Exhibit 2.1
EXECUTION VERSION
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
BY AND AMONG
CIBER, INC.,
CIBER INTEGRATION SERVICES, INC.
BUSINESS IMPACT SYSTEMS, INC.
AND
THE AFFILIATE STOCKHOLDERS OF
BUSINESS IMPACT SYSTEMS, INC.
AS OF FEBRUARY 26, 1999
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS...................................................................................1
1.1 Definitions...................................................................................1
ARTICLE II EXCHANGE......................................................................................6
2.1 Exchange......................................................................................6
2.2 Excluded Assets...............................................................................7
2.3 Assumption of Obligations and Liabilities.....................................................8
2.4 Non-Assignable Contracts......................................................................8
2.5 Consideration.................................................................................9
2.6 Closing.......................................................................................9
2.7 Closing Deliveries...........................................................................10
2.8 Post-Closing Deliveries and Adjustments of Total Consideration...............................10
2.9 Fractional Shares............................................................................12
2.10 Tax Treatment................................................................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE AFFILIATE STOCKHOLDERS........................................................13
3.1 Organization.................................................................................13
3.2 Capital Stock of Seller......................................................................13
3.3 Authority Relative to This Agreement; Non-Contravention......................................14
3.4 Financial Statements.........................................................................15
3.5 Absence of Certain Changes...................................................................16
3.6 Litigation...................................................................................16
3.7 Broker's or Finder's Fees....................................................................16
3.8 Subsidiaries.................................................................................16
3.9 Absence of Changes in Benefit Plans..........................................................16
3.10 Compliance with Laws.........................................................................17
3.11 Environmental Matters........................................................................17
3.12 Contracts; Debt Instruments..................................................................17
3.13 Properties...................................................................................19
3.14 Intellectual Property........................................................................19
3.15 Labor Matters................................................................................21
3.16 Certain Employee Matters.....................................................................21
3.17 Insurance....................................................................................22
3.18 Taxes........................................................................................22
3.19 ERISA........................................................................................24
3.20 Delivery of Prospectus.......................................................................26
3.21 Business Relations...........................................................................26
3.22 Bank Accounts................................................................................26
3.23 Pooling of Interests Treatment...............................................................27
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TABLE OF CONTENTS
(CONTINUED)
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3.24 Collectibility of Receivables................................................................27
3.25 Accounting Method............................................................................27
3.26 Net Worth....................................................................................27
3.27 Distributions; Redemptions...................................................................27
3.28 Year 2000 Compliance.........................................................................27
3.29 Agents.......................................................................................28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CIBER AND CIS..............................................28
4.1 Organization.................................................................................28
4.2 Capitalization...............................................................................28
4.3 Authority Relative to This Agreement; Non-Contravention......................................29
4.4 SEC Reports and Financial Statements.........................................................30
4.5 Absence of Certain Changes...................................................................31
4.6 Broker's or Finder's Fees....................................................................31
ARTICLE V REPRESENTATIONS OF THE AFFILIATE STOCKHOLDERS................................................31
5.1 Security Representations of the Affiliate Stockholders.......................................31
ARTICLE VI COVENANTS AND OTHER AGREEMENTS...............................................................33
6.1 Conduct of Business by Seller................................................................36
6.2 Confidentiality..............................................................................37
6.3 Employment Agreements........................................................................37
6.4 Employee Issues..............................................................................38
6.5 No Solicitation..............................................................................38
6.6 Sale of Seller Shares; Dissenters' Rights....................................................38
6.7 Pooling......................................................................................38
6.8 Publication of Financials....................................................................39
6.9 Satisfaction of Conditions...................................................................39
6.10 Indemnification..............................................................................39
6.11 Indemnification Procedures...................................................................40
6.12 Tax-Free Reorganization; Plan of Liquidation.................................................41
6.13 Listing of Shares............................................................................41
6.14 Termination of Benefit Plans.................................................................41
6.15 Books and Records............................................................................42
6.16 Consents.....................................................................................42
6.17 Powers of Attorney...........................................................................43
6.18 Certain Payables and Receivables.............................................................43
6.19 WARN Act.....................................................................................43
6.20 Termination of Amended and Restated Buy-Sell Agreement.......................................43
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TABLE OF CONTENTS
(CONTINUED)
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6.21 Registration Statement.......................................................................43
6.22 Issuance of Replacement Options..............................................................43
6.22 Payment of Dissolution Expenses..............................................................44
ARTICLE VII CONDITIONS...................................................................................44
7.1 Conditions to the Obligations of Each Party..................................................44
7.2 Additional Conditions to the Obligations of Seller and the Affiliate
Stockholders.................................................................................44
7.3 Additional Conditions to the Obligations of CIBER and CIS....................................45
ARTICLE VIII TERMINATION..................................................................................47
8.1 Termination..................................................................................47
8.2 Effect of Termination........................................................................47
ARTICLE IX GENERAL PROVISIONS...........................................................................48
9.1 Interpretation; Governing Law................................................................48
9.2 Expenses; Sales Taxes........................................................................48
9.3 Binding Effect; Assignment...................................................................48
9.4 Notices......................................................................................48
9.5 Severability.................................................................................49
9.6 Third-Party Beneficiaries....................................................................49
9.7 Further Assurances...........................................................................49
9.8 Entire Agreement; Modifications..............................................................50
9.9 Headings.....................................................................................50
9.10 Counterparts.................................................................................50
9.11 Waiver.......................................................................................50
9.10 Schedules....................................................................................50
9.10 Alternative Dispute Resolution...............................................................50
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A -- General Assignment, Xxxx of Sale and Assumption Agreement
Exhibit B -- Form of Affiliate Stockholder Employment Agreement
Exhibit C -- Form of Non-Affiliate Stockholder Employment Agreement
Exhibit D -- Form of Xxxxx, Xxxxxx & Xxxxxx LLP Opinion
Exhibit E -- Form of Opinion of Seller's Counsel
Exhibit F -- Form of Seller Representation Letter to Ernst & Young
Exhibit G -- Form of Pooling Letter to Seller from Ernst & Young
Exhibit H -- Form of Plan Representation Letter
Schedule 1.1 -- Permitted Liens
Schedule 2.1 -- Material Contracts and Contracts Requiring Consent
Schedule 2.2 -- Excluded Assets
Schedule 3.1 -- State Qualifications; Good Standing
Schedule 3.2(b) -- Outstanding Securities; Seller Dividend Payment History
Schedule 3.2(d) -- Share Ownership
Schedule 3.3 -- List of Conflicts
Schedule 3.4 -- Seller Financial Statements
Schedule 3.5 -- Absence of Certain Changes
Schedule 3.6 -- Litigation
Schedule 3.8 -- Subsidiaries
Schedule 3.9 -- Absence of Changes in Benefit Plans
Schedule 3.12 -- Seller Contracts and Debt Instruments
Schedule 3.14(a) -- Exceptions to Ownership or License of Intellectual Property
Schedule 3.14(b) -- Infringement of Intellectual Property Rights
Schedule 3.14(c) -- Intellectual Property Registrations; Licenses to Third Parties
Schedule 3.14(d) -- Third Party Intellectual Property Licensed by Seller
Schedule 3.16(a) -- Employee Confidentiality
Schedule 3.16(b) -- Employee Billing and Pay Rates
Schedule 3.16(c) -- Employee Nonsolicitation Agreements
Schedule 3.18 -- Tax Matters
Schedule 3.19 -- Pension Plan, Welfare Plans
Schedule 3.21 -- List of Customers and Suppliers
Schedule 3.22 -- Bank Accounts
Schedule 3.23 -- Pooling
Schedule 3.24 -- Uncollectible Receivables
Schedule 3.28 -- Year 2000
Schedule 3.29 -- Agents
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AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION (this
"Agreement") is entered into as of February 26, 1999, by and among BUSINESS
IMPACT SYSTEMS, INC., a Virginia corporation ("Seller"); CIBER, INC., a
Delaware corporation ("CIBER"); CIBER INTEGRATION SERVICES, INC., a Delaware
corporation and wholly owned subsidiary of CIBER ("CIS"); and the Affiliate
Stockholders (as defined in Section 1.1).
RECITALS
A. Subject to the terms and conditions contained in this Agreement,
CIBER desires to acquire from Seller, and Seller desires to transfer to
CIBER, all or substantially all of the assets of Seller in exchange for
shares of CIBER Common Stock (as defined below) and the assumption by CIBER
of the Liabilities (as defined below);
B. At the direction of CIBER, Seller shall transfer such assets
directly to CIS;
C. Seller has agreed to distribute, among other things, the shares
of CIBER Common Stock acquired pursuant to this Agreement to its stockholders
(together, the "Stockholders") as part of the dissolution and liquidation of
Seller, which dissolution and liquidation shall be conducted in accordance
with the laws of the Commonwealth of Virginia and Seller's articles of
incorporation and by-laws; and
D. It is intended that the transactions contemplated by this
Agreement shall qualify as a tax-free reorganization within the meaning of
Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the
"Code"), and be treated for financial reporting purposes as a pooling of
interests under the requirements of Accounting Principles Board Opinion No.
16 and the related interpretations of the American Institute of Certified
Public Accountants, as amended by Statements of the Financial Accounting
Standards Board, and as supplemented by guidance from the SEC.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
(a) As used in this Agreement, the following terms shall
have the meanings set forth below:
"Affiliate" means any Person directly or indirectly controlling,
controlled by, or under direct or indirect common Control with, the Person
specified.
"Affiliate Stockholders" means the following Stockholders of Seller:
Xxxxxxx XxXxxxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxxxxx, Xxxxx Xxxxxxx, Xxxxxxx
Xxxxx, Xxxx Xxxxx and Xxxxxxxx Xxxxxxxxxxx.
"Business" means all the business activities and operations of
Seller as of the Closing Date.
"CIBER Closing Stock Price" means the average of the daily closing
prices of a share of CIBER Common Stock on the NYSE for the five (5)
consecutive trading days ended February 19, 1999, but in the event the CIBER
Closing Stock Price is greater than $30 per share, then the CIBER Closing
Stock Price shall be $30, and in the event the CIBER Closing Stock Price is
less than $24 per share, then the CIBER Closing Stock Price shall be $24. The
CIBER Closing Stock Price was determined in accordance with the foregoing to
be $24.875.
"CIBER Common Stock" means the voting common stock, par value $0.01
per share of CIBER.
"CIBER Material Adverse Effect" means effects that individually or
in the aggregate have a material adverse effect on CIBER and the CIBER
Subsidiaries, taken as a whole.
"CIBER SEC Reports" means all forms, reports, schedules,
registration statements, definitive proxy statements and other documents
filed by CIBER with the SEC.
"CIBER Subsidiaries" means any entity Controlled by CIBER.
"Control" shall mean the power to direct the management and policies
of any Person under ordinary circumstances, whether by means of the ownership
of voting securities, by contract or otherwise.
"Environmental Laws" means any statute, law, ordinance, regulation,
rule, judgment, decree or order of any Governmental Entity relating to any
matter of pollution, protection of the environment, environmental regulation
or control regarding Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Full-Time Consultants" means billable professional consultants,
including employees and independent contractors, who, as a group, at the date
of any determination thereof, billed to Seller's clients and customers on
Seller's behalf an average of at least 37 hours per week for the four weeks
immediately preceding such determination (including in such determination of
billable hours any vacation time or paid sick days taken by such consultants
during the measured period). If a billable professional consultant has not
been employed or engaged by Seller for the four weeks immediately
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preceding such determination, then that consultant shall be deemed to be a
"Full Time Consultant" if the number of hours billed by that consultant to
Seller's clients and customers on Seller's behalf averages at least 37 hours
per week for the period of his or her employment or engagement by Seller.
"Governmental Entity" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality, domestic or foreign.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, codified at 15 U.S.C.A. Section 18a.
"Hazardous Substance" means any toxic or hazardous materials, wastes
or substances, defined as, or included in the definition of, "hazardous
wastes," "hazardous materials" or "toxic substances" under any Environmental
Law, including asbestos, buried contaminants, regulated chemicals, flammable
explosives, radioactive materials, polychlorinated biphenyls, petroleum and
petroleum products.
"Indebtedness" means, with respect to any Person, without
duplication, (A) all obligations of such Person for borrowed money or
obligations with respect to deposits or advances of any kind to such Person,
(B) all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, (C) all obligations of such Person upon which interest
charges are customarily or periodically paid, (D) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person, (E) all obligations of such Person issued
or assumed as the deferred purchase price of property or services (excluding
obligations of such Person to creditors for raw materials, inventory,
services and supplies incurred in the ordinary course of such Person's
business), (F) all capitalized lease obligations of such Person, (G) all
obligations of others secured by any lien on property or assets owned or
acquired by such Person, whether or not the obligations secured thereby have
been assumed, (H) all obligations of such Person under interest rate or
currency hedging transactions (valued at the termination value thereof), (I)
all letters of credit issued for the account of such Person and (J) all
guarantees and arrangements having the economic effect of a guarantee of such
Person of any Indebtedness of any other Person, excluding any endorsements of
items made in the ordinary course of Seller's business.
"Intellectual Property" means all (a) patents and patent rights, (b)
trademarks, trademark rights, trade names, trade name rights, service marks,
service xxxx rights, trade dress, logos, corporate names and domain addresses
and registrations and applications for registration thereof, (c) copyrights
and registrations and applications for registration thereof, (d) trade
secrets and confidential information, including formulas, compositions,
inventions (whether or not patentable), know-how, processes, techniques,
research, designs, drawing specifications, plans, technical data and
financial, marketing, and business information (including pricing
information, business and marketing plans and customer and supplier lists and
information), (e) other proprietary intellectual property rights, and (f)
computer programs, software documentation, data, training manuals and related
materials in each case as held and used in the Business.
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"Lien" means any mortgage, pledge, claim, lien, charge, encumbrance,
security interest or defect in title of any kind or nature on, of, or in the
Assets other than Permitted Liens.
"Net Worth" means, with respect to a particular balance sheet, the
difference between assets and liabilities, determined in accordance with
generally accepted accounting principles consistently followed (net of
accruals for any income taxes payable as a result of the conversion of assets
and liabilities of Seller from the cash basis of accounting for tax purposes
to the accrual basis of accounting resulting from this Agreement and net of
accruals for all employee benefit costs, including payroll, commissions,
bonuses, retirement benefits, and vacations).
"NYSE" means the New York Stock Exchange.
"Pension Plan" means an "employee pension benefit plan" (as defined
in Section 3(2) of ERISA).
"Permitted Liens" means those Liens listed on SCHEDULE 1.1.
"Person" shall mean any individual, sole proprietorship,
partnership, corporation, limited liability company, unincorporated society
or association, trust, estate, union, Governmental Entity or other entity.
"Prospectus" means the prospectus included in the Registration
Statement.
"Registration Statement" means the registration statement on Form
S-4, Registration No. 333-69031, effective January 5, 1999, filed by CIBER
relating to the Shares to be issued hereunder and the Prospectus included
therein.
"Return" or "Returns" means all returns, declarations of estimated
tax payments, reports, estimates, information returns and statements with
respect to Taxes, including any related or supporting information with
respect to any of the foregoing, filed or required to be filed with any
Taxing Authority.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Material Adverse Effect" means an effect that causes or
effects that, individually or in the aggregate, cause loss or damage to
Seller or the Assets or Business transferred to CIBER and CIS hereby of
$50,000 or more.
"Takeover Proposal" means any proposal or offer (whether or not in
writing and whether or not delivered to the Stockholders generally) for a
merger or other business combination involving Seller or to acquire in any
manner, directly or indirectly, a material equity interest in, any voting
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securities of, or a substantial portion of the assets of Seller, other than
the transactions contemplated by this Agreement.
"Tax" or "Taxes" means all federal, state, local, foreign and other
taxes, assessments, duties or similar charges of any kind, including income,
gross receipts, sales, property and ad valorem taxes and all payroll,
employment and other withholding taxes, including any interest, penalties or
additions imposed with respect to such amounts.
"Taxing Authority" means any governmental or any quasi-governmental
body exercising any taxing authority or any other authority exercising Tax
regulatory authority.
"Welfare Plan" means an "employee welfare benefit plan" (as defined
in Section 3(1) of ERISA).
(b) Each of the following terms is defined in the
Section set forth opposite such term:
TERM SECTION
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ADR 9.13(c)
Affiliate Stockholder Employment Agreements 6.3(a)
Arbitrators 9.13(f)
Assets 2.1
Benefit Plans 3.19(a)
CIBER Loss 6.10(a)
Closing 2.6
Closing Date 2.6
Code Recitals
Commonly Controlled Entity 3.19(a)
Contracts 2.1(c)
Covered Taxes 3.18(a)
Dispute 9.13(a)
Excluded Assets 2.2
Final Closing Balance Sheet 2.8(c)(i)
Fees 9.13(i)(vii)
Fixed-Fee Contract 3.12(e)
Holdback Sum 2.7(b)(iv)
Indemnified Party 6.11
Indemnifying Party 6.11
January 31, 1999 Balance Sheet 3.4(i)
Liabilities 2.3
Net Worth Deficiency 2.8(c)(i)
Net Worth Excess 2.8(c)(i)
Non-Affiliate Stockholders 6.3(b)
Non-Affiliate Stockholder Employment 6.3(b)
Agreements
Plan Representation Letter 6.4(a)
Product 3.28
Properties 3.11(a)
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TERM SECTION
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Restricted Period 6.7
Rules 9.13(e)
Seller Common Stock 3.2(a)
Seller Loss 6.10(b)
Seller Options 6.22
Seller Outstanding Securities 3.2(b)
Seller Pension Plan 3.19(e)
Seller Stock 3.2(a)
Shares 2.5(a)
System 3.28
Total Consideration 2.3(a)
Transfer 6.7
Transferred Employees 6.4(b)
VSCA 6.12
Written Statement 9.13(i)(vi)
Year 2000 Compliant 3.28
ARTICLE II
EXCHANGE
2.1 EXCHANGE. Upon the terms and subject to the conditions set forth
in this Agreement, at Closing, Seller agrees to sell, convey, assign,
transfer and deliver to CIS, at the direction of CIBER, and CIS, at the
direction of CIBER, agrees to acquire and accept from Seller, all of Seller's
right, title and interest in and to the assets and properties of Seller used
in the Business, whether real, personal, tangible or intangible, free and
clear of all Liens, such assets and properties being referred to herein as
the "Assets," and including the following:
(a) Seller's right, title and interest in and to all
parcels of real property owned in fee by Seller or in which Seller has a
leasehold interest, and all buildings, structures and other improvements
located thereon, and all rights-of-way and similar authorizations;
(b) Seller's right, title and interest in and to all of the
tangible personal property owned or leased by Seller, including all
inventory, furniture, fixtures, equipment and computers;
(c) Seller's right, title and interest in and to all
contracts, options, leases (whether of realty or personalty), purchase
orders, bids in process, commitments, licenses to use software, and other
agreements (all of such contracts, agreements, options, leases or commitments
are sometimes referred to herein collectively as the "Contracts"), including
the items identified in SCHEDULE 2.1 attached hereto (which schedule
identifies separately (i) each Contract that is material to Seller and (ii)
each Contract that requires the consent of a third party in order to assign
such contract to CIBER or CIS);
(d) Seller's right, title and interest in and to all
client, client contact, customer and advertiser lists;
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(e) All marketing files and promotional materials of
Seller, identifying client contacts, dates of most recent client contact and
other information customarily contained therein;
(f) All recruiting files of Seller, identifying all active
or potential recruiting prospects, including any and all applications of
employment by such prospects, letters of recommendation, evaluations and
technical reviews, references and resumes retained by the Seller in
connection with such recruitment;
(g) To the extent assignable, Seller's right, title and
interest in and to all employment agreements (whether written or oral) and
any non-compete, non-hire and non-disclosure agreements with any current
employee of the Seller (other than any agreements with Stockholders) who
becomes an employee of CIBER or CIS at the Closing Date;
(h) All personnel files of Seller pertaining to any Person
now providing or who in the prior three years has provided services on behalf
of Seller as a billable consultant or employee, together with any and all
information customarily contained therein, including W-2's, W-4's, I-9's,
1099's, employment agreements, personnel reviews, commission and/or bonus
arrangements and salary history;
(i) Seller's right, title and interest in and to all
Intellectual Property;
(j) All customer, trade and other accounts receivable due
to Seller;
(k) All notes receivable, marketable securities and
investments, and prepaid expenses;
(l) All cash on hand, in bank accounts or in transit and
all deposits under lease, utility and other similar agreements to which
Seller is or may become entitled;
(m) Originals or copies of all books and records of Seller;
(n) Any goodwill of and going concern value associated with
Seller; and
(o) Seller's right, title and interest in and to the
corporate and trade names "Business Impact Systems, Inc." and "Team BIS".
2.2 EXCLUDED ASSETS. Anything herein to the contrary
notwithstanding, Seller shall retain and shall not sell or deliver to CIBER
or CIS the following items:
(a) Seller's corporate minute books, stock record books,
and related corporate documents;
(b) Any agreements with employees and independent
contractors who do not become employees or independent contractors of CIBER
or CIS at the Closing Date;
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(c) All rights, properties and assets which have been sold,
transferred, conveyed, assigned, delivered or otherwise disposed of by the
Seller prior to the Closing in transactions permitted or contemplated by this
Agreement;
(d) Any Benefit Plan and all amendments, all documents and
financial statements relating thereto or associated trust maintained by
Seller or on Seller's behalf;
(e) Copies of all Returns of Seller and all corporate
financial and other documents related to the preparation of all such Returns;
(f) Miscellaneous office furnishings listed on Schedule 2.2;
(g) The capital stock of the Seller; and
(h) Any and all rights of Seller under this Agreement
(clauses (a) through (h) collectively referred to as the "Excluded Assets").
2.3 ASSUMPTION OF OBLIGATIONS AND LIABILITIES. Upon the terms and
subject to the conditions set forth in this Agreement, at Closing, CIBER
shall assume and undertake to discharge in full:
(a) All of the obligations and liabilities of Seller under
the Contracts arising with respect to periods on or after the Closing Date;
(b) All of the obligations and liabilities of Seller
disclosed on the January 31, 1999 Balance Sheet delivered to CIBER pursuant
to Section 3.4, together with any other obligations and liabilities of Seller
arising after such date; and
(c) All obligations and liabilities arising with respect to
periods after the Closing Date related to the ownership and operation of the
Assets.
All of the obligations and liabilities in this Section 2.3 shall be
referred to collectively herein as the "Liabilities." Other than the
Liabilities, CIBER shall not assume or be bound by any obligations of Seller
or the Stockholders of any kind or nature, contingent or otherwise, including
any Tax liability related to the transfer of the Assets contemplated by this
Agreement or any litigation or potential litigation disclosed on SCHEDULE 3.6.
2.4 NON-ASSIGNABLE CONTRACTS.
(a) To the extent that any Contract (including leases) to
be assigned pursuant to this Agreement is not capable of being assigned
without the consent, approval or waiver of a third Person, Seller, CIBER and
CIS shall use commercially reasonable efforts to obtain such consents,
approvals and waivers within thirty (30) days after the Closing Date.
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(b) If any such consent is not obtained, or if an attempted
assignment of an agreement would be ineffective or would affect the rights of
CIBER and CIS or Seller, as applicable, thereunder such that CIBER and CIS
would not in fact receive all rights transferred hereunder, Seller shall use
its commercially reasonable efforts to perform or cause to be performed such
agreement for the account of CIBER and CIS or otherwise cooperate with CIBER
and CIS in any arrangement reasonably necessary or desirable to provide for
CIBER and CIS the benefits and the corresponding obligations of any such
agreement, including enforcement for the benefit of CIBER and CIS of any and
all rights of Seller against the other party thereto arising out of the
breach, termination or cancellation of such agreement by such other party or
otherwise. To the extent Seller performs or cause the performance under any
permit or license for the benefit of CIBER and CIS pursuant to this SECTION 2.4
and CIBER or CIS ultimately obtains such permit or license for itself, Seller
shall, on demand by CIBER, relinquish its rights under such permit or license
with respect to the Business.
2.5 CONSIDERATION.
(a) In consideration for the sale and transfer of the
Assets, and other representations, warranties and covenants made and agreed
to by Seller and the Affiliate Stockholders, CIBER shall (i) pay $57,949,599,
subject to adjustment as provided in Section 2.8 (the "Total Consideration"),
and such amount shall be payable to Seller in that number of shares of CIBER
Common Stock that equals the Total Consideration divided by the CIBER Closing
Stock Price (the "Shares") and (ii) assume the Liabilities. Notwithstanding
the foregoing, the number of Shares payable to Seller shall be increased by
such number of Shares as is necessary to permit the rounding of fractional
shares pursuant to Section 2.9. All Shares delivered hereunder shall be
appropriately adjusted to reflect any recapitalization, reorganization,
reclassification, split-up, or stock dividend made, declared or effective
with respect to the CIBER Common Stock between the date of this Agreement and
the Closing.
(b) All of the Shares to be delivered to Seller shall be
represented by shares of CIBER Common Stock whose distribution to Seller, by
Seller to each Stockholder and by each Stockholder has been registered under
the Securities Act pursuant to the Registration Statement, and all such
Shares shall be free of any transfer restrictions except those imposed by
Rule 145 under the Securities Act and by the terms and conditions of this
Agreement.
(c) CIBER shall issue options to Xxxxx Xxxxx and Xxxx
Xxxxxxxx as set forth in Section 6.22 hereof.
2.6 CLOSING. Subject to the provisions of Articles VII and VIII, the
closing (the "Closing") of the exchange, transfer and delivery of the Shares
for the Assets and the assumption of the Liabilities hereunder shall take
place at the offices of Xxxxx, Xxxxxx & Xxxxxx LLP, Suite 4700, 000
Xxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000, on February 26, 1999, or at such
other place, date or time as CIBER and Seller may agree (the "Closing Date").
Risk of loss on the Assets shall pass from Seller to CIBER and CIS upon
Closing.
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2.7 CLOSING DELIVERIES.
(a) At the Closing, Seller or the Affiliate Stockholders,
as the case may be, shall deliver to CIBER:
(i) the executed General Assignment, Xxxx of Sale and
Assumption Agreement substantially in the form of
Exhibit A attached hereto; and
(ii) such assignments, consents, instruments and
agreements as are required or contemplated
herein, or as CIBER may reasonably require
to effect the transactions contemplated
hereby.
(b) At the Closing:
(i) CIBER shall deliver to Seller a copy of the
letter issued to CIBER's transfer agent as
of the Closing Date directing the immediate
issuance of that number of Shares equal to
$54,749,599 divided by the CIBER Closing
Stock Price;
(ii) CIBER and CIS shall deliver to Seller the
executed General Assignment, Xxxx of Sale
and Assumption Agreement referred to in
Section 2.7(a)(i);
(iii) CIBER or CIS, as the case may be,
shall deliver such assignments,
consents, instruments and agreements
as are required or contemplated
herein; and
(iv) CIBER shall retain that number of Shares
representing $3,200,000 of the Total
Consideration (the "Holdback Sum") measured
at the CIBER Closing Stock Price, which
Shares shall be deliverable, if due, in
accordance with the provisions of Section 2.8.
2.8 POST-CLOSING DELIVERIES AND ADJUSTMENTS OF TOTAL CONSIDERATION.
(a) As of the Closing Date, CIBER shall continue to hold
the Holdback Sum for distribution in accordance with this Section 2.8.
(b) Upon receipt of reasonably satisfactory evidence from
Seller that Seller has complied with the post-closing covenants set forth in
Section 6.12, CIBER shall release that number of Shares equal to $100,000
divided by the CIBER Closing Stock Price to Seller or the Stockholders, as
applicable. Upon receipt of reasonably satisfactory evidence from Seller that
Seller has complied with the post-closing covenants set forth in Section
6.14, CIBER shall release that number of Shares equal to $100,000 divided by
the CIBER Closing Stock Price to Seller or the Stockholders, as applicable.
If Seller and the Stockholders have not complied with the post-closing
covenants set
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forth in Sections 6.12 and 6.14 upon the expiration of one year following
Closing, CIBER may complete the obligations under 6.12 and 6.14 or hire
appropriate professionals to do so and offset against the Holdback Sum its
costs and expenses (including the salary of CIBER employees but not overhead)
associated with completing the obligations.
(c) (i) As promptly as practicable, but not later than
thirty (30) days following the Closing Date, Seller shall prepare and deliver
to CIBER a balance sheet of Seller prepared consistent with Seller's standard
month-end closing procedures and dated as of the Closing Date (the "Final
Closing Balance Sheet"). The Final Closing Balance Sheet shall fairly present
the financial position of Seller as of the Closing Date in accordance with
generally accepted accounting principles (except for the omission of footnote
disclosures required by GAAP) including all accruals (including an accrual
for any income taxes payable as a result of the conversion of assets and
liabilities of Seller from the cash basis of accounting for tax purposes to
the accrual basis of accounting resulting from this Agreement and accruals of
all employee benefit costs, including payroll, commissions, bonuses,
retirement benefits, and vacations), and shall comply with the
representations set forth in Section 3.4. If the Net Worth of Seller as shown
on the Final Closing Balance Sheet as of the Closing Date is equal to
$3,000,000, then the Total Consideration shall not be adjusted, and CIBER
shall deliver from the Holdback Sum to Seller or the Stockholders, as
applicable, that number of Shares equal to $3,000,000 divided by the CIBER
Closing Stock Price. If the Net Worth of Seller as shown on the Final Closing
Balance Sheet as of the Closing Date is greater than $3,000,000, (the amount
of which excess shall be referred to as the "Net Worth Excess"), then the
Total Consideration due and payable to Seller hereunder shall be increased by
the amount of the Net Worth Excess; and CIBER shall (x) release from the
Holdback Sum that number of Shares equal to $3,000,000 divided by the CIBER
Closing Stock Price, and (y) issue additional shares of CIBER Common Stock
equal to the Net Worth Excess divided by the CIBER Closing Stock Price. If
the Net Worth of Seller as shown on the Final Closing Balance Sheet as of the
Closing Date is less than $3,000,000, (the amount of which difference shall
be referred to as the "Net Worth Deficiency"), then the Total Consideration
due and payable to Seller hereunder shall be reduced by the amount of the Net
Worth Deficiency; and CIBER shall release from the Holdback Sum that number
of Shares equal to (x) $3,000,000 minus the Net Worth Deficiency, divided by
(y) the CIBER Closing Stock Price; provided, however, that if the deficiency
exceeds $3,000,000, then Seller or the Stockholders, as applicable, shall
deliver within ten (10) business days of the determination of the Net Worth
of Seller the number of Shares received pursuant to Section 2.5(b) of this
Agreement equal in value, based on the CIBER Closing Stock Price, to the
amount of the Net Worth Deficiency in excess of $3,000,000, accompanied by a
stock transfer power assigning such shares to CIBER free and clear of Liens.
If the Final Closing Balance Sheet has not been delivered within thirty (30)
days following the Closing Date, CIBER may prepare the Final Closing Balance
Sheet or hire accountants to do so and offset against the Holdback Sum its
costs and expenses (including the salary of CIBER employees but not overhead)
associated with completing the Final Closing Balance Sheet.
(ii) If the party receiving the Final Closing Balance
Sheet disagrees with any item thereon, it may, within ten (10) business days
after delivery of the Final Closing Balance Sheet to it, deliver a notice to
the party preparing the Final Closing Balance Sheet stating such
disagreement. Any such notice of disagreement shall specify those items or
amounts that are the
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subject of disagreement. If such a notice of disagreement is delivered, the
parties shall use their commercially reasonable efforts to reach agreement on
the disputed items or amounts within five (5) business days. If within five
(5) business days following delivery of the notice of disagreement, the
parties have not reached agreement, either party may submit the matter to a
nationally recognized accounting firm, other than one that regularly
represents either party, for review and resolution, with instructions to
complete the review as promptly as practicable. Each party will furnish to
such accounting firm such work papers and other documents and information
relating to the disputed issues as such accounting firm may request and are
available to that party (or its independent public accountants) and will be
afforded the opportunity to present to such accounting firm any materials
relating to the determination and to discuss the determination with such
accounting firm. The resolution of such accounting firm shall be conclusive
and binding on the parties hereto. The costs of such review by such
accounting firm shall be borne equally by the parties.
In each instance under this Section 2.8 where CIBER is
obligated to issue shares of CIBER Common Stock to the Seller or the
Stockholders, as the case may be, CIBER shall provide to Seller or the
Stockholders a copy of its letter issued to CIBER's transfer agent directing
the immediate issuance of such CIBER Common Stock.
2.9 FRACTIONAL SHARES. No fractional shares of CIBER Common Stock
shall be issued to Seller hereunder. Any fractional share to which Seller
would otherwise be entitled shall be rounded up to the nearest whole share.
2.10 TAX TREATMENT. Seller, the Affiliate Stockholders and CIBER
hereby acknowledge and agree that:
(a) the transactions contemplated hereby shall be treated
for all purposes as:
(i) the acquisition by CIBER of the Assets solely
in consideration of the issuance by CIBER to
Seller of the Shares and the assumption by
CIBER of the Liabilities; and
(ii) a tax-free reorganization under Sections
368(a)(1)(C) and 368(a)(2)(C) of the Code and
any other applicable federal and state laws;
(b) this Agreement shall constitute a "plan of
reorganization" for purposes of Section 368(a) of the Code; and
(c) immediately following the Closing, CIBER will have
exclusive dominion and control over the Assets and CIBER shall exercise its
dominion and control to direct Seller to transfer and deliver all of the
Assets directly to CIS.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE AFFILIATE STOCKHOLDERS
Seller and each of the Affiliate Stockholders jointly and severally
represent and warrant to CIBER and CIS and agree as follows:
3.1 ORGANIZATION. Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of Virginia
and has the corporate power to own its property and to carry on its business
as now being conducted. Seller is duly qualified and/or licensed, as may be
required, and in good standing in each of the jurisdictions in which the
nature of the business conducted by it or the character of the property
owned, leased or used by it makes such qualification and/or licensing
necessary, except in such jurisdictions where the failure to be so qualified
and/or licensed would not have an Seller Material Adverse Effect. Seller has
delivered to CIBER complete and correct copies of its articles of
incorporation and by-laws, as amended to the date of this Agreement. Attached
hereto as SCHEDULE 3.1 is a complete list of those states in which Seller is
required to be qualified and/or licensed to do business and an indication of
whether Seller is qualified and/or licensed and in good standing in such
states.
3.2 CAPITAL STOCK OF SELLER.
(a) At the date hereof:
(i) Seller's authorized capital stock consists
of 500,000 shares of common stock, $0.10 par
value per share (the "Seller Common Stock"),
of which 150,000 shares are issued and
outstanding (the "Seller Stock"); and
(ii) Seller holds no shares of Seller Common
Stock in its treasury or otherwise.
(b) Except as set forth in Section 3.2(a), or on
SCHEDULE 3.2(b), there are not outstanding as of the date hereof (A) shares of
stock or other voting securities of Seller, (B) securities of Seller convertible
into or exchangeable for shares of stock or voting securities of Seller or
(C) options or other rights to acquire from Seller, or other obligations of
Seller to issue, any stock, voting securities or securities convertible into
or exchangeable for stock or voting securities of Seller (the items in
clauses (A), (B) and (C) being referred to collectively as the "Seller
Outstanding Securities"). There are no outstanding obligations of Seller to
repurchase, redeem or otherwise acquire any Seller Outstanding Securities,
except in accordance with the terms of such Seller Outstanding Securities.
Except as set forth on SCHEDULE 3.2(b), Seller has not, subsequent to
December 31, 1995, declared or paid any dividend, or declared or made any
distribution on (whether in cash, stock or property), or authorized the
creation or issuance of, or issued, or authorized or effected any split-up or
any other recapitalization of, any of its capital stock, or directly or
indirectly
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redeemed, purchased or otherwise acquired any of its outstanding capital
stock. Seller has not at any time incurred any Indebtedness to finance
distributions to its stockholders.
(c) All outstanding shares of Seller Stock have been and,
at or prior to the Closing Date, will be duly authorized and validly issued,
fully paid and non-assessable.
(d) The Stockholders own beneficially and of record the
number of shares of Seller Stock set forth opposite their respective names on
SCHEDULE 3.2(d). Except as set forth on SCHEDULE 3.2(d), there are no other
holders of Seller Outstanding Securities.
3.3 AUTHORITY RELATIVE TO THIS AGREEMENT; NON-CONTRAVENTION.
(a) Seller has the requisite corporate power and authority
to enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement by Seller, the performance by Seller
of its obligations hereunder and the consummation by Seller of the
transactions contemplated herein have been duly authorized by the board of
directors of Seller and the Stockholders, and no other corporate proceedings
on the part of Seller are necessary to authorize the execution and delivery
of this Agreement, the performance by Seller of its obligations hereunder
and, except for the filing of articles of dissolution or equivalent document
with the State Corporation Commission of the Commonwealth of Virginia, the
consummation by Seller of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Seller and constitutes a
valid and binding obligation of Seller, enforceable against it in accordance
with its terms, except to the extent that such enforceability may be limited
by applicable bankruptcy, insolvency, fraudulent transfer, reorganization or
similar laws affecting the rights of creditors generally or by general
principles of equity.
(b) Except as set forth in SCHEDULE 3.3, neither the
execution and delivery of this Agreement by Seller nor the consummation by
Seller of the transactions contemplated herein nor compliance by Seller with
any of the provisions hereof will (i) conflict with or result in any breach
of the articles of incorporation or by-laws of Seller, (ii) result in a
violation or breach of any provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Lien upon any of the Assets of Seller
under, or result in the loss of a material benefit under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, contract, lease, agreement or other instrument or obligation
of any kind to which Seller is a party or by which Seller or any of its
properties or assets may be bound, or any permit, concession, franchise or
license applicable to it or its properties or assets or (iii) subject to
compliance with the statutes and regulations referred to in subsections (c)
and (d) below, conflict with or violate any judgment, ruling, order, writ,
injunction, decree, law, statute, rule or regulation applicable to Seller or
any of its properties or assets, other than any such event described in items
(ii) or (iii) that could not reasonably be expected (x) to prevent the
consummation of the transactions contemplated hereby or (y) to have a Seller
Material Adverse Effect.
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(c) No action by any Governmental Entity is necessary for
Seller's execution and delivery of this Agreement or the consummation by
Seller or the Stockholders of the transactions contemplated hereby, except
where the failure to obtain or take such action would not reasonably be
expected (i) to prevent the consummation of the transactions contemplated
hereby or (ii) to have a Seller Material Adverse Effect.
(d) Except as set forth on SCHEDULE 3.3, no consents,
approvals, orders, registrations, declarations, filings or authorizations are
required on the part of Seller for or in connection with the execution and
delivery of this Agreement or the consummation by Seller of the transactions
contemplated on its part hereby except filings under the Xxxx-Xxxxx-Xxxxxx
Act or where the failure to obtain or take such action would not reasonably
be expected (i) to prevent the consummation of the transactions contemplated
hereby or (ii) to have a Seller Material Adverse Effect.
3.4 FINANCIAL STATEMENTS. Seller has delivered to CIBER copies of
the following financial statements which have been prepared in accordance
with generally accepted accounting principles consistently followed (except
as disclosed on SCHEDULE 3.4) as of and for the periods indicated:
(i) the unaudited balance sheet of Seller dated
as of January 31, 1999 (the "January 31,
1999 Balance Sheet");
(ii) audited balance sheets of Seller at
December 31, 1996 and 1997 and unaudited
balance sheets at December 31, 1995 and
1998;
(iii) the unaudited statement of income
for the one month period ended
January 31, 1999; and
(iv) audited statements of income and stockholders'
equity of Seller for the years ended
December 31, 1996 and 1997, and an
unaudited statement of income and
stockholders' equity for each of the year
ended December 31, 1995 and the three, six
and nine month periods ended March 31, June
30, and September 30, 1998, respectively.
Except as set forth in such financial statements or in SCHEDULE 3.4, Seller
has no liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting principles
to be set forth on the balance sheets provided hereunder or in the notes
thereto or which, individually or in the aggregate, could have a Seller
Material Adverse Effect. Such financial statements present fairly the
financial condition of Seller as of the indicated dates and the results of
operations of Seller for the indicated periods, are correct and complete in
all material respects and are consistent with the books and records of
Seller. Such financial statements have accurate accruals of all employee
benefit costs including payroll, commissions, bonuses, retirement benefits
and vacation accruals.
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3.5 ABSENCE OF CERTAIN CHANGES. Except as set forth in SCHEDULE 3.5,
(I) since December 31, 1995, Seller has conducted its business only in the
ordinary course and Seller (i) has not changed its accounting principles or
methods except insofar as may be required by generally accepted accounting
principles and (ii) has not (A) granted to any officer or director of Seller
any increase in compensation, except in the ordinary course of business
consistent with prior practice, (B) granted to any officer of Seller any
increase in severance or termination pay, (C) entered into any employment,
severance or termination arrangement with any officer of Seller, (D) granted
any right or option to any employee or accelerated the vesting or exercise of
any such right or option or (E) purchased, redeemed or otherwise acquired any
shares of Seller's capital stock or any interest therein; and (II) since
December 31, 1997, there has not been any Seller Material Adverse Effect.
3.6 LITIGATION. Except as set forth in SCHEDULE 3.6, Seller has
received no notice or service of process with respect to any suit, action or
legal, administrative, arbitration or other proceeding or governmental
investigation or review nor, to the knowledge of Seller or the Affiliate
Stockholders, has any such matter been (a) initiated but not served or (b)
threatened, in each case, to which Seller is, or would be, a party or by
which it is or would be particularly affected and that considered
individually or in the aggregate, if determined adversely to Seller, would be
reasonably likely (i) to have a Seller Material Adverse Effect, (ii) to
materially impair the ability of Seller to perform its obligations under this
Agreement or (iii) to prevent the consummation of any of the transactions
contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Seller or the Affiliate Stockholders having, or that,
insofar as reasonably can be foreseen, in the future would have, any such
effect.
3.7 BROKER'S OR FINDER'S FEES. Other than fees payable by Seller to
Xxxx Xxxxx Xxxx Xxxxxx, no agent, broker, Person or firm acting on behalf of
Seller or the Stockholders or under any of their authority is or will be
entitled to any advisor's or broker's commission or finder's fee from Seller
or the Stockholders in connection with any of the transactions contemplated
herein.
3.8 SUBSIDIARIES. Except as set forth on SCHEDULE 3.8, Seller does
not own and will not own prior to Closing, directly or indirectly, any
capital stock or other ownership interest in any corporation, partnership,
joint venture or other entity.
3.9 ABSENCE OF CHANGES IN BENEFIT PLANS. Except as set forth in
SCHEDULE 3.9, since December 31, 1995, Seller has not adopted, or amended in
any material respect, any Benefit Plan. Except as set forth in the financial
statements described in Section 3.4 hereof and for those agreements set forth
on SCHEDULE 3.9, and except for obligations existing as a matter of law,
there exists no employment, consulting, severance, termination or
indemnification agreements, arrangements or understandings between Seller and
any current or former employee, officer or director of Seller who earns (or
earned prior to termination) annual cash compensation in excess of $100,000.
No Benefit Plan provides benefits to any Person who is not a current or
former employee, officer or director of Seller (or, with respect to health
insurance benefits, their respective spouses or dependents).
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3.10 COMPLIANCE WITH LAWS. Seller has not violated or failed to
comply with any statute, law, ordinance, regulation, rule, judgment, decree
or order of any Governmental Entity applicable to its business or operations,
except for violations and failures to comply that are not, individually or in
the aggregate, reasonably expected to result in a Seller Material Adverse
Effect. Seller has not received any written communication since March 1, 1997
from a Governmental Entity that alleges that Seller is not in compliance with
any applicable law. Except for expenditures to maintain routine business
licenses and Taxes not yet due and payable, Seller is not required to make,
and Seller has no reasonable expectation that it will be required to make,
any expenditures to achieve or maintain compliance with applicable law.
Seller is in material compliance with all immigration and other laws relating
to the employment or retention of Persons who are not citizens of the United
States.
3.11 ENVIRONMENTAL MATTERS.
(a) Seller has not (x) placed or disposed of any Hazardous
Substances on, under, from or at any of Seller's properties or any other
properties presently or formerly owned or operated by Seller (the
"Properties"), in violation of any applicable Environmental Laws, except for
violations that could not, in all such cases, taken individually or in the
aggregate, reasonably be expected to result in a Seller Material Adverse
Effect, (y) any knowledge of the presence of any Hazardous Substances on,
under or at any of the Properties or any other property but arising from the
Properties, in violation of any applicable Environmental Laws, except for
violations that could not, in all such cases taken individually or in the
aggregate, reasonably be expected to result in a Seller Material Adverse
Effect, or (z) received any written notice (A) during the preceding five
fiscal years from a Governmental Entity that Seller is in violation of, or
has failed to obtain any material permit or authorization under, any
Environmental Laws, (B) of the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity or any third
party in connection with any such violation or in connection with a release
or threatened release of Hazardous Substances at the Properties or any other
properties for which Seller may be responsible, (C) requiring the response to
or remediation of a release or threatened release of Hazardous Substances at
or arising from any of the Properties or any other properties or (D)
demanding payment by Seller for response to or remediation of a release or
threatened release of Hazardous Substances at or arising from any of the
Properties or any other properties.
(b) No Environmental Law imposes any obligation upon Seller
arising out of or as a condition to any transaction contemplated by this
Agreement, including any requirement to modify or to transfer any permit or
license, any requirement to file any notice or other submission with any
Governmental Entity, the placement of any notice, acknowledgment or covenant
in any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree. No Lien has been placed upon any
of Seller's owned or leased properties pursuant to any Environmental Law.
3.12 CONTRACTS; DEBT INSTRUMENTS.
(a) The Contracts constitute all of the contracts or
agreements to which Seller is a party that are material to the business,
properties, assets, condition (financial or otherwise) and
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results of operations of Seller. Each Contract is in full force and effect
and is a legal, valid and binding agreement of Seller and, to the knowledge
of Seller and the Stockholders, of each other party thereto, enforceable in
accordance with its terms except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws affecting the rights of creditors generally and
subject to general principles of equity. Seller is not in violation of or in
default under (nor does there exist any condition which upon the passage of
time or the giving of notice would cause such a violation of or default
under) any loan or credit agreement, note, bond, mortgage, indenture, lease,
permit, concession, franchise, license or any other Contract to which it is a
party or by which it or any of its properties or assets is bound, except for
violations or defaults that could not reasonably be expected (i) to result in
a Seller Material Adverse Effect, (ii) to impair the ability of Seller to
perform its obligations under this Agreement or (iii) to prevent the
consummation of any of the transactions contemplated by this Agreement.
(b) Set forth in SCHEDULE 3.12 is (i) a list of all loan or
credit agreements, notes, bonds, indentures and other agreements and
instruments pursuant to which any Indebtedness of Seller in an aggregate
principal amount in excess of $10,000 is outstanding or may be incurred and
(ii) the respective principal amounts currently outstanding thereunder.
Except as set forth in SCHEDULE 3.12, all Indebtedness of Seller was incurred
in the ordinary course of business.
(c) Except as set forth in SCHEDULE 3.12, Seller is not a
party to or bound by any material written or oral (i) employment agreement or
employment contract that is not terminable at will by Seller without cost to
Seller, (ii) covenant not to compete, (iii) agreement, contract or other
arrangement with (A) any Stockholder, (B) any Affiliate of Seller or any
Affiliate of any Stockholder or (C) any officer, director or employee of
Seller (other than employment agreements covered by clause (i) above); or
(iv) bonus compensation plans or arrangements (whether or not included in an
employment agreement or contract).
(d) Except as set forth in SCHEDULE 3.12, Seller is not a
party to or bound by any material written or oral mortgage, pledge, security
agreement, deed of trust or other document granting a Lien (including Liens
upon properties acquired under conditional sales, capital leases or other
title retention or security devices).
(e) Except as set forth on SCHEDULE 3.12, Seller is not
currently a party to any written or oral contract for hire which obligates
Seller to work on a fixed-fee or not-to-exceed fee basis regardless of the
number of hours actually spent on the project by Seller's employees (a
"Fixed-Fee Contract"). The financial statements delivered pursuant to Section
3.4 reflect adequate reserves for anticipated losses on all Fixed-Fee
Contracts. There are no Fixed-Fee Contracts where the profitability on work
completed prior to the Closing Date will be greater than profitability on
work completed after the Closing Date.
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3.13 PROPERTIES.
(a) Seller has good and marketable title to, or valid
leasehold interests in the Assets, except for Assets, if any, as are no
longer used or useful in the conduct of the Business or as have been disposed
of in the ordinary course of business. The Assets, other than the Assets in
which Seller has leasehold interests, are free and clear of all Liens. The
tangible personal property used by Seller that has a value, in the case of
each item, of $5,000 or more is in good operating condition and repair,
ordinary wear and tear excepted, and all personal property leased by Seller
is in the condition required of such property by the terms of the lease
applicable thereto during the term of such lease and upon the expiration
thereof except for such variances in the condition thereof as could not
reasonably be expected to result, individually or in the aggregate, in a
decrease in the value of Seller of $10,000 or more.
(b) Seller has complied in all material respects with the
terms of all leases relating to the Business to which it is a party and under
which it is in occupancy, and all such leases are in full force and effect.
Seller enjoys peaceful and undisturbed possession under all such leases.
Seller owns no real property.
(c) The Assets constitute "substantially all" the
properties of Seller within the meaning of Section 368(a)(1)(C) of the Code
and as specified in Section 3.01 of Revenue Procedure 77-37.
3.14 INTELLECTUAL PROPERTY.
(a) Except as set forth on SCHEDULE 3.14(a), Seller owns or
has the right to use pursuant to license, sublicense, agreement, or
permission all Intellectual Property necessary for the operation of the
Business as presently conducted, each item of Intellectual Property owned or
used by Seller immediately prior to the Closing hereunder will be owned or
available for use by CIBER and CIS on identical terms and conditions
immediately subsequent to the Closing Date hereunder, and Seller has taken
all appropriate action to maintain and protect each item of Intellectual
Property that it owns or uses, except where the failure to do so could not
reasonably be expected to result in a Seller Material Adverse Effect.
(b) Except as set forth on SCHEDULE 3.14(b), Seller has not
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties; Seller (and
its employees with responsibility for Intellectual Property matters) has not
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any
claim that Seller must license or refrain from using any Intellectual
Property rights of any third party); and, to the knowledge of Seller and the
Stockholders (and employees with responsibility for Intellectual Property
matters), no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of Seller.
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(c) SCHEDULE 3.14(c) identifies each registration which has
been issued to Seller with respect to any of its Intellectual Property,
identifies each pending application for registration which Seller has made
with respect to any of its Intellectual Property, and identifies each
license, agreement, or other permission which Seller has granted to any third
party with respect to any of its Intellectual Property (together with any
exceptions). Seller has delivered to CIBER correct and complete copies of all
such registrations, applications, licenses, agreements, and permissions (as
amended to date). SCHEDULE 3.14(c) also identifies each trade name or
unregistered trademark used by Seller in connection with its business. Except
as set forth on SCHEDULE 3.14(c), with respect to each item of Intellectual
Property required to be identified in SCHEDULE 3.14(c) and with respect to
each item of copyrightable Intellectual Property (whether or not registration
has been sought):
(i) Seller possesses all right, title, and
interest in and to the item, free and clear
of any lien, license, or other restriction;
(ii) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling,
or charge;
(iii) no action, suit proceeding, hearing,
investigation, charge, complaint, claim, or
demand is pending or, to the knowledge of
Seller and the Stockholders, threatened which
challenges the legality, validity,
enforceability, use, or ownership of the
item; and
(iv) Seller has never agreed to indemnify any
Person for or against any interference,
infringement, misappropriation, or other
conflict with respect to the item.
(d) SCHEDULE 3.14(d) identifies each item of Intellectual
Property that any third party owns and that Seller uses pursuant to license,
sublicense, agreement, or permission, except for any license implied by the
sale of a product and perpetual, paid-up or "shrinkwrap" licenses for
commonly available software programs with a value per program of less than
$2,500 under which the Seller is the licensee. Seller has delivered or made
available to CIBER correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). Except as set
forth on SCHEDULE 3.14(d) and except for the need to obtain any consents or
approvals or to give any notices to the extent required in order to effect
the assignment to CIBER or CIS of any license, sublicense, agreement or
permission referred to below in this subsection, with respect to each item of
Intellectual Property required to be identified in SCHEDULE 3.14(d):
(i) the license, sublicense, agreement, or
permission covering the item is legal,
valid, binding, enforceable, and in full
force and effect;
(ii) the license, sublicense, agreement or
permission will continue to be legal, valid,
binding, enforceable, and in full force and
effect on identical terms following the
Closing Date;
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(iii) Seller is not in breach of, and Seller
knows of no breach or default by other
parties to, the license, sublicense,
agreement, or permission, and, to the
knowledge of Seller, no event has occurred
that with notice or lapse of time would
constitute a breach or default or permit
termination, modification, or acceleration
thereunder;
(iv) Seller has not repudiated, and Seller knows
of no repudiation by other parties to, the
license, sublicense, agreement, or
permission;
(v) with respect to each sublicense, the
representations and warranties set forth in
subsections (i) through (iv) above are true
and correct with respect to the underlying
license;
(vi) to Seller's knowledge, the underlying item
of Intellectual Property is not subject to
any outstanding injunction, judgment,
order, decree, ruling, or charge;
(vii) Seller has received no notice or service of
process with respect to any action, suit,
proceeding, hearing, investigation, charge,
complaint, claim, or demand, nor, to the
knowledge of Seller and the Affiliate
Stockholders, has any such matter been (A)
initiated but not served, or (B)
threatened, in each case, that challenges
the legality, validity, or enforceability
of the underlying item of Intellectual
Property;
(viii) Seller has not granted any sublicense or
similar right with respect to the license,
sublicense, agreement, or permission; and
(ix) no such licenses, agreements or permissions
commit Seller to continued maintenance,
support, improvement, upgrade or similar
obligation of any of Seller's Intellectual
Property which obligation cannot be
terminated by Seller upon no greater than
ninety (90) days' notice.
3.15 LABOR MATTERS. There are no collective bargaining or other
labor union agreements to which Seller is a party or by which it is bound.
Since March 1, 1997, Seller has not been subject to any labor union
organizing activity, or had any actual or, to Seller's or the Stockholders'
knowledge, threatened employee strikes, work stoppages, slowdowns or lockouts.
3.16 CERTAIN EMPLOYEE MATTERS.
(a) Except as set forth on SCHEDULE 3.16(a), all current
and former (terminated within twelve (12) months of the date hereof) members
of management, key (including sales and recruiting) personnel and consultants
(whether employees or independent contractors) of Seller have executed and
delivered to Seller a confidential information agreement restricting such
Person's right
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to disclose confidential information of Seller. Except as set forth on
SCHEDULE 3.16(a), all such members of management, key personnel and
consultants of Seller have been party to a "work-for-hire" arrangement or
proprietary rights agreement with Seller pursuant to which either (i) in
accordance with applicable federal and state law, Seller has been accorded
full, effective, exclusive and original ownership of all tangible and
intangible property thereby arising or (ii) there has been conveyed to Seller
by appropriately executed instruments of assignment full, effective and
exclusive ownership of all tangible and intangible property thereby arising.
No employee, agent, consultant or contractor of Seller who has contributed to
or participated in the conception and development of proprietary rights of
Seller has asserted or threatened any claim against Seller in connection with
such Person's involvement in the conception and development of the
proprietary rights of Seller.
(b) SCHEDULE 3.16(b) identifies all employees, independent
contractors and other personnel of Seller, their respective rates of pay at
the date hereof and, with respect to all billing consultants (employees or
independent contractors), the billing rate of each such consultant. Unless
otherwise noted on SCHEDULE 3.16(b), each of Seller's personnel identified on
SCHEDULE 3.16(b) is working full time, and as of the date of this Agreement,
none of such personnel has expressly stated to an officer or manager of
Seller that he or she intends to resign or cease working with the business of
Seller as operated by CIBER after Closing. Except as identified on SCHEDULE
3.16(b), Seller has not committed to increase in any manner the compensation
of any of its personnel beyond the amount identified on SCHEDULE 3.16(b).
(c) Except as set forth on SCHEDULE 3.16(c), all current
and former (terminated within twelve (12) months of the date hereof) members
of management and key (including sales and recruiting) personnel and billable
consultants (whether employees or independent contractors) of Seller have
executed and delivered to Seller a nonsolicitation agreement restricting such
Person's right to solicit employees, customers, clients and prospective
customers and clients of Seller during the term of such Person's engagement
and for at least twelve (12) months thereafter.
3.17 INSURANCE. All of the policies of fire, liability, product
liability, worker's compensation, health and other forms of insurance
presently in effect with respect to Seller's business are valid and
outstanding policies and provide insurance coverage for the properties,
assets and operations of Seller, of the kinds, in the amounts and against the
risks (i) required to comply, in all material respects, with laws and (ii) as
management of Seller deems to be adequate. No notice of cancellation or
termination has been received with respect to any such policy. The activities
and operations of Seller have been conducted in a manner so as to conform in
all material respects to all applicable provisions of such insurance policies.
3.18 TAXES.
(a) Except as set forth in SCHEDULE 3.18, (A) Seller has
timely filed with the appropriate Taxing Authority all Returns required to be
filed on or prior to the date hereof and each such Return was properly
completed and correct in all material respects at the time of filing, (B) all
Taxes including Taxes, if any, for which no Returns are required to be filed
(i) of Seller, (ii) for
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which Seller is or could otherwise be held liable, or (iii) which are or
could otherwise become chargeable as an encumbrance upon the Assets (the
Taxes referred to in this Section being "Covered Taxes"), have been duly and
timely paid, except for (x) Taxes not yet due and payable that are disclosed
in the financial statements referred to in Section 3.4, (y) Taxes that are
disputed in good faith, listed on SCHEDULE 3.18, where appropriate amounts
have been reserved on the Final Closing Balance Sheet, and (z) when the
failure to file Returns or pay Taxes would not reasonably be expected to have
a Seller Material Adverse Effect, and (C) Seller has never been a member of
an affiliated group of corporations within the meaning of Section 1504 of the
Code and is not subject to any liability for the Taxes of any other Person,
including any liability arising from the application of U.S. Treasury
Regulation Section 1.1502-6 or any analogous provisions of state, local or
foreign law. Seller is not and never has been a party to any Tax sharing
agreement.
(b) Seller has delivered or made available to CIBER (A)
complete and correct copies of all Returns filed by Seller for taxable
periods ending on or after December 31, 1995 and for all other taxable
periods for which the applicable statute of limitations has not yet run and
(B) complete and correct copies of all ruling requests, private letter
rulings, revenue agent reports, information document requests and responses
thereto, notices of proposed deficiencies, deficiency notices, applications
for changes in method of accounting, protests, petitions, closing agreements,
settlement agreements, and any similar documents submitted by, received by or
agreed to by or on behalf of Seller and relating to any Taxes.
(c) Except as set forth in SCHEDULE 3.18 or as disclosed in
the financial statements referred to in Section 3.4, no Liens for Taxes exist
with respect to any of the assets or properties of Seller, other than for
Taxes not yet due and payable. Except as set forth in SCHEDULE 3.18, the
federal and state income Tax Returns of Seller have never been examined by
the Internal Revenue Service or any other Taxing Authority and the statute of
limitations with respect to the relevant Tax liability has expired for all
taxable periods through and including the taxable year ended on December 31,
1995. Except as set forth in SCHEDULE 3.18, each deficiency resulting from
any audit or examination relating to Covered Taxes by any Taxing Authority
has been paid and no material issues were raised in writing by the relevant
Taxing Authority during any such audit or examination that will apply to
taxable periods other than the taxable period to which such audit or
examination related. Except as set forth in SCHEDULE 3.18, (A) no Returns
with respect to federal income Taxes or other Taxes of Seller are currently
under audit or examination by the Internal Revenue Service or any other
Taxing Authority, (B) no audit or examination relating to Covered Taxes is
currently being conducted by the Internal Revenue Service or any other Taxing
Authority, (C) neither the Internal Revenue Service nor any other Taxing
Authority has given notice (either orally or in writing) that it will
commence any such audit or examination and (D) except with respect to a
change from the cash method of accounting to the accrual method of accounting
for income tax purposes, no adjustment under Section 481 of the Code is in
effect or will be required as a result of the transfer of the Assets.
(d) No Person has made with respect to Seller, or with
respect to any property held by Seller, any consent or election under Section
341(f) of the Code. Except as set forth in SCHEDULE 3.18, (A) no property of
Seller is "tax-exempt use property" within the meaning of
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Section 168(h) of the Code and (B) Seller is not a party to any lease made
pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect prior to the date of enactment of the Tax Equity and
Fiscal Responsibility Act of 1982.
(e) Except as set forth on SCHEDULE 3.18, Seller is not a
party to any agreement, contract, arrangement or plan that could result,
individually or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(f) Except as set forth in SCHEDULE 3.18, there is no
agreement or other document extending, or having the effect of extending, the
period of assessment or collection of any Covered Taxes and no power of
attorney with respect to any Covered Taxes, has been executed or filed with
the Internal Revenue Service or any other Taxing Authority.
(g) Except as set forth on SCHEDULE 3.18, no items of
income attributable to transactions occurring on or before the close of the
last preceding taxable year of Seller will be required to be included in
taxable income by Seller in a subsequent taxable year by reason of Seller
reporting income on the installment sales method of accounting, the completed
contract method of accounting or the percentage of completion-capitalized
cost method of accounting.
(h) Seller has withheld and paid over all Taxes required to
have been withheld and paid over and complied with all material information
reporting and backup withholding requirements, including maintenance of
required records with respect thereto, in connection with material amounts
paid or owing to any employee, independent contractor, creditor, stockholder
or other third party.
3.19 ERISA.
(a) SCHEDULE 3.19 contains a list and brief description of
each Pension Plan, Welfare Plan and each other written plan, arrangement or
policy relating to stock options, stock purchases, bonuses, compensation,
deferred compensation, severance, fringe benefits or other employee benefits
(other than the employment agreements listed on SCHEDULE 3.12), in each case
maintained or contributed to, or required to be maintained or contributed to,
by Seller or any other Person that, together with Seller, is treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code (each,
together with Seller, a "Commonly Controlled Entity") for the benefit of any
present or former officers, employees, agents, directors or independent
contractors of Seller (all the foregoing being herein called "Benefit
Plans"). Seller has delivered to CIBER true, complete and correct copies of
(1) each Benefit Plan, (2) the most recent annual report on Form 5500 filed
with the Internal Revenue Service with respect to each Benefit Plan (if any
such report was required by applicable law), (3) the most recent summary plan
description (or similar document) for each Benefit Plan for which such a
summary plan description is required by applicable law or was otherwise
provided to plan participants or beneficiaries, (4) each trust agreement and
insurance or annuity contract relating to any Benefit Plan, and (5)
discrimination tests conducted upon the Benefit Plans for each of the last
three (3) fiscal years. To the knowledge of Seller, each such Form 5500 and
each such summary plan description (or similar document) was and is as of the
date hereof true, complete
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and correct in all material respects, except for those forms and descriptions
that would not reasonably be expected to have a Seller Material Adverse
Effect.
(b) Each Benefit Plan has been administered in all material
respects in accordance with its terms and in compliance in all material
respects with the applicable provisions of ERISA and the Code. There are no
investigations by any governmental agency, termination proceedings or other
claims (except claims for benefits payable in the normal operation of the
Benefit Plans), suits or proceedings against or involving any Benefit Plan or
asserting any rights to or claims for benefits under any Benefit Plan that
would reasonably be expected to cause a Seller Material Adverse Effect.
(c) None of the Benefit Plans (i) constitutes a
"multiemployer plan," as defined in Section 3(37) of ERISA or (ii) has been
or is subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of
the Code.
(d) All contributions to, and benefit payments from, the
Benefit Plans required to be made in accordance with the terms of the Benefit
Plans have been timely made. All such contributions to, and payments from,
the Benefit Plans, except those payments to be made from any trust qualified
under Section 501(c) of the Code, for any period ending before the Closing
Date that are not yet, but will be, required to be made, will be properly
accrued and reflected in financial statements of Seller referred to in
Section 3.4.
(e) Each Benefit Plan that is a Pension Plan (hereinafter a
"Seller Pension Plan") that is intended to be a tax-qualified plan has been
the subject of a determination letter from the Internal Revenue Service to
the effect that such Seller Pension Plan is qualified and exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code; no
such determination letter has been revoked and, to the knowledge of Seller or
the Stockholders, revocation has not been threatened; to the knowledge of
Seller or the Stockholders, no circumstances exist that would adversely
affect the tax-qualification of such Seller Pension Plan; and such Seller
Pension Plan has not been amended since the effective date of its most recent
determination letter in any respect that might materially adversely affect
its qualification, materially increase its cost or require security under
Section 307 of ERISA. Seller has delivered to CIBER a copy of the most recent
determination letter received with respect to each Seller Pension Plan for
which such a letter has been issued; a copy of any pending application for a
determination letter and a list of all Seller Pension Plan amendments as to
which a favorable determination letter has not yet been received.
(f) (1) No "prohibited transaction" (as defined in Section
4975 of the Code or Section 406 of ERISA) has occurred that involves the
assets of any Benefit Plan; (2) no prohibited transaction has occurred that
could subject Seller, any of its employees or a trustee, administrator or
other fiduciary of any trust created under any Benefit Plan to the tax or
sanctions on prohibited transactions imposed by Section 4975 of the Code or
Title I of ERISA; and (3) neither Seller nor any trustee, administrator or
other fiduciary of any Benefit Plan nor any agent of any of the foregoing has
engaged in any transaction or acted in a manner that could, or has failed to
act so as to, subject Seller or any trustee, administrator or other fiduciary
to liability for breach of fiduciary duty under
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ERISA other than for liabilities that would not reasonably be expected to
have an Seller Material Adverse Effect.
(g) The list of Welfare Plans in SCHEDULE 3.19 discloses
whether each Welfare Plan is (i) unfunded, (ii) funded through a "welfare
benefit fund," as such term is defined in Section 419(e) of the Code, or
other funding mechanism or (iii) insured. Each such Welfare Plan may be
amended or terminated without Seller having a Seller Material Adverse Effect
at any time after the Closing Date. Seller complies in all material respects
with the applicable requirements of Section 4980B(f) of the Code with respect
to each Benefit Plan that is a group health plan, as such term is defined in
Section 5000(b)(1) of the Code.
(h) No compensation payable by Seller to any of its
employees, officers or directors under any existing contract, Benefit Plan or
other employment arrangement or understanding (including by reason of the
transactions contemplated hereby) will be subject to disallowance under
Section 162(m) of the Code.
(i) Any amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or director of Seller
or any of its Affiliates who is a "disqualified individual" (as such term is
defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation
arrangement or Benefit Plan currently in effect would not be characterized as
an "excess parachute payment" (as such term is defined in Section 280G(b)(l)
of the Code). SCHEDULE 3.19 sets forth (i) the maximum amount that could be
paid to each executive officer of Seller as a result of the transactions
contemplated by this Agreement under all employment, severance and
termination agreements, other compensation arrangements and Benefit Plans
currently in effect and (ii) the "base amount" (as such term is defined in
Section 280G(b)(3) of the Code) for each such executive officer calculated as
of the date of this Agreement.
3.20 DELIVERY OF PROSPECTUS. Seller has received CIBER's Prospectus
relating to the Shares to be issued hereunder and delivered a copy of such
Prospectus to each Stockholder at least twenty (20) business days prior to
the Closing Date and the date on which the Stockholders voted on the
transactions contemplated in this Agreement.
3.21 BUSINESS RELATIONS. Attached hereto as SCHEDULE 3.21 is a list
of all customers and suppliers of Seller as of January 1, 1999. As of the
date hereof, neither Seller nor the Stockholders have received from any
customer or supplier of Seller notice that such customer or supplier intends
to change its business relationship with Seller in any material respect after
consummation of the transactions contemplated by this Agreement.
3.22 BANK ACCOUNTS. Attached hereto as SCHEDULE 3.22 is a list of
all banks or other financial institutions with which Seller has an account or
maintains a safe deposit box, showing the type and account number of each
such account and safe deposit box and the names of the Persons authorized as
signatories thereon or to act or deal in connection therewith.
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3.23 POOLING OF INTERESTS TREATMENT. To the knowledge of Seller and
the Affiliate Stockholders, neither Seller, any of the Affiliate
Stockholders, nor any of their Affiliates have taken or agreed to take any
action or is aware of any condition that would prevent CIBER from accounting
for the transactions provided for herein as a pooling of interests. Since
December 31, 1995, (i) Seller has been autonomous and not a subsidiary or
division of another company or part of an acquisition which was later
rescinded, (ii) there has not been any sale or spin-off of a significant
amount of assets of Seller or any Affiliate of Seller other than in the
ordinary course of business, (iii) Seller has not acquired any of its capital
stock, and (iv) any and all changes in the voting capital structure and the
relative ownership of shares are described on SCHEDULE 3.23 hereto and none
of such changes, if any, has been made in contemplation of a business
combination. Seller does not own and has not owned any of the outstanding
shares of CIBER Common Stock. Seller has not issued any of its capital stock
pursuant to awards, grants or bonuses (other than pursuant to options listed
on SCHEDULE 3.5 that were granted to key employees during the past two years
in the ordinary course of the Seller's business pursuant to an option plan
adopted in November 1998 and prior to any contemplated business combination).
All debt incurred by Seller to its stockholders and all payments made in
connection therewith since December 31, 1995, are listed on SCHEDULE 3.23.
Seller has not incurred and repaid any Indebtedness owed to any stockholder
(other than debt incurred in the ordinary course of business and on terms and
conditions consistent with the past practices of Seller). Seller does not
lease any real estate from any Stockholder or Affiliates of Seller. Neither
Seller nor any Affiliate Stockholder has any ownership interest in or control
of any business or operations in the same or similar line of business as the
Business of Seller, nor does Seller or any Affiliate Stockholder have any
ownership interest or control of any competitor, supplier or customer of
Seller.
3.24 COLLECTIBILITY OF RECEIVABLES. Except as disclosed on SCHEDULE
3.24, all receivables that comprise the accounts receivable balance on the
Final Closing Balance Sheet are collectible within 120 days from the Closing
Date.
3.25 ACCOUNTING METHOD. Since inception, Seller has been, and at
Closing will be, a cash basis taxpayer.
3.26 NET WORTH. Seller has, and at the Closing will have, Net Worth
in excess of $3,000,000.
3.27 DISTRIBUTIONS; REDEMPTIONS. Since December 31, 1995, each
declaration or payment of a dividend, each distribution made on, and each
redemption of, Seller Common Stock or other shares of capital stock of Seller
has been made in accordance with and did not violate any provision of any
state or federal law and did not violate or conflict with any stockholders'
or other similar agreement, if any.
3.28 YEAR 2000 COMPLIANCE. Except as set forth on SCHEDULE 3.28, (a)
each system comprised of software, hardware, databases, or embedded control
systems (microprocessor controlled, robotic or other device) (collectively, a
"System"), that constitutes any part of, or is used
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in connection with the use, operation or enjoyment of any Asset of Seller has
been certified in writing by the manufacturer, programmer, vendor, supplier,
lessor or licensor, as the case may be, that such System, and (b) each
product licensed, sold or otherwise distributed by Seller, including
software, hardware, databases or embedded control systems (collectively, a
"Product"): (i) is designed (or has been modified) to be used prior to and
after January 1, 2000, (ii) will operate without error arising from the
creation, recognition, acceptance, calculation, display, reporting, storage,
retrieval, accessing, comparison, sorting, manipulation, processing or other
use of dates, or date-based, date-dependent or date-related data, including
century recognition, day-of-the-week recognition, leap years, date values and
interfaces of date functionalities, and (iii) will not be adversely affected
by the advent of the year 2000 or subsequent years, the advent of the
twenty-first century or the transition from the twentieth century through the
year 2000 and into the twenty-first century (collectively, items (i) through
(iii) are referred to herein as "Year 2000 Compliant"). Except as set forth
on SCHEDULE 3.28, no System that is material to the business, finances, or
operation of Seller receives data from or communications with any component
or system external to itself (whether or not such external component or
system is Seller's or any third party's) that is not itself certified as Year
2000 Compliant by the operator of such external components or system
excepting the parts of the external component or system within which
noncompliance to Year 2000 Compliance will have no material effect on the
data or communications sent to Seller, nor on the Systems of Seller. Except
as set forth on SCHEDULE 3.28, all licenses for the use of any System-
related software, hardware, databases or embedded control system are
certified by the manufacturer to be Year 2000 Compliant and to contain the
capabilities required to enable Year 2000 Compliance within Seller's computer
systems (hardware and software), or the licenses permit Seller or a third
party to make all modifications, bypasses, de-bugging, work-arounds, repairs,
replacements, conversions or corrections necessary to permit the System to
operate compatibly, in conformance with their respective specifications, and
to be Year 2000 Compliant. Except as set forth on SCHEDULE 3.28, Seller has
no reasonable basis to believe that it may incur material expenses arising
from or relating to the failure of any of its Systems or Products as a result
of not being Year 2000 Compliant.
3.29 AGENTS. Except as set forth in SCHEDULE 3.29, neither Seller
nor any Stockholder has designated or appointed any Person or other entity to
act for it or on its behalf pursuant to any power of attorney or to act or
deal in connection therewith.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF CIBER AND CIS
CIBER and CIS, as applicable, represent and warrant to Seller and
the Affiliate Stockholders and agrees as follows:
4.1 ORGANIZATION. CIBER is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. CIS is
a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware. Each of CIBER and CIS has the corporate
power to own its property and to carry on its business as now being
conducted. Each of CIBER and CIS is duly qualified and/or licensed, as may be
required, and in good standing in
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each of the jurisdictions in which the nature of the business conducted by it
or the character of the property owned, leased or used by it makes such
qualification and/or licensing necessary, except in such jurisdictions where
the failure to be so qualified and/or licensed would not individually or in
the aggregate have a CIBER Material Adverse Effect.
4.2 CAPITALIZATION.
(a) At December 31, 1998:
(i) CIBER's authorized capital stock consisted
of (i) 80,000,000 shares of CIBER Common
Stock, of which 53,741,443 shares were
issued and outstanding and (ii) 5,000,000
shares of preferred stock, par value $.01
per share, no shares of which were issued
and outstanding.
(ii) There were outstanding stock options to
purchase an aggregate of 6,188,082 shares of
CIBER Common Stock.
(b) As of the date hereof, other than as referred to in
subsection (a)(i) above, there are not outstanding shares of capital stock or
other voting securities of CIBER.
(c) As of the date hereof, other than as referred to in
subsection (a)(ii) above or as disclosed in the CIBER SEC Reports, there are
not outstanding any options or rights to purchase CIBER Common Stock or other
securities of CIBER convertible into or exchangeable for shares of CIBER
Common Stock.
(d) As of the date hereof, all shares of the issued and
outstanding capital stock of CIS are owned by CIBER and there are no options
or rights to purchase capital stock of CIS outstanding.
(e) When issued to Seller in accordance with this
Agreement, the Shares will be duly authorized, validly issued, fully paid and
non-assessable. All of the Shares to be delivered to Seller are represented
by shares of CIBER Common Stock whose distribution to Seller, by Seller to
each Stockholder and by each Stockholder has been registered under the
Securities Act pursuant to the Registration Statement.
4.3 AUTHORITY RELATIVE TO THIS AGREEMENT; NON-CONTRAVENTION.
(a) Each of CIBER and CIS has the requisite corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement by each of CIBER and
CIS, the performance by each of CIBER and CIS of its obligations hereunder
and the consummation by each of CIBER and CIS of the transactions
contemplated herein have been duly authorized by the board of directors of
each of CIBER and CIS, and no other corporate proceedings on the part of
CIBER or CIS are necessary to authorize the execution and delivery of this
Agreement, the performance by CIBER and CIS of their respective
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obligations hereunder and the consummation by CIBER and CIS of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by CIBER and CIS and constitutes a valid and binding obligation of
each of CIBER and CIS, enforceable against each of them in accordance with
its terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent transfer, reorganization or
similar laws affecting the rights of creditors generally or by general
principles of equity.
(b) Neither the execution and delivery of this Agreement by
CIBER or CIS nor the consummation by CIBER or CIS of the transactions
contemplated herein nor compliance by CIBER or CIS with any of the provisions
hereof will (i) conflict with or result in any breach of the certificate of
incorporation or by-laws of CIBER or CIS, (ii) result in a violation or
breach of any provisions of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result
in the termination of, or accelerate the performance required by, or result
in a right of termination or acceleration under, or result in the creation of
any Lien upon any of the properties or assets of CIBER or CIS, under, or
result in the loss of a material benefit under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
contract, lease, agreement or other instrument or obligation of any kind to
which CIBER or CIS, is a party or by which CIBER or CIS, or any of their
properties or assets may be bound, or any permit, concession, franchise or
license applicable to it or its properties or assets or (iii) subject to
compliance with the statutes and regulations referred to in subsection (c)
below, conflict with or violate any judgment, ruling, order, writ,
injunction, decree, law, statute, rule or regulation applicable to CIBER or
CIS or any of its properties or assets, other than any such event described
in items (ii) or (iii) that would not reasonably be expected (x) to prevent
the consummation of the transactions contemplated hereby or (y) to have a
CIBER Material Adverse Effect.
(c) Except for compliance with the federal securities laws
and state securities laws and the filings and approval requirements under the
Xxxx-Xxxxx-Xxxxxx Act by the Federal Trade Commission and the Antitrust
Division of the U.S. Department of Justice, no action by any Governmental
Entity is necessary for CIBER's or CIS's execution and delivery of this
Agreement or the consummation by CIBER or CIS of the transactions
contemplated hereby, except where the failure to obtain or take such action
would not reasonably be expected (i) to prevent the consummation of the
transactions contemplated hereby or (ii) to have a CIBER Material Adverse
Effect.
(d) Except for any action contemplated by subsection (c)
above, no consents, approvals, orders, registrations, declarations, filings
or authorizations are required on the part of CIBER or CIS for or in
connection with the execution and delivery of this Agreement or the
consummation by CIBER or CIS of the transactions contemplated hereby.
4.4 SEC REPORTS AND FINANCIAL STATEMENTS. Since December 31, 1997,
CIBER has filed all forms, reports and other documents required to be filed
by CIBER with the SEC. As of their respective dates, the CIBER SEC Reports
complied in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder applicable to such CIBER SEC Reports and, except to the extent
that information
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contained in any CIBER SEC Report has been revised or superseded by a later
CIBER SEC Report filed and publicly available prior to the date of this
Agreement, none of the CIBER SEC Reports contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of CIBER included in the CIBER SEC Reports complied as to form in
all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles (except,
in the case of unaudited statements, as permitted by the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto) and presented fairly in all material respects the
consolidated financial position of CIBER and its consolidated subsidiaries as
of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
CIBER SEC Reports, neither CIBER nor any of the CIBER Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting principles
to be set forth on a consolidated balance sheet of CIBER and its consolidated
subsidiaries or in the notes thereto and which, individually or in the
aggregate, would reasonably be expected to have a CIBER Material Adverse
Effect. None of the CIBER Subsidiaries is required to file any forms, reports
or other documents with the SEC pursuant to Sections 12 or 15 of the Exchange
Act.
4.5 ABSENCE OF CERTAIN CHANGES. Except as set forth in the CIBER SEC
Reports filed with the SEC prior to the date hereof, since December 31, 1997,
there has not been any CIBER Material Adverse Effect.
4.6 BROKER'S OR FINDER'S FEES. There is no investment banker,
broker, finder or other intermediary which has been retained by or authorized
to act on behalf of CIBER or CIS who might be entitled to any fee or
commission from Seller or the Stockholders in connection with the
transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS OF THE AFFILIATE STOCKHOLDERS
5.1 SECURITY REPRESENTATIONS OF THE AFFILIATE STOCKHOLDERS. In order
to induce CIBER to issue the Shares to Seller pursuant to Article II hereof,
each Affiliate Stockholder, as to himself, hereby represents and warrants to
CIBER and CIS and agrees as follows:
(a) the Affiliate Stockholder has received and carefully
reviewed the CIBER SEC Reports, including the Registration Statement (and the
Prospectus included therein), and except for the CIBER SEC Reports and this
Agreement and related documents, the Stockholder has not been furnished with
any materials or literature relating to the offer and sale of CIBER Common
Stock;
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(b) the Affiliate Stockholder has received CIBER's
Prospectus relating to the Shares to be issued hereunder at least twenty (20)
business days prior to the Closing Date and the date on which such Affiliate
Stockholder voted on the transactions contemplated in this Agreement;
(c) the Affiliate Stockholder has had a reasonable
opportunity to ask questions of and receive answers from CIBER concerning
CIBER and all such questions, if any, have been answered to the full
satisfaction of the Affiliate Stockholder; the Affiliate Stockholder has
received all the information he or she considers necessary or appropriate for
deciding whether to enter this Agreement and acquire the CIBER Common Stock;
(d) the Affiliate Stockholder (i) has such knowledge and
expertise in financial and business matters that the Affiliate Stockholder is
capable of evaluating the merits and risks involved in an investment in the
CIBER Common Stock or (ii) has available the services of an investment
advisor capable of such evaluation;
(e) except as set forth in this Agreement, no
representations or warranties have been made to the Affiliate Stockholder by
CIBER, or any agent, employee or Affiliate of CIBER; and in entering into
this transaction the Affiliate Stockholder is not relying upon any
information other than that contained in the CIBER SEC Reports, this
Agreement and the results of independent investigations, if any, by the
Affiliate Stockholder;
(f) the Affiliate Stockholder has been advised that as of
the date this Agreement is submitted to a vote of the stockholders of Seller
he or she may be deemed an "Affiliate" of Seller, as that term is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations
promulgated by the SEC under the Securities Act, and the Shares received by
the Affiliate Stockholder may be sold only (i) pursuant to an effective
registration statement under the Securities Act, (ii) in conformity with the
volume and other limitations of Rules 144 and 145 promulgated by the SEC
under the Securities Act, or (iii) in reliance upon an exemption from
registration available under the Securities Act; and the Affiliate
Stockholder will not sell or otherwise transfer any of the Shares in
violation of the Securities Act or the rules and regulations promulgated by
the SEC thereunder;
(g) it is understood that the certificates evidencing the
Shares may bear the following legends or a combination thereof:
(i) "THESE SHARES WERE ISSUED IN A TRANSACTION
TO WHICH RULE 145, PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,
APPLIES. THESE SHARES MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF
SUCH RULE. IN ADDITION, IN NO EVENT SHALL
THE SHARES REPRESENTED BY THIS CERTIFICATE
BE ASSIGNED, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF UNLESS AND UNTIL
CIBER, INC. HAS PUBLICLY REPORTED THE
FINANCIAL RESULTS FOR THE
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PERIOD ENDED WHICH INCLUDES THE RESULTS OF
THE COMBINED OPERATIONS OF CIBER, INC. AND
BUSINESS IMPACT SYSTEMS, INC. FOR AT LEAST
30 DAYS SUBSEQUENT TO THE CLOSING DATE."
(ii) Any legend required by the laws of the
State of Delaware or applicable state
securities laws.
(h) it is understood that any legend on a certificate
pursuant to Section 5.1(g)(i) shall be removed, and CIBER shall have a
certificate issued without such legend to the holder thereof, if such legend
may be properly removed under the terms of Rule 145 promulgated under the
Securities Act, and/or if the holder of the certificate provides CIBER with
an opinion of counsel for such holder, reasonably satisfactory to legal
counsel for CIBER to the effect that a sale, transfer or assignment of such
securities may be made and that the legend is no longer required;
(i) the Affiliate Stockholder has full power and authority
to execute, deliver and to perform the obligations of this Agreement and this
Agreement constitutes a legally binding obligation of the Affiliate
Stockholder, enforceable against such Affiliate Stockholder in accordance
with its terms, except to the extent that such enforceability may be limited
by applicable bankruptcy, insolvency, fraudulent transfer, reorganization or
similar laws affecting the rights of creditors generally or by general
principles of equity; and
(j) if the Affiliate Stockholder wishes to dispose of more
than 100,000 Shares received as a result of the transactions contemplated by
this Agreement, in a single or related series of transactions, he or she
shall provide written notice to CIBER, not less than five (5) days prior to
the intended date of disposition, specifying the number of shares of CIBER
stock such Stockholder proposes to transfer.
ARTICLE VI
COVENANTS AND OTHER AGREEMENTS
6.1 CONDUCT OF BUSINESS BY SELLER. Seller and each Affiliate
Stockholder covenants and agrees that, prior to the Closing Date, unless
CIBER shall otherwise agree in writing or except in connection with the
transactions contemplated by this Agreement:
(a) The business of Seller shall be conducted in the
ordinary and usual course of business, consistent with past practices, and
Seller and the Stockholders shall use commercially reasonable efforts to
maintain and preserve intact Seller's business organization, to keep
available the services of its officers and employees and to maintain
significant beneficial business relationships with suppliers, contractors,
distributors, customers, licensors, licensees and others having business
relationships with it.
(b) Without limiting the generality of the foregoing
subsection (a), Seller shall not, directly or indirectly:
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(i) sell, lease, transfer, mortgage or
otherwise encumber, subject to any Lien or
otherwise dispose of any Assets, except
sales of properties or assets no longer
needed by it for use in the ordinary course
of its business, or sales of Excluded
Assets;
(ii) amend or propose to amend its articles of
incorporation or by-laws, reincorporate in
any jurisdiction, dissolve, liquidate or
merge with any entity (whether or not
Seller is the survivor);
(iii) split, combine or reclassify any
outstanding shares of, or interests in, its
capital stock;
(iv) declare, set aside or pay any dividend or
distribution, payable in cash, stock,
property or otherwise with respect to any
of its capital stock;
(v) redeem, purchase or otherwise acquire or
offer to redeem, purchase or otherwise
acquire any shares of capital stock of
Seller or any options, warrants or rights
to acquire capital stock of Seller;
(vi) issue, sell, pledge, dispose of or
encumber, or authorize, propose or agree to
the issuance, sale, pledge or disposition
or encumbrance by Seller of, any shares of,
or any options, warrants or rights of any
kind to acquire any shares of, or any
securities convertible into or exchangeable
for any shares of, its capital stock of any
class, or any other securities in respect
of, in lieu of, or in substitution for any
class of its capital stock outstanding on
the date hereof;
(vii) modify the terms of any existing
Indebtedness or incur any Indebtedness or
issue any debt securities, except
Indebtedness incurred in the ordinary
course of business, but only if the amount
of such indebtedness, when added to all
other Indebtedness of Seller then
outstanding (determined in accordance with
generally accepted accounting principles)
does not exceed the sum of (x) the total
amount of Indebtedness outstanding on the
December 31, 1998 balance sheet and (y)
$25,000;
(viii) assume, guarantee, endorse or otherwise as
an accommodation become responsible for,
the obligations of any other Person, enter
into any "keep well" or other agreement to
maintain any financial statement condition
of another Person or enter into any
arrangement having the economic effect of
any of the foregoing or make any material
loans or advances or capital contributions
to, or investments in, any other Person;
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(ix) authorize, recommend or propose any
material change in its capitalization, or
any release or relinquishment of any
material contract right or effect or permit
any of the foregoing;
(x) adopt or establish any new employee benefit
plan or amend in any material respect any
employee benefit plan, increase the
compensation or fringe benefits of any
employee or pay any benefit not consistent
with any existing employee benefit plan
except in a manner consistent with Seller's
historical salary review procedures;
(xi) make any payments with respect to, enter
into or amend any employment, consulting,
severance or indemnification agreement with
any director, officer or employee of
Seller, except for any such payments made
in the ordinary course of business
consistent with past practice, or any
collective bargaining agreement or other
obligation to any labor organization or
employee;
(xii) make any material tax election or settle or
compromise any liability for Taxes;
(xiii) make or commit to make capital expenditures
for acquisitions of other businesses,
capital assets, properties, or Intellectual
Property in excess of $25,000;
(xiv) make any changes in its reporting for Taxes
or accounting procedures other than as
required by generally accepted accounting
principles or applicable law;
(xv) pay, discharge or satisfy any claims,
liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent
or otherwise), other than the payment,
discharge or satisfaction, in the ordinary
course of business consistent with past
practice or in accordance with their terms,
of liabilities reflected or reserved
against in, or contemplated by, the most
recent Seller financial statements that
were provided to CIBER pursuant to Section
3.4 or incurred after the date of such
financial statements in the ordinary course
of business consistent with past practice;
settle any litigation or other legal
proceedings involving a payment of more
than $5,000 in any one case by or to
Seller; or waive the benefits of, or agree
to modify in any manner, any
noncompetition, confidentiality, standstill
or similar agreement to which Seller is a
party;
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(xvi) write off any accounts or notes receivable
except in the ordinary course of business
consistent with past practices;
(xvii) acquire or agree to acquire (x) by merging
or consolidating with, or by purchasing a
substantial portion of the assets of, or by
any other manner, any business or any
corporation, partnership, joint venture,
association or other business organization
or division thereof of or (y) any assets
that are material, individually or in the
aggregate, to Seller;
(xviii) adopt any stockholder rights or similar
plan or take any other action with the
intention of, or which may reasonably be
expected to have the effect of, damaging,
CIBER or Seller; or
(xix) enter into, modify or authorize any
contract, agreement, commitment or
arrangement to do any of the foregoing.
(c) Seller shall promptly advise CIBER orally and in
writing of any change or event having, or which would reasonably be expected
to have, a material adverse effect on the transactions contemplated hereby or
a Seller Material Adverse Effect.
6.2 CONFIDENTIALITY. CIBER and CIS, on the one hand, and Seller and
the Affiliate Stockholders, on the other hand, shall consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by applicable law, including state and federal
securities laws, rules and regulations, court process or pursuant to any
listing agreement with any securities exchange. In the event the transactions
contemplated herein are not consummated, CIBER and CIS, on the one hand, and
Seller and the Affiliate Stockholders, on the other hand, shall hold all
information provided to each by the other in strict confidence, and shall not
(i) disclose or disseminate such information to anyone other than its
employees, lenders, investors and professional advisors (such as financial
consultants, accountants and counsel) with a need to know or as required by
law, or (ii) use such information other than in contemplation of the
transactions provided for in this Agreement. Without the prior written
consent of CIBER and CIS, neither Seller nor the Affiliate Stockholders shall
disclose to any Person the existence of this Agreement or the transactions
contemplated hereby except as required to consummate the transactions
contemplated hereby. Information subject to the confidentiality provisions of
this SECTION 6.2 shall not include such information that can be shown to have
been (a) in the public domain through no fault of the recipient of such
information, (b) previously known by such recipient on a non-confidential
basis from a source not known by the recipient to be under any
confidentiality restriction, (c) later lawfully acquired by the recipient
from a source not known by such recipient to be under any confidentiality
restriction, or (d) independently developed by the recipient without the use
of information subject to this confidentiality restriction. Both parties
shall be deemed to have satisfied their obligations to hold confidential
information concerning or supplied
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by the other party if it exercises the same care as it takes to preserve
confidentiality for their own similar information.
6.3 EMPLOYMENT AGREEMENTS.
(a) At Closing, Messrs. McLister, Dixon, Gressett, Paredes,
Price, Wince and Xx. Xxxxxxxxxxx shall enter into employment and
noncompetition agreements in substantially the form attached hereto as
EXHIBIT B (the "Affiliate Stockholder Employment Agreements").
(b) As of the Closing Date, CIBER shall offer employment to
all Stockholders other than the Affiliate Stockholders (the "Non-Affiliate
Stockholders"), and Seller and the Affiliate Stockholders shall use
commercially reasonable efforts to cause each of the Non-Affiliate
Stockholders to enter into employment and nonsolicitation agreements at
Closing in substantially the form attached hereto as EXHIBIT C (the
"Non-Affiliate Stockholder Employment Agreements").
(c) As of the Closing Date, CIBER shall offer employment to
all non-Stockholder employees of Seller on terms determined by CIBER and CIS
in their discretion.
6.4 EMPLOYEE ISSUES.
(a) CIBER may, in its sole discretion, permit employees of
Seller who are offered and accept employment from CIBER, effective as of the
Closing Date roll-over their retirement funds into CIBER's applicable benefit
plans. Any such rollovers will be contingent upon the representations and
warranties made by Seller and the Stockholders in Section 3.19 being accurate
as determined by CIBER in its sole discretion, Seller delivering the
representation letter in the form attached hereto as EXHIBIT G (the "Plan
Representation Letter") and CIBER receiving such other documentation as it
deems necessary including a determination letter issued by the Internal
Revenue Service in conjunction with termination of the Seller's benefit
plans. CIBER shall allow employees of Seller who are offered and accept
employment from CIBER to participate in CIBER's benefit plans, subject to
satisfaction of eligibility criteria under such benefit plans. To the extent
permitted by CIBER's benefit plans, such employees shall receive credit (for
purposes of eligibility, vesting and service credit) for their years of
service with Seller.
(b) CIBER will make available a pool of non-statutory stock
options to purchase 75,000 shares of common stock of CIBER to be granted to
certain employees of Seller who accept employment with CIBER or CIS as of the
Closing Date. Options to purchase such shares shall be granted at the Closing
Date, or as soon thereafter as practicable, pursuant to CIBER's Equity
Incentive Plan. The non-owner employees who shall receive such options at the
Closing Date shall be determined by mutual agreement of CIBER and Seller
prior to the Closing. The exercise price of options granted pursuant to this
paragraph will be the fair market value of the CIBER Common Stock on the
Closing Date. The options shall vest in the following percentages each year
over a period of four (4) years: 35%; 30%; 20%; and 15%.
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(c) CIBER will make available a pool of $1,800,000 to be
used over the three (3) year period following Closing for the purposes of
paying non-solicitation incentives to persons other than Affiliate
Stockholders and a pool of $450,000 to be used over the three (3) year period
following Closing for the purposes of paying non-solicitation incentives to
Affiliate Stockholders. The use of such pools shall be determined by Xxxxxxx
XxXxxxxx subject to the consent of the board of directors of CIS. If any
portion of such an incentive is forfeited by the grantee thereof due to the
termination of such grantee's employment by or engagement with CIS, any
forfeited amount may be reallocated by Xxxxxxx XxXxxxxx (subject to the
consent of the board of directors of CIS) to another grantee (so long as such
other grantee (i) is not an Affiliate Stockholder, and (ii) was in the
original pool of grantees); provided, however, that the total amount of the
incentive paid to such other grantee shall not increase the original amount
granted to such grantee by more than 50%.
6.5 NO SOLICITATION. Until such time as this Agreement is terminated
pursuant to Article VIII, the Affiliate Stockholders and Seller and its
respective officers, directors, employees, agents and representatives shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any Takeover Proposal, and will
not enter into any discussions with third parties regarding a Takeover
Proposal.
6.6 SALE OF SELLER SHARES; DISSENTERS' RIGHTS. Prior to Closing, the
Affiliate Stockholders shall not sell, transfer, pledge, encumber,
hypothecate or otherwise dispose of any of the capital stock of Seller. If
appraisal or dissenters' rights under the laws of the Commonwealth of
Virginia or otherwise are available to the stockholders of Seller as a result
of the transactions by this Agreement, the Affiliate Stockholders shall not
exercise and hereby waive any such contemplated rights. Seller shall obtain,
and shall provide to CIBER prior to Closing, the unanimous written consent of
all of the Stockholders of Seller waiving any appraisal or dissenters' rights
provided to the Stockholders under the laws of the Commonwealth of Virginia
and approving the transaction contemplated hereby.
6.7 POOLING. From and after the date hereof and until the expiration
of the Restricted Period, none of CIBER, CIS, Seller or the Affiliate
Stockholders shall take, or shall permit any of their respective subsidiaries
to take, and CIBER and Seller shall use commercially reasonable efforts to
cause their respective Affiliates not to take, any action, or fail to take
any action, that would jeopardize the treatment of the transactions
contemplated hereby as a pooling of interests. The "Restricted Period" shall
mean the period commencing on the date hereof and terminating on the date on
which at least thirty days of combined operations are publicly announced by
CIBER in accordance with the provisions of Section 6.8. Seller and the
Stockholders hereby agree that they will not directly or indirectly, sell,
offer to sell, contract to sell (including short sales), grant any option or
contract to purchase, enter into a hedging arrangement with respect to, grant
a security interest in, pledge, hypothecate or otherwise transfer or dispose
of, directly or indirectly (collectively, a "Transfer"), any interest in any
of the Shares issued to them under the terms of this Agreement prior to the
expiration of the Restricted Period; PROVIDED, HOWEVER, that the distribution
of the Shares to the Stockholders upon liquidation and dissolution of Seller
shall not be deemed a Transfer.
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6.8 PUBLICATION OF FINANCIALS. As promptly as reasonably practicable
after the end of the first fiscal quarter of CIBER ended after the Closing
Date which includes at least thirty (30) days of combined operations of
Seller and CIBER, and approximately on or about April 20, 1999, CIBER will
cause to be reported publicly financial statements of CIBER that include at
least thirty (30) days of combined operations of Seller and CIBER after the
Closing Date. Such report may be satisfied by the issuance of a press
release, the filing of a quarterly report on Form 10-Q, a current report on
Form 8-K or other appropriate filing under the Exchange Act.
6.9 SATISFACTION OF CONDITIONS. Subject to the terms and conditions
of this Agreement, CIBER, CIS, Seller and the Affiliate Stockholders will
each use commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable to
satisfy the conditions to the other party's obligation to consummate this
Agreement. The parties each agree to execute and deliver such other
documents, certificates, agreements and other writings and to take such other
actions as may be reasonably necessary or desirable in order to consummate or
implement expeditiously the transaction contemplated hereby in accordance
with this Agreement.
6.10 INDEMNIFICATION. The representations and warranties contained
in this Agreement shall survive the Closing and shall remain in effect for
one year following the Closing Date, except for any representations made by
Seller or the Affiliate Stockholders relating to the existence and accuracy
of accounts receivable as disclosed on the Final Closing Balance Sheet, which
representations shall remain in effect until August 31, 1999. No action or
proceeding may be brought by a party against another party on the basis of a
breach of a representation, warranty or covenant (other than a covenant that
by its terms extends beyond one year) hereunder more than one year after the
Closing Date unless such party gives written notice to the other party of
such breach, setting forth in reasonable detail the basis for such claim of
breach, on or before the expiration of such one-year period.
(a) Seller and the Affiliate Stockholders, jointly and
severally, agree to indemnify CIBER or CIS from and against any loss, cost,
liability or expense (including reasonable attorneys', expert witness and
other professional fees and disbursements) reasonably incurred by CIBER or
CIS, including both third-party and direct claims (a "CIBER Loss"), arising
out of or in connection with (i) any breach by any of them of any
representation, warranty, covenant or agreement made by any of them contained
in this Agreement; (ii) the ownership, operation or control of the Assets at
or prior to the Closing Date; or (iii) any noncompliance with any applicable
bulk sales or bulk transfer or similar law; PROVIDED, HOWEVER, that in no
event will the aggregate liability of such parties for all CIBER Losses under
item (i) above exceed $20,000,000.
(b) CIBER and CIS agree, jointly and severally, to
indemnify Seller and the Stockholders (any such amount to be in addition to
the Total Consideration paid hereunder) from and against any loss, cost,
liability or expense (including reasonable attorneys', expert witness and
other professional fees and disbursements) reasonably incurred by any of
them, including both third-party and direct claims (a "Seller Loss"), arising
out of or in connection with (i) any breach by CIBER or CIS of any
representation, warranty, covenant or agreement made by CIBER or CIS
contained in this Agreement; or (ii) the ownership, operation or control of
the Assets from and after
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the Closing Date; PROVIDED, HOWEVER, that in no event will the aggregate
liability of such parties for all Seller Losses under item (i) above exceed
$20,000,000.
(c) In the event of a breach by any party that gives rise
to a claim for indemnification hereunder, the amount of any loss, cost,
liability or expense for which indemnification may be sought shall be
determined without regard to the amount of any materiality qualifier provided
for herein.
(d) If Seller or the Affiliate Stockholders incur an
obligation for indemnification to CIBER, such obligation shall, to the extent
Seller or the Affiliate Stockholders still own Shares, be satisfied by a
return to CIBER of sufficient Shares, valued at the CIBER Closing Stock
Price, to satisfy said obligation.
(e) Anything in this Agreement to the contrary
notwithstanding, neither Seller and the Affiliate Stockholders, on one hand,
nor CIBER and CIS, on the other hand, shall have any liability under this
Section 6.10 until the aggregate amount of claims asserted against them
exceeds $50,000 at which point the indemnitor shall be liable for all claims
in excess of such amount.
6.11 INDEMNIFICATION PROCEDURES. If a third-party claim arises as to
which CIBER or CIS is entitled to indemnification from Seller or the
Affiliate Stockholders hereunder or if a third-party claim arises as to which
the Seller or the Stockholders are entitled to indemnification from CIBER,
the party entitled to indemnification (the "Indemnified Party") shall
endeavor to advise the other party (the "Indemnifying Party") of the claim
within five business days after receipt of a summons, or within twenty (20)
business days after receipt of other written communication giving information
as to the nature of the claim, by the Indemnified Party, provided that
failure to so notify shall not limit the Indemnified Party's right to
indemnification under Section 6.10, except to the extent the Indemnifying
Party was prejudiced thereby and then only to the extent of such prejudice.
The Indemnifying Party shall not be liable or responsible for any expenses
which are incurred by the Indemnified Party before such notice has been given
to the Indemnifying Party, nor bound by any settlements made by the
Indemnified Party before such notice. The Indemnifying Party shall, within
the lesser of twenty (20) days after receipt of notification of the claim
from the Indemnified Party or five (5) days before an answer is required to
be filed, advise the Indemnified Party whether the Indemnifying Party will
undertake the defense of such claim on behalf of the Indemnified Party and,
if so, shall specify the name of the attorney who will handle the matter,
which attorney shall be reasonably satisfactory to the Indemnified Party and
shall not have any present or potential conflict in representing the
interests of both parties. If the Indemnifying Party timely notifies the
Indemnified Party that it will undertake the defense of such claim and shall
thereafter diligently provide such defense, the Indemnifying Party's counsel
shall have control of the defense, but the Indemnified Party may participate
in the defense with its own counsel paid for by the Indemnified Party, and
the Indemnified Party shall not settle or compromise such claim without the
prior consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. If the Indemnifying Party fails timely to advise the
Indemnified Party that it will undertake the defense of such claim on behalf
of the Indemnified Party or fails diligently to pursue such defense, the
Indemnified Party may undertake the defense of such claim with its own
counsel and may settle or compromise such claim
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in its sole discretion and the Indemnifying Party shall not be relieved of
any obligation to indemnify the Indemnified Party hereunder.
6.12 TAX-FREE REORGANIZATION; PLAN OF LIQUIDATION. The parties
hereto shall use commercially reasonable efforts to cause the transactions
contemplated hereby to be treated for all purposes as provided in Section 2.6
and to be recognized as a tax-free reorganization under Section 368(a)(1)(C)
of the Code and any other applicable state or federal law. Seller hereby
covenants and agrees that, following the Closing, it will promptly effect its
complete liquidation and distribute all of its remaining assets (including
the Shares) on a pro rata basis to the Stockholders in accordance with the
Virginia Stock Corporation Act (the "VSCA") and Seller's articles of
incorporation and by-laws. In addition, at Closing, Seller shall take any and
all actions required to transfer all of Seller's right, title and interest in
and to the trade and corporate names "Business Impact Systems, Inc." and
"Team BIS" to CIS and to change its corporate name. Within thirty (30) days
following the Closing Date, or sooner if required by law, Seller shall timely
file IRS Form 966 with respect to such liquidation, and Seller shall cancel
any contracts for insurance coverage (including workers' compensation and
unemployment insurance) related to Seller's Business (other than "tail
coverage" for insurance carried on a claims-made basis) effective as of the
Closing Date. Seller, the Stockholders and CIBER agree that they will report
the transaction to the Internal Revenue Service as a tax free reorganization
under Section 368(a)(1)(C) of the Code. Seller and/or the Stockholders shall
file all final local, state and federal Tax Returns which shall be prepared
in a manner consistent with past practice, including income tax and sales and
use tax Returns, for Seller within ninety (90) days following the Closing
Date or sooner if required by law. Seller and/or the Stockholders shall
provide copies of all such returns to CIBER for review and comment at least
fifteen (15) days prior to filing and shall consider any comments made by
CIBER in good faith, although Seller shall have ultimate control as to the
content of such Returns. Seller and/or the Stockholders shall be responsible
for the costs of preparation of such Tax Returns, as well as any professional
fees associated with such preparation.
6.13 LISTING OF SHARES. CIBER shall file a listing application for,
and shall diligently pursue the listing of, the Shares issued to Seller
hereunder with the NYSE promptly after the Closing Date.
6.14 TERMINATION OF BENEFIT PLANS. Seller hereby covenants and
agrees that, prior to liquidation and dissolution, but within one hundred
eighty (180) days following the Closing Date, or sooner if required by law,
it shall terminate all Benefit Plans, and CIBER shall have no obligation to
continue any such Benefit Plans or make any contributions to any such Benefit
Plans for the benefit of Seller employees, former employees, their spouses or
their dependents. Within the same time frame, Seller shall also (i) file a
final IRS Form 5500 for each Benefit Plan, (ii) file all payroll tax Returns
required for the periods ended prior to and as of the Closing Date, and (iii)
distribute final W-2 and 1099 forms, as applicable, for all employees and
independent contractors of Seller.
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6.15 BOOKS AND RECORDS.
(a) Following the Closing Date until the sixth anniversary
of the Closing Date, each party will afford to the other party, its counsel
and its accountants, during normal business hours, reasonable access to the
books, records and other data in its possession relating to Seller, the
Assets or the Liabilities with respect to periods prior to the Closing Date
and the right to make copies and extracts therefrom, to the extent that such
access may be reasonably required by the requesting party (i) to facilitate
the investigation, litigation and final disposition of any claims which may
have been or may be made against any party or its Affiliates and (ii) for any
other reasonable business purpose.
(b) Each party agrees that for a period of not less than
six (6) years following the Closing Date, it shall not destroy or otherwise
dispose of any of the books and records in its possession relating to Seller,
the Assets or the Liabilities with respect to periods prior to the Closing
Date. Each party shall have the right to destroy all or part of such books
and records after the fourth anniversary of the Closing Date or by giving
each other party hereto thirty (30) days' prior written notice of such
intended disposition and by offering to deliver to the other parties, at the
other parties' expense, custody of such books and records as such party may
intend to destroy.
(c) Following the Closing Date until the sixth anniversary
of the Closing Date, Seller, the Stockholders, CIBER and CIS will provide
each other with such assistance as may reasonably be requested in connection
with the preparation of any Tax Return, any audit or other examination by any
taxing authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each will retain and provide the requesting party
with any records or information that may be reasonably relevant to such
return, audit or examination, proceedings or determination. Any information
obtained pursuant to this Section 6.15 or pursuant to any other Section
hereof providing for the sharing of information or the review of any Tax
Return or other schedule relating to Taxes shall be kept confidential and not
disclosed by the recipient thereof except (i) as required by law, (ii) with
the prior written consent of the disclosing party, (iii) where such
information becomes available to the public generally, (iv) where such
information was previously known by the recipient on a non-confidential basis
from a source not known by such Person to be under any confidentiality
restriction, (v) where such information is later lawfully acquired by the
recipient from a source not known by such Person to be under any
confidentiality restriction, or (vi) independently developed by the recipient
without the use of information subject to this confidentiality restriction.
6.16 CONSENTS. If Seller shall have failed to obtain, at or prior to
the Closing Date, any third-party consents required for the assignment of any
of the Contracts listed on SCHEDULE 2.1(c)(ii), Seller and the Affiliate
Stockholders shall attempt to obtain such consent in accordance with Section
2.4. Notwithstanding anything in this Agreement, neither this Agreement nor
any document or instrument delivered pursuant hereto shall constitute an
assignment of any claim, permit, Contract or any claim or right or any
benefit arising thereunder or resulting therefrom if an attempted assignment
thereof without the consent of any other Person would constitute a breach
thereof or in any way adversely affect the rights to be assigned, and any
transfer or assignment to CIBER by
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Seller of any property or property rights or any Contract or agreement that
shall require the consent or approval of any third party shall be made
subject to such consent or approval being obtained.
6.17 POWERS OF ATTORNEY. Seller and the Stockholders shall terminate
at or prior to Closing all powers of attorney granted by Seller which relate
to the Assets, including signatory capacities on bank accounts.
6.18 CERTAIN PAYABLES AND RECEIVABLES. At or prior to Closing, the
Seller and the Stockholders shall cause to be paid in full in cash all
accounts receivable, notes receivable and advances payable by the
Stockholders or employees of Seller to Seller, and Seller shall pay in full
in cash all accounts payable, notes payable and advances payable by Seller to
the Stockholders or to the employees of Seller.
6.19 WARN ACT. Seller and the Affiliate Stockholders shall use their
commercially reasonable efforts in the sixty (60) days following the Closing
Date to cause those employees of Seller who are offered employment by CIBER
or CIS to accept such employment. All Persons who become employees of CIBER
or CIS shall be required to sign CIBER's standard form of
confidentiality/invention and nonsolicitation agreement. CIBER and CIS
covenant and agree with the Seller and the Affiliate Stockholders that as of
the Closing Date CIBER and/or CIS shall offer employment to all of Seller's
employees.
6.20 TERMINATION OF AMENDED AND RESTATED BUY-SELL AGREEMENT. Seller
and the Affiliate Stockholders hereby terminate the Amended and Restated
Buy-Sell Agreement among Seller and the Affiliate Stockholders, dated October
13, 1998.
6.21 REGISTRATION STATEMENT. CIBER will use commercially reasonable
efforts to maintain at all times the effectiveness of the Registration
Statement until the Stockholders may resell the CIBER Common Stock received
at the Closing pursuant to Rule 145 under the Securities Act without any
limitation or restriction. If, following such time, CIBER must timely file
any periodic report with the SEC in order for the conditions of Rule 144(c)
be met so that the Stockholders may sell such Shares under Rule 145(d), CIBER
will use its commercially reasonable efforts to so act.
6.22 ISSUANCE OF REPLACEMENT OPTIONS. Seller hereby represents that
the incentive stock options held by Xxxxx Xxxxx and Xxxx Xxxxxxxx to purchase
117 shares, each, of Seller common stock, respectively (the "Seller
Options"), have not been exercised by the holders thereof. CIBER agrees to
issue at or promptly following the Closing, incentive stock options to
purchase 1,817 shares of CIBER Common Stock to each of Messrs. Xxxxx and
Xxxxxxxx at an exercise price of $11.0065 per share in replacement of the
Seller Options. Such replacement incentive stock options will be fully vested
upon delivery and will be exercisable for the same period as the Seller
Options. The shares issued pursuant thereto shall be fully paid and
non-assessable. The number and exercise price of the replacement incentive
stock options may be adjusted appropriately to reflect any adjustments in the
Total Consideration pursuant to Section 2.8.
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6.23 PAYMENT OF DISSOLUTION EXPENSES. CIBER hereby agrees to pay up
to $10,000 of miscellaneous liquidation and dissolution expenses incurred by
Seller following the Closing Date (and not included in the Final Closing
Balance Sheet) upon presentation to CIBER of itemized invoices therefor. The
actual amount of such expenses paid for by CIBER shall be offset by CIBER
against the Holdback Sum.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. Unless these
conditions are waived in writing by the parties, the obligations of each of
Seller, the Stockholders, CIBER and CIS to effect the transactions
contemplated by this Agreement shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions:
(a) this Agreement, and the consummation of the
transactions contemplated by this Agreement shall have been approved and
adopted by the requisite vote of the board of directors of Seller and the
Stockholders as required by the VSCA and its articles of incorporation and
by-laws;
(b) no preliminary or permanent injunction or other order,
decree or ruling issued by a Governmental Entity, nor any statute, rule,
regulation or executive order promulgated or enacted by any Governmental
Entity, shall be in effect that would make the transactions contemplated by
this Agreement, including the holding, directly or indirectly, by CIBER of
any of the Assets of Seller, illegal or otherwise prevent the consummation of
the transactions contemplated by this Agreement;
(c) any applicable waiting period under the
Xxxx-Xxxxx-Xxxxxx Act shall have expired or been earlier terminated; and
(d) all waivers, consents, approvals and actions or
non-actions of any Governmental Entity and of any other third party required
to consummate the transactions contemplated by this Agreement shall have been
obtained and shall not have been reversed, stayed, enjoined, set aside,
annulled or suspended, except for such failures to obtain such waiver,
consent, approval or action which would not be reasonably likely (x) to
prevent the consummation of the transactions contemplated hereby, (y) to have
an Seller Material Adverse Effect, or (z) to have a CIBER Material Adverse
Effect. Notwithstanding the foregoing and subject to the undertakings of
Section 2.4, it shall not be a condition precedent to any party's obligations
under this Section 7.1 that the parties shall have obtained, prior to the
Closing, consents to the assignment of any Contract on SCHEDULE 2.1(c).
7.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF SELLER AND THE
AFFILIATE STOCKHOLDERS. The obligations of Seller and the Affiliate
Stockholders to effect the transactions contemplated by this Agreement are
also subject to the fulfillment at or prior to the Closing Date of the
following conditions, unless such conditions are waived in writing by Seller
and the Stockholders:
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(a) each of CIBER and CIS shall have performed or complied,
in all material respects, with each obligation, agreement and covenant to be
performed or complied with by it hereunder at or prior to the Closing Date;
(b) the representations and warranties of CIBER and CIS in
this Agreement shall be true and correct in all material respects on the date
of this Agreement and on the Closing Date;
(c) Seller shall have received a certificate signed by an
executive officer of each of CIBER and CIS certifying to the matters set
forth in Sections 7.2(a) and (b) and a certificate signed by the secretaries
of CIBER and CIS, dated as of the Closing date, certifying the certificates
of incorporation and by-laws of CIBER and CIS, and the resolutions of their
respective boards of directors approving this Agreement and the transactions
contemplated hereby;
(d) CIS shall have executed and delivered the Affiliate
Stockholder Employment Agreements referred to in Section 6.3(a) hereof;
(e) CIS shall have executed and delivered the Non-Affiliate
Stockholder Employment Agreements referred to in Section 6.3(b) hereof; and
(f) Seller shall have received the opinion of Xxxxx, Xxxxxx
& Xxxxxx LLP, dated as of the Closing Date, in substantially the form
attached as EXHIBIT D.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF CIBER AND CIS. The
obligations of CIBER and CIS to effect the transactions contemplated by this
Agreement are also subject to the fulfillment at or prior to the Closing Date
of the following conditions, unless such conditions are waived in writing by
CIBER and CIS:
(a) each of Seller and the Affiliate Stockholders shall
have performed or complied, in all material respects, with each obligation,
agreement and covenant to be performed and complied with by it or them
hereunder at or prior to the Closing Date;
(b) the representations and warranties of Seller and the
Affiliate Stockholders set forth in this Agreement shall be true and correct
in all material respects on the date of this Agreement and on the Closing
Date;
(c) CIBER shall have received a certificate signed by an
executive officer of Seller, dated as of the Closing Date, certifying to the
matters set forth in Sections 7.3(a), (b), (f), (g) and (h), a certificate
signed by the Stockholders, dated as of the Closing Date, certifying to the
matters set forth in Sections 7.3(a) and (b), and a certificate signed by the
secretary of Seller, dated as of the Closing Date, certifying the articles of
incorporation, by-laws and the resolutions (which shall be resolutions by
unanimous written consent) of Seller's board of directors and Seller's
stockholders approving this Agreement and the transactions contemplated
hereby;
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(d) CIBER shall have received the opinion of Xxxxxxxx &
Xxxxxxxx, dated as of the Closing Date, in substantially the form attached
hereto as EXHIBIT E;
(e) Messrs. McLister, Dixon, Gressett, Paredes, Wince and
Xx. Xxxxxxxxxxx shall each have executed and delivered to CIS the Affiliate
Stockholder Employment Agreements; and each of the Non-Affiliate Stockholders
shall have executed and delivered to CIS the Non-Affiliate Stockholder
Employment Agreements, referred to in Section 6.3 hereof;
(f) there shall not have been suffered or incurred after
the date hereof any casualty or loss, whether or not covered by insurance,
which has had any Seller Material Adverse Effect;
(g) Seller shall not have suffered or incurred any Seller
Material Adverse Effect since December 31, 1997;
(h) the number of Full-Time Consultants at the Closing Date
shall be at least 130, of which 125 shall have been employed by or engaged
with Seller continuously since January 25, 1999;
(i) KPMG LLP shall have delivered to CIBER, a letter dated
the Closing Date, stating to CIBER's reasonable satisfaction, that it concurs
with CIBER management that the business combination contemplated by this
Agreement qualifies for treatment for financial purposes on a pooling of
interests basis; and Ernst & Young LLP shall have delivered to Seller, a
letter dated the Closing Date, stating to CIBER's reasonable satisfaction,
that it concurs with Seller management that the business combination
contemplated by this Agreement qualifies for treatment for financial purposes
on a pooling of interests basis;
(j) each of the Stockholders and the appropriate executive
officers of Seller, on Seller's behalf, shall have delivered to CIBER a
certificate of non-foreign status under Section 1445 of the Code;
(k) Ernst & Young LLP shall have received the
representation letter, dated as of the Closing Date, from the executive
officers of Seller in the form attached hereto as EXHIBIT F;
(l) CIBER shall have received the Plan Representation
Letter; and
(m) CIBER and CIS shall have received such other documents
and instruments as may reasonably be required by CIBER and CIS to consummate
the transactions contemplated by this Agreement.
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ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval of this Agreement and
the transactions contemplated herein:
(a) by mutual written consent of CIBER and Seller;
(b) by either of CIBER or Seller if the Closing Date shall
not have occurred on or before April 1, 1999; PROVIDED, HOWEVER, that the
right to terminate this Agreement under this Section 8.1(b) shall not be
available to any party whose breach of any obligation under this Agreement
has been the cause of, or resulted in, the failure of the Closing Date to
occur on or before such date;
(c) by CIBER, if not in material default hereunder, if any
of the conditions specified in Sections 7.1 and 7.3 have not been satisfied
or waived by CIBER at such time as such condition can no longer be satisfied;
(d) by Seller, if not in material default hereunder, if any
of the conditions specified in Sections 7.1 and 7.2 have not been satisfied
or waived by Seller at such time as such condition can no longer be satisfied.
(e) by either CIBER or Seller if a court of competent
jurisdiction or other Governmental Entity shall have issued an order, decree
or ruling or taken any other action (which order, decree or ruling each of
the parties hereto shall use commercially reasonable efforts to lift), in
each case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling
or other action shall have become final and nonappealable;
(f) by CIBER if the business combination contemplated by
this Agreement may not be, according to either KPMG LLP or Ernst & Young LLP,
treated for financial reporting purposes as a pooling of interests; or
(g) by Seller, if the business combination contemplated by
this Agreement may not be, according to Xxxxxxxx & Xxxxxxxx, tax-free to
Seller and the Stockholders.
8.2 EFFECT OF TERMINATION. Upon the termination of this Agreement
pursuant to Section 8.1, this Agreement shall forthwith become null and void
except as set forth in Sections 6.2, 6.10 and 6.11 and Article IX, which
provisions shall survive such termination, without any liability or
obligation on the part of CIBER, CIS, Seller or the Stockholders (other than
pursuant to the foregoing specified provisions), except to the extent that
such termination results from the breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
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ARTICLE IX
GENERAL PROVISIONS
9.1 INTERPRETATION; GOVERNING LAW. This Agreement shall be construed
as though prepared by both parties hereto and shall be construed without
regard to any presumption or other rule requiring construction against the
party causing an agreement to be drafted. Unless the context of this
Agreement clearly requires otherwise: (a) references to the plural include
the singular, the singular the plural, and the part the whole, (b) references
to one gender include all genders, (c) "or" has the inclusive meaning
frequently identified with the phrase "and/or," (d) "including" has the
inclusive meaning frequently identified with the phrase "but not limited to"
or "without limitation," (e) references to "hereunder," "herein" or "hereof"
relate to this Agreement as a whole, (f) the terms "dollars" and "$" refer to
United States dollars. Any reference herein to any statute, rule, regulation
or agreement, including this Agreement, shall be deemed to include such
statute, rule, regulation or agreement as it may be modified, varied, amended
or supplemented from time to time. Any reference herein to any Person shall
be deemed to include the heirs, personal representatives, successors and
permitted assigns of such Person. This Agreement shall be construed and
governed by the laws of the State of Colorado (without giving effect to any
otherwise applicable principles of conflicts of laws).
9.2 EXPENSES; SALES TAXES. Except with respect to the fee relating
to the filing made by the parties under the Xxxx-Xxxxx-Xxxxxx Act, which has
been paid by CIBER, each party will pay its respective expenses in connection
with the preparation and execution of this Agreement and the transactions
contemplated hereby. Seller shall be responsible for any and all sales, use
and other transfer taxes payable with respect to the transactions
contemplated hereby.
9.3 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns; provided, however, that
no party may assign his, her or its rights or obligations under this
Agreement without the prior written consent of the other parties, which
consent shall not be unreasonably withheld, conditioned or delayed.
9.4 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery, or
first-class mail, certified or registered with return receipt requested, or
by commercial overnight courier and shall be deemed to have been duly given
upon hand delivery, delivery by commercial overnight courier to the address
specified below, or deposit in the U.S. mail as provided above, addressed as
follows:
(a) If to Seller or the Stockholders:
Business Impact Systems, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx XxXxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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with a copy to (which shall not constitute notice):
Xxxxxxxx & Xxxxxxxx
000 Xxxxxxx Xxxxxx, X.X.
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) If to CIBER or CIS:
CIBER, Inc.
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxx, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx XxXxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(c) To such other address as to which notice is provided in
accordance with this Section 9.4.
9.5 SEVERABILITY. Should a court or other body of competent
jurisdiction determine that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum
extent possible, and all other provisions of this Agreement shall be deemed
valid and enforceable to the extent possible.
9.6 THIRD-PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit nor confer any rights or remedies on any Person
other than the parties hereto and their respective heirs, successors and
legal representatives.
9.7 FURTHER ASSURANCES. From time to time after the Closing Date,
Seller and the Stockholders shall execute all such instruments as CIBER shall
reasonably request in order more effectively to convey and transfer the
Assets to CIBER and CIS. The parties shall also execute and deliver to the
appropriate other party such other instruments as may be reasonably required
in connection with the performance of this Agreement and each shall take all
further actions as may be reasonably required to carry out the transactions
contemplated by this Agreement.
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9.8 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement represents the
entire understanding between the parties with respect to the subject matter
hereof and supersedes any and all prior understandings, agreements, plans and
negotiations, whether written or oral, with respect to the subject matter
hereof. All modifications to this Agreement must be in writing and signed by
the Party against whom enforcement of such modification is sought.
9.9 HEADINGS. The section headings herein are intended for reference
and shall not by themselves determine the construction or interpretation of
this Agreement.
9.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, in original or by facsimile, any of which shall be deemed an
original and all of which taken together shall constitute one and the same
Agreement.
9.11 WAIVER. Any agreement on the part of either party hereto to any
extension or waiver shall be valid only if in writing signed by the party
granting such waiver or extension and shall be a one-time waiver or extension
only, and any such waiver or extension or any other failure to insist on
strict compliance with any duty or obligation or any representation, warranty
or other covenant herein shall not operate as a waiver or extension of, or
estoppel with respect to, any continuing, subsequent or other failure to
comply with or fulfill any duty or obligation or any representation, warranty
or other covenant herein.
9.12 SCHEDULES. The Schedules to this Agreement are a part of this
Agreement as if set forth in full herein.
9.13 ALTERNATIVE DISPUTE RESOLUTION.
(a) The parties will attempt in good faith to resolve any
controversy or claim (other than any disagreement as to adjustment to the
Total Consideration pursuant to Section 2.8(c) hereof), whether based in
contract, tort or otherwise, arising in any way out of, relating to or in
connection with this Agreement ("Dispute") in accordance with this Section
9.13. The parties' commitment to resolve Disputes pursuant to this Section
survives the expiration or termination of this Agreement.
(b) When a party believes there is a Dispute, that party
will give the other parties written notice of the Dispute. Within five
business days after the date of such notice, the receiving parties shall
submit to the other a written response. The notice and response shall include
(i) a statement of each party's position and a summary of the evidence and
arguments supporting its position, and (ii) the name and title of the
executive who will negotiate for that party. Representatives of the parties
shall meet at a place and time mutually agreed upon by such parties as soon
as reasonably possible (but not later than twenty (20) days after notice from
any party hereto to the other that the party giving notice has such a
Dispute) and shall enter into good faith negotiations aimed at resolving the
Dispute. If they are unable to resolve the Dispute in a mutually satisfactory
manner within ten (10) days from the date of such meeting, they shall proceed
as set forth below.
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(c) First, the parties shall endeavor to: (i) choose a
mutually acceptable alternative dispute resolution ("ADR") mechanism, and
(ii) set forth the general framework for the ADR process. If the parties are
unable to agree to a mutually acceptable ADR mechanism within ten (10) days
from the date of the initial proposal from any party with respect thereto,
the parties shall enter into binding arbitration as set forth below.
(d) All Disputes that are not resolved by good faith
negotiations between the parties or by an ADR mechanism as set forth above
shall be resolved solely by binding arbitration pursuant to the United States
Arbitration Act, 9 U.S.C. Section 1 ET SEQ., to the exclusion of any
provision of State law inconsistent therewith and which would produce a
different result, and judgment upon the award rendered by the Arbitrator(s)
may be entered by any court having jurisdiction thereof. Either party may
commence arbitration proceedings at any time after the fifth day after
delivery of notice from one party to the other of the inability of the
parties to agree upon a mutually acceptable ADR mechanism as set forth above.
(e) Any arbitration shall be conducted in accordance with
the American Arbitration Association Commercial Arbitration Rules ("Rules").
In the event of a conflict between this section and the Rules, this section
shall govern. The attorney-client and work product privileges will be honored
in the arbitration. The Arbitrator(s) shall determine the claims of the
parties and render their final award in accordance with the substantive law
of the State of Colorado exclusive of conflict of law rules. The limitations
on any actions will be determined under Colorado law.
(f) The arbitration shall be conducted before three
independent and impartial arbitrators ("Arbitrators"), none of whom shall be
appointed by any party. Rather, the Arbitrators will be selected by pursuant
to Rules, and shall be currently licensed lawyers in the United States of
America with at least twenty (20) years experience in merger and acquisition
practice in the United States. By written agreement subsequent to the
initiation of any arbitration, the parties may elect to conduct any
arbitration before a single Arbitrator selected by the parties.
(g) The parties will mutually and promptly confer to
determine the place of arbitration for any Dispute. If the Parties cannot
agree within 10 days after the filing of the notice of arbitration under the
Rules, the AAA will determine whether the place of arbitration is either
Denver or Washington D.C., by randomization (E.G., coin flip).
(h) The Arbitrator(s) shall permit and facilitate such
discovery as they determine is appropriate in the circumstances, taking into
account the needs of the parties and the desirability of making discovery
expeditious and cost-effective. Such discovery may include prehearing
depositions, particularly depositions of witnesses who will not appear
personally to testify, if there is a demonstrated need therefor. The
Arbitrator(s) may issue orders to protect the confidentiality of proprietary
information, trade secrets and other sensitive information disclosed in
discovery.
(i) Unless otherwise agreed by the disputing parties prior
to the commencement of the arbitration:
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(i) The parties shall commence arbitration
proceedings within thirty (30) days of the selection
of the presiding Arbitrator.
(ii) The proceedings shall be conducted in an
expeditious manner and, to the extent possible, with
the goal of having the final award rendered within
120 days after the selection of the Arbitrator(s) has
been completed. The presentation of evidence and all
discovery shall be controlled by the Arbitrator(s).
The Arbitrator(s) are empowered to impose time
limitations they consider reasonable for each phase
of the proceeding including but not limited to:
(A) Limit issues so as to focus on the core
of the conflict;
(B) Limit the time allotted to each
party for presentation of its case
or rebuttal; and
(C) Exclude testimony and other evidence
they deem irrelevant, or cumulative.
(iii) The Arbitrator(s) shall be and remain at all
times wholly independent and neutral.
(iv) The decision of the Arbitrator(s) shall be
reduced to writing, set forth the Arbitrators'
findings of fact and conclusions of law and afford
any such remedy as is within the scope of the
Agreement (including equitable relief).
(v) The Arbitrator(s) may, in the course of
proceedings, order any provisional remedy or
conservatory measure, including but not limited to
attachment, specific performance, preliminary
injunction or the deposit of specified security,
which they consider to be necessary, just and
equitable. The failure of a party to comply with such
an interim order, after due notice and opportunity to
cure such noncompliance, may be treated by the
Arbitrators as a default and all or some of the
claims or defenses of the defaulting party may be
stricken and partial or final award entered against
such party, or the arbitrators may award such lesser
sanctions as they deem appropriate. A request for
interim or provisional relief to a court shall not be
deemed incompatible with the agreement to arbitrate
or as a waiver of that agreement.
(vi) The award shall be made on an expedited basis to
meet the time goal identified above. Prior to
rendering their final award, the Arbitrator(s) shall
submit to the parties an unsigned draft of the
proposed award (exclusive of any award of costs and
attorneys fees) and each party, within three (3)
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business days after receipt of such draft award, may
serve on the other party and file with the
Arbitrator(s): (a) a written statement outlining any
claimed errors of fact, law computation or otherwise
("Written Statement"); and (b) a certification by the
party's counsel of the costs and attorneys' fees
directly expended in the arbitration. Within three
(3) business days after receipt of the Written
Statement of each party, the Arbitrators shall render
their final award. The award shall briefly state the
reasoning on which it rests.
(vii) In the final award, the Arbitrator(s) are
authorized and encouraged to award, as the
Arbitrator(s) deem fair and just, to the party deemed
by the Arbitrator(s) to be the prevailing party, that
party's costs, attorneys' fees, and expert fees
("Fees") provided that such award of Fees may not
exceed the amount of costs, attorneys' fees and
expert fees incurred by the losing party in the
arbitration.
(v) The losing party shall promptly comply with the
provisions of any award, and damages shall be
promptly paid by the losing party to the prevailing
party, free of deduction or offset except as provided
for in the award, with interest thereon at the rate
of 8% per annum from the date of any breach or
violation of this Agreement (as determined as part of
the award) to but not including the date of payment.
To the extent allowed by applicable law, any losing
party resisting payment of any such award shall also
be responsible for reimbursing the prevailing party
for any fees and expenses incurred by such prevailing
party incident to the enforcement thereof.
(j) Each party will participate in any such arbitration in
good faith and will (and will cause its representatives, employees and
Affiliates to, and will request each participant in any ADR mechanism and
each Arbitrator to) hold the existence, content and result of any Dispute in
confidence except to the extent that disclosure of any such information is
required by law.
(k) Each party is required to continue to perform its
obligations under this Agreement pending final resolution of any Dispute.
(l) This Section 9.13 shall be a complete defense to any
suit, action or proceeding instituted before any court or agency with respect
to any matter resolvable hereunder, PROVIDED, HOWEVER, that, notwithstanding
this provision, any party may seek interim judicial relief in aid of ADR or
arbitration, to prevent a violation of this Agreement pending ADR or
arbitration or to enforce any ADR or arbitration award. Despite the
initiation of any such judicial proceedings, the parties will continue to
participate in good faith in the procedures specified in this section.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement and Plan of Reorganization and Liquidation as of the date first
above written.
CIBER, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx
Senior Vice President
CIBER INTEGRATION SERVICES, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx
Vice President
BUSINESS IMPACT SYSTEMS, INC.,
a Virginia corporation
By: /s/ Xxxxxxx XxXxxxxx
---------------------------
Name: Xxxxxxx XxXxxxxx
Title: Chief Executive Officer
AFFILIATE STOCKHOLDERS:
/s/ Xxxxxxx XxXxxxxx
------------------------------
Xxxxxxx XxXxxxxx
/s/ Xxxx Xxxxx
------------------------------
Xxxx Xxxxx
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[SIGNATURE PAGE CON'T]
/s/ Xxxxx Xxxxx
------------------------------
Xxxxx Xxxxx
/s/ Xxxxxxx Xxxxxxxx
------------------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxx
------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxx
------------------------------
Xxxxxxx Xxxxx
/s/ Xxxxxxxx Xxxxxxxxxxx
------------------------------
Xxxxxxxx Xxxxxxxxxxx
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