AGREEMENT AND PLAN OF MERGER
dated as of
April 9, 1997
by and among
XXXXX XXX, XXXXX XXXXXXX, XXXXXX XXXXXX,
XXXXX XXXXXXX, AS HOLDER REPRESENTATIVE,
NYMA, INC.,
and
NYMA ACQUISITION, INC.
TABLE OF CONTENTS
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.1 Conversion of Shares. . .. . . . . . . . . . . . . . . . 10
Section 2.2 Total Consideration and Terms. . . . . . . . . . . . . . 10
Section 2.3 Exchange of Certificates; Payment of Dividends . . . . . 11
Section 2.4 Effective Time of Merger; Closing Date . . . . . . . . . 12
Section 2.5 Adjustments . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.5.1 Closing Date Adjustments . . . . . . . . . . . . . . . . 12
Section 2.5.2 Post-Closing Adjustment. . . . . . . . . . . . . . . . . 12
Section 2.5.3 Rights of Set-Off. . . . . . . . . . . . . . . . . . . . 13
Section 2.6 Contingent Payments. . . . . . . . . . . . . . . . . . . 14
ARTICLE III CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.1 Filing . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.3 Holder Representative's Closing Deliveries . . . . . . . 16
Section 3.4 Acquisition's Closing Deliveries . . . . . . . . . . . . 16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
PRINCIPAL HOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.2 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . 17
Section 4.4 Authorization. . . . . . . . . . . . . . . . . . . . . . 18
Section 4.5 No Conflict or Violation . . . . . . . . . . . . . . . . 18
Section 4.6 Financial Statements . . . . . . . . . . . . . . . . . . 19
Section 4.7 Books and Records. . . . . . . . . . . . . . . . . . . . 19
Section 4.8 Projections. . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.9 Undisclosed Liabilities. . . . . . . . . . . . . . . . . 20
Section 4.10 Absence of Certain Changes or Events . . . . . . . . . . 20
Section 4.11 Contracts; No Defaults . . . . . . . . . . . . . . . . . 21
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Section 4.12 Government Contracts . . . . . . . . . . . . . . . . . . 23
Section 4.13 Machinery and Equipment and Other Property . . . . . . . 24
Section 4.14 Intellectual Property . . . . . . . . . . . . . . . . . 24
Section 4.15 Real Property . . . . . . . . . . . . . . . . . . . . . 25
Section 4.16 Litigation and Proceedings . . . . . . . . . . . . . . . 25
Section 4.17 Employee Benefit Plans . . . . . . . . . . . . . . . . . 25
Section 4.18 Labor Relations . . . . . . . . . . . . . . . . . . . . 30
Section 4.19 Legal Compliance . . . . . . . . . . . . . . . . . . . . 30
Section 4.20 Environmental Protection . . . . . . . . . . . . . . . . 30
Section 4.21 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.22 Governmental Authorities; Consents . . . . . . . . . . . 34
Section 4.23 Licenses, Permits and Authorizations . . . . . . . . . . 34
Section 4.24 Insurance . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.25 Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . 35
Section 4.26 No Other Agreements to Sell the Shares . . . . . . . . 35
Section 4.27 Merger with Certain Persons. . . . . . . . . . . . . . . 35
Section 4.28 Customers, Distributors and Suppliers. . . . . . . . . . 35
Section 4.29 Banking Relationships. . . . . . . . . . . . . . . . . . 36
Section 4.30 Full Disclosure. . . . . . . . . . . . . . . . . . . . . 36
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUISITION. . . . . . . . . . . 36
Section 5.1 Corporate Organization . . . . . . . . . . . . . . . . . 36
Section 5.2 Authorization . . . . . . . . . . . . . . . . . . . . . 36
Section 5.3 No Conflict or Violation . . . . . . . . . . . . . . . . 36
Section 5.4 Governmental Authorities; Consents . . . . . . . . . . . 37
Section 5.5 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . 37
Section 5.6 Sophisticated Investor . . . . . . . . . . . . . . . . . 37
ARTICLE VI COVENANTS OF COMPANY AND PRINCIPAL HOLDERS. . . . . . . . . . . . 37
Section 6.1 Conduct of Business. . . . . . . . . . . . . . . . . . . 37
Section 6.2 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.3 No Solicitations . . . . . . . . . . . . . . . . . . . . 39
Section 6.4 Notice to . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.5 Consents; Reasonable Effort; Cooperation . . . . . . . . 40
Section 6.6 Estoppel Certificates. . . . . . . . . . . . . . . . . . 40
Section 6.7 Inspections. . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.8 Employee Benefit Plans. . . . . . . . . . . . . . . . . 40
Section 6.9 Stockholder Approval . . . . . . . . . . . . . . . . . . 41
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ARTICLE VII COVENANTS OF ACQUISITION . . . . . . . . . . . . . . . . . . . . 41
Section 7.1 [This Section Intentionally Omitted.]. . . . . . . . . . 41
Section 7.2 Notice to Company. . . . . . . . . . . . . . . . . . . . 41
ARTICLE VIII COVENANTS OF THE COMPANY, PRINCIPAL HOLDERS
AND ACQUISITION. . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.1 Confidentiality. . . . . . . . . . . . . . . . . . . . . 41
Section 8.2 Books and Records. . . . . . . . . . . . . . . . . . . . 42
Section 8.3 Support of Transactions. . . . . . . . . . . . . . . . . 42
Section 8.4 [This Section Intentionally Omitted.]. . . . . . . . . . 43
Section 8.5 Notice of Changes by the Company . . . . . . . . . . . . 43
Section 8.6 Notice of Changes by Acquisition . . . . . . . . . . . . 43
Section 8.7 Dissenting Stockholders . . . . . . . . . . . . . . . . 43
Section 8.8 Provision of Schedules and Annexes . . . . . . . . . . . 43
Section 8.9 1996 Financial Statements. . . . . . . . . . . . . . . . 44
ARTICLE IX CONDITIONS TO OBLIGATIONS . . . . . . . . . . . . . . . . . . . . 44
Section 9.1 Conditions to Obligations of Acquisition, the
Company and Principal Holders . . . . . . . . . . . . . 44
Section 9.2 Conditions to Obligations of Acquisition. . . . . . . . 44
Section 9.3 Conditions to the Obligations of the Company and
Principal Holders. . . . . . . . . . . . . . . . . . . . 46
ARTICLE X TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.1 Termination . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.2 Effect of Termination . . . . . . . . . . . . . . . . . 47
ARTICLE XI DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.1 Breach and Opportunity to Cure . . . . . . . . . . . . . 47
Section 11.2 Company's and Principal Holders' Remedies . . . . . . . 48
Section 11.3 Acquisition's Remedies . . . . . . . . . . . . . . . . . 48
ARTICLE XII HOLDER REPRESENTATIVE. . . . . . . . . . . . . . . . . . . . . . 49
Section 12.1 Designation and Replacement of Holder Representative . . 49
Section 12.2 Authority and Rights of Holder Representative;
Limitations on Liability . . . . . . . . . . . . . . . . 49
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ARTICLE XIII POST CLOSING OBLIGATIONS; SURVIVAL OF
REPRESENTATION . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 13.1 Indemnification . . . . . . . . . . . . . . . . . . . . 50
Section 13.1.1 Acquisition's Right to Indemnification. . . . . . . . . 50
Section 13.1.2 Principal Holders' Right to Indemnification . . . . . . 50
Section 13.1.3 Limitation on Indemnification Obligations . . . . . . . 51
Section 13.1.4 Time Period . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.1.5 Conduct of Proceedings. . . . . . . . . . . . . . . . . 51
Section 13.1.6 Indemnification Sole Remedy . . . . . . . . . . . . . . 52
Section 13.1.7 Right of Offset . . . . . . . . . . . . . . . . . . . . 52
Section 13.2 Survival of Representations . . . . . . . . . . . . . . 52
Section 13.3 Rights of Set-Off . . . . . . . . . . . . . . . . . . . 52
Section 13.4 Rights of Set-Off for Third Party Claims . . . . . . . 53
ARTICLE XIV TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 14.1 Indemnification . . . . . . . . . . . . . . . . . . . . 54
ARTICLE XV MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 15.1 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 15.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 15.3 Assignment. . . . . . . . . . . . . . . . . . . . . . . 59
Section 15.4 Rights of Third Parties . . . . . . . . . . . . . . . . 59
Section 15.5 Reliance. . . . . . . . . . . . . . . . . . . . . . . . 59
Section 15.6 Transfer Taxes; Title Costs; Expenses . . . . . . . . . 59
Section 15.7 Construction. . . . . . . . . . . . . . . . . . . . . . 60
Section 15.8 Captions; Counterparts. . . . . . . . . . . . . . . . . 60
Section 15.9 Entire Agreement. . . . . . . . . . . . . . . . . . . . 60
Section 15.10 Amendments. . . . . . . . . . . . . . . . . . . . . . . 60
Section 15.11 Publicity . . . . . . . . . . . . . . . . . . . . . . . 60
ANNEXES
Annex A - Certificate of Merger
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Annex B - Form of Note
Annex C - Form of Escrow Agreement
Annex D - Form of Contingent Payment Escrow Agreement
Annex E - Form of Opinion of Principal Holders' and Company's Counsel
Annex F - Form of Non-Disclosure and Non-Solicitation Agreement
Annex G - Form of Employment Agreement
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "AGREEMENT") is entered into
as of this 9th day of April, 1997 by and among XXXXX XXX, XXXXX XXXXXXX and
XXXXXX XXXXXX (each a "PRINCIPAL HOLDER" and collectively the "PRINCIPAL
HOLDERS"), XXXXX XXXXXXX as the initial Holder Representative hereunder, NYMA,
INC., a Maryland corporation (the "COMPANY"), and NYMA ACQUISITION, INC., a
Delaware corporation ("ACQUISITION").
PLAN OF MERGER
A. Acquisition and the Company (Acquisition and the Company sometimes
being referred to as the "CONSTITUENT CORPORATIONS") are hereby adopting a plan
of merger, providing for the merger of Acquisition, a corporation formed by FDCT
Corp. ("FDCT"), a Delaware corporation, for the purpose of effecting the Merger,
with and into the Company, with the Company being the surviving corporation.
This merger (the "MERGER") will be consummated in accordance with this Agreement
and evidenced by a Certificate of Merger between Acquisition and the Company in
substantially the form of ANNEX A hereto (the "CERTIFICATE OF MERGER"), such
Merger to be consummated as of the "EFFECTIVE TIME OF THE MERGER" as defined
below.
B. Upon consummation of the Merger, the separate corporate existence of
Acquisition shall cease and the Company, as the surviving corporation in the
Merger (hereinafter referred to for the periods on and after the Effective Time
of the Merger as the "SURVIVING CORPORATION"), shall continue its corporate
existence under the Maryland General Corporation Law ("MGCL") as a wholly-owned
Subsidiary of FDCT.
C. On and after the Effective Time of the Merger, the Surviving
Corporation shall thereupon and thereafter possess all of the rights,
privileges, powers and franchises, of a public as well as a private nature, of
the Constituent Corporations, and shall become subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations; and all rights,
privileges, powers and franchises of each Constituent Corporation, and all
property, real, personal and mixed, and all debts due to each such Constituent
Corporation, on whatever account, and all chose in action belonging to each such
corporation, shall become vested in the Surviving Corporation; and all property,
rights, privileges, powers and franchises, and all and every other interest
shall become thereafter the property of the Surviving Corporation as they are of
the Constituent Corporations; and the title to any real property vested by deed
or otherwise or any other interest in real estate vested by any instrument or
otherwise in either of such Constituent Corporations shall not revert or become
in any way impaired by reason of the Merger; but all Liens upon any property of
either Constituent Corporation shall thereupon attach to the Surviving
Corporation and shall be enforceable against it to the same extent as if said
debts, liabilities and duties had been incurred or contracted by it; all of the
foregoing in accordance with the applicable provisions of the MGCL.
D. At the Effective Time of the Merger, the Certificate of Incorporation
and Bylaws of the Surviving Corporation shall be the Certificate of
Incorporation and Bylaws of the Company, as amended and restated as provided in
the Certificate of Merger, until thereafter amended as provided therein and
under the MGCL, and the directors and officers of the
Surviving Corporation shall be the directors and officers of Acquisition
immediately prior to the Effective Time of the Merger.
E. For certain limited purposes, and subject to the terms set forth
herein, the Holder Representative shall serve as the initial representative of
the holders of the "COMPANY COMMON STOCK" as defined below.
AGREEMENT
In order to consummate the Merger, and in consideration of the mutual
agreements hereinafter contained, Acquisition, the Company, the Principal
Holders and the Holder Representative agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following
meanings:
"1996 AUDITED FINANCIAL STATEMENTS" shall have the meaning set forth
in SECTION 8.9.
"1997 EBIT" shall mean the EBIT of the Company (excluding any
contribution to earnings of any acquired assets or businesses, including,
without limitation, the acquisition by the Company of certain assets of Analex
Corporation) for the period between January 1, 1997 and December 31, 1997. For
the purposes of such calculations, allocations to the Surviving Corporation of
indirect corporate expenses from FDC or its Affiliates shall be excluded to the
extent the amount of such indirect corporate expenses exceed the amount of such
expenses currently incurred (or reflected in the Projections to be incurred) by
the Company.
"ACQUISITION" shall have the meaning set forth in the Preamble.
"ACQUISITION INDEMNITEES" shall have the meaning set forth in
SUBSECTION 13.1.1.
"AFFILIATE" shall mean with respect to any specified Person, any
other Person that, directly or indirectly, controls, is controlled by, or is
under common control with, such Person, through one or more intermediaries or
otherwise.
"AGREEMENT" shall have the meaning set forth in the Preamble.
"ANCILLARY AGREEMENTS" shall mean all annexes and schedules to the
Agreement.
"ANTITRUST AUTHORITY" shall mean the Antitrust Division of the United
States Department of Justice or the United States Federal Trade Commission.
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"APPLICABLE PERCENTAGE" shall have the meaning set forth in SECTION
2.2(b)(ii).
"BALANCE SHEET" shall mean the consolidated balance sheet of the
Company as of the date indicated thereon, together with the notes thereon.
"BAFO" shall mean the best and final offer of a prospective
contractor in submission of bids for procurement of Government Contract awards.
"BENEFIT ARRANGEMENT" shall have the meaning set forth in
SECTION 4.17.
"BOOKS AND RECORDS" shall mean (a) all records and lists pertaining
to the Business, customers, suppliers or personnel of the Company, (b) all
product, business and marketing plans of the Company and (c) all books, ledgers,
files, reports, plans, drawings and operating records of every kind maintained
by the Company including, without limitation, all stock books, stock ledgers and
corporate minutes and Real Estate Records of the Company.
"BUSINESS" shall mean the Company's business of information
technology services, engineering services and computer hardware, software,
maintenance and related support.
"BUSINESS DAY" shall mean any day that is not a Saturday, Sunday or
any other day on which banks are required or authorized by law to be closed in
New York, New York.
"CASH CONSIDERATION" shall have the meaning specified in SECTION 2.2.
"CERTIFICATE OF MERGER" shall have the meaning specified in the
Recitals.
"CLAIMS" shall have the meaning set forth in SUBSECTION 13.1.1.
"CLOSING" shall have the meaning set forth in SECTION 3.2.
"CLOSING BALANCE SHEET" shall mean the most recent available (as of
the Closing Date) monthly unaudited and consolidated balance sheet for the
Company and its Subsidiary.
"CLOSING DATE" shall have the meaning set forth in SECTION 3.2.
"CLOSING DATE NET ASSETS" shall have the meaning set forth in
SUBSECTION 2.5.1(a).
"CLOSING DEFERRED INCOME TAX LIABILITY" shall mean the deferred
income tax liability of the Company calculated in accordance with GAAP related
to the cash to accrual conversion as reflected on the Closing Financial
Statements.
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"CLOSING FINANCIAL STATEMENTS" shall mean the Closing Balance Sheet
and the unaudited statements of operations, changes in shareholders' equity and
cash flow for the period ended as of the date of the Closing Balance Sheet.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
"COMPANY" shall have the meaning set forth in the Preamble.
"COMPANY COMMON STOCK" shall mean the shares of common stock, par
value $.02 per share, of the Company.
"CONSOLIDATED NET INCOME" shall mean the aggregate of the net income
(loss) of the Company determined in accordance with GAAP, excluding, however,
any extraordinary gain or loss, together with any related provisions for taxes
on such extraordinary gain or loss. Such amount shall be determined pursuant to
an audit by a nationally recognized accounting firm in accordance with GAAP.
"CONTINGENT PAYMENTS" shall have the meaning set forth in SECTION
2.6.
"CONTRACTS" shall mean, collectively, all agreements, contracts,
leases, purchase orders, memoranda of understanding and other binding
contractual commitments listed on SCHEDULE 4.11.
"CONTRACT VALUE" shall mean the total life-cycle revenue value of a
contract in the aggregate, based on the evaluated price at BAFO; PROVIDED,
HOWEVER, that in the event there is no customer price evaluation with respect to
any contract, the value of such contract will equal the minimum assured revenue
amount thereunder. The value of contracts awarded to a joint venture which
includes the Company shall be determined by multiplying the value of such
contract by the percentage interest of the Company in such joint venture.
Multiple award contracts shall be valued by dividing the total life-cycle
revenue value of such contracts based on the evaluated price at BAFO (or, if
there is no customary price evaluation, the minimum assured revenue as
determined by FDC under such contracts) by the number of contracts included in
such multiple award. Such calculation shall be made by the Chief Executive
Officer of FDC.
"DELOITTE" shall have the meaning set forth in SUBSECTION 2.5.2.
"DESIGNATED HOLDERS" shall mean those Holders listed on SCHEDULE 1.1
whose names are marked with an asterisk.
"DISCLOSURE SCHEDULE" shall mean the schedules attached hereto.
"EBIT" shall mean, for any period, the Consolidated Net Income of the
Company for such period, adjusted to deduct therefrom interest income and to add
thereto the following to
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the extent deducted in calculating such Consolidated Net Income: (i) income
tax expense and (ii) interest expense. Such amounts shall be determined
pursuant to an audit by a nationally recognized accounting firm in accordance
with GAAP, consistently applied.
"EFFECTIVE TIME OF THE MERGER" shall have the meaning set forth in
SECTION 2.4.
"ENCUMBRANCE" shall mean any mortgage, claim, charge, lien, easement,
right-of-way, covenant, condition, option, pledge, call, commitment, security
interest, conditional sales agreement, title retention agreement, lease, and any
other imperfection of title or restriction of any kind and nature, xxxxxx or
inchoate.
"EMPLOYEE PLANS" shall have the meaning set forth in SECTION 4.17(a).
"EMPLOYEE LAWS" shall have the meaning set forth in SECTION 4.18.
"ENVIRONMENTAL CONDITIONS" shall mean the state of the environment,
including natural resources (e.g., flora and fauna), soil, surface water, wet
lands, ground water, any present or potential drinking water supply, subsurface
strata, or ambient air, regulated under Environmental Laws relating to or
arising out of the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, disposal, dumping, or threatened
release of Hazardous Materials by the Company or its Subsidiary or their
predecessors or successors in interest, or by their agents, representatives,
employees, or independent contractors when acting in such capacity on behalf of
the Company or its Subsidiary. With respect to Environmental Claims by third
parties, Environmental Conditions also include the exposure of persons to
Hazardous Materials at the work place or the exposure of persons or property to
Hazardous Materials migrating from or otherwise emanating from or located on
property owned or occupied by the Company or its Subsidiary.
"ENVIRONMENTAL LAWS" shall mean any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, legally binding decrees or other requirement of any Governmental
Authority (including, without limitation, common law) regulating, relating to or
imposing liability or standards of conduct concerning protection of the
environment or of human health relating to exposure of any kind of Hazardous
Materials, as has been, is now, or may at any time hereafter be, in effect.
"ENVIRONMENTAL NONCOMPLIANCE" shall mean: (i) the release of any
Hazardous Materials into the environment, any storm drain, sewer, septic system
or publicly owned treatment works, in violation of any effluent or emission
limitations, standards or other criteria or guidelines established by any
federal, state or local law, regulation, rule, ordinance, plan or order; (ii)
any noncompliance with Environmental Laws including the failure to have obtained
permits, variances or other authorizations required under Environmental Laws;
(iii) any facility operations, procedures and/or designs which do not conform to
the statutory or regulatory requirements of Environmental Laws; and (iv) the
operation of any facility or equipment in
5
violation of any permit condition, schedule of compliance, administrative or
court order and the like.
"ERISA" shall have the meaning set forth in SECTION 4.17(a).
"ERISA AFFILIATE" shall have the meaning set forth in SECTION
4.17(a).
"ESCROW AGENT" shall have the meaning set forth in SECTION 2.2(b)(i).
"ESCROW AGREEMENT" shall have the meaning set forth in SECTION
2.2(b)(i).
"ESCROW DEPOSIT" shall have the meaning set forth in SECTION
2.2(b)(i).
"ESTOPPEL CERTIFICATE" shall have the meaning set forth in SECTION
6.6.
"FDC" shall mean Federal Data Corporation, a Delaware corporation.
"FINAL BALANCE SHEET" shall mean a consolidated balance sheet of the
Company and its Subsidiary as of the Closing Date which shall be audited by
Deloitte.
"FINAL DEFERRED INCOME TAX LIABILITY" shall mean the deferred income
tax liability of the Company calculated in accordance with GAAP related to the
cash to accrual conversion as reflected on the Final Financial Statements.
"FINAL FINANCIAL STATEMENTS" shall mean the Final Balance Sheet and
the consolidated statements of operations, changes in shareholders' equity and
cash flow for the period ended on the Closing Date.
"FINAL NET ASSETS" shall have the meaning set forth in SUBSECTION
2.5.2(a).
"FINANCIAL STATEMENTS" shall mean the Interim Financial Statements,
the Final Financial Statements and the Closing Financial Statements.
"FIXTURES" shall mean any fixtures, machinery, installations and
building equipment located at or on any Real Property.
"GAAP" shall mean United States generally accepted accounting
principles.
"GOLDEN PARACHUTE PAYMENT" shall have the meaning set forth in
SECTION 4.17(c).
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, municipal or
local government, governmental authority, regulatory or administrative agency,
governmental commission, department, board, bureau, court, tribunal, arbitrator
or arbitral body.
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"GOVERNMENT CONTRACT" shall have the meaning set forth in
SECTION 4.12.
"GOVERNMENT ORDER" shall mean any order, writ, rule, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"HAZARDOUS MATERIALS" shall mean any hazardous substance, gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, ureaformaldehyde insulation, asbestos or asbestos-
containing materials, pollutants, contaminants, radioactivity, and any other
materials or substances of any kind, whether solid, liquid or gas, and whether
or not any such substance is defined as hazardous under any Environmental Law,
that is regulated pursuant to any Environmental Law or that could give rise to
liability under any Environmental law.
"HOLDER INDEMNITEES" shall have the meaning set forth in
SUBSECTION 13.1.2.
"HOLDER REPRESENTATIVE" shall have the meaning set forth in
SECTION 12.1.
"HOLDERS" shall mean those individuals listed on SCHEDULE 1.1 hereto.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act
of 1976, as amended.
"IMPROVEMENTS" shall mean any right, title or interest in any
buildings, facilities, other structures and improvements, building systems and
fixtures.
"INDEMNIFIED PARTY" shall have the meaning set forth in
SUBSECTION 13.1.5.
"INDEMNITOR" shall have the meaning set forth in SUBSECTION 13.1.5.
"INDEPENDENT ACCOUNTING FIRM" shall have the meaning set forth in
SUBSECTION 2.5.2(c).
"INSURANCE POLICY" shall have the meaning set forth in SECTION 4.24.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in
SECTION 4.14.
"INTERIM BALANCE SHEET" shall mean the unaudited Balance Sheet dated
the Interim Balance Sheet Date.
"INTERIM BALANCE SHEET DATE" shall mean December 31, 1996.
"INTERIM FINANCIAL STATEMENTS" shall mean the Interim Balance Sheet
and the unaudited statements of operations, changes in shareholders' equity and
cash flow for the period ended on the Interim Balance Sheet.
7
"LETTER OF CREDIT" shall have the meaning set forth in
SECTION 2.2(b).
"LIABILITIES" shall mean any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any person of any type, whether accrued, absolute,
contingent, matured, unmatured or other.
"MACHINERY AND EQUIPMENT" shall have the meaning set forth in
SECTION 4.13.
"MAJORITY PRINCIPAL HOLDERS" shall have the meaning set forth in
SECTION 12.1.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, assets, liabilities, condition (financial or otherwise), results of
operations or prospects of the Company and its Subsidiary, taken as a whole.
"MULTIEMPLOYER PLAN" shall have the meaning set forth in
SECTION 4.17(a).
"MERGER" shall have the meaning set forth in the Recitals.
"MERGER CONSIDERATION" shall have the meaning set forth in
SECTION 2.2(a).
"NET ASSETS" shall have the meaning set forth in SUBSECTION 2.5.1(a).
"NEW CONTRACTS" shall mean contracts awarded to the Company from the
Closing Date up to and including the first anniversary of the Closing; PROVIDED,
HOWEVER, that such term shall not include the NASA Xxxxxxx SAERS contract.
"NOTES" shall have the meaning set forth in SECTION 2.2(a).
"PBGC" shall have the meaning specified in SECTION 4.17(a).
"PENSION PLAN" shall have the meaning specified in SECTION 4.17(a).
"PERMITS" shall mean any licenses, permits, certificates of
occupancy, approvals, authorizations, variances and waivers issued by any
Governmental Authority.
"PERMITTED ENCUMBRANCE" shall mean any (i) mechanics lien,
materialmen's lien and similar Encumbrance with respect to any amounts not yet
due and payable or which are being contested in good faith through appropriate
proceedings and for which adequate reserves are maintained in accordance with
GAAP, (ii) Encumbrance for Taxes not yet due and payable or which are being
contested in good faith through appropriate proceedings, for which adequate
reserves are maintained in accordance with GAAP, and which are disclosed to
Acquisition, (iii) routine utility easements or other non-detrimental agreements
of record affecting the Real Property which do not materially interfere with the
use, occupancy or marketability of the Real Property subject thereto and (iv)
other Encumbrances disclosed in the Schedules to this Agreement.
8
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, labor union or Governmental Authority.
"PERSONNEL" shall have the meaning set forth in SECTION 4.10(b).
"POST-CLOSING ADJUSTMENT" shall have the meaning set forth in
SUBSECTION 2.5.2(d).
"PRIME RATE" shall have the meaning set forth in SUBSECTION 13.1.1.
"PRO FORMA BALANCE SHEET" shall mean the Closing Balance Sheet with
pro forma adjustments for (i) the amount of proceeds to be received by the
Company prior to the Closing Date resulting from the exercise of stock options
in the Company Common Stock from the date hereof to the Closing Date; (ii) the
value of the Tax benefit to the Company resulting from the exercise of stock
options in the Company Common Stock from the date hereof to the Closing Date;
and (iii) the difference, if any, between the Closing Deferred Income Tax
Liability and Two Million Three Hundred Thousand Dollars ($2,300,000).
"PROJECTIONS" shall have the meaning set forth in SECTION 4.8.
"QUALIFIED PROPOSALS" shall mean proposals submitted from the Closing
Date up to and including the first anniversary of the Closing in accordance with
a customer's bid schedule that satisfy FDC's customary bid criteria. New
business opportunities of the Surviving Corporation will be reviewed, evaluated,
and approved or disapproved using substantially the same criteria as comparable
opportunities of FDC, and decisions to make bids that meet such criteria will
not be unreasonably withheld.
"REAL ESTATE RECORDS" shall mean, to the extent in the possession or
control of Principal Holders or the Company, the real estate records, files,
books, blueprints, plans (as-built and otherwise), surveys, specifications,
designs, drawings, and other data associated with the Real Property.
"REAL PROPERTY" shall have the meaning set forth in SECTION 4.15.
"RECIPIENTS" shall have the meaning set forth in SECTION 4.17(c).
"SECURITIES LAW NONCOMPLIANCE" shall mean any noncompliance by the
Company or its security holders with any applicable federal or state securities
laws at any time prior to the Closing, and any noncompliance with any applicable
federal or state securities laws in connection with the transactions
contemplated hereby including, without limitation, the offer and sale of the
Notes and issuance and payment of the Contingent Payments and rights thereto and
approval of the Merger.
9
"SHARES" shall have the meaning set forth in the Recitals.
"SUBSIDIARY" shall mean any corporation, partnership, limited
liability company, joint venture or other entity in which the Company, directly
or indirectly, holds fifty percent (50%) or more of the voting power of all
equity securities or other ownership interests of such entity, or over which the
Company either directly or indirectly exercises actual control.
"SURVIVING CORPORATION" shall have the meaning set forth in the
Recitals.
"TARGET NET ASSETS" shall have the meaning set forth in
SUBSECTION 2.5.1(b).
"TAX" or "TAXES" shall mean any federal, state, local or foreign net
or gross income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax, governmental fee or like assessment or charge of any
kind whatsoever, including any interest, penalty or addition thereto, whether
disputed or not, imposed by any Governmental Authority or arising under any Tax
law or agreement, including, without limitation, any joint venture or
partnership agreement.
"TAX RETURNS" shall have the meaning set forth in SUBSECTION 4.21.
"WELFARE PLAN" shall have the meaning set forth in SECTION 4.17(a).
ARTICLE II
THE MERGER
Section 2.1 CONVERSION OF SHARES.
(a) At the Effective Time of the Merger, each share (a "COMPANY
SHARE") of the common stock, par value $0.02 per share, of the Company (the
"COMPANY COMMON STOCK") that is then issued and outstanding (other than shares,
if any, held in the treasury of the Company, which treasury shares shall be
canceled as part of the Merger, and other than shares held by Persons who object
to the Merger and comply with the provisions of the MGCL concerning the rights
of holders of the Company Shares to dissent from the Merger and require
appraisal of their Company Shares ("DISSENTING SHAREHOLDERS"), which shares of
Dissenting Shareholders will not constitute the "COMPANY SHARES" hereunder),
shall thereupon be converted into and become the right to receive the applicable
portion of the Merger Consideration (defined below), as determined pursuant to
SECTION 2.2(b).
10
(b) Each share of the common stock, par value $.01 per share, of
Acquisition outstanding immediately prior to the Effective Time of the Merger
shall be converted into one share of the common stock, par value $0.02 per
share, of the Surviving Corporation.
Section 2.2 TOTAL CONSIDERATION AND TERMS.
(a) The aggregate consideration for the Shares hereunder (the
"MERGER CONSIDERATION") shall, subject to adjustment as provided in
SECTIONS 2.5, 2.6, and 13.1 hereof, consist of (i) Twenty-Five Million Dollars
($25,000,000) in cash (the "CASH CONSIDERATION"); (ii) promissory notes of FDC
the form attached hereto as ANNEX B (the "NOTES") in the aggregate principal
amount of Six Million Dollars ($6,000,000), subject to the rights of set-off as
provided in the Notes and ARTICLE XIII hereof; and (iii) up to Six Million
Dollars ($6,000,000) in Contingent Payments (as defined below), subject to the
rights of set-off as provided in ARTICLE XIII hereof and subject to satisfaction
of the terms and conditions set forth below in SECTION 2.4.
(b) The Total Consideration shall be payable as follows:
(i) At Closing, (A) Acquisition shall deposit Three Million
Dollars ($3,000,000) (the "ESCROW DEPOSIT") with Signet Banking Corporation, as
escrow agent (the "ESCROW AGENT"), to be held in accordance with the escrow
agreement attached hereto as ANNEX C (the "ESCROW AGREEMENT"); (B) Acquisition
shall either (i) deposit Four Million Dollars ($4,000,000) (the "CONTINGENT
PAYMENT DEPOSIT") with Signet Banking Corporation, as contingent payment escrow
agent ("CONTINGENT PAYMENT ESCROW AGENT") to be held in accordance with the
contingent payment escrow agreement attached hereto as ANNEX D (the "CONTINGENT
PAYMENT ESCROW AGREEMENT") or (ii) obtain a letter of credit ("LETTER OF
CREDIT") in the amount of Four Million Dollars ($4,000,000) from a financial
institution that has total assets of more than Five Hundred Million Dollars
($500,000,000) for the ratable benefit of the Holders to secure the payment
obligations of the Company pursuant to SECTION 2.6; (C) Acquisition will pay to
Holder Representative for the ratable benefit of the Holders by wire transfer of
immediately available funds to an account designated in writing by the Holders
an amount equal to the Cash Consideration as adjusted pursuant to SUBSECTION
2.5.1 (the "CASH CONSIDERATION"), LESS the Escrow Deposit; and (D) the Company
will issue the Notes to Designated Holders.
(ii) Each Holder of the outstanding Company Shares as of the
Effective Time of the Merger (a "HOLDER") shall be entitled to receive (A) such
Holder's Applicable Percentage (as defined below) of the Closing Cash
Consideration and Contingent Payments, respectively and (B) the Notes in the
principal amount equal to such Holder's Applicable Percentage of the aggregate
principal amount of Notes included in the Total Consideration. A Holder's
"APPLICABLE PERCENTAGE" shall mean, with respect to any Holder, the percentage
listed on SCHEDULE A alongside such Holder's name.
Section 2.3 EXCHANGE OF CERTIFICATES; PAYMENT OF DIVIDENDS.
Immediately after the Effective Time of the Merger, each holder of a certificate
or certificates for Company Shares, upon surrender of the same to the exchange
agent provided for in the Certificate of
11
Merger, shall be entitled to receive from Acquisition (or from the exchange
agent or their behalf) in exchange therefor (subject to the provisions of
SECTIONS 2.5 and 2.6 below and less the Escrow Deposit) such Holder's
Applicable Percentage of the Merger Consideration into which such Holder's
Company Shares shall have been converted as a result of the Merger. Pending
such surrender and exchange, a Holder's certificate or certificates for
Company Shares shall be deemed for all purposes (other than the exchange
contemplated by this SECTION 2.3) to evidence the portion of the Merger
Consideration into which such Company Shares shall have been converted by the
Merger. Unless and until the outstanding certificate or certificates
representing any Company Shares held of record by any Holder shall be
surrendered, no interest shall be paid to such Holder with respect to the
Subordinated Notes into which such Company Shares shall have been converted,
but upon surrender of the certificate or certificates evidencing such Company
Shares there shall be paid to the record holder thereof the amount of all
interest that has theretofore become payable subsequent to the Effective Time
of the Merger with respect to the Subordinated Notes issued upon such
surrender and exchange. The stock transfer books of the Company shall be
closed at the Effective Time of the Merger. If a portion of the Merger
Consideration to which any Holder is entitled is to be paid and issued to a
Person other than the Person in whose name a Holder's certificate or
certificates are registered, it shall be a condition of such payment and
issuance that the certificate(s) surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the Person requesting such
payment and issuance shall pay all transfer and other taxes required by
reason of receipt of such portion of the Merger Consideration by a Person
other than the registered holder of the certificate(s) surrendered. If any
certificate representing Company Shares shall not have been surrendered prior
to one year after the Effective Time of the Merger (or such earlier date on
which any payment in respect thereof would otherwise escheat to or become the
property of any governmental unit or entity), the right to receive the
portion of the Merger Consideration evidenced by such certificates shall, to
the extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims of interest of any Person
previously entitled thereto.
Section 2.4 EFFECTIVE TIME OF MERGER; CLOSING DATE. As soon as
practicable following the satisfaction (or, to the extent permitted, the waiver)
of all conditions to the Merger set forth in this Agreement, and provided that
this Agreement has not been terminated pursuant to the provisions hereof,
Acquisition and the Company shall cause the Certificate of Merger to be executed
and filed with the Secretary of the State of Delaware as provided in Section 251
of the Delaware General Corporation Law ("DGCL") and the Secretary of State of
Maryland and the State Department of Taxation of the State of Maryland as
provided in Sections 3-110 and 3-107, respectively, of the MGCL. For purposes
of this Agreement, the "EFFECTIVE TIME OF THE MERGER" shall mean the time at
which the Certificate of Merger has been duly filed in the Office of the
Secretary of the State of Delaware, the Secretary of State of Maryland and the
State Department of Taxation of the State of Maryland and has become effective
in accordance with the DGCL and the MGCL; and the term "CLOSING DATE" shall mean
the date on which the Effective Time of the Merger occurs.
12
Section 2.5 ADJUSTMENTS
2.5.1 CLOSING DATE ADJUSTMENTS
(a) No later than five (5) Business Days before the Closing Date,
the Company shall deliver to Acquisition (i) the Pro Forma Balance Sheet, and
(ii) a calculation of Net Assets (as defined below) of the Company as set forth
on the Pro Forma Balance Sheet ("CLOSING DATE NET ASSETS"). The Pro Forma
Balance Sheet shall be prepared in accordance with GAAP consistent with the
preparation of the historical consolidated financial statements of the Company,
and shall fairly present the consolidated financial position of the Company as
of the Closing. "NET ASSETS" as of any date shall mean (i) assets of the
Company as of such date, MINUS (ii) liabilities of the Company as of such date.
(b) The Cash Consideration payable to Holders shall be increased
(or reduced) dollar-for-dollar to the extent that the Closing Date Net Assets
exceeds (or is less than) Nine Million Dollars ($9,000,000) ("TARGET NET
ASSETS").
(c) The Cash Consideration payable to the Holders shall be
increased (or reduced) dollar-for-dollar to the extent that the Closing Deferred
Income Tax Liability is less than (or exceeds) Two Million Three Hundred
Thousand Dollars ($2,300,000).
2.5.2 POST-CLOSING ADJUSTMENT
(a) Within ninety (90) calendar days following the Closing Date,
Deloitte & Touche, LLP ("Deloitte") shall prepare and deliver to the Company,
Acquisition and the Holder Representative (i) the Final Balance Sheet, and
(ii) a calculation of the Net Assets of the Company and its Subsidiary as set
forth on the Final Balance Sheet (the "FINAL NET ASSETS"). The Final Balance
Sheet shall be audited, prepared in accordance with GAAP consistent with the
preparation of the historical consolidated financial statements of the Company
and accompanied by an unqualified audit opinion. During the preparation of the
Final Balance Sheet by Deloitte, Holder Representative and each of the Principal
Holders shall cooperate fully with Deloitte, in each case to the extent required
by Deloitte in order to prepare the Final Balance Sheet and render the audit
opinion. Such Final Balance Sheet shall be binding with respect to the Post-
Closing Adjustment on all parties to this Agreement.
(b) The Final Net Assets shall be increased (or reduced) dollar-
for-dollar to the extent that the Final Deferred Income Tax Liability is less
than (or exceeds) the Closing Deferred Income Tax Liability.
(c) Within fifteen (15) calendar days of delivery of the Final
Balance Sheet by Deloitte to the Company, Holder Representative and Acquisition,
the following adjustments shall be made: (i) if the Post-Closing Adjustment (as
defined below) is a negative number, the Surviving Corporation and Holder
Representative shall instruct the Escrow Agent to return a portion of the Escrow
Deposit equal to the Post Closing Adjustment to the Surviving Corporation
13
(including any interest accrued thereon) with any remaining amount paid to
Holder Representative for the ratable benefit of Holders and (ii) if the Post-
Closing Adjustment is a positive number, the Surviving Corporation and Holder
Representative shall instruct the Escrow Agent to return all of the Escrow
deposit to Holder Representative for the ratable benefit of the Holders
(including any interest accrued thereon) with any remaining amount to be paid by
the Surviving Corporation. The "POST-CLOSING ADJUSTMENT" shall be computed by
subtracting the Closing Date Net Assets from the Final Net Assets (as adjusted
pursuant to SUBSECTION 2.5.2(d)). If such amount due exceeds the Escrow
Deposit, the Surviving Corporation shall pay such excess to Holder
Representative for the ratable benefit of Holders.
(d) In the event that any taxing authority, court, or other
governmental or regulatory authority determines that the deferred income tax
liability of the Company related to the cash to accrual conversion as of
December 31, 1996 is greater than the Final Deferred Income Tax Liability,
Surviving Corporation and Holder Representative shall instruct the Escrow Agent
to return a portion of the Escrow Deposit equal to the difference between such
amounts to Surviving Corporation.
2.5.3 RIGHTS OF SET-OFF. Any Claims by the Surviving Corporation
against Principal Holders pursuant to SUBSECTION 2.5.2 and SECTION 13.3 in
excess of the amount of the Escrow Deposit are subject to the following rights
of set-off of the Surviving Corporation in the following priority:
(a) REDUCTION OF CONTINGENT PAYMENTS. Any Contingent Payments
owed by Acquisition to the Principal Holders (but not yet paid) pursuant to
SECTION 2.6 are subject to reduction for any Post-Closing Adjustments pursuant
to SUBSECTION 2.5.2. Any such adjustment is intended as, and shall be treated
by the parties as, an adjustment to the Total Consideration.
(b) REDUCTION OF PRINCIPAL AMOUNT OF THE NOTES. The principal
amount of the Notes is subject to reduction following the Closing for any Post-
Closing Adjustments pursuant to SUBSECTION 2.5.2. Any such adjustment is
intended as, and shall be treated by the parties as, an adjustment to the Total
Consideration. If the principal amount of the Notes is reduced pursuant to this
SUBSECTION 2.5.3, such reduction shall be deemed to be made effective as of the
Closing Date and all interest that may have accrued on the principal amount so
cancelled shall also be deemed to be retroactively cancelled, effective as of
the Closing Date (except with respect to third party claims, as to which no such
interest shall be cancelled). Upon any reduction of the principal amount of the
Notes, Principal Holders shall, upon request of the Surviving Corporation,
surrender the outstanding Notes for replacement Notes reflecting the reduced
principal amount.
Section 2.6 CONTINGENT PAYMENTS. As further consideration of the
Merger and of the agreements set forth herein, the Surviving Corporation shall
pay to Holder Representative for the ratable benefit of Holders the following
amounts (each a "CONTINGENT PAYMENT"), subject to the satisfaction of the terms
and conditions set forth below:
14
(a) 1997 EBIT. In the event the 1997 EBIT is equal to or exceeds
Six Million Dollars ($6,000,000), the Surviving Corporation shall pay to Holder
Representative for the ratable benefit of Holders in an amount as follows,
PROVIDED THAT any amounts payable under this SUBSECTION 2.6(a) shall be paid out
of the Contingent Payment Escrow to the extent funds are available in such
escrow and, to the extent funds are not so available, the remaining amount that
is payable shall be paid by the Surviving Corporation:
(i) One Million Dollars ($1,000,000) in the event 1997 EBIT is
equal to or greater than Six Million Dollars ($6,000,000) but less than Six
Million Five Hundred Thousand Dollars ($6,500,000); or
(ii) One Million Five Hundred Thousand Dollars ($1,500,000) in
the event 1997 EBIT is equal to or greater than Six Million Five Hundred
Thousand Dollars ($6,500,000) but less than Seven Million Dollars ($7,000,000);
or
(iii) Three Million Dollars ($3,000,000) in the event 1997 EBIT
is equal to or greater than Seven Million Dollars ($7,000,000).
Such amount shall be payable within thirty (30) calendar days after receipt by
Surviving Corporation of the Company's audited financial statements for calendar
year 1997 and in any event no later than April 30, 1998.
(b) NEW CONTRACTS. (i) In the event the aggregate Contract Value
of New Contracts equals or exceeds One Hundred Million Dollars ($100,000,000),
the Surviving Corporation shall pay to Holder Representative no later than
thirty (30) calendar days after the first anniversary of the Closing Date, for
the ratable benefit of Holders, the sum of: (A) Five Hundred Thousand Dollars
($500,000), (B) an amount (not to exceed One Million Dollars ($1,000,000)) equal
to one percent (1%) of the aggregate Contract Value of New Contracts in excess
of One Hundred Million Dollars ($100,000,000) and (C) Five Hundred Thousand
Dollars ($500,000) in the event the aggregate Contract Value of New Contracts
equals or exceeds Two Hundred Million Dollars ($200,000,000); PROVIDED, HOWEVER,
the amounts payable under this SUBSECTION 2.6(b) shall not exceed Two Million
Dollars ($2,000,000) in the aggregate and shall be paid out of the Contingent
Payment Escrow to the extent funds are available in such escrow and, to the
extent funds are not so available, the remaining amount that is payable shall be
paid by the Surviving Corporation.
(i) In instances where the Company is proposed as a subcontractor
by FDC or one of its subsidiaries under a subcontract to a New Contract, the
Company shall receive a credit to the Aggregate Contract Value of such
subcontract equal to the value of the Company's subcontract.
(ii) Notwithstanding the foregoing, any New Contract or any
subcontract that is subject to protest, no amount shall be payable hereunder
unless and until such protest is denied or dismissed with prejudice and that New
Contract or subcontract is officially
15
awarded and all impediments to, or suspensions of, performance based on such
protest have been lifted.
(c) QUALIFIED PROPOSALS. In the event that the aggregate Contract
Value of contracts subject to Qualified Proposals equals or exceeds One Hundred
Million Dollars ($100,000,000), the Surviving Corporation shall pay to Holder
Representative, no later than thirty (30) calendar days after the first
anniversary of the Closing Date, for the ratable benefit of Holders in an amount
equal to one-half of one percent (0.5%) of the aggregate Contract Value of
contracts subject to Qualified Proposals; PROVIDED, HOWEVER, that the amount
payable under this SUBSECTION 2.6(c) shall not exceed One Million Dollars
($1,000,000). For purposes of determining Contract Value in connection with a
Qualified Proposal that is submitted from the Closing Date up to and including
the first anniversary of the Closing but BAFO will occur after the first
anniversary of the Closing, such Contract Value will be based upon projected
BAFO price (Projected BAFO price shall be determined in good faith by the Chief
Executive Officer of FDC, based upon information available at the time such
projections are made.), PROVIDED THAT any amounts payable under this
SUBSECTION 2.6(c) shall be paid out of the Contingent Payment Escrow to the
extent funds are available in such escrow and, to the extent funds are not so
available, the remaining amount that is payable shall be paid by the Surviving
Corporation.
ARTICLE III
CLOSING
Section 3.1 FILING. As soon as all of the conditions set forth in
ARTICLE IX of this Agreement have either been fulfilled or waived, the Board of
Directors of Acquisition and the Company shall direct their officers forthwith
to file and record all relevant documents with the appropriate government
officials to effectuate the Merger.
Section 3.2 CLOSING. The consummation of the Merger shall take
place at 10:00 a.m., local time, on the tenth (10) Business Day following the
satisfaction of the conditions to the obligations of the parties set forth in
ARTICLE IX hereof, at the offices of Xxxxxx & Xxxxxxx, 0000 Xxxxxxxxxxxx Xxxxxx,
X.X., Xxxxx 0000, Xxxxxxxxxx, D.C., or at such other time or place as the
Company and Acquisition may agree in writing. The term "CLOSING" (when used in
this Agreement, means the Effective Time of the Merger.
Section 3.3 HOLDER REPRESENTATIVE'S CLOSING DELIVERIES. At the
Closing, Holder Representative shall deliver or cause to be delivered to
Acquisition (a) stock certificates evidencing not less than ninety-five percent
(95%) of the Shares outstanding, duly endorsed in blank or accompanied by a
stock power duly executed in blank, and (b) the other documents required to be
delivered by Holder Representative pursuant to ARTICLE IX hereof.
Section 3.4 ACQUISITION'S CLOSING DELIVERIES. At the Closing,
(a) Acquisition shall pay to Holder Representative the Cash Consideration (as
provided in SECTION 2.2 hereof) and shall deliver to Holder Representative the
Notes and (b) Acquisition shall deliver to Holder
16
Representative the other documents required to be delivered by Acquisition
pursuant to ARTICLE IX hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND PRINCIPAL HOLDERS
The Company and the Principal Holders each hereby jointly and
severally represents and warrants to Acquisition as follows, except as otherwise
set forth on the Disclosure Schedule, which representations and warranties are,
as of the date hereof, and will be, as of the Closing Date, true and correct:
Section 4.1 ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland with full corporate power and authority to conduct the Business as it
is presently being conducted and to own and lease its properties and assets.
The Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of its properties owned
or leased or the nature of its activities make such qualification necessary.
Copies of the certificate of incorporation and bylaws of the Company, and all
amendments thereto, heretofore delivered to Acquisition are accurate and
complete as of the date hereof. SCHEDULE 4.1 contains a true, correct and
complete list of all jurisdictions in which the Company is qualified to do
business as a foreign corporation.
Section 4.2 SUBSIDIARY.
(a) Other than the Subsidiary listed on SCHEDULE 4.2, the Company
has no direct or indirect stock or other equity or ownership interest (whether
controlling or not) in any corporation, association, partnership, joint venture
or other entity. The Subsidiary listed on SCHEDULE 4.2 is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction identified on SCHEDULE 4.2, has the requisite power and authority
to conduct its business as it is presently being conducted and to own and lease
its properties and Assets. SCHEDULE 4.2 contains a true, correct and complete
list of all jurisdictions in which the Subsidiary is qualified to do business as
a foreign corporation. The Subsidiary is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of its properties owned or leased or the nature of its activities make
such qualification necessary except. Copies of the certificate of incorporation
and bylaws (and/or similar organizational documents under the relevant law of
the Subsidiary) of the Subsidiary heretofore delivered to Acquisition are
accurate and complete. SCHEDULE 4.2 sets forth a description of all of the
issued and outstanding equity securities of the Subsidiary. The Company owns of
record and beneficially all of the issued and outstanding capital or other stock
of the Subsidiary free and clear of any Encumbrances, except as set forth on
SCHEDULE 4.2. There are no options, puts, calls or warrants with respect to the
equity securities of the Subsidiary.
17
(b) The Limited Liability Company Agreement ("L.L.C. AGREEMENT")
of Millennium Information Systems, Technology L.L.C. ("MIST"), a Delaware
Limited Liability Company dated as of September 12, 1996 between NYMA, Inc. and
Electronic Data Systems Corporation ("EDS") has been terminated and is no longer
in effect. The Company has made no capital contributions as none were required
under the L.L.C. Agreement, and the Company has no further liability or
obligation to any party, including, without limitation, MIST and EDS thereunder.
Section 4.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists solely of
4,000,000 shares of Company Common Stock, of which no more than 2,550,000 shares
will be issued and outstanding at the Closing. Except as set forth on
SCHEDULE 4.3 all of the issued and outstanding shares of the Company Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable. The Company has honored all of its obligations with respect to
preemptive rights (or as the same have been validly waived) relating to the
Company Common Stock.
(b) Except as set forth on SCHEDULE 4.3, the Company has not
issued or granted any outstanding options, warrants, rights or other securities
convertible into or exchangeable or exercisable for shares of the capital stock
of the Company, any other commitments or agreements providing for the issuance
of additional shares of the capital stock of the Company, the sale of treasury
shares, or for the repurchase or redemption of shares of the Company's capital
stock, and there are no agreements of any kind which may obligate the Company to
issue, purchase, register for sale, redeem or otherwise acquire any of its
securities or interests.
(c) Set forth on SCHEDULE 4.3 is a true, correct and complete list
of the record holders of the capital stock of the Company and all other
securities of the Company (together with an identification of the number and
type of securities owned by each such record holder) as of the date hereof. The
Company will provide an updated SCHEDULE 4.3 at least five (5) business days
prior to the Closing Date setting forth a true, correct and complete list of the
record holders of the capital stock of the Company and all other securities of
the Company (together with an identification of the number and type of
securities owned by each such record holder) as of the Closing Date. In
connection with the Merger and the payment of the Merger Consideration,
Acquisition and the Surviving Corporation shall be entitled to rely conclusively
on such updated SCHEDULE 4.3. Each Principal Holders represents and warrants
that he is the beneficial owner of the capital stock listed on SCHEDULE 4.3 (as
of the date hereof) and updated SCHEDULE 4.3 (as of the Closing Date) as owned
by him, free and clear of any Encumbrances.
Section 4.4 AUTHORIZATION. The Company has all requisite
corporate power and authority, and has taken all corporate and shareholder
action necessary, to execute and deliver this Agreement and the Ancillary
Agreements, to consummate the transactions contemplated hereby and thereby and
to perform its obligations hereunder and thereunder. The execution and
18
delivery of this Agreement and the Ancillary Agreements by action of the
Company and Principal Holders and the consummation by the Company and
Principal Holders of the transactions contemplated hereby and thereby have
been duly approved by the board of directors and shareholders of the Company.
Except for approval of this Agreement by the shareholders of the Company in
accordance with the MGCL, no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by the Company, Holder
Representative and Principal Holders and is, and upon execution and delivery
of the Ancillary Agreements will be, legal, valid and binding obligations of
the Company, Holder Representative and Principal Holders, enforceable against
them in accordance with its terms subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors' rights generally.
Section 4.5 NO CONFLICT OR VIOLATION. Neither the execution,
delivery or performance of this Agreement and the Ancillary Agreements nor the
consummation of the transactions contemplated hereby, nor compliance by the
Company, Holder Representative and Principal Holders with any of the provisions
hereof, does or will violate any provision of, or result in the breach of, any
applicable law, rule or regulation of any governmental body, the certificate of
incorporation or bylaws of the Company or its Subsidiary, or any agreement,
indenture or other instrument to which any Principal Holder, the Company or its
Subsidiary is a party or by which the Company or its Subsidiary may be bound, or
of any order, judgment or decree applicable to any of them, or terminate or
result in the termination of any such agreement, indenture or instrument, or
result in the creation of any lien, charge or encumbrance upon any of the
properties or assets of the Company or its Subsidiary, or constitute any event
which, after notice or lapse of time or both, would result in any such
violation, breach, acceleration, termination or creation of a lien or result in
a violation or revocation of any required license, permit or approval from any
government or other third party. Notwithstanding the foregoing, the Principal
Holders make no representation as to the applicability of 41 U.S.C. Section 15
(the "ASSIGNMENT OF CONTRACTS ACT"), 31 U.S.C. Section 3727 (the "ASSIGNMENT OF
CLAIMS ACT"), or the assignability of any Contracts subject to any restrictions
under Small Business Administration programs, as to each of which Acquisition
has made its own independent analysis.
Section 4.6 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 4.6
are the Interim Financial Statements. The Company shall deliver the Closing
Financial Statements at the same time the Pro Forma Balance Sheet is delivered
pursuant to SECTION 2.5.1. The Financial Statements (a) have and will be in
accordance with the Books and Records of the Company, (b) have and will be
prepared in accordance with GAAP consistently applied throughout the periods
covered thereby and (c) fairly and accurately present the consolidated assets,
Liabilities (including all reserves) and financial position of the Company as of
the respective dates thereof and the consolidated results of operations and
changes in cash flows for the periods then ended. The Final Balance Sheet will
be examined by Deloitte, independent certified public accountants, whose report
thereon will be included with such Final Balance Sheet. At the respective dates
of the Financial Statements, there were and will not be any Liabilities of the
Company, which, in
19
accordance with GAAP, should have been set forth or reserved for in the
Financial Statements or the notes thereto, which are not set forth or
reserved for in the Financial Statements or the notes thereto.
Section 4.7 BOOKS AND RECORDS. The Company has made and kept (and
given Acquisition access to) Books and Records and accounts, which, in
reasonable detail, accurately and fairly reflect the activities of the Company.
The minute books of the Company and of its Subsidiary previously delivered to
Acquisition accurately and adequately reflect all formal actions previously
taken by the shareholders, board of directors and committees of the board of
directors of the Company and its Subsidiary as applicable. The copies of the
stock book records of the Company previously delivered to Acquisition are true,
correct and complete, and accurately reflect all transactions effected in the
Company's stock as recorded on the books of the Company or presented for
recordation through and including the date hereof. The Company has not engaged
in any transaction, maintained any bank account or used any corporate funds
except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained Books and Records of the Company.
Section 4.8 PROJECTIONS. The Company has delivered to Acquisition
projected income statements, balance sheet and statements of cash flow of the
Company and its consolidated Subsidiary for the 1997 through 2001 fiscal years
(the "PROJECTIONS"), which are attached as SCHEDULE 4.8 hereto. The Projections
were prepared in good faith represent the Company's best estimate, at the time
of their preparation, of the financial position, cash flow and results of
operations of the Company and its consolidated Subsidiary for the periods
indicated. Nothing in this representation and warranty shall be construed as a
guarantee that the projected results set forth in the Projections will be
actually realized, and no variance between such projected results and actual
results shall, by itself, give rise to a breach of this SECTION 4.8.
Section 4.9 UNDISCLOSED LIABILITIES. To the best knowledge of the
Company and Principal Holders, since the Interim Balance Sheet Date neither the
Company nor its Subsidiary has any Liabilities, except for liabilities and
obligations that have arisen since the date of the Interim Balance Sheet in the
ordinary course of the operation of the business and consistent with past
practice of the Company and its Subsidiary (all of which are current liabilities
similar in type to those reflected on the audited balance sheet for 1995).
Section 4.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the
Interim Balance Sheet Date, except as disclosed on SCHEDULE 4.10 or a
transaction expressly and specifically contemplated by this Agreement, there has
not been any:
(a) adverse change in the business, operations, condition
(financial or otherwise), assets, liabilities, or prospects of the Company or
its Subsidiary;
(b) except for normal periodic increases in the ordinary course of
business consistent with past practice, increase in the compensation payable or
to become payable by the Company or its Subsidiary to any of their respective
officers, employees or agents (collectively,
20
"PERSONNEL"), (ii) any bonus, incentive compensation, service award or other
like benefit granted, made or accrued, contingently or otherwise, for or to
the credit of any of the Personnel, (iii) any employee welfare, pension,
retirement, profit-sharing or similar payment or arrangement made or agreed
to by the Company for any Personnel except pursuant to the existing plans and
arrangements described in the Disclosure Schedules hereto or (iv) any new
employment agreement to which the Company is a party;
(c) addition to or modification of the employee benefit plans,
arrangements or practices affecting Personnel other than (i) contributions made
for 1996 in accordance with the normal practices of the Company and its
Subsidiary or (ii) the extension of coverage to other Personnel who became
eligible after the Interim Balance Sheet Date;
(d) sale, assignment or transfer of any assets of the Company or
its Subsidiary other than in the ordinary course;
(e) cancellation of any indebtedness or waiver of any rights of
substantial value to the Company or its Subsidiary, whether or not in the
ordinary course of business;
(f) amendment, cancellation or termination of any Contract,
license or other instrument of the Company or its Subsidiary;
(g) capital expenditure or the execution of any lease or any
incurring of liability therefor by the Company or its Subsidiary, involving
payments in excess of $20,000 in the aggregate;
(h) failure to operate the Business of the Company and the
business of its Subsidiary in the ordinary course, consistent with past practice
so as to use reasonable efforts to preserve the business intact, to keep
available the services of the Personnel, and to preserve the goodwill of the
Company's suppliers, customers and others having business relations with the
Company or its Subsidiary;
(i) change in accounting methods or practices by the Company or
its Subsidiary;
(j) revaluation by the Company or its Subsidiary of any of their
respective assets, including without limitation, writing off notes or accounts
receivable;
(k) damage, destruction or loss (whether or not covered by
insurance) adversely affecting the properties, business or prospects of the
Company or its Subsidiary; or
(l) any indebtedness incurred by the Company for borrowed money or
any commitment to borrow money entered into by the Company, or any loans made or
agreed to be made by the Company.
21
Section 4.11 CONTRACTS; NO DEFAULTS.
(a) SCHEDULE 4.11 contains a listing of all Contracts described in
(i) through (xv) below to which the Company or its Subsidiary is a party. Such
listing provides reasonably complete details concerning such contracts,
identifying among other things, the parties to the contracts and the office of
the Company or such Subsidiary where details relating to the contract are
located. True, correct and complete copies of contracts referred to in
clauses (i) through (xv) below have been delivered to or made available upon
request to Acquisition and its agents and representatives.
(i) Each Contract which involves performance of services or
delivery of goods and/or materials, by or to the Company or its Subsidiary of an
amount or value in excess of $100,000;
(ii) Each note, debenture, other evidence of indebtedness,
guarantee, loan, letter of credit, surety-bond or financing agreement or
instrument or other contract for money borrowed, including any agreement or
commitment for future loans, credit or financing;
(iii) Each Contract not in the ordinary course of business other
than as listed on SCHEDULE 4.10;
(iv) Each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Contract affecting the
ownership of, leasing of, title to, use of, or any leasehold or other interest
in, any real or personal property;
(v) Each licensing agreement or other Contract with respect to
patents, trademarks, copyrights, or other intellectual property, including
agreements with current or former employees, consultants or contractors
regarding the appropriation or the nondisclosure of Intellectual Property;
(vi) Each Contract to which any employee of the Company or its
Subsidiary is bound which in any manner purports to (A) restrict such Person's
freedom to engage in any line of business or to compete with any other Person,
or (B) assign to any other Person its rights to any invention, improvement, or
discovery;
(vii) Each employment agreement, collective bargaining agreement
or other Contract to or with any employee or any labor union or other employee
representative of a group of employees relating to wages, hours, and other
conditions of employment;
(viii) Each joint venture Contract, partnership agreement,
limited liability company or other Contract (however named) involving a sharing
of profits, losses, costs, or liabilities by the Company or its Subsidiary with
any other Person;
22
(ix) Each Contract containing covenants which in any way
purport to restrict the Company's or its Subsidiary' business activity or
purport to limit the freedom of the Company or its Subsidiary to engage in any
line of business or to compete with any Person;
(x) Each Contract providing for payments to or by any Person or
entity based on sales, purchases or profits, other than direct payments for
goods;
(xi) Each power of attorney which is currently effective and
outstanding;
(xii) Each Contract requiring capital expenditures after the
date hereof in an amount in excess of $20,000;
(xiii) Each written warranty, guaranty or other similar
undertaking with respect to contractual performance extended by the Company or
its Subsidiary other than in the ordinary course of business;
(xiv) Any other Contract relating to the business or operations
of the Company or its Subsidiary; and
(xv) Each amendment, supplement, and modification (whether
written or oral) in respect of any of the foregoing.
(b) Except as set forth on SCHEDULE 4.11, all of the Contracts
listed pursuant to paragraph (a) hereof are (i) in full force and effect,
(ii) represent the legal, valid and binding obligations of the Company or the
Subsidiary of the Company party thereto and are enforceable against the Company
or such Subsidiary in accordance with their terms and (iii) to the best
knowledge of the Company and Principal Holders, represent the legal, valid and
binding obligations of the other parties thereto and are enforceable against
such parties in accordance with their terms. To the best knowledge of the
Company and Principal Holders, no condition exists or event has occurred which,
with notice or lapse of time or both, would constitute a default or a basis for
force majeure or the claim of excusable delay or nonperformance under such
Contracts.
(c) Except as set forth on SCHEDULE 4.11, there are no
renegotiations of, or attempts to renegotiate, or outstanding rights to
renegotiate, any amounts paid or payable to the Company or its Subsidiary under
current or completed Contracts, with any Person or entity having the contractual
or statutory right to demand or require such renegotiation. Neither the Company
nor its Subsidiary has received any written demand for such renegotiation in
respect of any such Contract. Except as set forth on SCHEDULE 4.11, no customer
or government contracting officer has asserted in writing or by formal
notification that any adjustments are required to the terms of any Contracts.
23
(d) Except as set forth on SCHEDULE 4.11, neither Principal
Holders, the Company nor its Subsidiary has committed any act or omission which
would result in, and there has been no occurrence which would give rise to, any
product liability or liability for breach of warranty on the part of the Company
or its Subsidiary.
Section 4.12 GOVERNMENT CONTRACTS.
(a) There is no suit pending as to which notice has been provided
to the Company or its Subsidiary or, to the best knowledge of the Company or the
Principal Holders, investigation pending or threatened against the Company or
its Subsidiary asserting or alleging the commission of criminal acts or bribery
by either the Company or its Subsidiary with respect to any Contract between the
Company or its Subsidiary and the United States Government or a department or
agency thereof (a "GOVERNMENT CONTRACT"). Neither the Company nor its
Subsidiary has been debarred or suspended from participation in the award of
contracts with the U.S. government or any agency or department thereof (it being
understood that debarment and suspension does not include ineligibility to bid
for certain contracts due to generally applicable bidding requirements). The
Company and its Subsidiary are, and at times have been, in compliance with all
applicable laws, rules and regulations relating to any Government Contract and
neither the Company nor any Subsidiary has received written notice of any kind
from the United States Government or any agency or department thereof alleging
any violation, or notifying the Company or any Subsidiary of any investigation
of a possible violation, of any applicable law, rule, or regulation by the
Company or its Subsidiary or any act for which the Company or its Subsidiary
could be debarred or suspended from contracting with any agency of any
government, or prohibiting or seeking to prohibit the Company or its Subsidiary
from conducting, or restricting or seeking to restrict the Company's or its
Subsidiary' ability to conduct, all or any part of its business or operations or
from contracting with any government. No payment has been made by the Company
or its Subsidiary, or, to the best knowledge of the Company, by any Person
acting on its or their behalf, to any Person in connection with any Government
Contract in violation of applicable procurement laws or regulations or in
violation of (or requiring disclosure pursuant to) the Foreign Corrupt Practices
Act. The cost accounting and procurement systems maintained by the Company and
its Subsidiary with respect to Government Contracts are in compliance with all
applicable U.S. government laws and regulations.
(b) With respect to each Government Contract (i) the Company and
its Subsidiary have complied with all terms and conditions of such Government
Contract, including all clauses, provisions and requirements incorporated
expressly, by reference or by operation of law therein; (ii) all representations
and certifications executed, acknowledged or set forth in or pertaining to such
Government Contract were complete and correct in all respects as of their
effective date, and the Company and each Subsidiary has complied in all respects
with all such representations and certifications; (iv) no termination for
convenience, termination for default, cure notice or show cause notice is in
effect as of the date hereof pertaining to any Government Contract.
24
(c) Except as set forth on SCHEDULE 4.12, no Contract with a
customer has accrued or is expected by the Company to result in any losses.
(d) SCHEDULE 4.12 identifies the Company's current Government
Contracts, provides a best estimate of the value of the remaining contract
ceiling, and provides a best estimate of the portion of the remaining ceiling
value that is authorized and remaining.
Section 4.13 MACHINERY AND EQUIPMENT AND OTHER PROPERTY. Except as
set forth on SCHEDULES 4.11 or 4.13, the Company or its Subsidiary owns and has
good and marketable title to the machinery, equipment, tools, spare parts,
furniture and automobiles reflected on the books of the Company and its
Subsidiary as owned by the Company or its Subsidiary (the "MACHINERY AND
EQUIPMENT"), free and clear of all Encumbrances other than Permitted
Encumbrances. The Machinery and Equipment, taken as a whole, are in good
operating condition and repair (subject to normal wear and tear) and are
suitable for the purposes for which each has historically been used. Except as
otherwise contemplated by this Agreement, the Company and its Subsidiary owns,
or, in the case of leases and licenses, has valid leasehold interests or
licenses in, all of the properties and assets of whatever kind (whether
personal, tangible or intangible), used in its business, in each case free and
clear of any Encumbrances other than Permitted Encumbrances.
Section 4.14 INTELLECTUAL PROPERTY. SCHEDULE 4.14 lists each
patent, registered and unregistered trademark, service xxxx, trade dress, logo,
trade name, copyright, mask work and registration or application for any of the
foregoing (the foregoing, together with all know-how, trade secrets,
confidential information, software, technical information process technology,
plans, drawings, and blue prints, being hereinafter collectively referred to as
the "INTELLECTUAL PROPERTY") owned by the Company or its Subsidiary. The
Contracts listed on SCHEDULE 4.11 include all license or sublicense agreements
with respect to any patent, trademark, service xxxx, trade dress, logo, trade
name, copyright or mask work to which the Company or its Subsidiary is a party.
Except as set forth on SCHEDULE 4.14, the Company or its Subsidiary has good
title to each item of Intellectual Property owned by it, free and clear of any
Encumbrances other than Permitted Encumbrances, and no other Person has the
right to use any Intellectual Property other than pursuant to the Contracts
listed on SCHEDULE 4.11. The Company's and its Subsidiary's use of the
Intellectual Property and other trade rights, trade secrets, designs, plans,
specifications and other proprietary rights, whether or not registered, is not
to the knowledge of the Company infringing upon or otherwise violating the
rights of any third party in or to such rights and no claims have been asserted
by any Person against the Company or its Subsidiary with respect to the use of
any trademark, trade name, service xxxx, patent, copyright, know how or process
or other rights used by the Company and its Subsidiary challenging or
questioning the validity or effectiveness of such use or any such right, license
or agreements and no Person has a right to a royalty or similar payment, or has
any other rights, in respect of any such rights, except any of the foregoing.
Neither the Company nor its Subsidiary, or the other party or parties thereto,
is in breach of any license of sublicense with respect to any item of
Intellectual Property. The Company and its Subsidiary own or have the right to
use pursuant to a valid license,
25
sublicense, agreement or permission all items of Intellectual Property used
in the operation of the business of the Company and its Subsidiary, as
presently conducted.
Section 4.15 REAL PROPERTY. SCHEDULE 4.15 lists the address of all
real property (together with all Improvements located thereon, the "REAL
PROPERTY") now used, operated or occupied by the Company or its Subsidiary. The
Company has delivered or made available to Acquisition true and correct copies
of the leases and subleases for the real property listed on SCHEDULE 4.15. Each
such lease or sublease is in full force and effect and gives the lessee or the
sublessee thereunder the right to use and occupy the demised premises thereunder
for the uses set forth therein.
Section 4.16 LITIGATION AND PROCEEDINGS. Except as disclosed on
SCHEDULE 4.16, there are no lawsuits, actions, suits, claims or other
proceedings at law or in equity (including, without limitation, investigations
by any government involving any Government Contract wherein a claim for improper
charges was made), or before or by any court or governmental authority or
instrumentality or before any arbitrator pending or, to the knowledge of the
Company, or any Principal Holder, threatened, against the Company, its
Subsidiary or any Principal Holder. Except as set forth on SCHEDULE 4.16, there
is no unsatisfied judgment, order, injunction or decree binding upon the Company
its Subsidiary or any Principal Holder.
Section 4.17 EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. The following terms, when used in this
SECTION 4.17, shall have the following meanings. Any of these terms may,
unless the context otherwise requires, be used in the singular or the
plural depending on the reference.
(i) BENEFIT ARRANGEMENT. "BENEFIT ARRANGEMENT" shall mean any
employment, consulting, severance or other similar contract, arrangement or
policy and each plan, arrangement (written or oral), program, agreement or
commitment providing for insurance coverage (including without limitation any
self-insured arrangements), workers' compensation, disability benefits, fringe
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits, life, health, disability or accident benefits (including without
limitation any "voluntary employees' beneficiary association" as defined in
SECTION 501(c)(9) of the Code providing for the same or other benefits) or for
deferred compensation, profit-sharing bonuses, stock options, restricted stock,
stock appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or benefits which (A) is
not a Welfare Plan, Pension Plan or Multiemployer Plan, (B) is entered into,
maintained, contributed to or required to be contributed to, as the case may be,
by the Company, and (C) covers any employee or former employee of the Company or
any ERISA Affiliate (with respect to their relationship with such entity).
(ii) EMPLOYEE PLANS. "EMPLOYEE PLANS" shall mean all Benefit
Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans.
26
(iii) ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(iv) ERISA AFFILIATE. "ERISA AFFILIATE" shall mean any entity
which is (or at any relevant time was) a member of a "controlled group of
corporations" with, under "common control" with, a member of an "affiliated
service group" with, or otherwise required to be aggregated with, the Company as
set forth in Section 414(b), (c), (m) or (o) of the Code.
(v) MULTIEMPLOYER PLAN. "MULTIEMPLOYER PLAN" shall mean any
"multiemployer plan," as defined in Section 4001(a)(3) of ERISA, (A) which the
Company or any ERISA Affiliate maintains, administers, contributes to or is
required to contribute to and (B) which covers any employee or former employee
of the Company or any ERISA Affiliate (with respect to their relationship with
such entities).
(vi) PBGC. "PBGC" shall mean the Pension Benefit Guaranty
Corporation.
(vii) PENSION PLAN. "PENSION PLAN" shall mean any "employee
pension benefit plan" as defined in Section 3(2) of ERISA (other than a
Multiemployer Plan) (A) which the Company or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to and (B) which covers
any employee or former employee of the Company or any ERISA Affiliate (with
respect to their relationship with such entities).
(viii) WELFARE PLAN. "WELFARE PLAN" shall mean any "EMPLOYEE
welfare benefit plan" as defined in Section 3(1) of ERISA, (A) which the Company
or any ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, and (B) which covers any employee or former employee of the
Company or any ERISA Affiliate (with respect to their relationship with such
entities).
(b) DISCLOSURE; DELIVERY OF COPIES OF RELEVANT DOCUMENTS AND OTHER
INFORMATION. SCHEDULE 4.17 contains a complete list of Employee Plans.
(c) Except as set forth in SCHEDULE 4.17:
(i) PENSION PLANS
(A) Neither the Company nor any ERISA Affiliate currently
maintains, or has ever maintained, a Pension Plan subject to Section 302 ERISA
or Section 412 of the Code.
(B) Each Pension Plan and each related trust agreement,
annuity contract or other funding instrument has been determined by the Internal
Revenue Service to be qualified and tax-exempt under the provisions of Code
Sections 401(a) and 501(a).
27
(C) Each Pension Plan and each related trust agreement,
annuity contract or other funding instrument is in compliance with its terms
and, both as to form and in operation, with the requirements prescribed by any
and all statutes, orders, rules and regulations which are applicable to such
plans, including without limitation ERISA and the Code.
(D) Neither the Company nor any ERISA Affiliate has engaged
in, or is a successor or parent corporation to an entity that has engaged in, a
transaction which, to the best knowledge of the Company, is described in Section
4069 of ERISA. No filing has been made by the Company or any ERISA Affiliate
with the PBCG, and no proceeding has been commenced by the PBGC, to terminate
any Pension Plan.
(ii) MULTIEMPLOYER PLANS There are no Multiemployer Plans, and
neither the Company nor any ERISA Affiliate has ever maintained, contributed to,
participated or agreed to participate in a Multiemployer Plan.
(iii) WELFARE PLANS
(A) Each Welfare Plan which covers or has covered employees or
former employees of the Company (with respect to their relationship with such
entities) is in compliance with its terms and, both as to form and operation,
with the requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Welfare Plan, including without
limitation ERISA and the Code.
(B) Neither the Company, the Principal Holders, any ERISA
Affiliate nor any Welfare Plan has any present or future obligation to make
payment to, or with respect to, any present or former employee of the Company or
any ERISA Affiliate pursuant to any retiree medical benefit plan, or other
retiree Welfare Plan, and no condition exists which would prevent the Company
from amending or terminating any such benefit plan or Welfare Plan.
(C) Each Welfare Plan which is a "group health plan," as
defined in Section 607(1) of ERISA, has been operated in compliance with the
provisions of Part 6 of Title I, Subtitle B of ERISA and Section 4980B of the
Code at all times.
(iv) BENEFIT ARRANGEMENTS. Each Benefit Arrangement is in
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to such Benefit
Arrangement, including without limitation the Code.
(v) FIDUCIARY DUTIES AND PROHIBITED MERGER. Neither the Company
nor its Subsidiary has any liability with respect to any transaction in
violation of Sections 404 or 406 of ERISA or any "prohibited transaction," as
defined in Section 4975(c)(1) of the Code, for which no exemption exists under
Section 408 of ERISA or Section 4975(c)(2) or (d) of the Code
28
with respect to any Welfare Plan or Pension Plan. Neither the Company nor
any of its Subsidiary has participated in a violation of Part 4 of Title I,
Subtitle B of ERISA by any plan fiduciary of any Welfare Plan or Pension Plan
or has any unpaid civil penalty under Section 502(l) of ERISA.
(vi) UNPAID CONTRIBUTIONS. Neither the Company nor any ERISA
Affiliate has any liability for unpaid contributions with respect to any Pension
Plan, Multiemployer Plan or Welfare Plan. The Company or an ERISA Affiliate has
made all required contributions under each Employee Plan for all periods through
the last payroll period prior to the Closing Date or proper accruals have been
made and are reflected on the appropriate balance sheet and books and records.
(vii) The Company has delivered pursuant to this Agreement a true
and complete set of copies of (a) all Employee Plans and related trust
agreements, annuity contracts or other funding instruments as in effect
immediately prior to the Closing Date, together with all amendments thereto
which shall become effective at a later date; (b) the latest Internal Revenue
Service determination letter obtained with respect to any such Employee Plan
which is intended to be qualified or exempt under Section 401 or 501 of the
Code; (c) Forms 5500 and certified financial statements for the most recently
completed three fiscal years for each Employee Plan required to file such form,
together with the most recent actuarial report, if any, prepared by the Employee
Plan's enrolled actuary; (d) all summary plan descriptions for each Employee
Plan required to prepare, file and distribute summary plan descriptions; (e) all
summaries furnished employees, officers and directors of the Company and its
Subsidiary of all incentive compensation, other plans and fringe benefits for
which a summary plan description is not required; and (f) the notifications to
employees of their rights under Section 4980B of the Code.
(viii) No payment made to any Person who constitutes a "disqualified
individual" within the meaning of Section 280G(c) of the Code with respect to
the Company or its Subsidiary ("RECIPIENTS") pursuant to any employment
contract, severance agreement or other arrangement to which the Company or any
ERISA Affiliate is a party ("GOLDEN PARACHUTE PAYMENT"), other than any payment
made or to be made under any of the Employment and Non-Competition Agreements,
will be nondeductible to the Company and its Subsidiary because of the
applicability of Section 280G of the Code to the Golden Parachute Payment, nor
will the Company or its Subsidiary be required to "gross up" or otherwise
compensate any Recipient because of the imposition of any excise tax (including
any interest or penalties related thereto) on the Recipient because of the
applicability of Sections 280G and 4999 of the Code.
(ix) UNRELATED BUSINESS TAXABLE INCOME. No Employee Plan (or
trust or other funding vehicle pursuant thereto) is subject to any tax under
Code Section 511.
(x) DEDUCTIBILITY OF PAYMENTS. Except for the items set forth on
SCHEDULE 4.17 (which identify the nature and amount of such items), there is no
contract, agreement, plan or arrangement covering any employee or former
employee of the Company (with respect to its relationship with such entities)
that, individually or collectively, provides for
29
the payment by the Company of any amount that is not deductible under Section
162(a)(1) or 404 of the Code.
(xi) VALIDITY AND ENFORCEABILITY. Each Welfare Plan, Pension
Plan, related trust agreement, annuity contract or other funding instrument and
Benefit Arrangement which covers or has covered employees or former employees of
the Company (with respect to their relationship with the Company) is legally
valid and binding and in full force and effect.
(xii) LITIGATION. There is no action, order, writ, injunction,
judgment or decree outstanding or claim, suit, litigation, proceeding, arbitral
action, governmental audit or investigation relating to or seeking benefits
under any Employee Plan that is pending, threatened or anticipated against the
Company, Principal Holders, any ERISA Affiliate or any Employee Plan.
(xiii) NO AMENDMENTS. None of the Company, Principal Holders or
any ERISA Affiliate has any announced plan or legally binding commitment to
create any additional Employee Plans which are intended to cover employees or
former employees of Company (with respect to their relationship with the
Company) or to amend or modify any existing Employee Plan which covers or has
covered employees or former employees of the Company (with respect to their
relationship with the Company).
(xiv) NO OTHER MATERIAL LIABILITY. No event has occurred in
connection with which the Company, Principal Holders or any ERISA Affiliate or
any Employee Plan, directly or indirectly, could be subject to any liability
(A) under any statute, regulation or governmental order relating to any Employee
Plans or (B) pursuant to any obligation of the Company to indemnify any person
against liability incurred under any such statute, regulation or order as they
relate to the Employee Plans.
(xv) INSURANCE CONTRACTS. None of the Company, Principal
Holders or any Employee Plan holds as an asset of any Employee Plan any interest
in any annuity contract, guaranteed investment contract or any other investment
or insurance contract issued by an insurance company that is the subject of
bankruptcy, conservatorship or rehabilitation proceedings.
(xvi) NO ACCELERATION OR CREATION OF RIGHTS. Neither the
execution and delivery of this Agreement by the Principal Holders nor the
consummation of the transactions contemplated hereby will result in the
acceleration or creation of any rights of any person to benefits under any
Employee Plan.
Section 4.18 LABOR RELATIONS. The Contracts listed on
SCHEDULE 4.11 include all collective bargaining agreements to which the Company
or its Subsidiary is a party. The Company has delivered or made available to
Acquisition true, correct and complete copies of each such Contract, as amended
to date. Neither the Company nor its Subsidiary that is a party thereto nor, to
the knowledge of the Company, the other party or parties thereto, is in breach
of
30
any term of any such Contract. Neither the Company nor its Subsidiary has
engaged in any unfair labor practice and there are no complaints against the
Company or its Subsidiary pending before the National Labor Relations Board
or any similar state or local labor agency by or on behalf of any employee of
the Company or its Subsidiary, except as disclosed SCHEDULE 4.16, to the
extent such actions and deemed "labor" actions. There are no representation
questions, arbitration proceedings, labor strikes, slow downs or stoppages,
grievances or other labor disputes pending or, to the knowledge of the
Company, threatened with respect to the employees of the Company or its
Subsidiary, and neither the Company nor its Subsidiary has experienced any
attempt by organized labor to cause the Company or its Subsidiary to comply
or conform to demands of organized labor relating to its employees. Except
as provided on SCHEDULE 4.18 hereto, neither the Company nor its Subsidiary
has entered into any severance or similar arrangement in respect of any
present employee of the Company or its Subsidiary that will result in any
obligation (absolute or contingent) of the Company or the Company's
Subsidiary to make any payment to any present employee of the Company or its
Subsidiary following termination of employment. The Company and its
Subsidiary have complied in all respects with all laws, rules and regulations
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health and plant
closings (hereinafter collectively referred to as the "EMPLOYMENT LAWS").
Neither the Company nor its Subsidiary is liable for the payment of taxes,
fines, penalties or other amounts, however designated, for failure to comply
with any of the foregoing Employment Laws.
Section 4.19 LEGAL COMPLIANCE. The Company and its Subsidiary have
been and are in compliance with all laws (including rules and regulations
thereunder) of federal, state, local and foreign governments (and all agencies
thereof) applicable thereto relating to the conduct of the Business, and have
not received any notice that the Company or its Subsidiary are not in compliance
with such laws.
Section 4.20 ENVIRONMENTAL PROTECTION. The Company and its
Subsidiary:
(a) At all times have been in compliance with all Environmental
Laws.
(b) Neither the Company nor its Subsidiary has received any claim,
assessment, or notification of any inquiry or investigation regarding any
disposal, release, or threatened release of any Hazardous Materials at any
current or former owned or leased facility or at any location to which any
Hazardous Materials may have been transported.
(c) With respect to any property currently or formerly owned or
under lease by the Company or its Subsidiary, there are (i) no underground tanks
or other underground storage receptacles for Hazardous Materials and there have
been no releases of any Hazardous Materials from any such underground tank,
receptacle or related piping, and (ii) there have been no releases (I.E., any
past or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing, or dumping) of
Hazardous Materials.
31
(d) There are no consent decrees, consent orders, judgments,
judicial or administrative orders, agreements with, or liens by, any
governmental authority or quasi-governmental entity relating to any
Environmental Law against the Company or its Subsidiary relating to any property
currently or formerly owned or leased by the Company or its Subsidiary or
relating to any Hazardous Materials generated, transported or released by the
Company or its Subsidiary.
(e) There are no written environmental reports, audits and
assessments conducted by the Company or its Subsidiary related to any property,
whether currently or formerly owned or leased by the Company or its Subsidiary.
(f) Neither the Company nor its Subsidiary have assumed any
responsibility or liability for any releases of Hazardous Materials or any other
liabilities arising from any Environmental Conditions or Environmental Laws.
(g) The Company and its Subsidiary have obtained all permits, and
have made or maintained all notices, warnings, records and reports so as to be
in compliance with all Environmental Laws.
Section 4.21 TAX MATTERS. Except as otherwise disclosed in
SCHEDULE 4.21:
(a) All federal, state, local, and foreign tax returns of the
Company and its Subsidiary and of each consolidated or affiliated group which
the Company and its Subsidiary have been a part ("TAX RETURNS"), including those
Tax Returns relating to income, employment, franchise, property, sales and use,
and excise taxes, and any other Taxes due from and/or withheld by or required to
be withheld by the Company and its Subsidiary and of each consolidated or
affiliated group which the Company and its Subsidiary have been a part, have
been duly and timely filed and are correct and complete.
(b) All Taxes or estimates thereof that are due, or are claimed or
asserted by any taxing authority to be due, have been timely and appropriately
paid so as to avoid penalties for underpayment.
(c) Except as set forth on SCHEDULE 4.21, none of the Tax Returns
has been audited or is being audited by any taxing authority.
(d) Except as set forth on SCHEDULE 4.21, no assessment, audit or
other proceeding by any taxing authority, court, or other governmental or
regulatory authority is proposed, pending, or, to the knowledge of the Company,
threatened with respect to the Taxes or Tax Returns of the Company or its
Subsidiary.
(e) There are no outstanding agreements, waivers, or arrangements
extending the statutory period of limitations applicable to any claim for or the
period for the collection or assessment of Taxes due for any taxable period.
32
(f) All positions taken on federal Tax Returns that could give
rise to a penalty for substantial understatement pursuant to Section 6662(d) of
the Code have been disclosed on such Tax Returns.
(g) Neither the Company, the Principal Holders nor the Subsidiary
is a foreign person within the meaning of Section 1445(b)(2) of the Code.
(h) Neither the Company nor its Subsidiary has made any tax
elections under any section of the Code, including, without limitation under any
of Sections 108, 168, 338, 441, 472, 1017, 1033 or 4977 of the Code or Treasury
Regulation Section 1.1502 (or any predecessor thereof). No consent to the
application of Section 341(f)(2) of the Code (or any predecessor thereof) has
been made or filed by or with respect to any of the Company or the Subsidiary or
any of their assets and properties. None of the assets and properties of the
Company or its Subsidiary is an asset or property that the holders of the
outstanding capital stock of Acquisition or any of the Affiliates of such entity
is or will be required to treat as being (i) owned by any other Person pursuant
to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954 as
amended, and in effect immediately before the enactment of the Tax Reform Act of
1986, or (ii) tax-exempt use property within the meaning of Section 168(h)(1) of
the Code.
(i) No closing agreement pursuant to Section 7121 of the Code (or
any predecessor provision) or any similar provision of any state, local, or
foreign law has been entered into by or with respect to the Company or its
Subsidiary or any assets thereof.
(j) Neither the Company nor its Subsidiary has agreed to or is
required to make any adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision) by reason of any change in any accounting method of the
Company or its Subsidiary, neither the Company nor its Subsidiary has any
application pending with any taxing authority requesting permission for any
changes in any accounting method of the Company or its Subsidiary, and the
Internal Revenue Service has not proposed any such adjustment or change in
accounting method therefor.
(k) The Company has previously made available to Acquisition true,
correct and complete copies of each of the United States federal, state, local
and foreign income Tax Returns for each of the most recent two taxable years,
filed by the Company and the Subsidiary or (insofar as such returns relate to
any of the Company or the Subsidiary) filed by any affiliated or consolidated
group of which the Company or any such Subsidiary was then a member.
(l) Neither the Company nor its Subsidiary has been or is in
violation (or with notice or lapse of time or both, would be in violation) of
any applicable law relating to the payment of withholding of Taxes. The Company
and its Subsidiary have duly and timely withheld from salaries, wages and other
compensation and paid over to the appropriate taxing authorities all amounts
required to be so withheld and paid over for all periods under all applicable
laws.
33
(m) Neither the Company nor its Subsidiary is a party to, is bound
by, or has any obligation under any Tax sharing agreement or similar agreement
and no such agreement shall be entered into or amended by the Company or its
Subsidiary at or prior to the Closing.
(n) No "excess loss account" or "deferred intercompany gain" (as
such terms are described in Treasury Regulation Section 1.1502) exist for,
between or with respect to the Company and its Subsidiary.
(o) Except as disclosed on SCHEDULE 4.21, neither the Company nor
its Subsidiary is partner in any partnership.
(p) No claim has ever been made by an authority in a jurisdiction
where the Company or its Subsidiary do not file Tax Returns that either of the
Company or its Subsidiary are or may be subject to taxation by that
jurisdiction;
(q) There are no liens or encumbrances related to Taxes on any of
the assets of the Company or its Subsidiary (other than for current Taxes not
yet due and payable);
(r) The Company and its Subsidiary have not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency;
(s) Neither the Company nor its Subsidiary (A) has been a member
of any affiliated group filing a consolidated federal income Tax Return and (B)
has any liability for the Taxes of any person as defined in Section 7701(a)(1)
of the Code (other than the Company and its Subsidiary under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise;
(t) The charges, accruals and reserves for Taxes (including
deferred Taxes) currently reflected on the Financial Statements in accordance
with GAAP are adequate to cover all unpaid Taxes accruing or payable by the
Company and its Subsidiary in respect of taxable periods that end on or before
the Closing Date and for any taxable periods that begin before the Closing Date
and end thereafter to the extent such Taxes are attributable to the portion of
such period ending on the Closing Date (determined under the closing of the
books method of allocation);
Section 4.22 GOVERNMENTAL AUTHORITIES; CONSENTS. Assuming the
truth and completeness of the representations and warranties of Acquisition
contained in this Agreement, no consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority or other
third party is required on the part of the Company with respect to the Company's
execution or delivery of this Agreement or the consummation of the transactions
contemplated hereby which will not be obtained by the Company prior to the
Closing, except for the following which are not required or have been obtained:
(a) any novations or consents required in connection with Government Contracts
or subcontracts thereunder, (b) any filings
34
required under the DOD Industrial Security Manual for Safeguarding Classified
Information, (c) any filings required under U.S. Export Control Laws, (d) the
approval of this Agreement by the stockholders of the Company in accordance
with the MGCL and (e) as otherwise disclosed in SCHEDULE 4.22. Any such
novations, consents, filings or approvals referenced above are listed on
SCHEDULE 4.22.
Section 4.23 LICENSES, PERMITS AND AUTHORIZATIONS. SCHEDULE 4.23
contains a list of all licenses, approvals, consents, franchises and other
permits (including without limitation, all facility security clearances) of or
with any governmental regulatory or administrative authority, whether foreign,
federal, state or local, which are held by the Company or its Subsidiary. All
such licenses, franchises and other permits are in full force and effect and
there are no proceedings pending or to the best knowledge of the Company,
threatened that seek the revocation, cancellation, suspension or adverse
modification thereof. Such licenses, approvals, consents, franchises and
permits constitute all of the licenses, approvals, consents, franchises and
permits necessary to permit the Company and its Subsidiary to own, operate, use
and maintain their assets in the manner in which they are now operated and
maintained and to conduct the business of the Company and its Subsidiary as
currently conducted. All required filings with respect to such licenses,
approvals, consents, franchises and permits have been timely made and all
required applications for renewal thereof have been timely filed.
Section 4.24 INSURANCE.
(a) SCHEDULE 4.24 contains an accurate and complete description of
all policies of property, fire and casualty, product liability, workers'
compensation, and other forms of insurance held by the Company or its Subsidiary
("INSURANCE POLICIES"). True, correct and complete copies of such insurance
policies have been made available to Acquisition.
(b) All policies listed on SCHEDULE 4.24 (i) are valid,
outstanding, and enforceable policies, (ii) to the best knowledge of the Company
and its management, provide adequate insurance coverage for the assets and the
operations of the Company and its Subsidiary for all risks normally insured
against by a Person or entity carrying on the same business or businesses as the
Company and its Subsidiary, and (iii) will not terminate (except for directors
and officers liability insurance), or lapse by reason of, the transactions
contemplated by this Agreement.
(c) Neither the Company nor its Subsidiary has received (i) any
notice of cancellation of any policy described in paragraph (a) hereof or
refusal of coverage thereunder, (ii) any notice that any issuer of such policy
has filed for protection under applicable bankruptcy laws or is otherwise in the
process of liquidating or has been liquidated, or (iii) any other notice that
such policies are no longer in full force or effect or that the issuer of any
such policy is no longer willing or able to perform its obligations thereunder.
Section 4.25 BROKERS' FEES. Except as disclosed on SCHEDULE 4.25,
no broker, finder, investment banker or other Person is entitled to any
brokerage fee, finders' fee or other
35
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by the Company or its Subsidiary or Affiliates.
Section 4.26 NO OTHER AGREEMENTS TO SELL THE SHARES . Principal Holders,
the Company or any officer, director, or affiliate of the Company have no
commitment or legal obligation, absolute or contingent, to any other person or
firm other than NYMA Acquisition, Inc. to sell, assign, transfer or effect a
sale of any of the capital stock of the Company, to effect any merger,
consolidation, liquidation, dissolution or other reorganization of the Company,
or to enter into any agreement or cause the entering into of an agreement with
respect to any of the foregoing.
Section 4.27 MERGER WITH CERTAIN PERSONS. Except as set forth on
SCHEDULE 4.27, no officer, director or employee of the Company or Principal
Holders nor any member of any such person's immediate family is presently, or
within the past five (5) years has been, a party to any transaction with the
Company relating to the Business, including without limitation, any contract,
agreement or other arrangement (a) providing for the furnishing of services by,
(b) providing for the rental of real or personal property from, or (c) otherwise
requiring payments to (other than for services as officers, directors or
employees of the Company) any such person or corporation, partnership, trust or
other entity in which any such person has an interest as a shareholder, officer,
director, trustee or partner.
Section 4.28 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS. SCHEDULE 4.28
sets forth a complete and accurate list of the names and addresses of the
Company's (a) ten largest customers, distributors and other agents and
representatives, showing the approximate total sales in dollars by the Company
to each such customer during such fiscal year; and (b) suppliers with purchases
greater than $1,000,000 during the Company's last fiscal year, showing the
approximate total purchases in dollars by the Company from each such supplier
during such fiscal year. Since January 1, 1997, there has been no adverse
effect in the business relationship of the Company with any customer,
distributor or supplier named on SCHEDULE 4.28. The Company has not received
any communication from any customer, distributor or supplier named on
SCHEDULE 4.28 of any intention to terminate or reduce purchases from or
supplies to the Company.
Section 4.29 BANKING RELATIONSHIPS. SCHEDULE 4.29 sets forth a
complete and accurate description of all arrangements that the Company has with
any banks, savings and loan associations or other financial institutions
providing for checking accounts, safe deposit boxes, borrowing arrangements, and
certificates of deposit or otherwise, indicating in each case account numbers,
if applicable, and the person or persons authorized to act or sign on behalf of
the Company in respect of any of the foregoing.
Section 4.30 FULL DISCLOSURE. No representation or warranty made
by Principal Holders, the Company or its Subsidiary in this Agreement, nor any
document, exhibit, statement, certificate or schedule furnished by Principal
Holders, the Company or any Subsidiary to Acquisition in connection with the
Merger, contains any untrue statement of fact or omits to state any fact
necessary in order to make the statement contained herein not misleading.
36
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
Acquisition hereby represents and warrants to the Company and
Principal Holders as follows, except as otherwise set forth on the Disclosure
Schedule, which representations and warranties are, as of the date hereof, and
will be, as of the Closing Date, true and correct:
Section 5.1 CORPORATE ORGANIZATION. Acquisition is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware with full corporate power and authority to conduct its
business as it is presently being conducted and to own and lease its properties
and assets. Acquisition is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
its properties owned or leased or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a material adverse effect on its business.
Section 5.2 AUTHORIZATION. Acquisition has all requisite
corporate power and authority, and has taken all corporate action necessary, to
execute and deliver this Agreement and the Ancillary Agreements, to consummate
the Merger and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Ancillary Agreements by
Acquisition and the consummation by Acquisition of the Merger duly approved by
the board of directors and shareholders of Acquisition. No other corporate
proceedings on the part of Acquisition are necessary to authorize this Agreement
and the Ancillary Agreements and the transactions contemplated hereby and
thereby. This Agreement has been duly executed and delivered by Acquisition and
is, and upon execution and delivery of the Ancillary Agreements will be, legal,
valid and binding obligations of Acquisition enforceable against it in
accordance with its terms.
Section 5.3 NO CONFLICT OR VIOLATION. Neither the execution,
delivery or performance of this Agreement nor the consummation of the
transactions contemplated hereby, nor compliance by Acquisition with any of the
provisions hereof, violates any provision of, or will result in the breach of,
any applicable law, rule or regulation of any governmental body, the certificate
of incorporation, bylaws or other organizational documents of Acquisition, or
any agreement, indenture or other instrument to which Acquisition is a party or
by which Acquisition may be bound, or of any order, judgment or decree
applicable to any of them, or terminate or result in the termination of any such
agreement, indenture or instrument, or constitute any event which, after notice
or lapse of time or both, would result in any such violation, breach,
acceleration, termination or result in a violation or revocation of any required
license, permit or approval from any government or other third party.
Section 5.4 GOVERNMENTAL AUTHORITIES; CONSENTS. Assuming the
truth and completeness of the representations and warranties of the Company and
Principal Holders contained in this Agreement, no consent, approval or
authorization of, or designation, declaration
37
or filing with, any governmental authority or other third party is required
on the part of Acquisition respect to Acquisition's execution or delivery of
this Agreement or the consummation of the transactions contemplated hereby,
except for (a) applicable requirements of the HSR Act, (b) any novations or
consents required in connection with Government Contracts or subcontracts
thereunder, (c) any filings required under the DOD Industrial Security Manual
for Safeguarding Classified Information, (d) any filings required under U.S.
Export Control Laws.
Section 5.5 BROKERS' FEES. No broker, finder, investment banker
or other Person is entitled to any brokerage fee, finders' fee or other
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by Acquisition or any of its Affiliates.
Section 5.6 SOPHISTICATED INVESTOR. Acquisition is a
sophisticated investor, represented by independent legal counsel. Acquisition
has carefully reviewed the representations concerning the Company contained in
this Agreement and has made detailed inquiry concerning the Company, its
business and its personnel. The officers of the Company have caused to be made
available to Acquisition any and all written information that it has requested
and have answered to Acquisition's satisfaction any and all inquiries made by
Acquisition.
ARTICLE VI
COVENANTS OF COMPANY AND PRINCIPAL HOLDERS
Section 6.1 CONDUCT OF BUSINESS.
(a) From the date hereof through the Closing Date, Principal
Holders agree that they shall, and shall cause the Company and its Subsidiary,
except as otherwise specifically and expressly contemplated by this Agreement or
as consented to by Acquisition in writing (which consent or denial of consent
shall not be unreasonably delayed), to operate the Business in the ordinary
course and consistent with past practice and not to take any action inconsistent
with this Agreement. Without limiting the generality of the foregoing, unless
consented to by Acquisition in writing, Principal Holders shall cause the
Company and its Subsidiary not to, except as contemplated by this Agreement and
as listed on SCHEDULE 6.1:
(i) change or amend their articles of incorporation, bylaws or
other organizational documents;
(ii) declare or pay any dividends, or make any distributions in
respect of any shares of its capital stock or other equity interests, or
repurchase or redeem any issued and outstanding shares of its capital stock or
other equity interests;
(iii) issue any shares of capital stock of the Company or equity
interest (including, without limitation, any options or warrants);
38
(iv) enter into, extend, materially modify, terminate or renew
any Contract of a type required to be listed on SCHEDULE 4.11;
(v) sell, assign, transfer, convey, lease or otherwise
dispose of any interest in the Real Property or any other material asset;
(vi) except as otherwise required by law or consistent with
past practices, take any action with respect to the grant of any severance or
termination pay (otherwise than pursuant to policies or agreements of the
Company or its Subsidiary as the case may be, in effect on the date hereof);
(vii) make any change in the key management structure of the
Company or its Subsidiary, including, without limitation, the hiring of
additional officers or the terminations of existing officers, other than in the
ordinary course of business;
(viii) acquire by merger or consolidation with, or merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire any material assets or business of any corporation, partnership,
association or other business organization or division thereof, including the
proposed acquisition of certain assets of Analex Corporation by the Company.
(ix) make any material loans or advances to any Person;
(x) make any material income Tax elections that could
affect the Surviving Company or its Subsidiary after the Closing;
(xi) agree to any material adjustments proposed in connection
with any Tax audit or examination that would affect the Company or its
Subsidiary; or
(xii) make any material change in its accounting policies or
practices;
(xiii) make any capital expenditure in excess of $20,000;
(xiv) waive, settle or release any claim or cause of action of
the Company or its Subsidiary;
(xv) enter into any agreement, or otherwise become obligated,
to do any action prohibited hereunder;
(xvi) except for transfers of life insurance policies to each of
the respective Principal Holders, declare or issue any bonus or other payments,
whether or not in the ordinary course of business, to any management or
executive employees of Company or its Subsidiaries; or
39
(xvii) enter into, extend, materially modify, terminate or renew
any Employee Plan of the type required to be listed on SCHEDULE 4.17.
(b) The Company and Principal Holders agree that, prior to the
Closing, they shall cause the Company and its Subsidiary to use their best
efforts to preserve substantially intact the business organization of the
Business, keep available to Acquisition the services of the key employees of the
Company and its Subsidiary employed in the Business and preserve the current
relationships of the Company and its Subsidiary with the material customers and
suppliers of, and other persons which have significant business relationships
with, the Business.
Section 6.2 HSR ACT. In connection with the transactions
contemplated by this Agreement, the Company and Principal Holders have (and, to
the extent required, have caused their Affiliates to) complied with the
notification and reporting requirements of the HSR Act and have obtained early
termination of the waiting period under the HSR Act. The Company and Principal
Holders shall (and, to the extent required, shall cause their Affiliates to)
have substantially complied with any additional requests for information,
including requests for production of documents and production of witnesses for
interviews or depositions, by any Antitrust Authority. A copy of the letter
from the Federal Trade Commission granting early termination is attached hereto
as SCHEDULE 6.2.
Section 6.3 NO SOLICITATIONS. From the date hereof through the
Closing Date, the Company and Principal Holders shall not, and shall not
knowingly permit any of their respective Affiliates, officers, directors,
employees, representatives and agents to, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any Person or group of Persons (other than Acquisition or
any of its Affiliates) concerning any merger, sale of assets, sale of shares of
capital stock or similar transactions involving the Company or its Subsidiary or
division of the Company or its Subsidiary. The Company and Principal Holders
shall (a) immediately notify Acquisition (orally and in writing) if any
discussions or negotiations are sought to be initiated, any inquiry or proposal
is made, any information is requested with respect to the Merger or any offer is
made with respect to the Company, its Subsidiary, any Real Property, or any
Shares, (b) include in such notification the terms of any such proposal or offer
that it may receive with respect thereto (and provide Acquisition with a copy
thereof in writing), including the identity of the soliciting party and (c) keep
Acquisition informed with respect to the status of the foregoing.
Section 6.4 NOTICE TO ACQUISITION. The Company and Principal
Holders will promptly notify Acquisition of any circumstance, event or action by
any Principal Holder or otherwise, that causes any statement made by Principal
Holders in this Agreement to be inaccurate or incomplete or that may result in a
breach of this Agreement by the Company or any Principal Holder.
Section 6.5 CONSENTS; REASONABLE EFFORT; COOPERATION. Unless
waived specifically in writing by Acquisition, the Company and Principal Holders
will obtain in writing any consents listed on SCHEDULE 4.22 of any Governmental
Authority or other third party
40
necessary for the consummation of the Transactions. Acquisition shall
cooperate with Principal Holders in connection with Principal Holders'
efforts to obtain the consent required by this Section.
Section 6.6 ESTOPPEL CERTIFICATES. The Company and Principal
Holders will obtain estoppel certificates (each an "ESTOPPEL CERTIFICATE") from
the parties to the Contracts listed on SCHEDULE 6.6 certifying that (a) such
Contract is a valid agreement of the parties thereto and in full force and
effect, (b) such Contract has not been amended, modified, supplemented or
extended except as disclosed to Acquisition, (c) no known breach or default or
known event which, with the passage of time or notice, or both, would constitute
a material breach or default under such Contract has occurred and is continuing
and (d) the consummation of the Merger shall not materially impair the rights of
the Company or its Subsidiary under such Contract.
Section 6.7 INSPECTIONS. Prior to the Closing, the Company and
Principal Holders shall provide Acquisition and its representatives (including,
without limitation, its engineers, surveyors, attorneys and accountants) access
at all reasonable times to the Real Property and other assets of the Company and
its Subsidiary. At all times prior to Closing, Acquisition and its
representatives, upon reasonable notice to the Company shall have the right to
have access to the Company's or its Subsidiary's employees, agents and
representatives to review all books and records of Company and its Subsidiary,
including all the Real Estate Records, to enter onto the Real Property, and to
inspect, examine and survey the Real Property; PROVIDED that such access shall
be had in such a manner so as not to unreasonably interfere with the conduct of
the Business.
Section 6.8 EMPLOYEE BENEFIT PLANS. Principal Holders shall
prevent the Company, its Subsidiary and any Welfare Plan or Pension Plan, or
trust created thereunder, from engaging in any "prohibited transaction" (as such
term is defined in Section 406 of ERISA), and prevent the Company or its
Subsidiary from (a) terminating any Pension Plan in a manner that results in the
imposition of a lien on any property of the Company or its Subsidiary pursuant
to Section 4068 of ERISA or (b) take any action that adversely affects the
qualification of any Employee Plan or its compliance with the applicable
requirements of ERISA or the Code or results in a "reportable event" (as such
term is defined in Section 4043(b) of ERISA).
Section 6.9 STOCKHOLDER APPROVAL. The Company shall promptly call
and convene, a special meeting of its stockholders (the "COMPANY STOCKHOLDERS'
MEETING") on or prior to May 1, 1997 to obtain all approvals of its stockholders
required in connection with the transactions contemplated by this Agreement, or,
in lieu thereof, shall obtain, on or prior to May 1,, 1997, any such approval by
the written consent of its stockholders as provided in Section 3-105 of the
MGCL, and shall, through its board of directors, recommend to its stockholders
approval of the Merger at the Company Stockholders' Meeting or by written
consent, as the case may be. Approval of this Agreement by the stockholders of
the Company shall not restrict the ability of the Board of Directors of the
Company thereafter to cause the Company to enter into an amendment to this
Agreement pursuant to SECTION 12.11 hereof. Prior to the vote of the Company's
stockholders with respect to the Merger, the Company and Principal Holders will
41
cause the Designated Holders to be the sole holders of equity securities in the
Company, including, without limitation, common stock and option agreements to
acquire common stock of the Company. The Company and Principal Holders shall
cause the Merger and the transactions contemplated hereby, including, without
limitation, the issuance of the Notes and the Contingent Payment rights to
comply with all applicable securities laws. The Company and Principal Holders
agree to cause this Agreement to be approved by Holders. The Principal Holders
agree to vote in favor of the Merger.
ARTICLE VII
COVENANTS OF ACQUISITION
Section 7.1 [This Section Intentionally Omitted.]
Section 7.2 NOTICE TO COMPANY. Acquisition will promptly notify
the Company of any circumstance, event or action by Acquisition that causes any
statement made by Acquisition in this Agreement to be inaccurate or incomplete
in any material respect or that may result in a breach of this Agreement by
Acquisition.
ARTICLE VIII
COVENANTS OF THE COMPANY, PRINCIPAL HOLDERS AND ACQUISITION
Section 8.1 CONFIDENTIALITY.
(a) Except (i) for any governmental filings required in order to
complete the Transactions, and (ii) as Acquisition, the Company and Principal
Holders may agree or consent in writing, all information received by
Acquisition, the Company or Principal Holders and their respective
representatives pursuant to the terms of this Agreement shall be kept in
confidence by the receiving party and its representatives; PROVIDED, HOWEVER,
that any party hereto may disclose such information to its legal and financial
advisors, lenders, financing sources and their respective legal advisors and
representatives so long as such Persons agree to maintain the confidentiality of
such information in accordance with this SECTION 8.1. If the transactions
contemplated hereby shall fail to be consummated, all copies of documents or
extracts thereof containing information and data as to one of the other parties,
including all information prepared by the receiving party or such receiving
party's representatives, shall be turned over to the party furnishing same,
except that such information prepared by the receiving party or such receiving
party's representatives may be destroyed at the option of the receiving party,
with notice of such destruction (or return) to be confirmed in writing to the
disclosing party. Any information not so destroyed (or returned) will remain
subject to these confidentiality provisions (notwithstanding any termination of
this Agreement) until the second anniversary of the date of this Agreement.
(b) The foregoing confidentiality provisions shall not apply to
such portions of the information received which (i) are or become generally
available to the public through no
42
action by the receiving party or by such party's representatives or (ii) are
or become available to the receiving party on a nonconfidential basis from a
source, other than the disclosing party or its representatives, which the
receiving party believes, after reasonable inquiry, is not prohibited from
disclosing such portions to it by a contractual, legal or fiduciary
obligation, and shall not apply to any disclosure by Acquisition or the
Company after the Closing.
Section 8.2 BOOKS AND RECORDS.
(a) ACCESS. The Company and Principal Holders agree that they will
cooperate with and make available to Acquisition, its representatives and
agents, during normal business hours, all books and records information and
personnel (without substantial disruption of the other party's business)
retained and remaining in existence after the Closing which are necessary or
useful in connection with any tax inquiry, audit, investigation or dispute, any
litigation or investigation or any other matter requiring any such books and
records, information or employees for any reasonable business purpose not
adverse to the Company.
(b) COOPERATION AND RECORDS RETENTION. The Company and Principal
Holders shall (a) provide Acquisition with such assistance as may reasonably be
requested by in connection with the preparation of any return, audit, or other
examination by any taxing authority or judicial or administrative proceedings
relating to liability for any taxes, (b) provide Acquisition with any records or
other information that may be relevant to such return, audit or examination,
proceeding or determination, and (c) provide Acquisition with any final
determination of any such audit or examination, proceeding, or determination
that affects any amount required to be shown on any tax return of the other for
any period. Without limiting the generality of the foregoing, the Company and
Principal Holders shall each retain, until the applicable statutes of
limitations (including any extensions) have expired, copies of all tax returns,
supporting work schedules, and other records or information that may be relevant
to such returns for all tax periods or portions thereof ending on or before the
Closing Date.
Section 8.3 SUPPORT OF TRANSACTIONS. Acquisition, the Company,
and their respective Affiliates shall each (i) use its reasonable best efforts
to assemble, prepare and file any information (and, as needed, to supplement
such information) as may be reasonably necessary to obtain as promptly as
practicable all governmental and regulatory consents required under
ARTICLE VIII, (ii) use its reasonable best efforts to obtain all material
consents and approvals of third parties that any of Acquisition, the Company,
or their respective Affiliates are responsible to obtain in order to consummate
the Merger, (iii) take such other action as may reasonably be necessary or as
another party may reasonably request to satisfy the conditions of ARTICLE IX or
otherwise to comply with this Agreement, and (iv) provide the other parties and
such other party's employees, officers, accountants, lawyers, financial advisors
and other representatives with access to its personnel, properties, business and
records under all reasonable circumstances.
Section 8.4 [This Section Intentionally Omitted.]
43
Section 8.5 NOTICE OF CHANGES BY THE COMPANY. The Company shall
promptly inform Acquisition in writing if any change shall have occurred or
shall have been threatened (or any development or condition shall have occurred
or shall have been threatened involving a prospective change) in the financial
condition, results of operations or business of the Company and its Subsidiary
that is or may reasonably be expected to become materially adverse to the
Company and its Subsidiary taken as a whole. The Company shall promptly inform
Acquisition in writing if any representation or warranty made in ARTICLE II of
this Agreement shall cease to be accurate in any material respect.
Section 8.6 NOTICE OF CHANGES BY ACQUISITION. Acquisition shall
promptly inform the Company in writing if any change shall have occurred or
shall have been threatened (or any development or condition shall have occurred
or shall have been threatened involving a prospective change) in the financial
condition, results of operations or business of Acquisition that is or may
reasonably be expected to become materially adverse to Acquisition and its
business, taken as a whole. Acquisition shall promptly inform the Company in
writing if any representation or warranty made in ARTICLE III of this Agreement
shall cease to be accurate in any material respect.
Section 8.7 DISSENTING STOCKHOLDERS. The Company shall give
Acquisition (a) prompt notice of any demands received from Dissenting
Stockholders, if any, for payment of the fair value for their shares of capital
stock and (b) the opportunity to participate in all negotiations and proceedings
with respect to any such demands.
Section 8.8 PROVISION OF SCHEDULES AND ANNEXES. The parties agree
to cooperate with one another in good faith to agree upon the form and substance
of all Schedules and Annexes hereto, within ten (10) Business Days after the
date hereof (or such later date that the parties may agree upon). In the event
such Schedules and Annexes shall have been agreed upon within such time period,
they shall be initialed and attached hereto and become part of this Agreement as
of the date hereof. In the event the parties are unable to reach agreement as
to the form and substance of such Schedules and Annexes, then this Agreement may
be terminated pursuant to SECTION 10.1(d) hereof.
Section 8.9 1996 FINANCIAL STATEMENTS. The Company and Principal
Holders shall deliver to Acquisition the audited consolidated financial
statements of the Company and its Subsidiary for the year ended and at December
31, 1996 (the "1996 AUDITED FINANCIAL STATEMENTS") as soon as they become
available and in no event later than April 19, 1997. In the event the 1996
Audited Financial Statements shall not be satisfactory in form and substance to
Acquisition in its sole discretion, Acquisition shall have the right to
terminate this Agreement pursuant to SECTION 10.1(b). There shall be no
presumption that the 1996 Audited Financial Statements will be satisfactory to
Acquisition if they do not vary materially from the draft of such financial
statements provided to Acquisition on April 3, 1997.
44
ARTICLE IX
CONDITIONS TO OBLIGATIONS
Section 9.1 CONDITIONS TO OBLIGATIONS OF ACQUISITION, THE COMPANY
AND PRINCIPAL HOLDERS. The obligations of Acquisition, the Company and
Principal Holders to consummate, or cause to be consummated, the Merger are
subject to the satisfaction of the following conditions, any one or more of
which may be waived in writing by such parties:
(a) All necessary permits, approvals, clearances, and consents of,
and all filings with, Governmental Authorities required to be procured which are
listed on SCHEDULE 4.22 shall have been procured.
(b) There shall not be in force any order or decree, statute, rule
or regulation nor shall there be on file any complaint by a Governmental
Authority seeking an order or decree, restraining, enjoining or prohibiting the
consummation of the Merger and neither of Acquisition nor the Company shall have
received notice from any Governmental Authority that it has determined to
institute any suit or proceeding to restrain or enjoin the consummation of the
Merger or to nullify or render ineffective this Agreement if consummated, or to
take any other action which would result in the prohibition or a material change
in the terms of the Merger.
(c) This Agreement and the Merger shall have been approved and
adopted by the requisite vote or consent of the stockholders of the Company
required by the MGCL.
Section 9.2 CONDITIONS TO OBLIGATIONS OF ACQUISITION. The
obligations of Acquisition to consummate, or cause to be consummated, the Merger
are subject to the satisfaction of the following additional conditions, any one
or more of which may be waived in writing by Acquisition:
(a) Each of the representations and warranties of the Company and
Principal Holders contained in this Agreement shall be true and correct in all
material respects both on the date hereof and as of the Closing, as if made anew
at and as of that time, and each of the covenants and agreements of the Company
and Principal Holders to be performed as of or prior to the Closing shall have
been duly performed in all material respects.
(b) The Company shall have delivered to Acquisition a certificate
signed by each of the Principal Holders and an officer of the Company dated as
of the Closing Date, certifying that the conditions specified in SECTION 9.1, as
they relate to the Company and Principal Holders, and SECTION 9.2(a) have been
fulfilled.
(c) Any consent required for the consummation of the Merger under
any Contract required to be listed on SCHEDULE 4.11 hereto or for the continued
enjoyment by the
45
Company or its Subsidiary of the benefits of any such Contract after the
Closing shall have been obtained.
(d) There shall not have occurred any Material Adverse Effect.
(e) All Persons who are directors or officers of the Company shall
have resigned such directorships or offices, effective as of the Closing Date.
(f) Acquisition shall have received an opinion, dated as of the
Closing Date, from counsel to the Company, in the form of ANNEX E hereto.
(g) Principal Holder and the Company shall not have been informed
by any of the customers of the Company that such customer will terminate or
modify in any material respect its existing contractual relationship with the
Company and/or its Subsidiary after the Closing Date as a result of the
consummation of the Merger.
(h) The Company and Principal Holders shall have delivered all
assignments, consents, approvals and other documents, certificates and
instruments as Acquisition may reasonably request for the purpose of
(i) evidencing the accuracy and completeness of any of the representations,
warranties or statements, the performance of any covenants or agreements of the
Company or the compliance by the Company with any of the conditions, all as
contained or referred to in this Agreement or (ii) effectuating or confirming
the consummation of the Merger.
(i) Acquisition shall have received possession or control of all
corporate, accounting, business and tax records of the Company and its
Subsidiary.
(j) The form and substance of all actions, proceedings,
instruments and documents required to consummate the Merger shall be
satisfactory in all reasonable respects to Acquisition and its counsel.
(k) Xxxxx Xxx shall have entered into a Non-Disclosure and Non-
Solicitation Agreement in the form attached hereto as ANNEX F.
(l) Xxxxx Xxxxxxx, Xxxxx Xxxxxxx and Xxxxxx Xxxxxx shall have
entered into an Employment Agreement in the form attached hereto as ANNEX G.
(m) Acquisition shall have received a true and complete copy,
certified by the Secretary or an Assistant Secretary (or similar officer) of the
Company of the resolutions duly and validly adopted by the Board of Directors of
the Company evidencing its authorization of the execution and delivery of this
Agreement and the consummation of the Merger.
(n) Principal Holders shall have delivered the Estoppel
Certificates from the parties to the Contracts listed on SCHEDULE 6.6 to
Acquisition.
46
(o) At the Effective Time, the aggregate number of shares of the
Company Common Stock held by Dissenting Stockholders, if any, shall not exceed
five percent of the total number of shares of the Company Common Stock then
outstanding.
(p) Principal Holders shall cause any and all Tax sharing, Tax
allocation and similar agreements among any of Holders, the Company or its
Subsidiary to be terminated immediately prior to Closing.
(q) The protest of the NASA Xxxxxxx SAERS Contract shall have been
denied or dismissed with prejudice and shall have been officially awarded for
the scope and value previously represented by the Company to Acquisition and all
impediments to, or suspensions of, performance based on such protest have been
lifted.
(r) Company and Principal Holders shall have delivered audited
financial statements (including footnotes) of the Company and its Subsidiary for
the year ended December 31, 1996 and shall be in form and substance reasonably
satisfactory to Acquisition in its sole discretion.
Section 9.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND
PRINCIPAL HOLDERS. The obligation of the Company and Principal Holders to
consummate the Merger is subject to the satisfaction of the following additional
conditions, any one or more of which may be waived in writing by the Company and
Principal Holders:
(a) Each of the representations and warranties of Acquisition
contained in this Agreement shall be true and correct in all material respects
both on the date hereof and as of the Closing, as if made anew at and as of that
time, and each of the covenants and agreements of Acquisition to be performed as
of or prior to the Closing shall have been duly performed in all material
respects.
(b) Acquisition shall have delivered to the Company a certificate
signed by an officer of Acquisition, dated as of the Closing Date, certifying
that, the conditions specified in SECTION 9.1, as they relate to Acquisition,
and SUBSECTION 9.3(a) have been fulfilled.
(c) The form and substance of all actions, proceedings,
instruments and documents required to consummate the Merger shall be
satisfactory in all reasonable respects to the Company and their counsel.
(d) The Company shall have received a true and complete copy,
certified by the Secretary or an Assistant Secretary (or similar officer) of
Acquisition, of the resolutions duly and validly adopted by the Board of
Directors of Acquisition evidencing its authorization of the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
47
ARTICLE X
TERMINATION
Section 10.1 TERMINATION. This Agreement may be terminated and the
Transactions abandoned:
(a) By mutual written consent of the parties at any time prior to
the Closing.
(b) Prior to the Closing, by written notice to the Company and the
Holder Representative from Acquisition, (i) pursuant to SECTION 11.1, (ii) if
the Closing has not occurred on or before June 1, 1997 and Acquisition is not in
material breach of a representation, warranty, covenant or agreement, (iii) if
consummation of the Merger is enjoined, prohibited or otherwise restrained by
the terms of a final, non-appealable order or judgment of a court of competent
jurisdiction, (iv) if the 1996 Audited Financial Statements are not satisfactory
to Acquisition in its sole discretion, or (v) this Agreement and the Merger
shall fail to receive the requisite votes for approval and adoption (or
consents) by the stockholders of the Company.
(c) Prior to the Closing, by written notice to Acquisition from
the Company and the Holder Representative, (i) pursuant to SECTION 11.1, (ii) if
the Closing has not occurred on or before June 1, 1997 and neither Principal
Holders nor the Company are in material breach of their representations,
warranties, covenants or agreements or (iii) if consummation of the Merger is
enjoined, prohibited or otherwise restrained by the terms of a final, non-
appealable order or judgment of a court of competent jurisdiction.
(d) Prior to the Closing, by written notice either (i) to the
Company and the Holder Representative from Acquisition or (ii) to Acquisition
from the Company and the Holder Representative, in the event that the form and
substance of the Schedules and Annexes hereto shall not have been agreed upon
within the time period specified in SECTION 8.8.
Section 10.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement pursuant to SECTION 10.1, this Agreement shall forthwith become
void and have no effect, without liability on the part of any party hereto or
their respective Affiliates, officers, directors or stockholders, other than
(solely in the case of termination pursuant to SECTION 10.1(a), (b) or (c))
liability of Principal Holders, the Company or Acquisition as the case may be,
for any misrepresentation contained in, or any breach of this Agreement
occurring prior to such termination. The provisions of SECTION 10.1, this
SECTION 10.2 and ARTICLE XI shall survive any termination of this Agreement.
ARTICLE XI
DEFAULT AND REMEDIES
48
Section 11.1 BREACH AND OPPORTUNITY TO CURE. If any party shall
breach the terms of this Agreement or default in the performance of its
obligations hereunder, nondefaulting party shall have the right to provide the
defaulting party with notice specifying in reasonable detail the nature of such
breach or default. If such breach or default has not been cured by the earlier
of (a) the Closing Date and (b) thirty (30) calendar days after delivery of such
notice, then the party giving such notice may (i) terminate this Agreement by
giving written notice to the defaulting party hereunder, (ii) extend the Closing
Date if such default has not been cured by the Closing Date (but no such
extension shall constitute a waiver of such nondefaulting party's right to
terminate as a result of such default), (iii) exercise the remedies available to
such party pursuant to SECTION 11.2 or 11.3, subject to the right of the other
party to contest such action through appropriate proceedings, and/or (iv)
proceed to Closing, but such Closing shall not constitute a waiver of such
breach or default.
Section 11.2 COMPANY'S AND PRINCIPAL HOLDERS' REMEDIES.
Acquisition recognizes that if the Merger is not consummated solely as a result
of Acquisition's default, the Company and Principal Holders would incur damages,
the extent of which is extremely difficult and impractical to ascertain. The
parties, therefore, agree that if this Agreement is terminated or otherwise is
not consummated solely due to the default of Acquisition, Acquisition shall pay
to the Holder Representative One Million Dollars ($1,000,000) for the ratable
benefit of Holders, as liquidated damages, as Company's and Principal Holders'
sole and exclusive remedy in full settlement of any damages of any nature or
kind that such parties may suffer or allege to suffer as the result of any
default or breach by Acquisition. The parties agree that this sum shall be in
lieu of any and all other relief to which the Company or the Principal Holders
might otherwise be entitled due to Acquisition's breach of, or default under,
this Agreement. FDC agrees to guarantee the payment by Acquisition of such
liquidated damages amount.
Section 11.3 ACQUISITION'S REMEDIES. Principal Holders and the
Company agree that the Shares represent unique property that cannot be readily
obtained on the open market and that Acquisition would be irreparably injured if
this Agreement is not specifically enforced after default. Therefore,
Acquisition shall have the right to specifically enforce Principal Holders' and
the Company's performance under this Agreement, and Principal Holders and the
Company agree to waive, and cause each other to waive, the defense in any such
suit that Acquisition has an adequate remedy at law and to interpose no
opposition, legal or otherwise, as to the propriety of specific performance as a
remedy, and that Acquisition shall have the right to obtain specific performance
of the terms of this Agreement without being required to prove actual damages,
post bond or furnish other security. In addition, Acquisition shall be entitled
to obtain from Principal Holders and the Company court costs and reasonable
attorneys' fees incurred by Acquisition in enforcing its rights hereunder. As a
condition to seeking specific performance, Acquisition shall not be required to
have tendered the Cash Consideration, but shall be ready, willing and able to do
so. In the event Acquisition elects to terminate this Agreement as a result of
Principal Holders' or the Company's default instead of seeking specific
performance, then Acquisition shall be entitled to a return of the Escrow
Payment and to recover its damages resulting from Principal Holders or the
Company's default, plus reasonable attorneys' fees and court costs incurred by
Acquisition in enforcing its rights under this Agreement.
49
ARTICLE XII
HOLDER REPRESENTATIVE
Section 12.1 DESIGNATION AND REPLACEMENT OF HOLDER
REPRESENTATIVE. The parties have agreed that it is desirable to designate a
representative to act on behalf of Principal Holders (the "HOLDER
REPRESENTATIVE"). The parties have designated Xxxxx Xxxxxxx as the initial
Holder Representative, and approval of this Agreement by Principal Holders shall
constitute ratification and approval of such designation. The Holder
Representative may resign at any time, and the Holder Representative may be
removed by the vote of Persons which collectively owned more than fifty percent
(50%) of the Shares at the Closing ("MAJORITY PRINCIPAL HOLDERS"). In the event
that a Holder Representative has resigned or been removed, a new Holder
Representative shall be appointed by a vote of Majority Principal Holders, such
appointment to become effective upon the written acceptance thereof by the new
Holder Representative.
Section 12.2 AUTHORITY AND RIGHTS OF HOLDER REPRESENTATIVE;
LIMITATIONS ON LIABILITY. The Holder Representative shall have such powers and
authority as are necessary to carry out the functions assigned to it under this
Agreement; PROVIDED, HOWEVER, that the Holder Representative will have no
obligation to act on behalf of Principal Holders, except as expressly provided
herein. Without limiting the generality of the foregoing, the Holder
Representative shall have full power, authority and discretion to exercise the
rights granted to it under the Escrow Agreement and to act on behalf of all the
Holder Indemnitees pursuant to SECTION 13.1 hereof. The Holder Representative
will have no liability to the Company or Principal Holders with respect to
actions taken or omitted to be taken in its capacity as Holder Representative,
except with respect to the Holders' Representative gross negligence or willful
misconduct. The Holder Representative will at all times be entitled to rely on
any directions received from the Majority Principal Holders; PROVIDED, HOWEVER,
that the Holder Representative shall not be required to follow any such
direction, and shall be under no obligation to take any action in its capacity
as Holder Representative. The Holder Representative shall be entitled to engage
such counsel, experts and other agents and consultants as it shall deem
necessary in connection with exercising its powers and performing its function
hereunder and (in the absence of bad faith on the part of Principal Holder
Representative) shall be entitled to conclusively rely on the opinions and
advice of such Persons. Holder Representative shall be entitled to
reimbursement, from Principal Holders for all reasonable expenses, disbursements
and advances (including fees and disbursements of its counsel, experts and other
agents and consultants) incurred by the Holder Representative in such capacity,
and for indemnification against any loss, liability or expenses arising out of
actions taken or omitted to be taken in its capacity as Holder Representative
(except for those arising out of the Holder Representative's gross negligence or
willful misconduct), including the costs and expenses of investigation and
defense of claims.
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ARTICLE XIII
POST CLOSING OBLIGATIONS; SURVIVAL OF REPRESENTATION
The parties covenant and agree as follows with respect to the period
subsequent to the Closing Date:
Section 13.1 INDEMNIFICATION.
13.1.1 ACQUISITION'S RIGHT TO INDEMNIFICATION. The Company and
Principal Holders, jointly and severally, undertake and agree to indemnify,
defend by counsel reasonably acceptable to Acquisition, and hold harmless
Acquisition, its parent, affiliates, successors and assigns and their respective
directors, officers, employees, shareholders, representatives and agents
(hereinafter referred to collectively as "ACQUISITION INDEMNITEES") from and
against and in respect of any and all losses, costs, liabilities, claims,
obligations, diminution in value and out-of-pocket expenses, including
reasonable attorneys' fees (together "CLAIMS"), incurred or suffered by an
Acquisition Indemnitee arising from (a) the claims of third parties with respect
to operation of the Business and the Company prior to Closing; (b) a breach,
misrepresentation, or other violation of any of the Company's or Principal
Holders' covenants, warranties or representations contained in this Agreement;
(c) any breach or default by the Company or Principal Holders under any Contract
prior to Closing; (d) any Environmental Noncompliance under SECTION 4.20; (e)
any Securities Law Noncompliance; and (f) any and all actions, suits,
proceedings, claims demands, assessments, judgments, costs and expenses,
including reasonable attorney fees, incident to any of the foregoing or incurred
or to oppose the imposition thereof, or in enforcing this indemnity; together
with interest at the Prime Rate (as defined below) on any such Claim from the
date of incurrence by Acquisition until the date of reimbursement by the Company
or Principal Holders; provided, however, that interest shall accrue with respect
to third party claims from the date of payment of such claims until the date of
satisfaction in full of all indemnification obligations with respect thereto.
"PRIME RATE" shall mean the prime rate as published in the Money Rates column of
the Eastern Edition of the WALL STREET JOURNAL (or the average of such rates if
more than one rate is indicated), in effect on the date of incurrence of such
Claim. The foregoing indemnity is intended by Principal Holders to cover all
acts, suits, proceedings, claims, demands, assessments, adjustments, diminution
in value, costs, and expenses with respect to any and all of the specific
matters in this indemnity set forth.
13.1.2 PRINCIPAL HOLDERS' RIGHT TO INDEMNIFICATION. Acquisition
undertakes and agrees to indemnify, defend by counsel reasonably acceptable to
Principal Holders and hold harmless Principal Holders, their employees,
representatives and agents (hereinafter referred to collectively as "HOLDER
INDEMNITEES") from and against and in respect of any and all Claims incurred or
suffered after Closing; (a) a breach, misrepresentation, or other violation of
any of Acquisition's covenants, warranties and representations contained in this
Agreement; (b) any breach or default by Acquisition under any Ancillary
Agreement or Contract after Closing; and (c) any and all actions, suits,
proceedings, claims, demands, assessments, judgments, costs and expenses,
including reasonable attorney fees, incident to any of the foregoing or incurred
or to
51
oppose the imposition thereof; together with interest at the Prime Rate on
any such claim from the date of incurrence by Principal Holders to the date of
reimbursement by Acquisition. The foregoing indemnity is intended by
Acquisition to cover all acts, suits, proceedings, claims, demands, assessments,
adjustments, costs, and expenses with respect to any and all of the specific
matters in this indemnity set forth.
13.1.3 LIMITATION ON INDEMNIFICATION OBLIGATIONS. No Holder
Indemnitees shall be entitled to indemnification for any Losses or Damages for
which they would otherwise be entitled to indemnification pursuant to this
SECTION 13.1 unless and until the aggregate amount of all Losses and Damages for
which all the Holder Indemnitees are entitled to indemnification exceeds
$400,000, at which time, the Holder Indemnitees shall (subject to the other
limitations set forth in this SECTION 13.1) be entitled to indemnification for
the full amount of all such Losses and Damages. No Acquisition Indemnitees
shall be entitled to indemnification for any Losses and Damages for which it
would otherwise be entitled to indemnification pursuant to this SECTION 13.1
unless and until the aggregate amount of all Losses and Damages for which all
Acquisition Indemnitees are entitled to indemnification exceeds $400,000, at
which time, such Acquisition Indemnitees shall (subject to the other limitations
set forth in this SECTION 13.1) be entitled to indemnification for the full
amount of all such Losses and Damages; PROVIDED, HOWEVER, that such $400,000
threshhold shall not apply to any indemnification obligation of Holder
Indemnitees arising from any Securities Law Noncompliance. Notwithstanding any
provision hereof to the contrary, (i) Acquisition Indemnitees shall not be
entitled to indemnification by Principal Holders for Losses or Damages in excess
of $10,000,000, PLUS interest accrued on such Damages as provided in this
SECTION 13.1, and (ii) Principal Holder Indemnitees shall not be entitled to
indemnification by Surviving Corporation for Losses or Damages in excess of
$10,000,000, PLUS interest accrued on such Damages as provided in this
SECTION 13.1. In addition, each Principal Holder's liability under this
SECTION 13.1 shall not exceed an amount equal to fifty-percent (50%) of the
Merger Consideration payable to such Principal Holder under this Agreement.
13.1.4 TIME PERIOD. The indemnification obligations of Principal
Holders and the Company under this ARTICLE XIII shall continue for the same
period of survival specified in SECTION 13.2 for each such representation and
warranty. Any claim against the Company or Principal Holders which is pending
or asserted at or prior to the expiration of any survival period may continue to
be asserted and indemnified against. Such clause may be asserted
notwithstanding that the scope or amount of such claim shall not have been
finally determined.
13.1.5 CONDUCT OF PROCEEDINGS. If any claim or proceeding covered by
the foregoing agreements to indemnify and hold harmless shall arise (by receipt
of notice of any such claim or proceeding prior to the expiration of the periods
set forth in SECTION 13.2), the party who seeks indemnification (the
"INDEMNIFIED PARTY") shall give written notice thereof to the other party (the
"INDEMNITOR", which, in the case of Principal Holders, shall be the Holder
Representative) promptly after the Indemnified Party learns of the existence of
such claim or proceeding; PROVIDED, HOWEVER, that the Indemnified Party's
failure to give the Indemnitor prompt notice shall not bar the Indemnified
Party's right to indemnification unless such failure
52
has materially prejudiced the Indemnitor's ability to defend the claim or
proceeding. The Indemnitor shall have the right to employ counsel reasonably
acceptable to the Indemnified Party to defend against any such claim or
proceeding, or to compromise, settle or otherwise dispose of the same, if the
Indemnitor deems it advisable to do so, all at the expense of the Indemnitor;
PROVIDED that the Indemnitor shall not have the right to control the defense
of any such claim or proceeding unless it has acknowledged in writing its
obligation to indemnify the Indemnified Party fully from all liabilities
incurred as a result of such claim or proceeding and then and periodically
thereafter provides the Indemnified Party with reasonably sufficient evidence
of the ability of the Indemnitor to satisfy any such liabilities. The
parties will fully cooperate in any such action, and shall make available to
each other any books or records useful for the defense of any such claim or
proceeding. If the Indemnitor fails to acknowledge in writing its obligation
to defend against or settle such claim or proceeding within thirty (30)
calendar days after receiving notice thereof from the Indemnified Party (or
such shorter time specified in the notice as the circumstances of the matter
may dictate), the Indemnified Party shall be free to dispose of the matter,
at the expense of the Indemnitor, reasonably and in any way in which the
Indemnified Party deems to be in its best interest; provided, however, that
during such thirty (30) day notice period, the Indemnified Party shall have
the right to take any actions it deems appropriate to preserve its rights and
avoid prejudicing its defenses with regard to such claim or proceeding;
PROVIDED, FURTHER, that if Indemnitor and Indemnified Party agree in advance
that both Indemnitor and Indemnified Party would both share liability with
respect to a claim or proceeding, the Indemnitor and Indemnified Party shall
agree on a joint defense of such claim or proceeding without the requirement
for an advance acknowledgement in writing of Indemnitor's obligation to
indemnify the Indemnified Party fully from all liabilities incurred as a
result of such claim or proceeding.
13.1.6 INDEMNIFICATION SOLE REMEDY. The right to indemnification
hereunder shall be the exclusive remedy of any party in connection with any
breach by another party of its representations, warranties, or covenants set
forth in this Agreement, except in cases of fraud, violations of law (except for
violations of law constitute a breach of SECTION 4.22) or intentional
misconduct.
13.1.7 RIGHT OF OFFSET. Each of Acquisition and Principal Holders
shall have the right to offset against amounts owing to the other any amounts
owing to such party pursuant to this SECTION 13.1.
Section 13.2 SURVIVAL OF REPRESENTATIONS. The representations and
warranties contained herein shall survive for three (3) years after the Closing;
PROVIDED, HOWEVER, that and the representations and warranties made by the
Company and Principal Holders in SECTION 4.12 shall survive until the Company
receives notice of the completion of the 1997 DCAA audit; PROVIDED, FURTHER,
that the representations, warranties and covenants contained herein relating to
Tax matters shall survive for the period set forth in Section 6501(a) plus 90
calendar days, provided that if such period is voluntarily extended, the
representations, warranties and covenants shall survive through the period of
such extension plus 90 calendar days, and provided
53
further that matters described in Sections 6501(c)(1)-(9), 6501(e), and
6501(f) shall survive for five years.
Section 13.3 RIGHTS OF SET-OFF. Subject to the restrictions set
forth in SECTION 13.4, any Claims by Acquisition or the Surviving Corporation
against Principal Holders pursuant to SECTION 13.1 above are subject the
following rights of set-off at the option of Acquisition in the following
priority:
(a) First, any payment owed but not yet paid by Acquisition to
Principal Holders pursuant to SUBSECTION 2.5.2 is subject to reduction for any
Claims pursuant to SECTION 13.1 as provided in SUBSECTION 2.5.3 above. Any such
adjustment is intended as, and shall be treated by the parties as, an adjustment
to the Total Consideration.
(b) Second, any Contingent Payments owed but not yet paid by
Acquisition to Principal Holders pursuant to SECTION 2.6 are subject to
reduction for any Claims pursuant to SECTION 13.1 above. Any such adjustment is
intended as, and shall be treated by the parties as, an adjustment to the Total
Consideration.
(c) Third, the principal amount of the Notes is subject to
reduction following the Closing for any Claims pursuant to SECTION 13.1 as
provided in Subsections 2.5.3 above. Any such adjustment is intended as, and
shall be treated by the parties as, an adjustment to the Total Consideration.
If the principal amount of the Notes is reduced pursuant to this SECTION 13.3,
such reduction shall be deemed to be made effective as of the Closing Date and
all interest that may have accrued on the principal amount so cancelled shall
also be deemed to be retroactively cancelled, effective as of the Closing Date.
Upon any reduction of the principal amount of the Notes, Principal Holders
shall, upon request of Acquisition, surrender the outstanding Notes for
replacement Notes reflecting the reduced principal amount.
Section 13.4 RIGHTS OF SET-OFF FOR THIRD PARTY CLAIMS. The rights
of set-off under SECTION 13.3 above with respect to any Claims by Acquisition
against Principal Holders which arise from a third party claim may not be
exercised until the amount of such third party claim has been determined and
payment is due; provided, however, that notwithstanding anything to the contrary
set forth in this Agreement:
(a) In connection with the repayment of the Notes in full, the
Surviving Corporation may withhold from such repayment (and pay into escrow) a
sum equal to the maximum possible amount of any and all third party claims then
outstanding until the same have been determined and payment is due; and
(b) To the extent that any third party claims are asserted by any
government authority or relate to any Government Contract and the relief sought
thereunder exceed $2,000,000 in the aggregate, Surviving Corporation may
withhold the amount by which such claims exceed $2,000,000 from any amounts due
to Principal Holders (including amounts held in the Escrow Agreement and the
Contingent Payment Escrow Agreement).
54
Any amounts withheld by Surviving Corporation pursuant to subsections
(a) and (b) above shall be held in escrow until determination of the third party
claims and payment of such claims shall have been made out of such escrow. All
amounts (including interest) remaining in such escrow after payment in full of
such claims shall thereupon be disbursed to the Holder Representative for the
ratable benefit of Principal Holders.
ARTICLE XIV
TAX MATTERS
Section 14.1 INDEMNIFICATION.
14.1.1 (a) Principal Holders shall indemnify and hold harmless
Acquisition and its respective Affiliates, successors and assigns, from and
against all Taxes in excess of reserves for Taxes on the Final Balance Sheet (i)
with respect to all periods of the Company and the Subsidiaries ending on or
prior to the Closing Date, (ii) with respect to any period of the Company and
the Subsidiaries beginning before the Closing Date and ending after the Closing
Date, but only with respect to the portion of such period up to and including
the Closing Date (such portion, a "PRE-CLOSING PARTIAL PERIOD"), or (iii)
payable as a result of a material breach of any representation or warranty set
forth in SECTION 4.21 of this Agreement.
(b) Acquisition shall indemnify and hold harmless Principal
Holders from and against all unpaid Taxes (i) with respect to all periods
beginning after the Closing Date, (ii) with respect to any period of any of the
Company and its Subsidiary beginning before the Closing Date and ending after
the Closing Date, but only with respect to the portion of such period beginning
the day after the Closing Date (such portion, a "POST-CLOSING PARTIAL PERIOD")
or (iii) payable as a result of an election under Section 338(g) and/or any
comparable state election by Acquisition or any of its Affiliates to treat the
Merger for federal and/or state income tax purposes as a purchase of the assets
of the Company.
(c) The amount of indemnity required to be paid by an indemnitor
under this ARTICLE XIV shall be subject to the indemnity threshold and cap
limits set forth in SUBSECTION 13.1.3. Indemnity claims under each of
ARTICLE XIII and XIV shall be counted together in determining whether the
indemnity threshold and cap limits set forth in SECTION 13.1.3 have been met.
For purposes of this SECTION 14.1, Tax or Taxes shall include the amount of
Taxes which would have been paid but for the application of any credit or net
operation or capital loss deduction attributable to periods beginning after the
Closing Date or to any Post-Closing Partial Period, but shall not include
amounts which would have been paid but for the application of any credit or net
operating or capital loss deduction attributable to periods ending on or prior
to the Closing Date or to any Pre-Closing Partial Period.
(d) Any Taxes for a period including a Pre-Closing Partial Period
and a Post-Closing Partial Period shall be apportioned between such Pre-Closing
Partial Period and such Post-Closing Partial Period, based, in the case of real
and personal property Taxes, on a per diem
55
basis and, in the case of other Taxes, on the actual activities, taxable
income or taxable loss of the Company and the Subsidiaries during such
Pre-Closing Partial Period and such Post-Closing Partial Period.
(e) Payment by the indemnitor of any amount due under this
SECTION 14.1 shall be made within 30 calendar days following written notice by
the indemnitee that payment of such amounts to the appropriate tax authority
is due, provided that the indemnitor shall not be required to make any payment
earlier than two calendar days before it is due to the appropriate Tax
authority.
(f) The parties agree to treat all payments made under this
SECTION 14.1, under any other indemnity provision contained in this Agreement,
and for any misrepresentations or breach of warranties or covenants, as
adjustments to the Purchase Price for Tax purposes.
14.1.2 (a) After the Closing, the Surviving Corporation shall
promptly notify Principal Holders in writing of the commencement of any Tax
audit or administrative or judicial proceeding or of any demand or claim on the
Surviving Corporation or any Operating Company or Subsidiary which, if
determined adversely to the taxpayer or after the lapse of time, would be
grounds for indemnification under SECTION 14.1. Such notice shall contain
factual information (to the extent known) describing the asserted Tax liability
in reasonable detail and shall include copies of any notice or other document
received from any Tax authority in respect of any such asserted Tax liability.
(b) Principal Holders may elect to direct, through counsel of
their own choosing and at its own expense, any audit, claim for refund and
administrative or judicial proceeding involving any asserted liability with
respect to which indemnity may be sought under SECTION 14.1 (any such audit,
claim for refund or proceeding relating to an asserted Tax liability is referred
to herein as a "CONTEST"). If Principal Holders elect to direct a Contest, it
shall within 30 calendar days of receipt of the notice of asserted Tax liability
notify the Surviving Corporation of its intent to do so, and the Surviving
Corporation shall cooperate and shall cause each Operating Company and
Subsidiary to cooperate in each phase of such Contest and Principal Holders
shall pay the Operating Company's and Subsidiary's out-of-pocket expenses in
connection therewith. If the Principal Holders elect not to direct the Contest,
fail to notify the Surviving Corporation of its election as herein provided or
contests its obligation to indemnify under SECTION 14.1, Surviving Corporation
or relevant Subsidiary may pay, compromise or contest at its own expense, such
asserted liability. However, in such case, neither the Surviving Corporation
nor any Subsidiary may settle or compromise any asserted liability over the
objection of the Principal Holders; PROVIDED, HOWEVER, that consent to
settlement or compromise shall not be unreasonably withheld. In any event, the
Surviving Corporation may participate, at their own expense, in the Contest. If
the Principal Holders choose to direct the contest, the Surviving Corporation
shall promptly empower and shall cause the relevant Operating Company or
Subsidiary promptly to empower (by power of attorney and such other
documentation as may be appropriate) such representative of Principal Holders as
it may designate to represent the Surviving Corporation and such Operating
Company or Subsidiary in the Contest insofar as the
56
Contest involves an asserted Tax liability for which the Principal Holders
would be liable under SECTION 14.1.
14.1.3 The Surviving Corporation shall prepare and file U.S. federal,
state and local income and franchise Tax Returns relating to the Company and its
Subsidiary for any Tax period ending on or after the Closing Date and which are
required to be filed after the Closing Date. The Surviving Corporation shall
deliver to Principal Holders copies of such Tax Returns within 10 calendar days
of the date such Tax Return is filed with the appropriate Tax authority.
14.1.4 (a) The Surviving Corporation and Principal Holders agree to
furnish or cause to be furnished to each other, upon request, as promptly as
practicable, such information (including access to personnel, books and records)
and assistance relating to the Business as is reasonably necessary for the
filing of any Return, for the preparation of any audit, for the prosecution or
defense of any claim relating to any proposed adjustment with respect to Taxes,
for accounting requirements and any reports or documents to be filed with any
regulatory agency or for any other reasonable purpose.
(b) The Surviving Corporation and Principal Holders agree to
retain or cause to be retained all books and records pertinent to the Business
(including the Returns, documents and records relating to the assets and
properties of both) until the applicable period for assessment under applicable
law (giving effect to any and all properly claimed and valid extensions or
waivers) has expired, and to abide by or cause the compliance with all record
retention agreements entered into with any governmental or taxing authority.
(c) The Surviving Corporation and Principal Holders shall
cooperate with each other in the conduct of any audit or other proceedings
involving the Business for any Tax and shall execute and deliver such powers of
attorney and other documents as are necessary to carry out the intent of this
ARTICLE XIV.
(d) Principal Holders will reimburse the Surviving Corporation for
all out-of-pocket-costs which Acquisition may reasonably incur pursuant to this
SECTION 14.1.4 in assisting the Surviving Corporation and the Surviving
Corporation will reimburse Principal Holders for all out-of-pocket-costs which
the Principal Holders may reasonably incur pursuant to this SUBSECTION 14.1.4 in
assisting the Surviving Corporation.
(e)The Surviving Corporation and Principal Holders will, upon
request, provide the other with all information that is required to report
pursuant to Section 6043 of the Code and all Treasury Department Regulations
promulgated thereunder.
14.1.5 For purposes of this ARTICLE XIV, all references to the
Surviving Corporation, the Principal Holders, the Company and its Subsidiary
include successors.
14.1.6 This ARTICLE XIV shall be the exclusive Article governing
indemnity for Tax matters.
57
ARTICLE XV
MISCELLANEOUS
Section 15.1 WAIVER. Either party to this Agreement may, at any
time prior to the Closing, waive any of the terms or conditions of this
Agreement; PROVIDED, HOWEVER, any such waiver must be in writing, executed in
the same manner as this Agreement.
Section 15.2 NOTICES. All notices and other communications among
the parties shall be in writing and shall be deemed to have been duly given when
(i) delivered in person, or (ii) five (5) calendar days after posting in the
United States mail having been sent registered or certified mail return receipt
requested, or (iii) delivered by telecopy and promptly confirmed by delivery in
person or post as aforesaid in each case, with postage prepaid, addressed as
follows:
(a) If to Acquisition:
NYMA Acquisition, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Telecopy No.: (000) 000-0000
with copies to (which shall not constitute notice):
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxx
Telecopy No.: (000) 000-0000
(b) If to the Company, to:
NYMA, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
with copies to (which shall not constitute notice)
58
Manatt, Xxxxxx & Xxxxxxxx, LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attention: B. Xxxxxxx Xxxx
Telecopy No.: (000) 000-0000
(c) If to Holder Representative, to:
Xxxxx Xxxxxxx
NYMA, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
with copies to (which shall not constitute notice):
Manatt, Xxxxxx & Xxxxxxxx, LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attention: B. Xxxxxxx Xxxx
Telecopy No.: (000) 000-0000
(d) If to Xxxxx Xxx:
Xxxxx Xxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
with copies to
Manatt, Xxxxxx & Xxxxxxxx, LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attention: B. Xxxxxxx Xxxx
Telecopy No.: (000) 000-0000
59
(e) If to Xxxxx Xxxxxxx:
Xxxxx Xxxxxxx
NYMA, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Attention: Xxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
with copies to
Manatt, Xxxxxx & Xxxxxxxx, LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attention: B. Xxxxxxx Xxxx
Telecopy No.: (000) 000-0000
(f) If to Xxxxxx Xxxxxx:
Xxxxxx Xxxxxx
00000 Xxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
with copies to
Manatt, Xxxxxx & Xxxxxxxx, LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attention: B. Xxxxxxx Xxxx
Telecopy No.: (000) 000-0000
or to such other address or addresses as the parties may from time to time
designate in writing.
Section 15.3 ASSIGNMENT. Neither the Company nor the Principal
Holders may assign their rights or obligations hereunder or with respect to any
portion of the Merger Consideration (including rights with respect to the
Contingent Payment and the Notes) without the prior written consent of the other
parties hereto; PROVIDED, HOWEVER, that after the Closing the Designated Holders
may assign Notes to the Principal Holders.
Section 15.4 RIGHTS OF THIRD PARTIES. Nothing expressed or implied
in this Agreement is intended or shall be construed to confer upon or give any
Person, other than the parties hereto, any right or remedies under or by reason
of this Agreement.
60
Section 15.5 RELIANCE. Each of the parties to this Agreement shall
be deemed to have relied upon the accuracy of the written representations and
warranties made to it in or pursuant to this Agreement, notwithstanding any
investigations conducted by or on its behalf or notice, knowledge or belief to
the contrary.
Section 15.6 TRANSFER TAXES; TITLE COSTS; EXPENSES.
Notwithstanding any other provision hereof, Principal Holders shall be solely
responsible for the costs and expenses of all recording fees (on a per-page
basis or otherwise), transfer taxes, conveyance taxes, sales and use taxes,
stamp taxes and other taxes incurred or otherwise payable in connection with the
Transaction. Such payments shall be made by Principal Holders promptly after
incurred, but in any event on or prior to the Closing Date or, in the case of
taxes, fees and charges that may accrue or arise after the Closing Date,
promptly after the date that such obligation so accrues or arises. All other
costs and expenses incurred by the parties in connection with the transactions
contemplated hereby shall be borne by the party incurring such expense.
Section 15.7 CONSTRUCTION. This Agreement shall be construed and
enforced in accordance with the laws of the State of Maryland. Unless otherwise
stated, references to Sections, Articles, Schedules and Annexes refer to the
Sections, Articles, Exhibits and Schedules to this Agreement. As used herein,
the phrase "to the knowledge" of any Person shall mean the actual knowledge of
such Person's executive officers. The parties to this Agreement participated
jointly in the negotiation and drafting of this Agreement. If any ambiguity or
question of intent or interpretation shall arise with respect to this Agreement,
then this Agreement shall be construed as if drafted jointly by the parties and
no presumption or burden of proof will arise favoring or disfavoring any party
to this Agreement by virtue of the authorship of any provision of this
Agreement.
Section 15.8 CAPTIONS; COUNTERPARTS. The captions in this
Agreement are for convenience only and shall not be considered a part of or
affect the construction or interpretation of any provision of this Agreement.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
Section 15.9 ENTIRE AGREEMENT. This Agreement (together with the
Schedules and Annexes to this Agreement, which constitute part of this
Agreement) constitutes the entire agreement among the parties and supersedes any
other agreements, whether written or oral, that may have been made or entered
into by or among any of the parties hereto or any of their respective Subsidiary
relating to the Merger. No representations, warranties, covenants,
understandings, agreements, oral or otherwise, relating to the transactions
contemplated by this Agreement exist between the parties except as expressly set
forth in this Agreement.
Section 15.10 AMENDMENTS. This Agreement may be amended or
modified in whole or in part, only by a duly authorized agreement in writing
executed in the same manner as this Agreement and which makes reference to this
Agreement.
61
Section 15.11 PUBLICITY. All press releases or other public
communications of any nature whatsoever relating to the transactions
contemplated by this Agreement, and the method of the release for publication
thereof, shall be subject to the prior mutual approval of the Company and
Acquisition which approval shall not be unreasonably withheld by any party;
PROVIDED, HOWEVER, that, nothing herein shall prevent any party from publishing
such press releases or other public communications as such party may consider
necessary in order to satisfy such party's legal or contractual obligations
after such consultation with the other parties hereto as is reasonable under the
circumstances.
62
IN WITNESS WHEREOF the parties have hereunto caused this Agreement to
be duly executed as of the date first above written.
NYMA, INC.
By: /s/ Xxxxx Xxx
------------------------------------------------
Name: Xxxxx Xxx
Title: Chairman & CEO
HOLDER REPRESENTATIVE
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Xxxxx Xxxxxxx
XXXXX XXX
/s/ Xxxxx Xxx
------------------------------------------------
XXXXX XXXXXXX
/s/ Xxxxx Xxxxxxx
------------------------------------------------
XXXXXX XXXXXX
/s/ Xxxxxx Xxxxxx
------------------------------------------------
NYMA ACQUISITION, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------------------
Name: Xxxxx Xxxxxx
Title: President
As to Section 11.2 Only:
FEDERAL DATA CORPORATION
By: /s/ Xxxxx X. Xxxx
------------------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President-
Chief Financial Officer
64
ANNEX A
CERTIFICATE OF MERGER
ANNEX B
FORM OF NOTE
ANNEX C
FORM OF ESCROW AGREEMENT
ESCROW AGREEMENT
among
ACQUISITION
NYMA, INC.
HOLDER REPRESENTATIVE
and
____________________
as Escrow Agent
Dated as of ___________, 1997
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of _________ __, 1997, among Acquisition,
and after the Effective Time, Surviving Corporation, the Holder Representative
(as defined in the Merger Agreement) and ____________________ (the "ESCROW
AGENT").
WHEREAS, Principal Holders, the Company, Holder Representative and
Acquisition have entered into an Agreement and Plan of Merger Purchase dated as
of ________ __, 1997 (the "MERGER AGREEMENT");
WHEREAS, Section 2.2 of the Merger Agreement provides that at the
Closing (as such term and other capitalized terms used herein without definition
are defined in the Merger Agreement), the sum of Three Million Dollars
($3,000,000) (the "ESCROW DEPOSIT") shall be delivered to the Escrow Agent,
which shall be held and disbursed by the Escrow Agent pursuant to the terms
hereof.
NOW THEREFORE, the parties hereto agree as follows:
SECTION I
APPOINTMENT OF ESCROW AGENT; RESIGNATION AND SUCCESSOR
1.1 APPOINTMENT OF ESCROW AGENT. The Escrow Agent is hereby
appointed, and accepts its appointment and designation as, Escrow Agent pursuant
to the terms and conditions of this Agreement.
1.2 RESIGNATION OF ESCROW AGENT; APPOINTMENT OF SUCCESSOR. The
Escrow Agent acting at any time hereunder may resign at any time by giving at
least 30 calendar days' prior written notice of resignation to the Holder
Representative and Surviving Corporation, such resignation to be effective on
the date specified in such notice. Upon receipt of such notice, the Holder
Representative and Surviving Corporation shall, unless they otherwise agree,
appoint a bank or trust company with a combined capital and surplus of at least
One Hundred Million Dollars ($100,000,000) as successor to the Escrow Agent, by
a written instrument delivered to such successor Escrow Agent, the Holder
Representative and Surviving Corporation, whereupon such successor Escrow Agent
shall succeed to all the rights and obligations of the resigning Escrow Agent as
of the effective date of resignation as if originally named herein. Upon such
assignment of this Agreement, the resigning Escrow Agent shall duly transfer and
deliver the Escrow Amount (as defined in SECTION 2.1(b) hereof), at the time
held by the resigning Escrow Agent, to such successor Escrow Agent, PROVIDED
that, if no successor Escrow Agent shall have been appointed on the effective
date of resignation of the resigning Escrow Agent hereunder, the resigning
Escrow Agent may pay the Escrow Amount into a court of competent jurisdiction.
2
SECTION II
ESCROW ARRANGEMENTS
2.1 DELIVERY OF THE DEPOSIT, ETC.
(a) Acquisition has, concurrent with the execution hereof, delivered
to the Escrow Agent, by wire transfer of immediately available funds, the Escrow
Deposit. The parties acknowledge and agree that for tax purposes, the Escrow
Agent shall report Earnings (as defined in Section 2.1(b) hereof) on the Escrow
Deposit as attributable to the party receiving such portion of the Escrow
Deposit. Each party hereto, except the Escrow Agent shall, promptly after the
date hereof, provide the Escrow Agent with its Employer Identification Number
(ION) as assigned by the Internal Revenue Service. Any disbursement of the
Escrow Deposit shall be allocated and paid by the Escrow Agent as provided
herein and reported by the recipient to the Internal Revenue Service as having
been so allocated and paid.
(b) The Escrow Agent shall hold the Escrow Deposit and all interest
and other proceeds from the investment thereof ("Earnings", together with the
Escrow Deposit, the "Escrow Amount") in an escrow account (the "Escrow
Account"). The Escrow Amount shall not be subject to any lien or attachment or
any creditor or any third party and shall be used solely for the purposes and
subject to the conditions set forth in this Agreement and the Purchase
Agreement.
2.2 INVESTMENT OF THE ESCROW AMOUNT. The Escrow Agent is hereby
authorized and directed to invest and reinvest and reinvest any amounts at any
time in the Escrow Account in the following obligations (collectively, the
"Permitted Investments"):
(a) obligations of, or fully guaranteed as to timely payment of
principal and interest by, the United States of America;
(b) such money market funds as are agreed to from time to time by the
Holder Representative and Surviving Corporation; and
(c) certificates of deposit with any bank or trust company organized
under the laws of the United States of America or any agency or instrumentality
thereof or under the laws of any state thereof which has a combined capital and
surplus of at least One Hundred Million Dollars ($100,000,000).
Subject to the foregoing limitations, the Escrow Agent shall invest
the Escrow Amount in accordance with written instructions delivered to it by
Holder Representative from time to time. Except as provided above, the Escrow
Agent shall have no power or duty to invest the Escrow Amount or to make
substitutions thereof.
3
SECTION III
RELEASE OF THE ESCROW AMOUNT
The Escrow Agent shall release the Escrow Amount only in accordance
with this SECTION 3.
3.1 NOTICE OF CLAIM. Following the receipt by the Escrow Agent of
the Escrow Deposit, the following procedures shall govern the application of the
Escrow Deposit to satisfy any adjustments pursuant to ARTICLE II of the Purchase
Agreement:
3.1.1 ADJUSTMENT
(a) The Surviving Corporation shall promptly give to Holder
Representative and the Escrow Agent a notice of any adjustments owed by
Principal Holders to Surviving Corporation under Section 2.5 of the Purchase
Agreement.
(b) Following receipt of notice of any such adjustment owed by
Principal Holders to Surviving Corporation, Surviving Corporation and the Holder
Representative shall promptly give the Escrow Agent joint written instructions
to apply such portion of the balance of the Escrow Account (including Earnings
from such portion) agreed upon Surviving Corporation and Holder Representative
as shall be necessary to compensate Surviving Corporation for such Post-Closing
Adjustment ("JOINT INSTRUCTIONS"). In the event any such adjustment exceeds the
Escrow Amount, then the Joint Instructions shall direct the Escrow Agent to
apply the full amount of the Escrow Amount (including all Earnings). If
Surviving Corporation and Holder Representative do not reach an agreement within
such period (or a mutually agreed upon extension thereof), such claim shall be
governed by the provisions of SECTION 3.4 hereof.
3.2 PAYMENT OF CLAIMS. Whenever there shall be delivered to the
Escrow Agent Joint Instructions, the Escrow Agent shall pay to the party
entitled thereto the amount specified in such instructions. In the event the
amount set forth in such instructions exceeds the balance of the Escrow Account,
the Escrow Agent shall apply the full amount of the Escrow Amount (including all
Earnings) to such claim.
3.3 TERMINATION: RETENTION OF FUNDS.
As of the date of the final determination and payment of the Post-
Closing Adjustment to Surviving Corporation pursuant to Section 3.1 hereof (the
"ADJUSTMENT DATE"), the following procedures shall govern the application of the
Escrow Amount. On the Adjustment Date the Escrow Agent shall pay and deliver to
Holder Representative for the ratable benefit of Principal Holders the balance
of the Escrow Amount, in accordance with written instructions delivered by the
parties hereto; PROVIDED that if prior to the Adjustment Date Surviving
Corporation shall have provided one or more notices of an adjustment pursuant to
SECTION 3.1
4
hereof, then that portion of the balance of the Escrow Account (without
giving effect to any Earnings) equal to the aggregate of all such adjustments
shall not be paid and delivered to Holder Representative until the amount, if
any, due to Surviving Corporation in respect of all such adjustments shall
have been determined by delivery to the Escrow Agent of one or more Joint
Instructions.
3.4 DISPUTE. In the event of any dispute among any of the parties to
this Agreement relating to this Agreement, including without limitation a
dispute with respect to (a) an adjustment by Surviving Corporation to the Escrow
Amount or any portion thereof or (b) the interpretation or administration of
this Agreement, the Escrow Agent shall not comply with any such claims or
demands from either Surviving Corporation or Holder Representative as long as
such dispute may continue, and the Escrow Agent shall make no delivery or other
disposition of any property then held by it under this Agreement until it has
received either joint written instructions from Surviving Corporation and Holder
Representative or certified copy of a final and non-appealable judgement of a
court of competent jurisdiction directing disposition of the Escrow Amount.
3.5 OTHER DISBURSEMENTS OF THE ESCROW AMOUNT. The Escrow Agent shall
disburse amounts to Holder Representative for the payment of Taxes on the
Earnings, upon receipt of a certificate signed by Holder Representative setting
forth the amount and nature of such Taxes, PROVIDED, HOWEVER, that the amount of
any such disbursements shall not exceed the Earnings accrued on the Escrow
Deposit through the date of such disbursement.
SECTION IV
ESCROW AGENT
4.1 EXPENSES. Surviving Corporation, on the one hand, and Holder
Representative, on the other hand, shall share equally the cost of reimbursing
the Escrow Agent for its reasonable out-of-pocket expenses, including reasonable
attorney's fees in administering the Escrow Account and performing its duties
under this Agreement.
4.2 RESPONSIBILITIES OF ESCROW AGENT. The Escrow Agent's acceptance
of its duties under this Agreement is subject to the following terms and
conditions, which the parties hereto agree shall govern and control with respect
to its rights, duties, liabilities and immunities:
(a) Except as to its due execution and delivery of the Agreement, it
makes no representation and has no responsibility as to the validity of this
Agreement or of any other instrument referred to herein, or as to the
correctness of any statement contained herein, and it shall not be required to
inquire as to the performance of any obligation under the Purchase Agreement;
(b) The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, receipt or other paper or document, not only
as to its due execution and
5
the validity and effectiveness of its provisions, but also as to the truth of
any information therein contained, which it in good faith believes to be
genuine and what it purports to be;
(c) The Escrow Agent shall not be liable for any error of judgment,
or for any act done or step taken or omitted by it in good faith, or for any
mistake of fact or law, or for anything which it may do or refrain from doing in
connection therewith, except its own gross negligence or misconduct;
(d) The Escrow Agent may consult with competent and responsible legal
counsel selected by it, and it shall not be liable for any action taken or
omitted by it in good faith in accordance with the advice of such counsel;
(e) Principal Holders, on the one hand, and Surviving Corporation, on
the other hand, agree to indemnify and hold the Escrow Agent and its directors,
employees, officers, agents, successors and assigns (collectively, the
"INDEMNIFIED PARTIES") harmless from and against any and all losses, claims,
damages, liabilities and expenses (collectively, "DAMAGES"), including, without
limitation, reasonable costs of investigation and counsel fees and expenses
which may be imposed on the Escrow Agent or incurred by it in connection with
the performance of its duties hereunder. Such indemnity includes, without
limitation, Damages incurred in connection with any litigation (whether at the
trial or appellate levels) arising from this Agreement or involving the subject
matter hereof. The indemnification provisions contained in this paragraph shall
survive the termination of this Agreement or the resignation or removal of the
Escrow Agent. Notwithstanding any provision to the contrary in this Agreement,
neither the Principal Holders, Holder Representative nor Surviving Corporation
shall have any liability to the Indemnified Parties with respect to any Damages
that result, directly or indirectly, from the gross negligence or misconduct of
the Escrow Agent;
(f) The Escrow Agent shall have no duties or responsibilities except
those expressly set forth herein, and it shall not be bound by any modification
of this Agreement unless in writing and signed by all parties hereto or their
respective successors in interest;
(g) The recitals of facts in this Agreement shall be taken as the
statements of Principal Holders and Surviving Corporation, and the Escrow Agent
assumes no responsibility for the correctness of the same. The Escrow Agent
shall be under no obligation or duty to perform any act which would involve it
in an expense or liability or to institute or defend any suit in respect of this
Agreement or to advance any of its own moneys unless properly indemnified;
(h) The Escrow Agent shall be protected in acting upon any notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
paper or document reasonably believed by it to be genuine and to have been
signed and presented by the proper party or parties. Whenever the Escrow Agent
shall deem it necessary or desirable that a matter be proved or established
prior to taking or suffering any action under this agreement, such matter may be
deemed inclusively proved and established by a certificate signed by the Holder
Representative
6
and Surviving Corporation, and such certificate shall be full warranty for
any action taken or suffered in good faith under the provisions of this
Agreement; and
(i) The Escrow Agent does not have any interest in the Escrow Amount
but is serving as Escrow Agent only and having only possession thereof. This
SECTION 4.2(i) shall survive notwithstanding any termination of this Agreement
or the resignation of the Escrow Agent.
SECTION V
MISCELLANEOUS
5.1 AMENDMENT. No amendment, waiver of compliance with any provision
or condition hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of any amendment, waiver, consent is sought.
5.2 TERMINATION. This Agreement shall terminate automatically at
such time as all funds from the Escrow Account have been paid or distributed in
accordance with the terms of this Agreement and the Escrow Agent has received
all fees as described in SECTION 4.1 hereof. Notwithstanding the foregoing, all
provisions concerning the indemnification of the Escrow Agent shall survive any
termination of this Agreement.
5.3 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, and if any provision of this Agreement is interpreted by a
court of competent jurisdiction and found to be invalid or unenforceable,
neither the enforceability nor the validity of such provisions with respect to
any other facts or under any other circumstances shall thereby be impaired. The
unenforceability or invalidity of any provision shall not result in the
interpretation of the remainder of this Agreement, or any section hereof, in a
manner inconsistent with intent of the parties as evidenced by the terms of this
Agreement, or such section, as a whole.
5.4 WAIVER. Failure of any party to complain of any act or omission
on the part of any other party in breach or default of this Agreement, no matter
how long the same may continue, shall not be deemed to be a waiver by the part
of its rights hereunder. No waiver by any party at any time, express or
implied, of any breach of any other provision of this Agreement shall be deemed
a waiver of a breach of any other provision of this Agreement or a consent to
any subsequent breach of the same or other provisions.
5.5 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given or
made as follows: (a) if sent by registered or certified mail in the United
States return receipt requested, upon receipt; (b) if sent by reputable
overnight air courier (such as DHL or Federal Express), two business days after
mailing; (c) if sent by fax, with a copy mailed on the same day in the manner
7
provided in (a) or (b) above, when transmitted and receipt is confirmed by
telephone; or (d) if otherwise actually personally delivered, when delivered,
and shall be delivered as follows:
(a) If to Holder Representative:
_________________________
_________________________
_________________________
Attention:_______________
Telecopy No.:____________
with copies to (which shall not constitute notice)
_________________________
_________________________
_________________________
Attention:_______________
Telecopy No.:____________
(b) If to Surviving Corporation
_________________________
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, XX, Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Xxxxx
Telecopy No.: (000) 000-0000
(c) If to the Escrow Agent:
_________________________
_________________________
_________________________
Attention:_______________
Telecopy No.:____________
8
or to such other address or to such other person as the party to whom notice is
given may have previously furnished to the other in writing in the manner set
forth above.
5.6 ASSIGNMENT. Surviving Corporation and Principal Holders may
assign their rights under this Agreement to the same extent as they are
permitted to assign their rights and obligations under the Merger Agreement.
5.7 ENTIRE AGREEMENT. This Agreement, the Merger Agreement and the
exhibits thereto embody the entire agreement and understanding among Holder
Representative, Acquisition, Surviving Corporation and the Escrow Agent with
respect to the subject matter hereof and supersedes any and all prior agreements
and understandings, oral and written, among Holder Representative, Acquisition,
Surviving Corporation and the Escrow Agent with respect to the subject matter
hereof.
5.8 INTERPRETATION. The headings set forth in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.
5.9 GOVERNING LAW; JURISDICTION. The construction and performance of
this Agreement shall be governed by the laws of the State of Maryland without
regard to its principles of conflict of law, and the state and federal courts of
Maryland shall have exclusive jurisdiction over any controversy or claim arising
out of or relating to this Agreement.
5.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same agreement.
9
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
ACQUISITION
By:_____________________________
Name:
Title:
HOLDER REPRESENTATIVE,
on behalf of Principal Holders
By:_____________________________
ESCROW AGENT
By:_____________________________
Name
10
ANNEX D
CONTINGENT PAYMENT ESCROW AGREEMENT
CONTINGENT PAYMENT ESCROW AGREEMENT, dated as of April __, 1997, among
NYMA Acquisition, Inc., a Delaware corporation ("Acquisition," and after the
Effective Time, the "Surviving Corporation"), the Holder Representative (as
defined in the Merger Agreement) and ____________________ (the "CONTINGENT
PAYMENT ESCROW AGENT").
WHEREAS, Principal Holders (as defined in the Merger Agreement), the
Holder Representative, the Company and Acquisition have entered into an
Agreement and Plan of Merger Purchase dated as of April __, 1997 (the "MERGER
AGREEMENT");
WHEREAS, Section 2.2 of the Merger Agreement provides that at the
Closing (as such term and other capitalized terms used herein without definition
are defined in the Merger Agreement), the sum of Three Million Seven Hundred and
Fifty Thousand Dollars ($3,750,000) (the "CONTINGENT PAYMENT DEPOSIT") shall be
delivered to the Contingent Payment Escrow Agent, which shall be held and
disbursed by the Contingent Payment Escrow Agent pursuant to the terms hereof.
NOW THEREFORE, the parties hereto agree as follows:
SECTION I
APPOINTMENT OF CONTINGENT PAYMENT ESCROW AGENT; RESIGNATION AND SUCCESSOR
1.1 APPOINTMENT OF CONTINGENT PAYMENT ESCROW AGENT. The Contingent
Payment Escrow Agent is hereby appointed, and accepts its appointment and
designation as, Contingent Payment Escrow Agent pursuant to the terms and
conditions of this Agreement.
1.2 RESIGNATION OF CONTINGENT PAYMENT ESCROW AGENT; APPOINTMENT OF
SUCCESSOR. The Contingent Payment Escrow Agent acting at any time hereunder may
resign at any time by giving at least 30 calendar days' prior written notice of
resignation to the Holder Representative and Surviving Corporation, such
resignation to be effective on the date specified in such notice. Upon receipt
of such notice, the Holder Representative and Surviving Corporation shall,
unless they otherwise agree, appoint a bank or trust company with a combined
capital and surplus of at least One Hundred Million Dollars ($100,000,000) as
successor to the Contingent Payment Escrow Agent, by a written instrument
delivered to such successor Contingent Payment Escrow Agent, the Holder
Representative and Surviving Corporation, whereupon such successor Contingent
Payment Escrow Agent shall succeed to all the rights and obligations of the
resigning Contingent Payment Escrow Agent as of the effective date of
resignation as if originally named herein. Upon such assignment of this
Agreement, the resigning Contingent Payment Escrow Agent shall duly transfer and
deliver the Contingent Payment Escrow Amount (as defined in SECTION 2.1(b)
hereof), at the time held by the resigning
1
Contingent Payment Escrow Agent, to such successor Contingent Payment Escrow
Agent, PROVIDED that, if no successor Contingent Payment Escrow Agent shall
have been appointed on the effective date of resignation of the resigning
Contingent Payment Escrow Agent hereunder, the resigning Contingent Payment
Escrow Agent may pay the Escrow Amount into a court of competent jurisdiction.
SECTION II
ESCROW ARRANGEMENTS
2.1 DELIVERY OF THE DEPOSIT, ETC.
(a) Acquisition has, concurrent with the execution hereof, delivered
to the Contingent Payment Escrow Agent, by wire transfer of immediately
available funds, the Contingent Payment Deposit. The parties acknowledge and
agree that for tax purposes, the Escrow Contingent Payment Agent shall report
Earnings (as defined in Section 2.1(b) hereof) on the Contingent Payment Deposit
as attributable to the party receiving such portion of the Contingent Payment
Deposit. Each party hereto, except the Contingent Payment Escrow Agent shall,
promptly after the date hereof, provide the Contingent Payment Escrow Agent with
its Employer Identification Number (ION) as assigned by the Internal Revenue
Service. Any disbursement of the Contingent Payment Deposit shall be allocated
and paid by the Contingent Payment Escrow Agent as provided herein and reported
by the recipient to the Internal Revenue Service as having been so allocated and
paid.
(b) The Contingent Payment Escrow Agent shall hold the Contingent
Payment Deposit and all interest and other proceeds from the investment thereof
("EARNINGs", together with the Contingent Payment Deposit, the "CONTINGENT
PAYMENT ESCROW AMOUNT") in an escrow account (the "CONTINGENT PAYMENT ACCOUNT").
The Contingent Payment Escrow Amount shall not be subject to any lien or
attachment or any creditor or any third party and shall be used solely for the
purposes and subject to the conditions set forth in this Agreement and the
Purchase Agreement.
2.2 INVESTMENT OF THE ESCROW AMOUNT. The Contingent Payment Escrow
Agent is hereby authorized and directed to invest and reinvest and reinvest any
amounts at any time in the Contingent Payment Account in the following
obligations (collectively, the "PERMITTED INVESTMENTS"):
(a) obligations of, or fully guaranteed as to timely payment of
principal and interest by, the United States of America;
(b) such money market funds as are agreed to from time to time by the
Holder Representative and Surviving Corporation; and
2
(c) certificates of deposit with any bank or trust company organized
under the laws of the United States of America or any agency or instrumentality
thereof or under the laws of any state thereof which has a combined capital and
surplus of at least One Hundred Million Dollars ($100,000,000).
Subject to the foregoing limitations, the Contingent Payment Escrow
Agent shall invest the Contingent Payment Escrow Amount in accordance with
written instructions delivered to it by the Holder Representative from time to
time. Except as provided above, the Contingent Payment Escrow Agent shall have
no power or duty to invest the Contingent Payment Escrow Amount or to make
substitutions thereof.
SECTION III
RELEASE OF THE CONTINGENT PAYMENT ESCROW AMOUNT
The Contingent Payment Escrow Agent shall release the Contingent
Payment Escrow Amount only in accordance with this SECTION 3.
3.1 NOTICE OF CLAIM. Following the receipt by the Contingent Payment
Escrow Agent of the Contingent Payment Deposit, the following procedures shall
govern the application of the Contingent Payment Deposit to satisfy any
contingent payments due to Holders pursuant to SECTION 2.6 of the Merger
Agreement:
3.1.1 CONTINGENT PAYMENTS
(a) The Surviving Corporation shall promptly give to Holder
Representative and the Contingent Payment Escrow Agent a notice of any payments
owed by Surviving Corporation to the Holders under Section 2.6 of the Merger
Agreement.
(b) Following receipt of notice of any such payment owed by the
Surviving Corporation to the Holders, the Surviving Corporation shall promptly
give the Contingent Payment Escrow Agent written instructions to disburse such
portion of the balance of the Escrow Account (including Earnings from such
portion) equal to the amount of payment due under Section 2.6 of the Merger
Agreement ("PAYMENT INSTRUCTIONS"). In the event any such payment exceeds the
Contingent Payment Escrow Amount, then the Payment Instructions shall direct the
Contingent Payment Escrow Agent to apply the full amount of the Contingent
Payment Escrow Amount (including all Earnings).
3.2 PAYMENT OF CLAIMS. Whenever there shall be delivered to the
Contingent Payment Escrow Agent Payment Instructions, the Contingent Payment
Escrow Agent shall pay to the party entitled thereto the amount specified in
such instructions. In the event the amount set forth in such instructions
exceeds the balance of the Contingent Payment Account, the
3
Contingent Payment Escrow Agent shall apply the full amount of the Contingent
Payment Escrow Amount (including all Earnings) to such claim.
3.3 TERMINATION: RETENTION OF FUNDS.
As of the date of the final determination and payment of any sums due
Holders pursuant to Section 3.1 hereof (the "ADJUSTMENT DATE"), the following
procedures shall govern the application of the Contingent Payment Escrow Amount.
On the Adjustment Date the Contingent Payment Escrow Agent shall pay and deliver
to Acquisition the balance of the Contingent Payment Escrow Amount, in
accordance with written instructions delivered by the parties hereto.
3.4 DISPUTE. In the event of any dispute among any of the parties to
this Agreement relating to this Agreement, including without limitation a
dispute with respect to the interpretation or administration of this Agreement,
the Contingent Payment Escrow Agent shall not comply with any such claims or
demands from either Surviving Corporation or Holder Representative as long as
such dispute may continue, and the Contingent Payment Escrow Agent shall make no
delivery or other disposition of any property then held by it under this
Agreement until it has received either joint written instructions from the
Surviving Corporation and Holder Representative or certified copy of a final and
non-appealable judgement of a court of competent jurisdiction directing
disposition of the Escrow Amount.
3.5 OTHER DISBURSEMENTS OF THE ESCROW AMOUNT. The Contingent Payment
Escrow Agent shall disburse amounts to Surviving Corporation or Holder
Representative, as the case may be for the payment of Taxes on the Earnings,
upon receipt of a certificate signed by Holder Representative setting forth the
amount and nature of such Taxes, PROVIDED, HOWEVER, that the amount of any such
disbursements shall not exceed the Earnings accrued on the Contingent Payment
Deposit through the date of such disbursement.
SECTION IV
ESCROW AGENT
4.1 EXPENSES. Surviving Corporation, on the one hand, and Holder
Representative, on the other hand, shall share equally the cost of reimbursing
the Contingent Payment Escrow Agent for its reasonable out-of-pocket expenses,
including reasonable attorney's fees in administering the Escrow Account and
performing its duties under this Agreement.
4.2 RESPONSIBILITIES OF ESCROW AGENT. The Contingent Payment Escrow
Agent's acceptance of its duties under this Agreement is subject to the
following terms and conditions, which the parties hereto agree shall govern and
control with respect to its rights, duties, liabilities and immunities:
4
(a) Except as to its due execution and delivery of the Agreement, it
makes no representation and has no responsibility as to the validity of this
Agreement or of any other instrument referred to herein, or as to the
correctness of any statement contained herein, and it shall not be required to
inquire as to the performance of any obligation under the Merger Agreement;
(b) The Contingent Payment Escrow Agent shall be protected in acting
upon any written notice, request, waiver, consent, receipt or other paper or
document, not only as to its due execution and the validity and effectiveness of
its provisions, but also as to the truth of any information therein contained,
which it in good faith believes to be genuine and what it purports to be;
(c) The Contingent Payment Escrow Agent shall not be liable for any
error of judgment, or for any act done or step taken or omitted by it in good
faith, or for any mistake of fact or law, or for anything which it may do or
refrain from doing in connection therewith, except its own gross negligence or
misconduct;
(d) The Contingent Payment Escrow Agent may consult with competent
and responsible legal counsel selected by it, and it shall not be liable for any
action taken or omitted by it in good faith in accordance with the advice of
such counsel;
(e) Principal Holders, on the one hand, and Surviving Corporation, on
the other hand, agree to indemnify and hold the Contingent Payment Escrow Agent
and its directors, employees, officers, agents, successors and assigns
(collectively, the "INDEMNIFIED PARTIES") harmless from and against any and all
losses, claims, damages, liabilities and expenses (collectively, "DAMAGES"),
including, without limitation, reasonable costs of investigation and counsel
fees and expenses which may be imposed on the Contingent Payment Escrow Agent or
incurred by it in connection with the performance of its duties hereunder. Such
indemnity includes, without limitation, Damages incurred in connection with any
litigation (whether at the trial or appellate levels) arising from this
Agreement or involving the subject matter hereof. The indemnification
provisions contained in this paragraph shall survive the termination of this
Agreement or the resignation or removal of the Contingent Payment Escrow Agent.
Notwithstanding any provision to the contrary in this Agreement, neither the
Principal Holders, the Holder Representative nor Surviving Corporation shall
have any liability to the Indemnified Parties with respect to any Damages that
result, directly or indirectly, from the gross negligence or misconduct of the
Contingent Payment Escrow Agent;
(f) The Contingent Payment Escrow Agent shall have no duties or
responsibilities except those expressly set forth herein, and it shall not be
bound by any modification of this Agreement unless in writing and signed by all
parties hereto or their respective successors in interest;
(g) The recitals of facts in this Agreement shall be taken as the
statements of Principal Holders and Surviving Corporation, and the Contingent
Payment Escrow Agent
5
assumes no responsibility for the correctness of the same. The Contingent
Payment Escrow Agent shall be under no obligation or duty to perform any act
which would involve it in an expense or liability or to institute or defend
any suit in respect of this Agreement or to advance any of its own moneys
unless properly indemnified;
(h) The Contingent Payment Escrow Agent shall be protected in acting
upon any notice, resolution, request, consent, order, certificate, report,
opinion, bond or other paper or document reasonably believed by it to be genuine
and to have been signed and presented by the proper party or parties. Whenever
the Contingent Payment Escrow Agent shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering any action under
this agreement, such matter may be deemed inclusively proved and established by
a certificate signed by the Holder Representative and Surviving Corporation, and
such certificate shall be full warranty for any action taken or suffered in good
faith under the provisions of this Agreement; and
(i) The Contingent Payment Escrow Agent does not have any interest in
the Contingent Payment Escrow Amount but is serving as Contingent Payment Escrow
Agent only and having only possession thereof. This SECTION 4.2(i) shall
survive notwithstanding any termination of this Agreement or the resignation of
the Contingent Payment Escrow Agent.
SECTION V
MISCELLANEOUS
5.1 AMENDMENT. No amendment, waiver of compliance with any provision
or condition hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of any amendment, waiver, consent is sought.
5.2 TERMINATION. This Agreement shall terminate automatically at
such time as all funds from the Contingent Payment Account have been paid or
distributed in accordance with the terms of this Agreement and the Contingent
Payment Escrow Agent has received all fees as described in SECTION 4.1 hereof.
Notwithstanding the foregoing, all provisions concerning the indemnification of
the Contingent Payment Escrow Agent shall survive any termination of this
Agreement.
5.3 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, and if any provision of this Agreement is interpreted by a
court of competent jurisdiction and found to be invalid or unenforceable,
neither the enforceability nor the validity of such provisions with respect to
any other facts or under any other circumstances shall thereby be impaired. The
unenforceability or invalidity of any provision shall not result in the
interpretation of the remainder of this Agreement, or any section hereof, in a
manner inconsistent with intent of the parties as evidenced by the terms of this
Agreement, or such section, as a whole.
6
5.4 WAIVER. Failure of any party to complain of any act or omission
on the part of any other party in breach or default of this Agreement, no matter
how long the same may continue, shall not be deemed to be a waiver by the part
of its rights hereunder. No waiver by any party at any time, express or
implied, of any breach of any other provision of this Agreement shall be deemed
a waiver of a breach of any other provision of this Agreement or a consent to
any subsequent breach of the same or other provisions.
5.5 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given or
made as follows: (a) if sent by registered or certified mail in the United
States return receipt requested, upon receipt; (b) if sent by reputable
overnight air courier (such as DHL or Federal Express), two business days after
mailing; (c) if sent by fax, with a copy mailed on the same day in the manner
provided in (a) or (b) above, when transmitted and receipt is confirmed by
telephone; or (d) if otherwise actually personally delivered, when delivered,
and shall be delivered as follows:
(a) If to Holder Representative:
_________________________
_________________________
_________________________
Attention:_______________
Telecopy No.:____________
with copies to (which shall not constitute notice)
_________________________
_________________________
_________________________
Attention:_______________
Telecopy No.:____________
(b) If to Surviving Corporation
_________________________
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, XX, Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
7
Attn: Xxxx X. Xxxxx
Telecopy No.: (000) 000-0000
(c) If to the Contingent Payment Escrow Agent:
_________________________
_________________________
_________________________
Attention:_______________
Telecopy No.:____________
or to such other address or to such other person as the party to whom notice is
given may have previously furnished to the other in writing in the manner set
forth above.
5.6 ASSIGNMENT. Surviving Corporation and Principal Holders may
assign their rights under this Agreement to the same extent as they are
permitted to assign their rights and obligations under the Merger Agreement.
5.7 ENTIRE AGREEMENT. This Agreement, the Merger Agreement and the
schedules and annexes thereto embody the entire agreement and understanding
among Holder Representative, Acquisition, Surviving Corporation and the
Contingent Payment Escrow Agent with respect to the subject matter hereof and
supersedes any and all prior agreements and understandings, oral and written,
among Holder Representative, Acquisition, Surviving Corporation and the
Contingent Payment Escrow Agent with respect to the subject matter hereof.
5.8 INTERPRETATION. The headings set forth in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.
5.9 GOVERNING LAW; JURISDICTION. The construction and performance of
this Agreement shall be governed by the laws of the State of Maryland without
regard to its principles of conflict of law, and the state and federal courts of
Maryland shall have exclusive jurisdiction over any controversy or claim arising
out of or relating to this Agreement.
5.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same agreement.
8
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
NYMA ACQUISITION, INC.
By:_____________________________
Name:
Title:
HOLDER REPRESENTATIVE,
on behalf of Principal Holders
By:_____________________________
CONTINGENT PAYMENT ESCROW
AGENT
By:_____________________________
Name
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ANNEX E
FORM OF OPINION OF PRINCIPAL HOLDERS AND COMPANY COUNSEL
1. The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of Maryland. The Company has
the requisite corporate power and authority to conduct its business as now
conducted, and the Company and Principal Holders have the requisite corporate or
other power and authority to execute, deliver and perform their obligations
under the Merger Agreement and the Ancillary Agreements.
2. The execution and delivery of the Merger Agreement and the
Ancillary Agreements by the Company and Principal Holders, and the performance
of their respective obligations thereunder, have been duly authorized by all
necessary corporate or other action by the Company and Principal Holders.
3. The Merger Agreement and the Ancillary Agreements have been duly
executed by the Company and Principal Holders, as applicable, and delivered to
Acquisition and constitute the valid and binding obligation of the Company and
Principal Holders enforceable against the Company and Principal Holders in
accordance with their terms.
4. The execution and delivery by the Company and Principal Holders
of the Merger Agreement and the Ancillary Agreements, and the performance by the
Company and Principal Holders of their obligations thereunder, do not:
(i) violate any United States federal or Maryland state statute, rule or
regulation applicable to the Company or Principal Holders, (ii) violate the
provisions of the Company's or Principal Holders governing documents, (iii)
violate any of the Contracts or (iii) require any consents, approvals,
authorizations, registrations, declarations or filings under any United States
federal or Maryland state statute, rule or regulation.
5. There is no judgment, order, injunction, decree, litigation,
proceeding or governmental investigation in effect, pending or to the best of
our knowledge, threatened against the Company or Principal Holders which might
adversely affect the ability of the Company or Principal Holders to perform
their obligations under the Merger Agreement.
6. The authorized capital stock of the Company consists of _______
shares of Common Stock, $.01 par value per share, of which _______ shares are
issued and outstanding. There are no (i) options, warrants, rights of
conversion or other rights to acquire from the Company or Principal Holders
shares of the capital stock of the Company or securities convertible or
exchangeable or exercisable for shares of the capital stock of the Company or
(ii) agreements or commitments by the Company or Principal Holders to issue or
sell any shares of capital stock of the Company, any options, warrants, rights
of conversion or other rights to
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acquire shares of the capital stock of the Company or any securities
convertible into or exchangeable or exercisable for shares of capital stock
of the Company.
7. All the issued and outstanding shares of capital stock of the
Company have been duly authorized and are fully paid and non-assessable and are
owned of record and beneficially by Holders as set forth on the Disclosure
Schedules to the Merger Agreement.
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ANNEX F
FORM OF NON-DISCLOSURE AND NON-SOLICITATION AGREEMENT
ANNEX G
FORM OF EMPLOYMENT AGREEMENT
