance or other disposition of
any CONDOR Stock, or interest therein, owned by either of them. The term
"transfer" includes any purported transfer, assignment, sale or other
disposition by assignment or operation of law, as a result of the appointment of
a trustee in bankruptcy, under any judgment or order, as the result of the
appointment of a receiver, or as a result of any assignment for the benefit of
creditors. Notwithstanding the foregoing, nothing in this Section 7.2 shall be
construed to prevent (a) the transfer by GLOBAL of CONDOR Stock to XXXX, and (b)
any transfer which takes place upon the death of XXXX, to XXXX'x estate or to an
heir at law.
33
7.3. Access to Books and Records. After the Closing, CONDOR and GLOBAL
shall afford XXXX with reasonable access to GLOBAL's books and records (as they
relate to periods prior to the Closing) for the purpose of completing tax
returns, responding to IRS audits or handling other inquiries, and satisfying
other legal and regulatory requirements.
8. INDEMNIFICATION
XXXX, GLOBAL and CONDOR, agree as follows:
8.1 General Indemnification by XXXX and GLOBAL. XXXX and GLOBAL,
jointly and severally, covenant and agree that they will indemnify, defend,
protect and hold harmless CONDOR and GLOBAL SUB at all times, from and after the
date of this Agreement until the Expiration Date, from and against all claims,
damages, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and reasonable expenses of investigation) incurred by CONDOR and
GLOBAL SUB as a result of or arising from:
(a) Any breach of the representations and warranties of XXXX
and GLOBAL set forth herein or on the schedules or certificates delivered in
connection herewith;
(b) Any breach of any agreement on the part of XXXX or GLOBAL
under this Agreement, it being understood and agreed that the Expiration Date
for a claim of breach of any such agreement shall be eighteen (18) months after
the date performance was due;
(c) Any obligations for payment or performance under any
Material Contract which, as of the Closing Date, is in an "overrun" (defined
below) position, to the extent of such overrun, and only if such overrun was not
accrued or otherwise reflected on the GLOBAL Financial Statements or the Closing
Date Balance Sheet. For the purposes hereof, a Material Contract shall be deemed
to be in an "overrun" position if the cost of GLOBAL's performance thereunder
exceeds the consideration contractually agreed upon or is expected to exceed the
consideration contractually agreed upon, and the "overrun" shall be the amount
of such excess;
(d) Any debt, liability or obligation of GLOBAL (whether known
or unknown, absolute or contingent) not assumed by CONDOR and/or GLOBAL SUB
under the Assumption Agreement;
(e) Any debt, liability or obligation suffered as a result of
XXXX and GLOBAL having failed to obtain the consent to the transactions
contemplated hereby of a party to a Material Contract, it being understood and
agreed that, because of the exigencies of time and contract relationships, XXXX
and GLOBAL may not seek or obtain certain consents;
(f) Any debt, liability or obligation suffered as a result of
the parties having failed to comply with any applicable laws governing bulk
sales or transfers;
(g) The Young Claim, for which it is understood and agreed the
Expiration Date shall be the date on which any applicable statutes of limitation
have run; and
34
(h) Any obligation or liability reflected on Schedule 8.1
hereto, whether or not such obligation or liability has been excepted from the
representations and warranties of XXXX and GLOBAL by disclosure on a Schedule or
otherwise.
8.2 Indemnification by CONDOR. CONDOR covenants and agrees that it will
indemnify, defend, protect and hold harmless XXXX and GLOBAL at all times from
and after the date of this Agreement until the Expiration Date, from and against
all claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred by XXXX or
GLOBAL as a result of or arising from (a) any breach by CONDOR of its
representations and warranties set forth herein or on the schedules or
certificates delivered in connection herewith, or (b) any breach of any
agreement on the part of CONDOR under this Agreement, it being understood and
agreed that the Expiration Date for a claim of breach of any such agreement
shall be eighteen (18) months after the date performance was due.
8.3 Third Person Claims. Promptly after any party hereto (hereinafter
the "Indemnified Party") has received notice of or has knowledge of any claim by
a Third Person or of the commencement of any action or proceeding by a Person
not a party to this Agreement (a "Third Person"), the Indemnified Party shall,
as a condition precedent to a claim with respect thereto being made against any
party obligated to provide indemnification pursuant to Section 8.1 or 8.2 hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same in good faith and diligently,
provided that the Indemnifying Party shall not settle any criminal proceeding
without the written consent of the Indemnified Party, such consent not to be
unreasonably withheld or delayed. If the Indemnifying Party undertakes to defend
or settle, it shall promptly notify the Indemnified Party of its intention to do
so, and the Indemnified Party shall cooperate, at the Indemnifying Party's
expense, with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records or
information reasonably requested by the Indemnifying Party that are in the
Indemnified Party's possession or control. All Indemnified Parties shall
endeavor to use the same counsel, which shall be the counsel selected by the
Indemnifying Party, provided that if counsel to the Indemnifying Party shall
have a conflict of interest in the opinion of such counsel that prevents counsel
for the Indemnifying Party from representing the Indemnified Party, the
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and the Indemnifying Party will reimburse the
Indemnified Party for the reasonable expenses of its counsel. After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability, except (i) as set forth in the preceding sentence and (ii) to the
extent such participation is requested by the Indemnifying Party, in which event
the Indemnified Party shall be reimbursed by the Indemnifying Party for
reasonable additional legal expenses and out-of-pocket expenses. If the
Indemnifying Party desires to accept a final and complete settlement of any such
Third Person claim and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this Section with
respect to such Third Person claim shall be limited to the amount so offered in
settlement
35
to said Third Person, plus all indemnifiable costs and expenses incurred to
date, the Indemnifying Party shall be relieved of its duty to defend and shall
tender the Third Person claim back to the Indemnified Party, who shall
thereafter, at its own expense, be responsible for the defense and negotiation
of such Third Person claim. If the Indemnifying Party does not undertake to
defend such matter to which the Indemnified Party is entitled to indemnification
hereunder, or fails diligently to pursue such defense, the Indemnified Party may
undertake such defense through counsel of its choice, at the cost and expense of
the Indemnifying Party, and the Indemnified Party may settle such matter, and
the Indemnifying Party shall reimburse the Indemnified Party for the amount paid
in such settlement and any other liabilities or expenses incurred by the
Indemnified Party in connection therewith, provided, however, that under no
circumstances shall the Indemnified Party settle any Third Person claim without
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. All settlements hereunder shall effect a
complete release of the Indemnified Party, unless the Indemnified Party
otherwise agrees in writing. The parties hereto will make appropriate
adjustments for any Tax benefits, Tax detriments or insurance proceeds in
determining the amount of any indemnification obligation under this Section,
provided that no Indemnifying Party shall be obligated to seek any payment
pursuant to the terms of any insurance policy.
8.4. Limitations and Conditions on Indemnification. Except as otherwise
specifically provided in this Agreement:
(a) Except for liability for breaches of the representations
and warranties contained in Sections 2.2 and 2.19 hereof, and except for the
Young Claim, for which there shall be no minimum claim, CONDOR and the other
Persons or entities indemnified pursuant to Section 8.1 shall not assert any
claim for indemnification hereunder against XXXX or GLOBAL until such time as,
and with respect to any individual claim, unless and until such claim or claims,
individually or in the aggregate, exceed Fifty Thousand Dollars ($50,000).
Except for claims for payment of Purchase Price and other obligations of CONDOR
in Sections 1, 7.1 and 7.3, for which there shall be no minimum claim, XXXX and
GLOBAL shall not assert any claim for indemnification hereunder against CONDOR
until such time as, and solely to the extent that, the aggregate of all claims
which XXXX and GLOBAL may have against CONDOR exceeds Fifty Thousand Dollars
($50,000).
(b) In the event CONDOR has a claim against GLOBAL or XXXX
hereunder, CONDOR shall first proceed against the Escrowed Funds, if any. If
such Escrowed Funds are inadequate to satisfy CONDOR's claims, CONDOR shall the
have the right, upon written notice, to offset indemnification amounts due to it
pursuant to this Agreement against payments due to XXXX, if any, under (i) this
Agreement, (ii) the Consulting Agreement, and/or (iii) any other contract
contemplated by, or referred to in, this Agreement. XXXX and GLOBAL shall remain
personally liable for any deficiency.
(c) Notwithstanding any other term of this Agreement, GLOBAL
and XXXX shall not be liable under this Section 8 for an amount which exceeds,
in the aggregate, One-Third (1/3) of the proceeds received by GLOBAL in
connection with this Agreement, provided that the Young Claims shall not be
counted for the purposes of this limit, and this limit shall not apply to the
Young Claims.
(d) Indemnity obligations of GLOBAL and XXXX hereunder may, at
their election, be satisfied through the payment of cash or the delivery of
CONDOR Stock, or a combination thereof. For
36
purposes of calculating the value of the CONDOR Stock received or delivered by
GLOBAL or XXXX (for purposes of determining the amount of any indemnity paid),
the value of CONDOR Stock shall be determined as of the date of payment of the
indemnity claim in the manner described in Section 1.3(b) hereof. Indemnity
obligations of CONDOR shall be satisfied through the payment of cash.
(e) Except as specifically set forth in this Agreement, no
party shall be entitled to indemnity for claims or conditions which have been
waived, or deemed to be waived, by such party.
(f) No payment of indemnity shall be duplicative of the Net
Worth Adjustment.
(g) No party shall be entitled to indemnity hereunder for
punitive or consequential damages.
(h) XXXX agrees that he shall, through the latest applicable
Expiration Date (as it relates to GLOBAL and XXXX), continue the existence of
GLOBAL, and that he shall not voluntarily cause the dissolution or termination
of GLOBAL's corporate existence.
(i) Notwithstanding any provision herein to the contrary, no
Indemnified Party shall be entitled to make any claim for indemnification
hereunder after the appropriate Expiration Date, provided, however, that if
prior to the close of business on the Expiration Date an Indemnifying Party
shall have been notified of a claim for indemnity hereunder and such claim shall
not have been finally resolved or disposed of at such date, the basis for such
claim shall continue to survive with respect to such claim and shall remain a
basis for indemnity hereunder with respect to such claim until such claim is
finally resolved or disposed of in accordance with the terms hereof.
(j) Upon making a claim for indemnification, the Indemnifying
Party shall be subrogated, to the extent of such payment, to any rights that the
Indemnified Party may have against any other parties with respect to the subject
matter underlying such indemnified claim.
9. TERMINATION OF AGREEMENT
9.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date solely:
(a) by mutual consent of CONDOR, GLOBAL and XXXX;
(b) by CONDOR, on the one hand, or XXXX or GLOBAL, on the
other hand, if the transactions contemplated by this Agreement to take place at
the Closing shall not have been consummated by December 31, 1998, unless the
failure of such transactions to be consummated is due to the willful failure of
the party seeking to terminate this Agreement to perform any of its obligations
under this Agreement to the extent required to be performed by it prior to or on
the Closing Date; or
(c) by XXXX or GLOBAL on the one hand, or by CONDOR, on the
other hand, if a material breach or default shall be made by the other party in
the observance or in the due and timely
37
performance of any of the covenants, agreements or conditions contained herein,
and the curing of such default shall not have been made on or before the Closing
Date.
9.2 Liabilities in Event of Termination. The termination of this
Agreement will in no way limit any obligation or liability of any party based on
or arising from a breach or default by such party with respect to any of its
representations, warranties, covenants or agreements contained in this
Agreement, including, but not limited to, legal and audit costs and out of
pocket expenses.
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
10.1 XXXX and GLOBAL. XXXX and GLOBAL recognize and acknowledge that
they have in the past, currently have, and in the future may have, access to
certain confidential information of GLOBAL and/or CONDOR, such as operational
policies, and pricing and cost policies that are valuable, special and unique
assets of GLOBAL's and/or CONDOR's respective businesses. XXXX and GLOBAL agree
that they will not disclose such confidential information to any Person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except (a) to authorized representatives of CONDOR who need to know information
in connection with the transactions contemplated hereby, who have been informed
of the confidential nature of such information and who have agreed to keep such
information confidential as provided hereby, (b) following the Closing, such
information may be disclosed by XXXX as is required in the course of performing
his duties for CONDOR or GLOBAL SUB, and (c) to counsel and other advisers,
provided that GLOBAL and XXXX shall be responsible for such advisor's breach of
this Section 10.1, unless (i) such information becomes known to the public
generally through no fault of XXXX or GLOBAL, (ii) disclosure is required by law
or the order of any Governmental Authority under color of law; provided, that
prior to disclosing any information pursuant to this clause (ii), XXXX and
GLOBAL shall, if possible, give prior written notice thereof to CONDOR and
provide CONDOR with the opportunity to contest such disclosure, or (iii) the
disclosing party reasonably believes that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party. In the
event the transactions contemplated by this Agreement are not consummated, XXXX
and GLOBAL shall no longer be subject to all of the above-mentioned restrictions
with respect to his ability to disseminate confidential information regarding
GLOBAL.
10.2 CONDOR. CONDOR recognizes and acknowledges that it had in the
past, currently has, and in the future may have, access to certain confidential
information of GLOBAL, such as operational policies, and pricing and cost
policies that are valuable, special and unique assets of GLOBAL's business.
CONDOR agrees that, prior to the Closing, or if the transactions contemplated by
this Agreement are not consummated, they will not disclose such confidential
information to any Person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except (a) to XXXX and GLOBAL and to
authorized representatives of GLOBAL, (b) to counsel and other advisers,
provided that such advisors (other than counsel) agree to the confidentiality
provisions of this Section 10.2, unless (i) such information becomes known to
the public generally through no fault of CONDOR, (ii) disclosure is required by
law or the order of any Governmental Authority under color of law; provided,
that, prior to disclosing any information pursuant to this clause (ii), CONDOR
shall, if possible, give prior written notice thereof to GLOBAL and XXXX and
provide GLOBAL and XXXX with the opportunity to contest such disclosure, or
(iii) the disclosing party reasonably believes that such disclosure is required
in connection with the defense of a lawsuit against the disclosing party. In the
event of a breach or threatened breach by CONDOR of the
38
provisions of this Section, GLOBAL and XXXX shall be entitled to an injunction
restraining CONDOR from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting GLOBAL and XXXX
from pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
10.3 Damages. Because of the difficulty of measuring economic losses as
a result of the breach of the foregoing covenants in Sections 10.1 and 10.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced against the other parties by injunctions and restraining orders.
Nothing herein shall be construed as prohibiting a party hereto from pursuing
any other available remedy for such breach or threatened breach of Sections 10.1
and 10.2, including the recovery of damages.
10.4 Survival. The obligations of the parties under this Article 10
shall survive the termination of this Agreement for a period of five years from
the Closing Date.
11. GENERAL
11.1 Cooperation. XXXX, GLOBAL and CONDOR shall each deliver or cause
to be delivered to the other on the Closing Date, and at such other times and
places as shall be reasonably agreed to, such additional instruments as the
other may reasonably request for the purpose of carrying out this Agreement.
11.2 Successors and Assigns. This Agreement and the rights of the
parties hereunder may not be assigned (including by operation of law) without
the consent of the other party and shall be binding upon and shall inure to the
benefit of the parties hereto, the successors of CONDOR, and the heirs and legal
representatives of XXXX. Notwithstanding the foregoing, the parties acknowledge
and agree that (a) GLOBAL shall have the right to assign all, or any part, of
its rights to receive payment of the Earnout Price to key employees of GLOBAL
SUB or an entity of which such key employees (as determined by GLOBAL) are the
owners, and (b) CONDOR shall have the right to assign its rights and obligations
hereunder to GLOBAL SUB, provided that CONDOR shall guarantee the obligations of
GLOBAL SUB.
11.3 Entire Agreement. This Agreement (including the Schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among XXXX, GLOBAL and
CONDOR and supersede any prior agreement and understanding relating to the
subject matter of this Agreement. This Agreement, upon execution, constitutes a
valid and binding agreement of the parties hereto enforceable in accordance with
its terms and may be modified or amended only by a written instrument executed
by XXXX, GLOBAL and CONDOR.
11.4 Counterparts; Facsimile Signatures. This Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument. Signatures may be exchanged by telecopy, and each party agrees that
it will be bound by its telecopied signature and that it accepts the telecopied
signatures of the other parties to this Agreement.
39
11.5 Brokers and Agents. Each party represents and warrants that,
except as set forth on Schedule 11.5, it employed no broker or agent in
connection with this transaction and agrees to indemnify the other parties
hereto against all loss, cost, damages or expense arising out of claims for fees
or commissions of brokers employed or alleged to have been employed by such
indemnifying party.
11.6 Expenses. Except as provided in Section 4.3(d), each party shall
each bear its own expenses incurred in connection with the transactions
contemplated by this Agreement.
11.7 Notices. All notices or communications required or permitted
hereunder shall be in writing and shall be deemed to have been given when
personally delivered or upon receipt if sent by first class certified mail,
return receipt requested or the next business day if sent by telex (receipt
confirmed and followed up by one of the other delivery methods discussed herein
as well), or upon delivery if sent by express mail, in each case postage prepaid
and addressed as follows:
(a) If to CONDOR:
Annapolis Office Plaza
000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. XxXxxx, Esquire
with copies to:
Xxxxxxxxx, Xxxxxx & Xxxxxxx L.L.P.
Xxxxx Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Xx., Esq.
(b) If to XXXX and GLOBAL:
Global Core Strategies, Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000
with copies to:
Xxxxxxxxxxx Xxxxx, Esquire
Loeb & Loeb, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
and
40
Xxxxxxx X. Xxxxxxxx, Esquire
Xxxxxx Xxxxxxxx Xxxxxx & Xxxxx, LLP
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 11.7 from time to time.
11.8 Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Maryland, except that matters herein within the
purview of the matters covered by the General Corporation Law of the State of
Delaware shall be governed by such General Corporation Law, in each case without
reference to conflicts of laws principles.
11.9 Exercise of Rights and Remedies. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
11.10 Reformation and Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
11.11 Remedies Cumulative. No right, remedy or election given by any
term of this Agreement shall be deemed exclusive but each shall be cumulative
with all other rights, remedies and elections available at law or in equity.
Notwithstanding the foregoing, each party's rights under Section 8 hereof (as
specifically limited thereby) shall be the exclusive means by which such party
shall seek money damages against another party in connection with the
transactions contemplated hereby.
11.12. Captions. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
11.13 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived only with the
written consent of CONDOR, GLOBAL and XXXX. Any amendment or waiver effected in
accordance with this Section 11.14 shall be binding upon each of the parties
hereto and their successors or assigns.
11.14 Sales Taxes. Any sales, use, transfer, recordation or other taxes
arising as a result of the transactions contemplated hereby shall be the sole
responsibility of GLOBAL and XXXX.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CONDOR:
CONDOR TECHNOLOGY SOLUTIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
----------------------------
XXXX:
/s/ Xxxxx Xxxx
--------------
XXXXX XXXX
GLOBAL:
GLOBAL CORE STRATEGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
----------------------------
42
