1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
MAXIMUS, INC.
SCB COMPUTER TECHNOLOGY, INC., and
TECHNOLOGY MANAGEMENT RESOURCES, INC.
2
TABLE OF CONTENTS
PAGE
ARTICLE 1 - SALE AND PURCHASE OF ASSETS................................1
1.1 Sale of Assets...................................................1
1.2 Assumption of Liabilities........................................1
1.3 Purchase Price and Payment.......................................2
1.4 Transfer of Purchased Assets.....................................2
1.5 Delivery of Records and Contracts................................2
1.6 MAXIMUS Designees................................................3
1.7 Closing..........................................................3
1.8 Allocation of Purchase Price.....................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF TMR......................3
2.1 Organization and Qualification...................................3
2.2 Authority to Execute and Perform Agreements......................3
2.3 Capitalization and Title to Shares...............................3
2.4 Charter and By-laws..............................................4
2.5 Financial Statements.............................................4
2.6 No Material Adverse Change.......................................4
2.7 Tax Matters......................................................5
2.8 Compliance with Laws.............................................6
2.9 Consents; No Breach..............................................7
2.10 Actions and Proceedings..........................................7
2.11 Contracts and Other Agreements...................................7
2.12 Real Estate......................................................9
2.13 Tangible Property................................................9
2.14 Intangible Property.............................................10
2.15 Title to Assets; Liens..........................................10
2.16 Absence of Undisclosed Liabilities..............................11
2.17 Customers.......................................................11
2.18 Employer Relations..............................................11
-i-
3
TABLE OF CONTENTS
(CONTINUED)
PAGE
2.19 Insurance........................................................11
2.20 Brokerage........................................................11
2.21 Hazardous Materials..............................................11
2.22 Backlog..........................................................12
2.23 Full Disclosure..................................................12
2.24 Year 2000 Compliance.............................................12
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SCB.......................13
3.1 Organization and Qualification...................................13
3.2 Authority to Execute and Perform Agreements......................13
3.3 Brokerage........................................................13
3.4 No Breach........................................................14
3.5 Validity.........................................................14
3.6 Insurance........................................................14
3.8 Employee Benefit Plans...........................................15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF MAXIMUS.....................15
4.1 Organization and Qualification of MAXIMUS........................15
4.2 Authority to Execute and Perform Agreements......................15
4.3 Brokerage........................................................16
4.4 No Breach........................................................16
4.5 Validity.........................................................16
ARTICLE 5 CONDITIONS PRECEDENT TO THE OBLIGATION OF MAXIMUS TO CLOSE....17
5.1 Delivery of Instruments of Transfer..............................17
5.2 Certificate of Secretary of TMR..................................17
5.3 Third Party Consents and Permits.................................17
5.4 Escrow Agreement.................................................17
5.5 Employment.......................................................17
5.6 Noncompetition Agreement.........................................17
-ii-
4
TABLE OF CONTENTS
(CONTINUED)
PAGE
5.7 Opinion of Counsel to SCB and TMR................................17
5.8 Tax Clearance Certificates.......................................17
5.9 Release of Liens.................................................18
ARTICLE 6 CONDITIONS PRECEDENT TO THE OBLIGATION OF SCB AND TMR TO
CLOSE.........................................................18
6.1 Delivery of Assumption Agreement.................................18
6.2 Related Agreements...............................................18
6.3 Delivery of the Purchase Price...................................18
ARTICLE 7 INDEMNIFICATION...............................................18
7.1 Survival.........................................................18
7.2 Obligation of SCB and TMR to Indemnify...........................18
7.3 Obligation of MAXIMUS to Indemnify...............................19
7.4 Notice and Opportunity to Defend.................................19
7.5 Limitations on Indemnification...................................20
ARTICLE 8 POST-CLOSING COVENANTS AND AGREEMENTS.........................21
8.1 Authorization From Others........................................21
8.2 Tax Clearance Certificates.......................................21
8.3 Collection of Assets.............................................21
8.4 Health Insurance.................................................22
8.5 Further Assurances...............................................22
8.6 401(k) Contributions.............................................22
ARTICLE 9 MISCELLANEOUS.................................................22
9.1 Publicity........................................................22
9.2 Expenses.........................................................23
9.3 Notices..........................................................23
9.4 Entire Agreement.................................................24
9.5 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies.........................................24
9.6 Governing Law....................................................24
-iii-
5
TABLE OF CONTENTS
(CONTINUED)
PAGE
9.7 Arbitration......................................................24
9.8 Binding Effect; No Assignment....................................24
9.9 Counterparts.....................................................25
9.10 Exhibits and Schedules...........................................25
9.11 Headings.........................................................25
-iv-
6
EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Executive Employment Agreement
Exhibit C Form of Noncompetition Agreement
Exhibit D Form of Opinion of Baker, Donelson, Bearman & Xxxxxxxx PC
SCHEDULES
Schedule 1.1A Excluded Assets
Schedule 1.1B Contracts Included in Purchased Assets
Schedule 1.2 Assumed Liabilities
Schedule 2.1A Qualifications
Schedule 2.1B Leases
Schedule 2.5 Financial Statements
Schedule 2.6 Changes Since Balance Sheet Date
Schedule 2.7A Tax Extensions
Schedule 2.7B Unpaid Taxes
Schedule 2.8A Permits
Schedule 2.8B Permits Not Being Transferred
Schedule 2.9 Consents
Schedule 2.10 Actions and Proceedings
Schedule 2.11 Contracts and Other Agreements
Schedule 2.14A Intellectual Property
Schedule 2.14B Registered Rights
Schedule 2.15 Title to Assets; Liens
Schedule 2.17 Customers
Schedule 2.18 Employee Benefit Plans
Schedule 2.19 Key Employees
Schedule 2.22 Backlog
Schedule 2.24 Year 2000 Compliance
Schedule 3.6 Insurance
Schedule 3.8 Employee Benefit Plans
7
ASSET PURCHASE AGREEMENT
THIS AGREEMENT dated as of the 29th day of April, 2000, is made and
entered into by and among:
MAXIMUS, Inc. ("MAXIMUS"), a Virginia corporation with an address at
0000 Xxxxxxx Xxxx, XxXxxx, Xxxxxxxx 00000;
SCB Computer Technology, Inc. ("SCB"), a Tennessee corporation with an
address at 0000 Xxxxxx Xxxx-Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000; and
Technology Management Resources, Inc. ("TMR"), a Tennessee corporation
with an address at 000 Xxxxx 000xx Xxxxxx, Xxxxx, Xxxxxxxx 00000 and a
wholly-owned subsidiary of SCB.
WITNESSETH
WHEREAS, TMR wishes to sell to MAXIMUS, and MAXIMUS wishes to purchase,
substantially all of the assets of TMR upon the terms and conditions of this
Agreement;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth below, the parties hereby agree as follows:
ARTICLE 1 - SALE AND PURCHASE OF ASSETS
1.1 Sale of Assets. Subject to the provisions of this Agreement, at the
Closing (as defined in Section 1.7 hereof), TMR agrees to sell and MAXIMUS
agrees to purchase, all of the properties, assets and business of TMR of every
kind and description, tangible and intangible, real, personal or mixed, and
wherever located, excluding the assets listed on Schedule 1.1A (the "Excluded
Assets"), but including without limitation all contracts listed on Schedule 1.1B
and Schedule 2.11, all intellectual property listed on Schedule 2.14A and
Schedule 2.14B, all accounts receivable for work performed on or after the
Closing Date, inventory, equipment, all of TMR's goodwill and the exclusive
right to use any and all derivations of the name of Technology Management
Resources as all or part of a trade or corporate name. SCB and TMR shall have
access to the books and records of TMR at reasonable times for purposes of
handling tax matters and dealing with liabilities and claims. The assets,
property and business of TMR to be sold to and purchased by MAXIMUS (or its
designee) under this Agreement are hereinafter sometimes referred to as the
"Purchased Assets."
1.2 Assumption of Liabilities. Upon the sale and purchase of the
Purchased Assets, MAXIMUS shall assume and agree to pay or discharge when due
the liabilities and obligations of TMR described on Schedule 1.2 which are to be
performed after the Closing Date (as defined in Section 1.7 below). The
liabilities to be assumed by MAXIMUS under this Agreement are hereinafter
sometimes referred to as the "Assumed Liabilities." Except as otherwise
specifically provided in this Section 1.2 (a) MAXIMUS shall not assume or be
liable for any obligation or liability of TMR, of any kind or nature, known,
unknown, contingent or otherwise, including without limitation: (i) any
liability of TMR incurred in connection with this Agreement and the
8
transactions provided for herein, including brokerage, accounting and counsel
fees, transfer and other taxes, and expenses pertaining to the performance by
TMR of its obligations hereunder, (ii) any litigation, proceeding, claim by any
person or entity or other obligation of TMR relating to the business or
operations of or otherwise relating to the Purchased Assets prior to the Closing
Date, whether or not such litigation, proceeding, claim or obligation is
pending, threatened, or asserted before, on, or after the Closing Date, (iii)
any liability or obligation of TMR for Taxes (as defined in Section 2.7) whether
relating to periods before or after the Closing Date, and (iv) any obligations
of TMR under any law, including but not limited to antitrust, civil rights,
health, safety, labor, discrimination and environmental laws; and (b) TMR shall
be solely responsible for any and all liabilities and obligations of TMR not
included within the Assumed Liabilities. The assumption of the Assumed
Liabilities by MAXIMUS hereunder shall be treated as independent of its existing
business and shall not enlarge any rights of third parties under contracts or
arrangements with MAXIMUS or TMR. Nothing herein shall prevent MAXIMUS from
contesting in good faith any of the Assumed Liabilities with any party to whom
any such Assumed Liability relates.
1.3 Purchase Price and Payment. In consideration of the sale of the
Purchased Assets to MAXIMUS, at the Closing, MAXIMUS shall:
(a) deliver to TMR the amount of $8,674,397.94 in cash by wire
transfer of immediately available funds (the "Closing Payment"); and
(b) deliver to an escrow agent to be mutually agreed upon by the
parties (the "Escrow Agent") the amount of $1,000,000 (the "Escrow Amount") to
be held by the Escrow Agent pursuant to and in accordance with the Escrow
Agreement to be executed by the Escrow Agent and the other parties hereto
substantially in the form of Exhibit A hereto.
1.4 Transfer of Purchased Assets. At the Closing, TMR shall deliver or
cause to be delivered to MAXIMUS good and sufficient instruments of transfer
transferring to MAXIMUS title to all the Purchased Assets. Such instruments of
transfer (a) shall be in the form and will contain the warranties, covenants and
other provisions (not inconsistent with the provisions hereof) which are usual
and customary for transferring the type of property involved under the laws of
the jurisdictions applicable to such transfers, (b) shall be in form and
substance satisfactory to MAXIMUS and its counsel, and (c) shall effectively
vest in MAXIMUS good title to all the Purchased Assets free and clear of all
liens, restrictions and encumbrances.
1.5 Delivery of Records and Contracts. At the Closing, TMR shall
deliver or cause to be delivered to MAXIMUS all written leases, contracts,
commitments and rights evidencing Purchased Assets and Assumed Liabilities. As
soon as practicable after the Closing Date, TMR shall deliver to MAXIMUS
(subject to Section 8.1) such assignments of written leases, contracts,
commitments and rights evidencing Purchased Assets and Assumed Liabilities and
consents to assignments as are necessary to assure MAXIMUS of the full benefit
of the same. TMR shall also deliver to MAXIMUS at the Closing originals of all
of TMR's business records, tax returns, books and other data and TMR shall take
all requisite steps to put MAXIMUS (or its designee) in actual possession and
operating control of TMR.
2
9
1.6 MAXIMUS Designees. MAXIMUS shall have the right, in its sole
discretion, to designate one or more direct or indirect subsidiaries to purchase
the Purchased Assets subject to this Agreement and fulfill the other obligations
and exercise the other rights of MAXIMUS hereunder. Notwithstanding the
foregoing, MAXIMUS shall at all times remain responsible to TMR to perform all
obligations of MAXIMUS to TMR hereunder.
1.7 Closing. The closing of the transactions contemplated hereby (the
"Closing"), shall take place at the offices of Xxxxxx & Dodge LLP at 11:00 a.m.
local time, on or before May 1, 2000 (the date of such Closing shall hereinafter
be referred to as the "Closing Date").
1.8 Allocation of Purchase Price. Within 60 days of the Closing,
MAXIMUS shall allocate the purchase price among the Purchased Assets. Such
allocation shall be made in accordance with the provisions of Section 1060 of
the Internal Revenue Code of 1986, as amended (the "Code"), and shall be binding
upon MAXIMUS and SCB for tax purposes. MAXIMUS and SCB also each agree to file
tax returns consistently with the foregoing and in accordance with Section 1060
of the Code.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF TMR
TMR represents and warrants to MAXIMUS as follows:
2.1 Organization and Qualification. TMR is a corporation duly
organized, validly existing and in good standing under the laws of Tennessee,
and has full corporate power and lawful authority to own, lease and operate its
assets, properties and business and to carry on its business as now being and as
heretofore conducted. TMR is qualified or otherwise authorized to transact
business as a foreign corporation in every jurisdiction (in the United States
and outside of the United States) in which such qualification or authorization
is required by law and in which the failure to so qualify or be authorized could
have a material adverse effect on TMR or its assets, properties, business,
operations or condition (financial or otherwise). Each jurisdiction in which TMR
is qualified or otherwise authorized to transact business is listed in Schedule
2.1A. Except as set forth in Schedule 2.1B, TMR does not lease property in any
jurisdiction (in the United States or outside the United States).
2.2 Authority to Execute and Perform Agreements. TMR has the corporate
power and all authority and approvals required to enter into, execute and
deliver this Agreement and the Related Agreements (as defined in Section 6.2)
and to perform fully its respective obligations hereunder and thereunder, and
each of this Agreement and the Related Agreements has been or will be duly
executed and delivered and is the valid and binding obligation of TMR
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights and
remedies of creditors generally, and to equitable principles. TMR has obtained
the necessary approval of the holder of all of the outstanding capital stock of
TMR to effect the transactions contemplated hereby.
2.3 Capitalization and Title to Shares. TMR is authorized to issue
1,000 shares of common stock, $0.01 par value (the "TMR Common Stock"), of which
1,000 shares are issued and outstanding as of the date hereof. SCB owns all of
the issued and outstanding shares of TMR Common Stock. There are no authorized
or outstanding subscriptions, options, conversion
3
10
or exchange rights, warrants, repurchases or redemption agreements, or other
agreements, claims or commitments of any nature whatsoever obligating TMR to
issue, transfer, deliver or sell or cause to be issued, transferred, delivered,
sold, repurchased or redeemed, additional shares of the capital stock or other
securities of TMR or obligating TMR to grant, extend or enter into any such
agreement. There are no stockholder agreements, voting trusts, proxies or other
agreements, instruments or understandings with respect to the voting of the
capital stock of TMR.
2.4 Charter and By-laws. TMR has heretofore delivered to MAXIMUS true
and complete copies of TMR's Certificate of Incorporation (certified by the
Secretary of the State of Tennessee) and By-laws as in effect on the date
hereof. The minute books of TMR contain true and complete records of all
meetings and consents in lieu of meetings of the Board of Directors (and any
committees thereof) and of the stockholders of TMR since the time of its
incorporation and accurately reflect all transactions referred to in such
minutes and consents in lieu of meetings. The stock books of TMR are true,
complete and correct.
2.5 Financial Statements. The internally prepared balance sheets of
TMR as at April 30, 1999 and the related statements of operations and retained
earnings for the year then ended, and the internally prepared balance sheets of
TMR at March 31, 2000 and the related statements of operations and retained
earnings for the eleven month period then ended, all of which are attached
hereto as Schedule 2.5, fairly present in all material respects the financial
condition and results of operations of TMR as at such dates, and for the periods
then ended, in accordance with generally accepted accounting policies ("GAAP")
consistently applied throughout the periods covered thereby; provided, however,
that the March 31, 2000 financial statements are subject to normal year-end
adjustments. The foregoing financial statements of TMR as at March 31, 2000, and
for the eleven month period then ended, are sometimes herein called the
"Financials," the balance sheet included in the Financials is sometimes herein
called the "Balance Sheet" and March 31, 2000 is sometimes herein called the
"Balance Sheet Date."
2.6 No Material Adverse Change. Except as set forth on Schedule 2.6,
since the Balance Sheet Date,
(a) there have been no changes in the assets, properties, business,
operations or condition (financial or otherwise) of TMR which either
individually or in the aggregate materially and adversely affect TMR, nor does
TMR know of any such change that is threatened, nor has there been any damage,
destruction or loss materially and adversely affecting the assets, properties,
business, operations or condition (financial or otherwise) of TMR, whether or
not covered by insurance; and
(b) TMR has not:
(i) incurred any indebtedness for borrowed money;
(ii) declared or paid any dividend or declared or made any
other distribution of any kind to its stockholders, or made any direct or
indirect redemption, retirement, purchase or other acquisition of any shares of
its capital stock;
4
11
(iii) made any loan or advance to any of its stockholders,
officers, directors, employees, consultants, agents or other representatives
(other than travel advances made in the ordinary course of business), or made
any other loan or advance otherwise than in the ordinary course of business;
(iv) made any payment or commitment to pay any severance or
termination pay to any of its officers, directors, employees, consultants,
agents or other representatives, other than payments to, or commitments to pay,
persons made in the ordinary course of business;
(v) except in the ordinary course of business: entered into any
lease (as lessor or lessee); sold, abandoned or made any other disposition of
any of its assets or properties, granted or suffered any lien or other
encumbrance on any of its assets or properties; entered into or amended any
contract or other agreement to which it is a party, or by or to which it or its
assets or properties are bound or subject, or pursuant to which it agrees to
indemnify any party or to refrain from competing with any party;
(vi) except for inventory or equipment acquired in the ordinary
course of business, made any acquisition of all or any part of the assets,
properties, capital stock or business of any other person;
(vii) incurred any contingent liability as a guarantor or
otherwise with respect to the obligations of others or cancelled any material
debt or claim owing to, or waived any material right of, TMR;
(viii) incurred any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties, assets
or business of TMR; or
(ix) made any change in accounting methods or practices, credit
practices or collection policies used by TMR; and
(c) The business of TMR has been conducted only in the ordinary
course and consistently with its prior practices.
2.7 Tax Matters.
(a) Except as set forth on Schedule 2.7A, all required federal,
state, county, local, foreign, and other taxes, including, without limitation,
income taxes, estimated taxes, excise taxes, sales taxes, use taxes, gross
receipts taxes, franchise taxes, employment and payroll related taxes,
withholding taxes, property taxes and import duties, whether or not measured in
whole or in part by net income and all deficiencies, or other additions to tax,
interest and penalties (hereinafter, "Taxes" or, individually, a "Tax") required
to be paid by TMR through the date hereof, have been paid and all returns
relating to such Taxes required to be filed through the date hereof have been
filed. All such returns are, in all material respects, true, correct and
complete and correctly and accurately reflect the amount of Tax liability for
such period. All Taxes required to be collected or withheld by TMR have been
duly collected or withheld by TMR and have been or will be duly remitted or
deposited in accordance with law. TMR has no knowledge of any Tax deficiency or
claim for additional Taxes or interest thereon or penalties in
5
12
connection therewith, asserted or threatened to be asserted against TMR by any
taxing authority. There has not been any audit of any tax return filed by TMR
and no audit of any tax return of TMR is in progress and TMR has not been
notified by any tax authority that any such audit is contemplated or pending.
Except as set forth on Schedule 2.7A, no extension of time with respect to any
date on which a tax return was or is to be filed by TMR is in force, and no
waiver or agreement by TMR is in force for the extension of time for the
assessment or payment of any Tax. TMR does not file, and is not required to
file, any franchise, income or other tax returns in any other jurisdiction (in
the United States or outside of the United States), other than its jurisdiction
of incorporation or the states where it is qualified to do business, based upon
the ownership or use of property therein or the derivation of income therefrom.
(b) The provisions for taxes on the Balance Sheet are sufficient
for the payment of all unpaid state and federal Taxes owed by TMR in relation to
TMR, including interest and penalties thereon due and payable and any applicable
taxes owing to any foreign jurisdiction, whether or not assessed or disputed, as
of the Balance Sheet Date. Except as set forth on Schedule 2.7B, TMR has timely
paid or will pay before the Closing, or where payment is not required to be
made, has made or will make adequate provision for the payment of, all material
Taxes, including interest and penalties due and payable, in respect of any
taxable period ending on or before the Closing Date. For purposes of the
preceding sentence, the Closing Date shall be treated as the last day of a
taxable period whether or not the Closing Date is in fact the last day of such
taxable period.
2.8 Compliance with Laws.
(a) TMR is not in violation of any order, judgment, injunction,
award or decree binding upon it. TMR is not in violation of any federal, state,
local or foreign law, ordinance or regulation or any other requirement of any
governmental or regulatory body, court or arbitrator applicable to its business
or assets, including, without limitation, regulations and requirements of the
Occupational Safety and Health Administration ("OSHA"), and laws, ordinances,
regulations and other requirements respecting labor, employment and employment
practices, terms and conditions of employment and wages and hours, or relating
to the uses of its assets, zoning, pollution or protection of the environment,
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes; except where the violation
would not have a material adverse effect upon the financial condition of TMR.
TMR has never received notice of, and there has never been, any citation, fine
or penalty imposed or asserted against TMR for, any such violation or alleged
violation. Nothing in this Section 2.8(a) shall abrogate the representation of
TMR pertaining to Hazardous Materials contained in Section 2.21 hereof.
(b) Set forth on Schedule 2.8A are all of the licenses, permits,
franchises, orders or approvals of any federal, state, local or foreign
governmental or regulatory body, including, but not limited to, licenses issued
by OSHA or otherwise relating to employment and environmental matters
(collectively, "Permits") that are material to the conduct of the business of
6
13
TMR and the uses of the Purchased Assets. TMR holds all Permits necessary to
operate its business as presently conducted and as currently contemplated to be
conducted. Such Permits are in full force and effect and, except as set forth on
Schedule 2.8B, such Permits will be transferred to MAXIMUS as part of the
Purchased Assets. No violations are or have been recorded with any governmental
or regulatory body in respect of any Permit; and no proceeding is pending or, to
the best knowledge of TMR, threatened to revoke or limit any Permit.
2.9 Consents; No Breach. All consents, permits, authorizations and
approvals from any person pursuant to applicable law or contracts or other
agreements with TMR, that are required in connection with the performance of
TMR's obligations under this Agreement, or the assignment of the Purchased
Assets or the assumption of the Assumed Liabilities are set forth on Schedule
2.9 hereto. The execution, delivery and performance of this Agreement and the
Related Agreements and the consummation of the transactions contemplated hereby
and thereby will not (i) violate any provision of the Certificate of
Incorporation or By-laws of TMR; (ii) except as set forth on Schedule 2.9,
violate, conflict with or result in the breach of any of the terms or conditions
of, result in modification of the effect of, or otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any material instrument, contract
or other agreement to which TMR or any of the Purchased Assets or Assumed
Liabilities may be bound or subject; (iii) violate any order, judgment,
injunction, award or decree of any court, arbitrator or governmental or
regulatory body against, or binding upon, TMR or upon the securities,
properties, assets or business of TMR; (iv) violate any statute, law or
regulation of any jurisdiction as such statute, law or regulation relates to TMR
or to the securities, properties, assets or business of TMR which violation,
individually or in the aggregate, could have a material adverse effect upon the
transactions contemplated hereby or upon the assets, properties, business,
operation or financial condition of TMR; (v) violate any Permit, which
violation, individually or in the aggregate, would have a material adverse
effect on the financial condition of TMR; (vi) except as set forth in Schedule
2.9, require the approval or consent of any foreign, federal, state, local or
other governmental or regulatory body or the approval or consent of any other
person; or (vii) result in the creation of any lien or other encumbrance on the
Purchased Assets or Assumed Liabilities.
2.10 Actions and Proceedings. Except as set forth on Schedule 2.10,
there are no outstanding orders, judgments, injunctions, awards or decrees of
any court, governmental or regulatory body or arbitration tribunal against or
involving TMR or any of its securities, assets, or properties. There are no
actions, suits or claims or legal, administrative or arbitral proceedings or, to
the best knowledge of TMR, investigations (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) pending or, to the best
knowledge of TMR, threatened against or involving TMR or any of its securities,
assets or properties. To the best knowledge of TMR, there is no fact, event or
circumstance that may give rise to any suit, action, claim, investigation or
proceeding that individually or in the aggregate could have a material adverse
effect upon the transactions contemplated hereby or upon the assets, properties,
business, operations or condition (financial or otherwise) of TMR.
2.11 Contracts and Other Agreements. Schedule 2.11 sets forth all of
the following contracts and other agreements included in the Purchased Assets or
Assumed Liabilities or by or to which the Purchased Assets are bound or subject:
7
14
(a) contracts and other agreements with any current or former
officer, director, stockholder, employee, consultant, agent or other
representative of TMR or SCB and contracts and other agreements for the payment
of fees or other consideration to any entity in which any officer or director of
TMR or SCB has an interest;
(b) contracts and other agreements with any labor union or
association representing any employee of TMR or otherwise providing for any form
of collective bargaining;
(c) contracts and other agreements, in excess of $100,000 in the
aggregate or $25,000 individually, for the purchase or sale of materials,
supplies, equipment, merchandise or services that contain an escalation,
renegotiation or redetermination clause or that obligate TMR to purchase all or
substantially all of its requirements of a particular product from a supplier,
or for periodic minimum purchases of a particular product from a supplier;
(d) contracts and other agreements for the sale of any of the
assets or properties of TMR other than in the ordinary course of business or for
the grant to any person of any options, rights of first refusal, or preferential
or similar rights to purchase any of such assets or properties;
(e) partnership or joint venture agreements;
(f) contracts or other agreements under which TMR agrees to
indemnify any party or to share the tax liability of any party;
(g) contracts, options and other agreements for the purchase of any
asset, tangible or intangible calling for an aggregate purchase price or
payments in any one year of more than $20,000 in any one case (or in the
aggregate, in the case of any related series of contracts and other agreements);
(h) contracts and other agreements that cannot by their terms be
canceled by TMR and any successor or assignee of TMR without liability, premium
or penalty on no less than thirty days notice;
(i) contracts and other agreements with customers or suppliers for
the sharing of fees, the rebating of charges or other similar arrangements;
(j) contracts and other agreements containing obligations or
liabilities of any kind to holders of the securities of TMR as such (including,
without limitation, an obligation to register any of such securities under any
federal or state securities laws);
(k) contracts and other agreements containing covenants of TMR not
to compete in any line of business or with any person or covenants of any other
person not to compete with TMR in any line of business;
(l) contracts and other agreements relating to the acquisition by
TMR of any operating business or the capital stock of any other person;
8
15
(m) contracts and other agreements requiring the payment to any
person of a commission or fee, including contracts or other agreements with
consultants which provide for aggregate payments in excess of $20,000 annually;
(n) contracts, indentures, mortgages, promissory notes, loan
agreements, guaranties, security agreements, pledge agreements, and other
agreements relating to the borrowing of money or securing any such liability;
(o) distributorship or licensing agreements which provide for
aggregate payments in excess of $20,000 annually;
(p) contracts under which TMR will acquire or has acquired
ownership of, or license to, intangible property, including software (other than
software licensed by TMR as an end user for less than $20,000 and not
distributed by it);
(q) leases, subleases or other agreements under which TMR is lessor
or lessee of any real property; or
(r) any other material contract or other agreement whether or not
made in the ordinary course of business that has or may have a material adverse
effect on TMR's business or prospects, condition, financial or otherwise, or any
of its assets or properties of TMR.
There have been delivered to MAXIMUS true and complete copies of all of
the contracts and other agreements (and all amendments, waivers or other
modifications thereto) set forth on Schedule 2.11. All of such contracts and
other agreements are valid, subsisting, in full force and effect, binding upon
TMR, and to the best knowledge of TMR, binding upon the other parties thereto in
accordance with their terms, and TMR has paid in full or accrued all amounts now
due thereunder and has satisfied in full or provided for all of its liabilities
and obligations thereunder which are presently required to be satisfied or
provided for, and is not in default under any of them, nor, to the best
knowledge of TMR, is any other party to any such contract or other agreement in
default thereunder, nor does any condition exist that with notice or lapse of
time or both would constitute a default thereunder.
2.12 Real Estate. The Purchased Assets do not include any property or
any buildings or other structures or any options or any contractual obligations
to purchase or acquire any interest in real property. The leasehold interests of
TMR set forth in Schedule 2.11 are subject to no lien or other encumbrance.
2.13 Tangible Property. The plant, machinery, equipment, furniture,
leasehold improvements, fixtures, vehicles, structures, any related capitalized
items and other tangible property material to the business of TMR ("Tangible
Property") are in good operating condition and repair, ordinary wear and tear
excepted, and TMR has not received notice that any of its Tangible Property is
in violation of any existing law or any building, zoning, health, safety or
other ordinance, code or regulation.
9
16
2.14 Intangible Property.
(a) Except as set forth on Schedule 2.14A, TMR has exclusive
ownership of all patents, trademarks, service marks, trade names and copyrights;
all applications to register any of the foregoing; all franchises, trade
secrets, inventions, customer lists, manufacturing or other processes, designs,
computer software, data compilations, research results and other confidential
information and legally protected proprietary rights; whether any of the
foregoing are owned or licensed (collectively, "Proprietary Rights") that are
material to the business of TMR and that are used in its business as presently
conducted or to be used in its business as it is contemplated to be conducted
and TMR has the right to use, free and clear of claims or rights of others, all
such Proprietary Rights.
(b) TMR has not received any notices of infringement by TMR of any
Proprietary Rights of others, and, to the best knowledge of TMR, none of the
present activities, or contemplated activities under planning or development, of
TMR or its products or assets infringe on any Proprietary Rights of others,
including unauthorized use of any confidential information or trade secrets of
any person, including without limitation any former employer of any past or
present employees of TMR. TMR does not know of any infringement or violation by
others of its Proprietary Rights, including any violation of TMR's confidential
information.
(c) All patents, patent applications, trademarks, trademark
applications and registrations and registered copyrights (or applications
therefor) which are owned by or licensed to TMR or used or to be used by TMR in
its business as presently conducted or contemplated are listed in Schedule 2.14B
("Registered Rights"). All of the Registered Rights have been duly registered
in, filed in or issued by the United States Patent and Trademark Office, the
United States Register of Copyrights, or the corresponding offices of other
jurisdictions as identified on said Schedule, and have been properly maintained
and renewed in accordance with all applicable provisions of law and
administrative regulations in the United States and in each such other
jurisdiction.
(d) To the best knowledge of TMR, no employee of TMR has any
agreement or arrangement with a former employer currently in effect relating to
confidential information or trade secrets of such employer. To the best
knowledge of TMR, none of the activities of its employees on behalf of TMR
violate any agreements or arrangements which any such employees have with former
employers currently in effect.
2.15 Title to Assets; Liens. Except as set forth in Schedule 2.15 or
with respect to Excluded Assets, TMR owns outright and has good title to all of
the Purchased Assets, including, without limitation, all of the assets and
properties reflected on the Balance Sheet, free and clear of any claim, lien or
other encumbrance, except for (i) assets and properties disposed of, or subject
to purchase or sales orders, in the ordinary course of business since the
Balance Sheet Date; or (ii) liens or other encumbrances securing the claims of
materialmen, carriers, landlords and like persons, all of which are not yet due
and payable. Upon delivery of and payment for the Purchased Assets as herein
provided, MAXIMUS will acquire all right, title and interest in the Purchased
Assets, free and clear of any claim, lien or other encumbrance.
10
17
2.16 Absence of Undisclosed Liabilities. As at the Balance Sheet Date,
TMR had no liabilities of any nature, whether accrued, absolute, contingent or
otherwise (including, without limitation, liabilities as guarantor or otherwise
with respect to obligations of others or liabilities for Taxes due or then
accrued or to become due), required to be shown on the Balance Sheet that were
not fully and adequately reflected or reserved against on the Balance Sheet or
notes thereto. TMR has no such liabilities, other than liabilities (i) fully and
adequately reflected or reserved against on the Balance Sheet, and (ii) incurred
since the Balance Sheet Date in the ordinary course of business.
2.17 Customers. Schedule 2.17 sets forth the ten customers who
accounted for the largest sales of TMR for the twelve months ended December 31,
1999 (the "Customers"). The relationships of TMR with its Customers are
generally good commercial working relationships. Except at the request of TMR,
no Customer has canceled or otherwise terminated its relationship with TMR, or
has during the last 12 months decreased materially its services, supplies or
materials to TMR or its usage or purchase of the services or products of TMR, as
the case may be. TMR does not know of any plan or intention of any such
Customer, and has not received any written threat from any Customer to
terminate, to cancel or otherwise materially and adversely modify its
relationship with TMR or to decrease materially or limit its usage, purchase of
the services of TMR.
2.18 Employer Relations. TMR has an aggregate of approximately 125
employees and generally enjoys a good employer-employee relationship with such
employees. TMR is not delinquent in payments to any of its employees or
consultants for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them to the date hereof or amounts
required to be reimbursed to such employees. Upon termination of the employment
of any said employees, neither TMR nor MAXIMUS will by reason of anything done
prior to the Closing be liable to any of said employees or consultants for
severance pay or any other payments (other than accrued salary, vacation or sick
pay in accordance with TMR's normal policies). Schedule 2.18 contains a list of
all employees and consultants of TMR working for TMR who, individually, have
received or are scheduled to receive compensation from TMR for the current
fiscal year in excess of $75,000. In each case such Schedule includes the
current job title and aggregate annual compensation of each such individual.
2.19 Insurance. TMR is not in default with respect to any provision
contained in any insurance policy or binder listed on Schedule 3.6, nor has TMR
failed to give any notice or present any claim under any such policy or binder
in due and timely fashion. TMR has not received notice of cancellation or
non-renewal of any such policy or binder.
2.20 Brokerage. No broker, finder, agent or similar intermediary has
acted on behalf of TMR in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with TMR, or any action taken by it.
2.21 Hazardous Materials. TMR has never generated, used or handled any
Hazardous Materials (as defined below), nor has TMR treated, stored or disposed
of any Hazardous Materials at any site owned or leased by TMR or shipped any
Hazardous Materials for treatment,
11
18
storage or disposal at any other site or facility. No other person has ever
generated, used, handled, stored or disposed of any Hazardous Materials at any
site owned or premises leased by TMR during the period of TMR's ownership or
lease, nor has there been or is there threatened any release of any Hazardous
Materials on or at any such site or premises during such period. TMR does not
presently own, operate, lease or use, nor has it previously owned, operated,
leased, or used any site on which underground storage tanks are or were located.
No lien has ever been imposed by any governmental agency on any property,
facility, machinery, or equipment owned, operated, leased or used by TMR in
connection with the presence of any Hazardous Materials. For purposes of this
Section 2.21, "Hazardous Materials" shall mean and include any "hazardous waste"
as defined in either the United States Resource Conservation and Recovery Act or
regulations adopted pursuant to said Act, and also any "hazardous substances" or
"hazardous materials" as defined in the United States Comprehensive
Environmental Response, Compensation and Liability Act. TMR has provided to
MAXIMUS copies of all documents, records and information available to TMR
concerning any environmental or health and safety matter relevant to TMR,
whether generated by TMR or others, including, without limitation, environmental
audits, environmental risk assessments, site assessments, documentation
regarding off-site disposal of Hazardous Materials, spill control plans, and
reports, correspondence, permits, licenses, approvals, consents and other
authorizations related to environmental or health and safety matters issued by
any governmental agency.
2.22 Backlog. As of the date hereof, TMR has a backlog of firm orders
for the sale or lease of products or services, for which revenues have not been
recognized by TMR, as set forth in Schedule 2.22.
2.23 Full Disclosure. All documents and other papers delivered by or on
behalf of TMR in connection with this Agreement and the transactions
contemplated hereby are true, complete and authentic in all material respects.
No representation or warranty of TMR contained in this Agreement, and, to the
best knowledge of TMR, no document or other paper furnished by or on behalf of
TMR to MAXIMUS (or any of its agents) pursuant to this Agreement or in
connection with the transactions contemplated hereby, taken as a whole, contains
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements made, in the
context in which made, not false or misleading. There is no fact known to TMR
that has not been disclosed to MAXIMUS in this Agreement or the Schedules hereto
that materially adversely affects, or (in the reasonable business judgment of
TMR) is likely to materially adversely affect, the assets, properties, business,
operations or condition (financial or otherwise) of TMR. Notwithstanding the
foregoing, TMR makes no representation or warranty regarding any assets other
than the Purchased Assets or any liabilities other than the Assumed Liabilities,
and none shall be implied at law or in equity.
2.24 Year 2000 Compliance. Except as set forth in Schedule 2.24, each
significant system, comprised of software, hardware, databases, or embedded
control systems (microprocessor controlled, robotic or other devices) (each a
"System"), that constitutes any part of, or which is under control of TMR and is
used in connection with the use, operation or enjoyment of any material tangible
or intangible asset or real property of TMR: (a) accurately processes date/time
data (including, but not limited to, calculating, comparing and sequencing)
from, into, and between the twentieth and twenty first centuries, and the years
1999 and 2000 and leap year calculations, to the extent that other systems
properly exchange date/time data with
12
19
TMR's systems; and (b) was not and will not be materially adversely affected by
the advent of the year 2000 or 2001, the advent of the twenty-first century or
the transition from the twentieth century through the year 2000 and into the
twenty-first century (collectively, items (a) and (b) are referred to herein as
"Year 2000 Compliant"). No System that is material to the business, finances, or
operations of TMR receives data from or communications with any component or
system external to itself (whether or not such external component or system is
TMR's or any third party's) that is not itself Year 2000 Compliant excepting the
parts of the external component or system within which noncompliance will have
no effect on the data or communications sent to TMR, nor on the Systems of TMR.
Except as set forth in Schedule 2.24, all licenses for the use of any
System-related software, hardware, databases or embedded controls under TMR's
control are certified by the manufacturer to be Year 2000 Compliant and to
contain the capabilities required to enable them to be Year 2000 Compliant
within TMR's computer systems (hardware and software), or the licenses permit
TMR or a third party to make all modifications, bypasses, de-bugging,
work-arounds, repairs, replacements, conversions or corrections necessary to
permit the Systems to operate compatibly, in conformance with their respective
specifications, and to be Year 2000 Compliant. TMR has not, and has no reason to
believe that it may, incur material expenses or that there may be a material
adverse effect on the business of TMR arising from or relating to the failure of
any of its Systems as a result of not being Year 2000 Compliant.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SCB
SCB represents and warrants to MAXIMUS as follows:
3.1 Organization and Qualification. SCB is a corporation duly
organized, validly existing and in good standing under the laws of Tennessee,
and has full corporate power and lawful authority to own, lease and operate its
assets, properties and business and to carry on its business as now being and as
heretofore conducted.
3.2 Authority to Execute and Perform Agreements. SCB has the corporate
power and all authority and approvals required to enter into, execute and
deliver this Agreement and the Related Agreements to which it is a party and to
perform fully its obligations hereunder and thereunder, and each of this
Agreement and the Related Agreements to which it is a party has been or will be
duly executed and delivered and is the valid and binding obligation of SCB
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights and
remedies of creditors generally, and to equitable principles. SCB has obtained
the necessary approval of its board of directors and stockholders to effect the
transactions contemplated hereby.
3.3 Brokerage. No broker, finder, agent or similar intermediary has
acted on behalf of SCB in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with SCB, or any action taken by it.
13
20
3.4 No Breach. The execution, delivery and performance of this
Agreement and the Related Agreements by SCB and the consummation of the
transactions contemplated hereby and thereby will not: (a) violate any provision
of the Certificate of Incorporation or By-laws of SCB; (b) violate any order,
judgment, injunction, award or decree of any court, arbitrator or governmental
or regulatory body against, or binding upon, SCB or upon the securities,
properties, assets or business of SCB; (c) violate any statute, law or
regulation of any jurisdiction as such statute, law or regulation relates to SCB
or to the securities, properties, assets or business of SCB which violation,
individually or in the aggregate, could have a material adverse effect upon the
transactions contemplated hereby; (d) violate any Permit which violation,
individually or in the aggregate, could have a material adverse effect upon the
transactions contemplated hereby; or (e) require the approval or consent of any
foreign, federal, state, local or other governmental or regulatory body or the
approval or consent of any other person.
3.5 Validity. There are no consents, approvals, registrations, filings,
applications, notices, qualifications and waivers to be made, filed, given or
obtained by SCB in connection with the execution and delivery of this Agreement
and the Related Agreements to which it is a party and the consummation of the
transactions contemplated hereunder and thereunder except for those the failure
to make, file, give or obtain which would not, individually or in the aggregate,
either have a material adverse effect upon the consummation of the transactions
contemplated hereunder.
3.6 Insurance. Schedule 3.6 sets forth a list of all policies or
binders of fire, liability, product liability, workmen's compensation,
vehicular, directors and officers and other insurance held by SCB or on behalf
of TMR for the business of TMR. Such policies and binders are in full force and
effect, all premiums with respect thereto are currently paid, are reasonably
believed to be adequate for the businesses engaged in by TMR and are in
conformity with the requirements of all contracts to which TMR is a party and to
the best knowledge of SCB, are valid and enforceable in accordance with their
terms. SCB is not in default with respect to any provision contained in any such
policy or binder nor has SCB failed to give any notice or present any claim
under any such policy or binder in due and timely fashion with respect to the
business of TMR. There are no outstanding unpaid claims under any such policy or
binder. SCB has not received notice of cancellation or non-renewal of any such
policy or binder.
3.7 Full Disclosure. No representation or warranty of SCB contained in
this Agreement, and, to the best knowledge of SCB, no document or other paper
furnished by or on behalf of SCB to MAXIMUS (or any of its agents) pursuant to
this Agreement or in connection with the transactions contemplated hereby, taken
as a whole, contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
made, in the context in which made, not false or misleading. There is no fact
known to SCB that has not been disclosed to MAXIMUS in this Agreement or the
Schedules hereto that materially adversely affects, or (in the reasonable
business judgment of SCB) is likely to materially adversely affect, the assets,
properties, business, operations or condition (financial or otherwise) of TMR.
Notwithstanding the foregoing, SCB makes no representation or warranty regarding
any assets other than the Purchased Assets or any liabilities other than the
Assumed Liabilities, and none shall be implied at law or in equity.
14
21
3.8 Employee Benefit Plans. Schedule 3.8 sets forth a correct and
complete list of all pension, profit sharing, retirement, deferred compensation,
welfare, insurance, disability, bonus, vacation pay, severance pay and similar
plans, programs or arrangements, including without limitation all employee
benefit plans as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") in which TMR participates (the
"Plans"). TMR has never maintained or contributed to a defined benefit pension
plan that is subject to Title IV of ERISA. TMR has never maintained or
contributed to any "multiemployer plan" as defined in Section 4001(a)(3) of
ERISA, and TMR has not incurred any material liability under Sections 4062, 4063
or 4201 of ERISA. To the knowledge of SCB, each Plan has been administered in
all material respects in accordance with the terms of such Plan and the
provisions of any and all applicable statutes, orders or governmental rules or
regulations, including without limitation ERISA and the Code except where the
failure to comply would not result in any material claim against the Purchased
Assets. All contributions required by law or the terms of any Plan have been
made. Except for continuation of health coverage to the extent required under
Section 4980B of the Code, applicable state law or as otherwise set forth in
this Agreement, there are no obligations under any Plan providing health or
other welfare benefits after termination of employment. Complete copies of the
following documents with respect to each Plan (as applicable) will be delivered
to MAXIMUS within five days after the Closing: (a) each relevant Plan document
and subsequent amendment thereto; (b) each trust agreement, group annuity
contract, insurance policy or contract; (c) the most recent IRS determination
letter; and (d) the most recent summary plan description and each summary of
material modification thereto. For purposes of this Section 3.8, references to
TMR include TMR and its ERISA Affiliates. An "ERISA Affiliate" of TMR means any
trade or business (whether or not incorporated) that together with TMR would
have been deemed a "single employer" within the meaning of Section 4001(b) of
ERISA or Section 414(m) of the Code at any time within the five-year period
ending on the Closing Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MAXIMUS
MAXIMUS represents and warrants to SCB and TMR as follows:
4.1 Organization and Qualification of MAXIMUS. MAXIMUS is duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and has full corporate power and lawful authority to
own, lease and operate its assets, properties and business and to carry on its
business as now being and as heretofore conducted. MAXIMUS is qualified or
otherwise authorized to transact business as a foreign corporation in each
jurisdiction (in the United States and outside of the United States) in which
such qualification or authorization is required by law and in which the failure
to so qualify or be authorized would have a material adverse effect on MAXIMUS
or its assets, properties, business, operations or financial condition.
4.2 Authority to Execute and Perform Agreements. MAXIMUS has the
corporate power and all authority and approvals required to enter into, execute
and deliver this Agreement and the Related Agreements, and to perform fully its
obligations hereunder and thereunder, and each of this Agreement and the Related
Agreements has been or will be duly executed and
15
22
delivered and the valid and binding obligation of MAXIMUS enforceable in
accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights and remedies of
creditors generally, and to equitable principles. MAXIMUS has obtained the
necessary approval of its board of directors for the execution and delivery of
this Agreement and the Related Agreements, and the consummation of the
transactions contemplated hereunder and thereunder, and no other corporate
proceedings or actions on the part of MAXIMUS are necessary therefor.
4.3 Brokerage. No broker, finder, agent or similar intermediary has
acted on behalf of MAXIMUS in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with MAXIMUS or any action taken by
MAXIMUS.
4.4 No Breach. The execution, delivery and performance of this
Agreement and the Related Agreements by MAXIMUS and the consummation of the
transactions contemplated hereby and thereby will not: (a) violate any provision
of the Amended and Restated Articles of Incorporation or Amended and Restated
By-laws of MAXIMUS; (b) violate, conflict with or result in the breach of any of
the terms or conditions of, result in modification of the effect of, or
otherwise give any other contracting party the right to terminate, or constitute
(or with notice or lapse of time or both constitute) a default under, any
material instrument, material contract or other material agreement to which
MAXIMUS is a party or to which it or any of its assets or properties may be
bound or subject; (c) violate any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory body against, or binding
upon, MAXIMUS or upon the securities, properties, assets or business of MAXIMUS;
(d) violate any statute, law or regulation of any jurisdiction as such statute,
law or regulation relates to MAXIMUS or to the securities, properties, assets or
business of MAXIMUS which violation, individually or in the aggregate, could
have a material adverse effect upon the transactions contemplated hereby or upon
the assets, properties, business, operations or financial condition of MAXIMUS;
(e) violate any Permit which violation, individually or in the aggregate, could
have a material adverse effect upon the transactions contemplated hereby or upon
the assets, properties, business, operations or financial condition of MAXIMUS;
(f) require the approval or consent of any foreign, federal, state, local or
other governmental or regulatory body or the approval or consent of any other
person; or (g) result in the creation of any lien or other encumbrance on the
assets or properties of MAXIMUS.
4.5 Validity. There are no consents, approvals, registrations, filings,
applications, notices, qualifications and waivers to be made, filed, given or
obtained by MAXIMUS in connection with the execution and delivery of this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereunder and thereunder except for those the failure to make,
file, give or obtain which would not, individually or in the aggregate, either
have a material adverse effect upon the assets, properties, business, operations
or condition (financial or otherwise) of MAXIMUS or upon the consummation of the
transactions contemplated hereunder.
16
23
ARTICLE 5
CONDITIONS PRECEDENT TO THE OBLIGATION
OF MAXIMUS TO CLOSE
The obligation of MAXIMUS to close is subject, at the option of MAXIMUS
acting in accordance with the provisions of this Agreement with respect to
termination hereof, to the fulfillment of the following conditions, any one or
more of which may be waived by it:
5.1 Delivery of Instruments of Transfer. TMR shall have delivered or
caused to be delivered to MAXIMUS a xxxx of sale or other instruments of
transfer for the assignment of the Purchased Assets by TMR containing provisions
(not inconsistent with the provisions hereof) which are usual and customary for
assigning the assets involved.
5.2 Certificate of Secretary of TMR. TMR shall have delivered to
MAXIMUS a certificate of the Secretary of TMR, dated as of the Closing Date,
certifying as to: (a) the Certificate of Incorporation and the By-laws of TMR,
as in effect on and as of the Closing Date; and (b) the resolutions of the Board
of Directors and stockholders of TMR authorizing and approving the execution,
delivery and performance by TMR of this Agreement and the transactions
contemplated hereby.
5.3 Third Party Consents and Permits. All consents and approvals from
parties to contracts or other agreements with TMR and all Permits that may be
required in connection with the performance by TMR or the stockholder of their
respective obligations under this Agreement or the continuance of such contracts
or other agreements with TMR after the Closing shall have been obtained.
5.4 Escrow Agreement. TMR shall have entered into the Escrow Agreement
substantially in the form of Exhibit A hereto (the "Escrow Agreement").
5.5 Employment. Xxxxxx Xxxxxxx, Xxxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxx
Xxxxxxxx, Xxxxxx Xxxxxxx Xxxxxxx and Xxxxxxxx Xxxxx shall have entered into
Executive Employment Agreements with MAXIMUS substantially in the form of
Exhibit B.
5.6 Noncompetition Agreement. SCB shall have executed and delivered the
Noncompetition Agreement in substantially the form attached hereto as Exhibit C
(the "Noncompetition Agreement").
5.7 Opinion of Counsel to SCB and TMR. MAXIMUS shall have received the
opinion of Baker, Donelson, Bearman & Xxxxxxxx PC, counsel to SCB and TMR, dated
the Closing Date, addressed to MAXIMUS, and substantially in the form of Exhibit
D hereto.
5.8 Tax Clearance Certificates. TMR shall have delivered to MAXIMUS
copies of all tax clearance or other similar certificates issuable by any
applicable state or other agency in connection with the transfer of the
Purchased Assets, which certificates shall show that all required returns and
reports have been filed by TMR and that no taxes or similar payments are due and
owing or claimed to be due and owing.
17
24
5.9 Release of Liens. TMR shall have delivered to MAXIMUS evidence that
all liens or other encumbrances on the Purchased Assets have been released.
ARTICLE 6
CONDITIONS PRECEDENT TO THE OBLIGATION
OF SCB AND TMR TO CLOSE
The obligation of SCB and TMR to consummate the transactions
contemplated hereby is subject, at the option of SCB and TMR acting in
accordance with the provisions of this Agreement with respect to termination
hereof, to the fulfillment of the following conditions, any one or more of which
may be waived:
6.1 Delivery of Assumption Agreement. MAXIMUS shall have delivered or
caused to be delivered to TMR an agreement for assumption of the Assumed
Liabilities by MAXIMUS containing provisions (not inconsistent with the
provisions hereof) which are usual and customary for assuming the liabilities
involved.
6.2 Related Agreements. MAXIMUS shall have entered into the Escrow
Agreement and the Noncompetition Agreement (the "Related Agreements").
6.3 Delivery of the Purchase Price. Pursuant to Section 1.3, MAXIMUS
shall have: (a) delivered to TMR the Closing Payment; and (b) deposited the
Escrow Amount with the Escrow Agent pursuant to the Escrow Agreement.
ARTICLE 7
INDEMNIFICATION
7.1 Survival. Notwithstanding any right of any party to fully
investigate the affairs of the other party and notwithstanding any knowledge of
facts determined or determinable by such party pursuant to such investigation or
right of investigation, each party has the right to rely fully upon the
representations, warranties, covenants and agreements of each other party in
this Agreement, the Related Agreements, the certificates required to be
delivered by the parties pursuant to Articles 5 and 6, or in any Schedule
delivered by any party pursuant hereto. All such representations, warranties,
covenants and agreements shall survive the execution and delivery hereof and the
Closing hereunder (except where expressly limited to a specific time period) and
be indemnified in accordance with this Article 7 and shall thereafter survive in
accordance with the provisions of Section 7.5 below.
7.2 Obligation of SCB and TMR to Indemnify. Subject to the limitations
set forth in Section 7.5 hereof, SCB and TMR jointly and severally agree to
indemnify, defend and hold harmless MAXIMUS (and its directors, officers,
employees, affiliates and assigns) from and against all losses, liabilities,
damages, deficiencies, costs or expenses (including interest and penalties
imposed or assessed by any judicial or administrative body and reasonable
attorneys
18
25
fees) ("Losses") to the extent not covered in full by insurance based upon,
arising out of or otherwise in respect of:
(a) any inaccuracy in or any breach of any representation,
warranty, covenant or agreement of SCB or TMR contained in this Agreement, the
certificates required to be delivered pursuant to Article 5, or in any Schedule
delivered pursuant hereto;
(b) any claim or demand or assertion of liability against MAXIMUS
based upon, arising out of or otherwise in respect of any and all liabilities
and obligations of any nature whatsoever, other than Assumed Liabilities, of or
relating to (i) SCB or TMR or their businesses either prior to or after the
Closing; or (ii) the Purchased Assets prior to the Closing;
(c) any claim or demand for commission or other compensation by any
broker, finder, agent or similar intermediary claiming to have been employed or
retained by or on behalf of SCB or TMR, whether or not included in clause (b);
(d) any claim based upon, arising out of or otherwise in respect
of (i) issues raised on audit by Tax authorities with respect to TMR's business
on or before the Closing Date; or (ii) any other Tax liabilities of TMR,
including any liability of TMR for the unpaid Taxes of any other person under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or otherwise; and
(e) any claim made by an employee or former employee of TMR
(including any employees of TMR who are subsequently hired by MAXIMUS) arising
out of or otherwise in respect of their employment with, or termination by, TMR.
7.3 Obligation of MAXIMUS to Indemnify. Subject to the limitations set
forth below and in Section 7.5 hereof, MAXIMUS agrees to indemnify, defend and
hold harmless SCB and TMR (and their respective directors, officers, employees,
affiliates and assigns) from and against any Losses based upon, arising out of
or otherwise in respect of:
(a) any inaccuracy in or breach of any representation, warranty,
covenant or agreement of MAXIMUS contained in this Agreement;
(b) any claim or demand for commission or other compensation by any
broker, finder, agent or similar intermediary claiming to have been employed by
or on behalf of MAXIMUS, whether or not included in clause (a); and
(c) any claim or demand or assertion of liability against TMR by a
third party based upon, arising out of or otherwise in respect of the Assumed
Liabilities.
7.4 Notice and Opportunity to Defend.
(a) Notice of Asserted Liability. Promptly and in any case within
seven (7) days after receipt by any party hereto (the "Indemnitee") of notice of
any demand, claim or circumstances which, with the lapse of time, would give
rise to a claim or the commencement (or threatened commencement) of any action,
proceeding or investigation (an "Asserted Liability") that may result in a Loss,
the Indemnitee shall give notice thereof (the "Claims Notice") to any
19
26
other party or parties obligated to provide indemnification pursuant to Sections
7.2 or 7.3 hereof (the "Indemnifying Party"). The Claims Notice shall describe
the Asserted Liability in reasonable detail, and shall indicate the amount
(estimated, if necessary) of the Loss that has been or may be suffered by the
Indemnitee.
(b) Opportunity to Defend. The Indemnifying Party may elect to
compromise or defend, and control the defense of, at its own expense and by
counsel of its own choosing, any Asserted Liability, provided that the
Indemnitee shall have no liability under any compromise or settlement agreed to
by the Indemnifying Party to which the Indemnitee has not consented in writing,
which consent shall not be unreasonably withheld. If the Indemnifying Party
elects to compromise or defend such Asserted Liability, it shall within 30 days
(or sooner, if the nature of the Asserted Liability so requires) notify the
Indemnitee of its intent to do so, and the Indemnitee shall cooperate upon the
request and at the expense of the Indemnifying Party, in the compromise of, or
defense against, such Asserted Liability. If the Indemnifying Party elects not
to compromise or defend the Asserted Liability, or fails to notify the
Indemnitee of its election as herein provided, or fails to diligently defend or
seek to compromise such Asserted Liability after electing to assume such defense
or compromise, the Indemnitee may pay, compromise or defend such Asserted
Liability and receive full indemnification for its losses, liabilities, damages,
deficiencies, costs and expenses as provided in Sections 7.2 and 7.3 hereof. In
any event, the Indemnitee may participate in (but shall not have the right to
control), at their own expense, the defense of such Asserted Liability by the
Indemnifying Party or the Indemnitee, respectively. If the Indemnifying Party
chooses to defend any claim, the Indemnitee shall make available to the
Indemnifying Party any books, records or other documents within its control that
are reasonably requested for such defense and shall otherwise cooperate with the
Indemnifying Party, in which event the Indemnitee shall be reimbursed for its
reasonable out-of-pocket expense. Subject to Section 7.5, all amounts required
to be paid in connection with any such Asserted Liability pursuant to the
determination of any court, governmental or regulatory body or arbitrator, and
all amounts required to be paid in connection with any such compromise or
settlement entered into by the Indemnifying Party, shall be borne and paid by
the Indemnifying Party. The parties agree to cooperate fully with one another in
the defense, compromise or settlement of any such Asserted Liability.
7.5 Limitations on Indemnification. The indemnification provided by
Sections 7.2 and 7.3 shall be subject to the following limitations:
(a) Limitation on Survival. The obligation of SCB and TMR to
indemnify MAXIMUS for any Loss (other than an Unlimited Loss and a Loss
resulting, directly or indirectly, from (a) any inaccuracy in or breach of the
representations, warranties and covenants contained in Section 2.7 of this
Agreement or (b) any liability described in Section 7.2(d) of this Agreement (a
"Tax Loss")) and the obligation of MAXIMUS to indemnify SCB and TMR for any Loss
(other than an Unlimited Loss) shall expire on the date one year after the
Closing Date. The obligation of SCB and TMR to indemnify MAXIMUS for any Tax
Loss shall survive until the expiration of the applicable statute of limitations
for such Tax Loss. The obligations of any party to indemnify another party for
any Unlimited Loss shall survive until the expiration of the applicable statute
of limitations for such Unlimited Loss.
20
27
(b) Maximum Indemnification Amount. The maximum aggregate
indemnification amount that shall be due from SCB or TMR to MAXIMUS, on the one
hand, and from MAXIMUS to SCB or TMR, on the other hand, for any Losses (other
than Tax Losses and Unlimited Losses), shall not in any event exceed $5,000,000.
The foregoing limitations on the liability of SCB and TMR to MAXIMUS and of
MAXIMUS to SCB and TMR are not intended to limit a party's liability to another
party to the extent a party has a cause of action against another party hereto
which is based on events unrelated to this Agreement and the transactions
contemplated hereby.
(c) Deductible. Neither MAXIMUS on the one hand, or SCB or TMR on
the other hand, shall be entitled to make a claim for indemnification pursuant
to Section 7.2 or 7.3 hereof unless and until the amount of such claim or claims
for indemnification is equal to $50,000, whereupon satisfaction of such claim
shall begin at the first dollar of liability.
(d) Satisfaction of Indemnification Claims. All indemnification
claims under Section 7.2 shall be satisfied first from the Escrow Amount held
pursuant to the Escrow Agreement.
(e) Unlimited Losses. The limitations of this Section 7.5 shall not
apply in the case of Losses resulting from a misrepresentation or breach by TMR,
SCB or MAXIMUS that an arbitrator or a court of competent jurisdiction has
determined was fraudulent ("Unlimited Loss").
(f) Characterization of Indemnification Payments. All amounts paid
by TMR, SCB or MAXIMUS, as the case may be, under this Article 7 shall be
treated for all Tax purposes as adjustments to the purchase price unless
otherwise required by applicable law, in which event such payments shall be in
an amount sufficient to indemnify the Indemnitee on a net after-Tax basis
(subject to Section 7.5(b)).
ARTICLE 8
POST-CLOSING COVENANTS AND AGREEMENTS
8.1 Authorization From Others. To the extent that the assignment of any
lease, contract, commitment or right which are among the Purchased Assets shall
require the consent of other parties thereto and MAXIMUS shall have waived the
receipt of such consent at the Closing, this Agreement shall not constitute an
assignment thereof; however, TMR shall use its reasonable best efforts after the
Closing to obtain such consents or waivers to assure MAXIMUS of the benefits of
such leases, contracts, commitments or rights as soon as practicable.
8.2 Tax Clearance Certificates. TMR agrees to use its best efforts to
obtain, as soon as practicable after the Closing, any tax clearance certificates
that were required to be delivered by TMR at the Closing pursuant to Section
5.8, but which delivery MAXIMUS agreed to waive for purposes of the Closing.
8.3 Collection of Assets. After the Closing, MAXIMUS shall have the
right to collect all accounts receivable for work performed on or after the
Closing Date and other items
21
28
transferred and assigned to it by TMR hereunder and to endorse with the name of
TMR any checks received on account of such receivables or other items. SCB
agrees that it will transfer or deliver promptly to MAXIMUS from time to time,
any cash or other property that SCB may receive with respect to any accounts
receivable for work performed on or after the Closing Date or with respect to
any of the Purchased Assets. MAXIMUS agrees that it will transfer or deliver
promptly to SCB from time to time, any cash or other property that MAXIMUS may
receive with respect to the Excluded Assets, including but not limited to
accounts receivable for work performed prior to the Closing Date. MAXIMUS agrees
that any accounts receivable payments shall be applied according to the invoice
number to which the amount relates, or if there is no invoice number or other
evidence as to the work that the payment relates, any such payment shall be
applied to the oldest accounts receivable.
8.4 Health Insurance. At the option of MAXIMUS, for a period of thirty
(30) days after Closing, TMR shall continue to provide health insurance to the
TMR employees and their dependents who are covered by such health insurance as
of Closing. MAXIMUS shall reimburse TMR for all costs and expenses associated
with providing such coverage, including without limitation any premium charged
by the third party insurance company, any reasonable fee charged for
administration of the health insurance plan and any claims made by the covered
persons which are not covered by insurance.
8.5 Further Assurances. Each of the parties shall execute such
documents, further instruments of transfer and assignment and other papers and
take such further actions as may be reasonably required or desirable to carry
out the provisions hereof and the transactions contemplated hereby.
8.6 401(k) Contributions. The parties hereto agree and acknowledge that
the employees of TMR as of the date hereof will remain employees of TMR on April
30, 2000, the last day of SCB's fiscal year. SCB agrees that (i) it will
contribute to the 401(k) account of each such employee any and all amounts due
as matching contributions through April 30, 2000, (ii) each employee will become
fully vested in all amounts credited to their 401(k) accounts, whether for April
30, 2000 matching contributions or for matching contributions made as of an
earlier date, and whether or not such employee otherwise would have been vested
in such amounts.
ARTICLE 9
MISCELLANEOUS
9.1 Publicity. Prior to the Closing, no publicity release or public
announcement concerning this Agreement or the transactions contemplated hereby
shall be made without advance approval thereof by TMR and MAXIMUS (which
approval shall not be unreasonably withheld), except to the extent required by
law on the reasonable advice of counsel to such party. After the Closing, no
publicity release or public announcement concerning this Agreement or the
transactions contemplated hereby shall be made without advance approval thereof
by MAXIMUS (which approval shall not be unreasonably withheld), except to the
extent required by law on the reasonable advice of counsel to such party.
22
29
9.2 Expenses. Each of MAXIMUS, on the one hand, and SCB and TMR, on the
other, shall bear its respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, including, without limitation, all fees and expenses of
agents, representatives, counsel and accountants and no such expenses shall be
included in any of the Assumed Liabilities.
9.3 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission with confirmation retained or sent by
certified, registered or express mail, postage prepaid. Any such notice shall be
deemed given when so delivered personally, telegraphed, telexed or sent by
facsimile transmission with confirmation retained or, if mailed, two days after
the date of deposit in the United States mails, as follows:
(a) if to MAXIMUS, to:
MAXIMUS, Inc.
0000 Xxxxxxx Xxxx
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Dodge LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to SCB and TMR:
SCB Computer Technology, Inc.
0000 Xxxxx Xxxx-Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
(c) with a copy to:
Baker, Donelson, Bearman & Xxxxxxxx PC
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
23
30
Any party may by notice given in accordance with this Section 8.3 to the other
parties designate another address or person for receipt of notices hereunder.
9.4 Entire Agreement. This Agreement (including the Schedules), the
Escrow Agreement and the Related Agreements between the parties and any
collateral agreements executed in connection with the consummation of the
transactions contemplated herein contain the entire agreement among the parties
with respect to the Purchased Assets and related transactions, and supersedes
all prior agreements, written or oral, with respect thereto.
9.5 Waivers and Amendments; Non-Contractual Remedies; Preservation of
Remedies. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity
except where this Agreement expressly provides otherwise.
9.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Virginia, exclusive of its
choice of law rules.
9.7 Arbitration. The parties hereto shall attempt to settle amicably
through negotiation any controversy, claim or dispute between them arising out
of or relating to this Agreement ("Dispute"). If a Dispute cannot be settled by
such means, the parties hereto intend and agree to submit such Dispute to final
and binding arbitration before an arbitration tribunal which is, and pursuant to
arbitration procedures which are, acceptable to all parties. If the parties
cannot or do not otherwise agree within 30 days of the date on which notice of a
Dispute is given, any such claim shall be submitted for arbitration by the
American Arbitration Association pursuant to the Commercial Arbitration Rules of
the American Arbitration Association then in effect. Any arbitration shall be
conducted, in the sole discretion of MAXIMUS, in Virginia or Massachusetts.
Notice of demand for arbitration shall be provided in writing to the other
party. The parties hereto further intend and agree that the final decision or
award of the arbitration tribunal shall be binding on the parties and their
successors and fully enforceable by any court of competent jurisdiction. The
parties hereto further intend and agree that facts and other information
relating to any arbitration arising out of or in connection with this Agreement
shall be kept confidential to the fullest extent permitted by law. Each party
shall bear its own expenses in connection with such arbitration unless otherwise
ordered by the arbitrator.
9.8 Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
legal representatives. This Agreement is not assignable except by operation of
law, by MAXIMUS to any of its affiliates, or by MAXIMUS in connection with the
merger, consolidation or sale of all or substantially all of its business or
assets.
24
31
9.9 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
9.10 Exhibits and Schedules. The Exhibits and Schedules are a part of
this Agreement as if fully set forth herein. All references herein to Sections,
subsections, clauses, Exhibits and Schedules shall be deemed references to such
parts of this Agreement, unless the context shall otherwise require.
9.11 Headings. The headings in this Agreement are for reference only,
and shall not affect the interpretation of this Agreement.
25
32
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first above written.
MAXIMUS, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx
President & Chief Executive Officer
SCB COMPUTER TECHNOLOGY, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Secretary
TECHNOLOGY MANAGEMENT RESOURCES, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Secretary
[Signature Page to Asset Purchase Agreement]
