Exhibit 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PERFORMANCE GROUP, INC., AS SELLER
AND
ESSEX CORPORATION, AS BUYER
TABLE OF CONTENTS
RECITALS .......................................................1
AGREEMENT .......................................................1
ARTICLE 1. THE TRANSACTION.............................................1
1.1 PURCHASED ASSETS......................................1
1.2 ASSUMED LIABILITIES...................................1
1.3 ASSIGNMENT AND ASSUMPTION.............................2
1.4 NOVATION..............................................2
ARTICLE 2. PURCHASE AND SALE...........................................6
2.1 TERMS OF PURCHASE AND SALE............................6
2.2 PURCHASE PRICE ADJUSTMENTS............................7
2.3 ESCROW................................................8
2.4 TRANSFER TAXES; PRORATIONS; COOPERATION...............9
2.5 ALLOCATION OF PURCHASE PRICE.........................10
ARTICLE 3. THE CLOSING................................................11
3.1 TIME AND PLACE OF CLOSING............................11
3.2 CLOSING DELIVERIES BY SELLER.........................11
3.3 CLOSING DELIVERIES BY BUYER..........................13
3.4 CLOSING DELIVERIES BY BUYER AND SELLER...............14
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER...................14
4.1 ORGANIZATION AND QUALIFICATION.......................14
4.2 AUTHORITY............................................14
4.3 NO CONFLICTS; REQUIRED CONSENTS......................15
4.4 FINANCIAL STATEMENTS.................................15
4.5 ABSENCE OF UNDISCLOSED LIABILITIES...................16
4.6 ABSENCE OF CHANGES...................................16
4.7 ACCOUNTS RECEIVABLE..................................16
4.8 MATERIAL CONTRACTS...................................17
4.9 INSURANCE............................................17
4.10 TITLE; SUFFICIENCY; CONDITION OF ASSETS..............18
4.11 REAL PROPERTY LEASES.................................18
4.12 INTELLECTUAL PROPERTY................................18
4.13 CUSTOMERS AND SUPPLIERS..............................18
4.14 EMPLOYEES............................................19
4.15 SELLER BENEFIT PLANS.................................20
4.16 COMPLIANCE WITH LAWS; GOVERNMENTAL APPROVALS.........20
4.17 LITIGATION...........................................21
4.18 ENVIRONMENTAL MATTERS................................21
4.19 TAXES................................................21
4.20 BROKERS..............................................22
4.21 FRAUDULENT CONVEYANCE................................22
4.22 TRANSACTIONS WITH AFFILIATES.........................22
4.23 PRODUCT WARRANTIES...................................22
4.24 PRODUCT LIABILITIES..................................22
4.25 FULL DISCLOSURE......................................23
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER....................23
5.1 ORGANIZATION AND GOOD STANDING.......................23
5.2 AUTHORITY............................................23
5.3 NO CONFLICTS; REQUIRED CONSENTS......................23
5.4 FINANCIAL CAPACITY...................................24
5.5 NOVATION EXPERIENCE..................................24
5.6 BROKERS..............................................24
ARTICLE 6. CONDUCT PRIOR TO CLOSING...................................24
6.1 SELLER'S CONDUCT OF THE BUSINESS.....................24
6.2 NO SOLICITATION......................................26
ARTICLE 7. ADDITIONAL AGREEMENTS......................................26
7.1 STOCKHOLDER VOTE.....................................26
7.2 CERTAIN NOTIFICATIONS................................27
7.3 ACCESS TO INFORMATION................................27
7.4 BEST EFFORTS.........................................27
7.5 CONSENTS.............................................27
7.6 EXPENSES.............................................27
7.7 CONFIDENTIALITY......................................27
7.9 EMPLOYEES............................................28
7.10 KNOWLEDGE OF BREACH..................................28
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ARTICLE 8. CONDITIONS TO CLOSING......................................29
8.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.........29
8.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER........30
ARTICLE 9. TERMINATION................................................31
9.1 CIRCUMSTANCES FOR TERMINATION........................31
9.2 EFFECT OF TERMINATION................................32
ARTICLE 10. INDEMNIFICATION...........................................32
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........32
10.2 INDEMNIFICATION BY SELLER AND SHAREHOLDER............32
10.3 INDEMNIFICATION BY BUYER.............................33
10.4 PROCEDURES FOR INDEMNIFICATION.......................33
10.5 LIMITATIONS ON INDEMNIFICATION.......................34
10.6 INSURANCE; THIRD PARTY PAYMENTS; TAX BENEFITS
OR DETRIMENT.........................................35
10.7 EXCLUSIVE REMEDY....................................35
ARTICLE 11. MISCELLANEOUS PROVISIONS..................................35
11.1 AMENDMENTS AND WAIVERS...............................35
11.2 NOTICES..............................................36
11.3 GOVERNING LAW........................................36
11.4 EXHIBITS AND SCHEDULES...............................36
11.5 ASSIGNMENTS PROHIBITED; SUCCESSORS AND ASSIGNS.......36
11.6 COUNTERPARTS.........................................37
11.7 SEVERABILITY.........................................37
11.8 ENTIRE AGREEMENT.....................................37
11.9 CONSTRUCTION.........................................37
11.10 WAIVER OF JURY TRIAL.................................37
11.11 FURTHER ASSURANCES...................................37
11.12 CONFIDENTIALITY; PUBLICITY...........................38
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SCHEDULES
Schedule 1.1(a) Purchased Assets and Excluded Assets
Schedule 1.2 Assumed Liabilities
Schedule 2.5 Purchase Price Allocation
Schedule 8.1(g) Key Employees
EXHIBITS
Exhibit 1.4(b)(ii) Novation Documentation Responsibilities
Exhibit 1.4(c)(i) Subcontract
Exhibit 2.1 Escrow Agreement
Exhibit 2.3 Military Installations Under the Principal Government
Contract
Exhibit 3.2(a) General Assignment and Xxxx of Sale
Exhibit 3.2(i) Legal Opinion of Seller's Counsel
Exhibit 3.2(o) FIRPTA Certification
Exhibit 3.3(d) Legal Opinion of Buyer's Counsel
Exhibit 3.4(a) Assignment and Assumption Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made as of June 3,
2004, by and between Essex Corporation, a Virginia corporation (the "BUYER"),
Performance Group, Inc., a Virginia corporation (the "SELLER") and Xxxxxx Xxxx,
sole shareholder of Seller (the "SHAREHOLDER").
RECITALS
WHEREAS, Seller is engaged in the business of providing geographic
information system engineering products and services and other related services
(the "BUSINESS"); and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer; substantially all of the assets, properties, rights and claims of
the Business on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual representations, warranties, covenants and promises contained herein, the
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
AGREEMENT
ARTICLE 1. THE TRANSACTION
1.1 PURCHASED ASSETS. Subject to the terms and conditions of this
Agreement, at the Closing (as defined below), Seller shall sell, transfer,
convey, assign and deliver to Buyer, and Buyer shall purchase from Seller, all
of Seller's right, title and interest in the assets, properties, goodwill and
rights of Seller related to the Business, other than the Excluded Assets
(collectively, the "PURCHASED ASSETS"), all as more specifically described on
SCHEDULE 1.1(A). Seller shall retain all right, title and interest in and to the
Excluded Assets, including the right to take all actions reasonably necessary to
collect any accounts receivable not included within the Purchased Assets.
1.2 ASSUMED LIABILITIES. Subject to the terms and conditions of this
Agreement, at the Closing, as defined below, Seller shall assign, and Buyer
shall assume, the Assumed Liabilities. For the purposes of this Agreement, the
"Assumed Liabilities" shall mean only the following liabilities of Seller: (a)
Any liability arising after the Closing Date under the Seller's contracts that
are included in this Agreement as Purchased Assets, which shall be deemed to
include any such liability to which Seller may be subject under any related
novation or similar agreement; and (b) The liabilities of Seller specifically
listed on SCHEDULE 1.2. The Assumed Liabilities shall not include any Excluded
Liabilities as of the date of this Agreement as defined on SCHEDULE 1.2.
Schedules 1.1(a) and 1.2 attached hereto have been prepared as of the
date of this Agreement. Updated versions of such Schedules as of the Closing
Date shall be delivered at Closing.
1.3 ASSIGNMENT AND ASSUMPTION.
(a) Notwithstanding anything herein to the contrary, if
an attempted sale, assignment, transfer or delivery of any Purchased Asset would
be ineffective without the consent of any third party, or if such an act would
violate the rights of any third party in the Purchased Assets or otherwise
affect adversely the rights of Buyer in the Purchased Assets, and the applicable
consent has not been obtained on or prior to the Closing Date, this Agreement
shall not constitute an actual or attempted sale, assignment, transfer or
delivery of such Purchased Asset (each, a "RESTRICTED ASSET"). Unless and until
any such consent is obtained, such Restricted Asset shall not constitute a
Purchased Asset and any associated Liability shall not constitute an Assumed
Liability for any purpose hereunder, but upon receipt of consent will constitute
same.
(b) In any such case, with respect to Purchased Assets
and Assumed Liabilities other than Government Contracts (which are addressed in
SECTION 1.4 below), if the Closing has occurred, Seller shall use best efforts
to obtain, as soon as practicable, such consent. Buyer shall cooperate
reasonably with Seller in obtaining such consents, PROVIDED, that neither Buyer
nor Seller shall be required to pay any cash consideration therefor or give or
allow to remain in effect any guaranty, letter of credit, performance bond or
other financial assurance.
(c) Except with respect to Government Contracts (which
are addressed in SECTION 1.4 below), until such consent shall have been
obtained, Seller shall at its expense effect an alternate arrangement, in the
form of a license, sublease, operating agreement or other arrangement, in any
case reasonably satisfactory to Buyer, which results in Buyer receiving all the
benefits and bearing all the ordinary course costs, liabilities and other
obligations with respect to each Restricted Asset.
1.4 NOVATION.
(a) GENERAL. The parties recognize that, in accordance
with the Federal Acquisition Regulation ("FAR") 42.1200 et seq., novation of any
contract, subcontract, offer or teaming agreement with or related to any federal
or state governmental authority that is included in the Purchased Assets (each,
a "GOVERNMENT CONTRACT") is necessary for the full transfer and assignment of
the Government Contracts to the Buyer and that application for novation cannot
be made until after the execution of this Agreement and may take a substantial
amount of processing time. The parties intend, however, to submit the necessary
documents in accordance with FAR 42.1204(e)(1) prior to Closing, and the
remainder of the required documents as they become available in an attempt to
obtain a preliminary decision from the responsible contracting officer
expressing the Government's consent to the transfer and assignment of the
Government Contracts. As used in this SECTION 1.4, the term "GOVERNMENT
CONTRACTS" includes current proposals relating to potential government contracts
and contracts issued in response thereto.
(b) NOVATION PROCESS.
(i) During the Interim Period each party will
cooperate fully and reasonably assist the other to obtain novation of each
Government Contract into the name of the Buyer and under substantially the same
terms and conditions as in effect at the time of Closing
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and without materially adverse conditions upon either the Seller or the Buyer,
and to facilitate performance thereof by the Buyer. Neither party will take any
action intended to, or which could reasonably be expected to, interfere with,
delay or otherwise adversely affect novation. The Buyer shall reimburse the
Seller for any third party out-of-pocket expenses attributable to the novation
process described in this SECTION 1.4 and exceeding One Thousand Dollars
($1,000.00) in the aggregate, provided that such expenses were incurred at the
request of the Buyer and, if in excess of $100, were pre-approved by the Buyer
in writing and such reimbursement shall occur only after the Seller submits an
invoice reasonably satisfactory to the Buyer for such expenses.
(ii) Promptly following the execution of this
Agreement, each party shall complete its respective portion of the
documentation required for novation of each Government Contract by FAR
42.1204(e), as identified for each party on EXHIBIT 1.4(B)(II), and the Buyer
and Seller shall each deliver its respective portion to the other. On behalf of
the Seller, the Buyer shall promptly submit the required documentation to
the appropriate contracting officer and provide a copy thereof to the Seller.
Each party will thereafter, promptly and in coordination and cooperation with
the other party, (i) respond appropriately to any requests from the
contracting officer for additional information or documentation relating to such
novation, and (ii) take all other actions reasonably necessary to complete
novation of all Government Contracts on a timely basis. Each party shall keep
the other fully informed, on a current and timely basis, as to the progress
of the novation process and provide copies of all letters, correspondence,
and other material documents to or from the governmental authority with
respect thereto. Buyer will use its best efforts to not engage in any material
communication, oral or written, with any contracting officer or other person
involved in the novation process without the prior consent of Seller, and
Seller shall have the right to participate in all such communications.
To the extent such prior consent is not possible, Buyer shall notify Seller
promptly after the communication and disclose to Seller the nature and content
of the communication. Buyer shall provide all support necessary to facilitate
completion of novation as quickly as possible, including having Buyer's CEO
participate in the meetings. Buyer will not take or omit to take any action that
would have an adverse effect on Seller's ability to complete novation quickly.
(iii) Solely with respect to the Principal Government
Contract, after execution of this Agreement and prior to Closing, Seller and
Buyer will seek a written indication from the appropriate contracting officer
(the "CONTRACT ADMINISTRATOR") pursuant to FAR 42.1204(e) that the Contract
Administrator is not aware of any requirement, circumstance or consideration
pertaining to the Principal Government Contract or the process for its novation
that would create a substantial likelihood that its novation (within the meaning
of this Section 1.4) from the Seller for the benefit of the Buyer would (i) not
occur within a period of 180 days after the Closing Date, or (ii) require the
imposition of materially adverse conditions upon either the Seller or the Buyer,
such indication being referred to for all purposes of this Agreement as the
"PRELIMINARY NOVATION APPROVAL." Upon execution of this Agreement, and in
conjunction with the submission of the documentation referenced in Section
1.4(b)(ii) above, the Seller shall promptly contact the Contract Administrator
to arrange a meeting for the purpose of discussing the documentation and seeking
the Preliminary Novation Approval. The Buyer shall provide all assistance and
support the Seller may reasonably request, including participation of the
Buyer's Chief Executive Officer and other senior management in preparation for,
conduct of, and follow up to all meetings and other communications with the
Contract Administrator and other government personnel. The Buyer acknowledges
that while the Seller will use its best efforts to
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obtain the Preliminary Novation Approval and to otherwise obtain novation of all
Government Contracts to which the Seller is a party in accordance with this
Agreement, the Seller neither makes any representation or warranty nor offers
any other assurance that any such novation can be obtained.
(c) PERFORMANCE OF GOVERNMENT CONTRACTS PENDING NOVATION.
With respect to each Government Contract the novation of which has not occurred
prior to the Closing Date, in the interim period between (i) the Closing Date
and (ii) the novation of each of the Government Contracts, or final close-out
and payment of the respective Government Contract, whichever first occurs (as to
each individual Government Contract, the "INTERIM PERIOD"):
(i) The Buyer, to the extent legally permissible,
will perform in a good and workmanlike manner and otherwise in full compliance
with all requirements of the Government Contracts, using to the extent
appropriate all Seller personnel and Purchased Assets conveyed to the Buyer
hereunder, the Seller's obligations and receive all economic and operational
benefits under each of the Government Contracts in lieu of the Seller, in
accordance with a subcontract to be executed by the parties at the Closing in
the form set forth in EXHIBIT 1.4(C)(I) (each, a "SUBCONTRACT"), which shall
incorporate to the maximum extent practicable the terms, conditions, and
requirements of the respective Government Contract. In no event will the Buyer
or the Seller be liable or responsible for failure to comply with the
requirements associated with the Government Contracts if the non-compliance
arose out of causes beyond the control and without the fault or negligence of
the Buyer, or the Seller, as the case may be. The Seller, promptly following
execution of this Agreement, will advise the respective contracting officer of
the intended Subcontract, obtain approval if required, and facilitate
appropriate meetings between the Buyer and the contracting officer, and Buyer
and Seller shall perform their respective obligations under SECTION 1.4.
(ii) Any modification to a Government Contract
approved by the Seller prior to the Closing Date will be duly signed by the
Seller.
(iii) Any other correspondence, invoices, or other
written submissions, including requests for equitable adjustments, claims,
contract modifications, and requests for final decisions will be prepared by the
Seller (with the Buyer's assistance as requested by the Seller), coordinated
with and submitted for the Buyer's final approval, which approval shall not
unreasonably be withheld, signed by the Seller if approved, and submitted by the
Seller to the government. The Buyer shall respond promptly to any request for
approval and shall provide all reasonable assistance to the Seller needed to
effectuate this Section. In this context, the Seller hereby designates
Shareholder as "SELLER'S DESIGNATED CONTRACT REPRESENTATIVE", and the Buyer
hereby designates Xxxxxxxxx Xxxx as the "BUYER'S DESIGNATED CONTRACT
REPRESENTATIVE" for all purposes of this Section 1.4(c). Either party may change
its Designated Contract Representative by written notice to the other. In
addition, if any certification is required, the Buyer shall certify to the
Seller in writing that such certification is proper under the Contract Disputes
Act of 1978 (the "CDA"), and not in violation of the False Claims Act, and upon
receipt of such certification the Seller shall review and certify the claim
under the CDA for submittal to and decision by the contracting officer.
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(iv) During the Interim Period, the Seller will be
responsible for preparing and certifying all pre-Closing Date cost claims,
including all of the Seller's direct, indirect, and general and administrative
cost claims, for each Government Contract through the Closing Date. During the
Interim Period, the Seller will submit such claims to the contracting officer.
Following the Interim Period, the Seller will be responsible for preparing and
certifying to the Buyer all pre-Closing Date cost claims, including all of the
Seller's direct, indirect, and general and administrative cost claims, for each
Government Contract through the Closing Date. The Buyer will be responsible for
certifying (based on the Seller's certificate) and submitting such claims to the
contracting officer. During and following the Interim Period, each party will
cooperate reasonably with the other in preparing and submitting such claims.
With respect to all cost claims covering periods prior to the Closing Date, (i)
to the extent included in the Purchased Assets (whether as an account receivable
or otherwise), the Buyer shall be entitled to all cost reimbursements and fees
and other entitlements, (ii) to the extent not included in the Purchased Assets
(whether as an account receivable or otherwise), the Seller shall be entitled to
all cost reimbursements and fees and other entitlements, and (iii) the Seller
shall be responsible for any and all liabilities and obligations (other than
Assumed Liabilities) arising from such claims and shall pay or otherwise
discharge such liabilities and obligations when due.
(v) If the appropriate contracting officer refuses to
allow the Buyer to perform a Government Contract pursuant to a Subcontract
during the Interim Period, has not acted on the request for novation on a
Government Contract by August 30, 2004, or refuses to permit novation of a
Government Contract under substantially the same terms and conditions as in
effect at the time of the Closing in the name of the Buyer and without material
adverse conditions upon either the Seller or the Buyer (collectively, a
"Governmental Refusal") and, (i) the Governmental Refusal is no longer
appealable by law or regulation, or (y) the parties jointly agree that the
Governmental Refusal cannot or should not as a practical matter be further
pursued, appealed, or submitted for reconsideration, the parties shall for a
period of thirty (30) days consult in good faith on how to proceed.
(A) If the parties fail within such period to agree
jointly on the disposition of an affected Government Contract other than the
Principal Government Contract, either the Buyer or the Seller may elect to cause
all remaining performance obligations under such contract to be retransferred to
the Seller (a "Retransfer Event"). Upon such Retransfer Event, the Interim
Period will end as to such contract, and all performance obligations, payments,
expenses, cost reimbursements, fees, and other matters attributable to the
period subsequent to the Interim Period will be for the account of the Seller.
The parties will thereupon negotiate in good faith and agree upon an equitable
adjustment to the Purchase Price considering the relative value of the
respective Government Contract, and the Buyer's net-of-tax profit to date under
the respective Subcontract and arrangements to enable the Seller to perform its
ongoing obligations under any Government Contract that is the subject of a
Retransfer Event.
(B) If the parties fail within such period to agree
jointly on the disposition of the Principal Government Contract, so long as the
Government Refusal shall not be primarily attributable to a breach by the Seller
of this Agreement, the parties will work together in good faith to take all
actions necessary to restructure the transaction contemplated by this Agreement
as a purchase of all of the issued and outstanding shares of capital stock of
the Seller substantially in accordance with the terms and conditions set forth
in this Agreement and
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the other agreements provided for herein; provided, however, that the terms and
conditions of the transaction will be modified to reflect the inherent legal and
economic differences between an asset purchase and a stock purchase as follows;
(i) the Buyer shall have the right to conduct all additional due diligence it
reasonably determines necessary to address the liability issues associated with
a stock purchase, and as a result of such due diligence shall be entitled to
require commercially reasonable changes to the Buyer indemnification rights
hereunder to the extent necessary to reflect such changes in the Buyer's
liability exposure without otherwise departing from the principal terms,
conditions and limitations of such indemnification; (ii) the Seller shall make
such additional representations, warranties and covenants as are customary in a
stock purchase transaction, including without limitation those addressing clear
title to all of the capital stock of the Seller; and (iii) the Purchase Price
shall be adjusted to reflect (x) any additional liability exposure the parties
shall reasonably determine would result from the change in deal structure,
taking into account changes which may be made to the indemnification rights of
the Buyer, and (y) any variation in the tax consequences to the Buyer of the
change in transaction structure, taking into account the right of the Buyer to
make a Section 338(h)(10) election with respect to the transaction. The parties
shall execute and deliver a Stock Purchase Agreement and related documentation
providing for a transaction structure intended to facilitate the obtaining, if
required, of any governmental consents or approvals for the transaction and
shall, consistent with the provisions of Section 1.4(a), take such actions as
shall be reasonably necessary to obtain such government consents or approvals.
(d) If a Retransfer Event occurs as to any Government
Contract, the Buyer shall remain responsible for payment of all expenses
incurred and other matters and shall be entitled to retain all cost
reimbursements and fees and other entitlements applicable to the Interim Period.
(e) Notwithstanding any provisions or language contained
herein, the Seller shall not compromise, settle, or release any existing
requests for equitable relief or claims pertaining to the Government Contracts,
whether asserted or unasserted, prior to the Closing Date, or the government's
approval of the novation, whichever is later, without the express written
consent of the Buyer, which shall not be unreasonably withheld. The Seller
further agrees to indemnify the Buyer in accordance with SECTION 10.2 herein,
for any Government or third-party liability or claims arising out of the
Seller's violation or non-compliance with any Government Contract requirements
resulting from acts or omissions on or prior to the Closing Date, and the Buyer
agrees to indemnify the Seller in accordance with SECTION 10.3 herein, for any
government or third-party liability or claims arising out of the Buyer's
violation or non-compliance with any Government Contract requirements resulting
from acts or omissions following the Closing Date.
ARTICLE 2. PURCHASE AND SALE
2.1 TERMS OF PURCHASE AND SALE. Subject to the terms of this Agreement,
including adjustment pursuant to Section 2.2, the purchase price for the sale,
transfer, conveyance, assignment and delivery of the Purchased Assets shall be
Five Million Dollars ($5,000,000) (the "PURCHASE PRICE"), payable by Buyer as
follows: (i) by a payment to Seller on the Closing Date in the amount of
$3,500,000 by wire transfer of immediately available U.S. funds, and (ii) by a
payment on the Closing Date in the amount of $1,500,000 (the "ESCROW AMOUNT") by
wire
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transfer of immediately available U.S. funds to U.S. Bank National Association,
as escrow agent (the "ESCROW AGENT"), which amount shall be governed by the
terms and conditions of an Escrow Agreement by and among Seller, Buyer and
Escrow Agent in the form attached hereto as EXHIBIT 2.1 (the "ESCROW
AGREEMENT").
2.2 PURCHASE PRICE ADJUSTMENTS.
(a) As promptly as practicable, but no later than thirty
(30) days after the Closing Date, the Buyer shall prepare and deliver to the
Seller a statement of Working Capital as of the close of business on the Closing
Date ("CLOSING DATE WORKING CAPITAL"), which shall set forth the Buyer's
determination of the Closing Date Working Capital prepared on the basis of, and
using the same accounting policies, principles, methodologies and preparations
as, the audited balance sheet as of December 31, 2003 (the "AUDITED BALANCE
SHEET") but excluding the Excluded Assets and Excluded Liabilities. At all
reasonable times following the Seller's receipt of Buyer's statement of the
Closing Date Working Capital, the Seller and its representatives shall be
permitted to review the Buyer's respective working papers relating to its
Closing Date Working Capital determination, and the Buyer shall make reasonably
available the individuals responsible for the preparation of the statement in
order to respond to the inquiries of the Seller related thereto. As used herein,
the term "WORKING CAPITAL" consists of the following items relating to the
Business and included in the Purchased Assets and the Assumed Liabilities: (i)
accounts receivable; plus (ii) inventory (which shall be deemed to include work
performed but not billed through the Closing Date); plus (iii) other current
assets; minus (iv) accounts payable; minus (v) accrued expenses; provided that
the items described in clauses (i) through (v) above shall be determined in
accordance with U.S. GAAP, and, for purposes of the calculation of the Closing
Date Working Capital, shall be determined as of the close of business on the
Closing Date.
(b) The Seller shall notify the Buyer in writing (the
"NOTICE OF DISAGREEMENT") within thirty (30) days of Seller's receipt of the
statement of Closing Date Working Capital if Seller disagrees with the Buyer's
calculation of the Closing Date Working Capital. The Notice of Disagreement
shall set forth in reasonable detail the basis for such dispute, the dollar
amounts involved and the Seller's good faith estimate of the Closing Date
Working Capital. If the Seller does not deliver a Notice of Disagreement to the
Buyer within such thirty (30) day period, then the Closing Date Working Capital
set forth in Buyer's statement shall be deemed to have been accepted by the
Seller, shall become final and binding upon the parties and shall be deemed the
final working capital statement (the "FINAL WC STATEMENT"). At all reasonable
times following the Buyer's receipt of a Notice of Disagreement, the Buyer and
its representatives shall be permitted to review the Seller's respective working
papers relating to the Notice of Disagreement, and the Seller shall make
reasonably available the individuals responsible for the preparation of the
Notice of Disagreement in order to respond to the inquiries of the Buyer related
thereto.
(c) During the thirty (30) days immediately following the
delivery of a Notice of Disagreement, the Seller and the Buyer shall seek to
resolve any differences that they may have with respect to any matter specified
in the Notice of Disagreement. If at the end of such thirty (30) day period the
Seller and the Buyer have been unable to agree upon a Final WC Statement, then
the Seller and the Buyer shall submit to RSM McGladrey or another certified
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public accounting firm mutually agreed to by them (the "INDEPENDENT ACCOUNTING
FIRM") for review and resolution any and all matters that remain in dispute with
respect to the Notice of Disagreement. The Buyer and the Seller shall cause the
Independent Accounting Firm to make a final determination (which determination
shall be binding on the parties hereto) of the Closing Date Working Capital
within thirty (30) days from such submission, and such final determination shall
be deemed the Final WC Statement. During the thirty (30) day review by the
independent accounting firm, the Buyer and the Seller will each make available
to the Independent Accounting Firm such individuals and such information, books
and records as may be reasonably required by the Independent Accounting Firm to
make its final determination.
(d) If the Closing Date Working Capital as set forth in
the Final WC Statement (the "FINAL WORKING CAPITAL") exceeds $442,500 (the
"WORKING CAPITAL TARGET"), then the Buyer shall pay to the Seller as additional
Purchase Price an amount equal to such excess, or (ii) if the Final Working
Capital is less than $442,500, then the Seller shall pay to the Buyer an amount
equal to such shortfall, in either case within five (5) business days after the
Final WC Statement becomes or is deemed final and binding on the parties hereto
and, in either case, together with interest on the amount of such excess or
shortfall from the Closing Date until the date of payment at the rate of four
percent (4%) per annum.
(e) In the event that the parties submit any unresolved
objections to the Independent Accounting Firm for resolution as provided in this
Section 2.2, the Buyer and the Seller will share responsibility for the fees and
expenses of the Independent Accounting Firm as follows:
(i) if the Independent Accounting Firm resolves all
of the remaining objections in favor of the Buyer (the Final Working Capital so
determined is referred to herein as the "Low Value"), the Seller will be
responsible for all of the fees and expenses of the Independent Accounting Firm;
(ii) if the Independent Accounting Firm resolves all
of the remaining objections in favor of the Seller (the Final Working Capital so
determined is referred to herein as the "High Value"), the Buyer will be
responsible for all of the fees and expenses of the Independent Accounting Firm;
and
(iii) if the Independent Accounting Firm resolves
some of the remaining objections in favor of the Buyer and the rest of the
remaining objections in favor of the Seller (the Final Working Capital so
determined is referred to herein as the "Actual Value"), the Seller will be
responsible for that fraction of the fees and expenses of the Independent
Accounting Firm equal to (x) the difference between the High Value and the
Actual Value over (y) the difference between the High Value and the Low Value,
and the Buyer will be responsible for the remainder of the fees and expenses.
2.3 ESCROW.
(a) Upon the first to occur of (i) novation of contract
number DABJ03-03-D-0005 described on SECTION 4.8(A) of the Seller Disclosure
Schedule (the "PRINCIPAL GOVERNMENT
8
CONTRACT") as required in SECTION 1.4, (ii) the work anticipated to be performed
and paid for pursuant to the Principal Government Contract becoming the subject
of another contract in which Buyer has an interest, or (iii) Buyer becoming the
provider of the services to be provided pursuant to the Principal Government
Contract at the military installations listed on EXHIBIT 2.3, to the extent such
services are required by the Government, the parties shall take all actions
necessary to cause the Escrow Agent to deliver to Seller One Million Dollars
($1,000,000) of the Escrow Amount (the "NOVATION AMOUNT") in accordance with the
Escrow Agreement and in the manner reasonably designated by Seller to the Escrow
Agent.
(b) From time to time prior to the one (1) year
anniversary of the Closing Date (the "ESCROW TERMINATION DATE"), the parties
shall take all actions necessary to cause the Escrow Agent to pay from the
Escrow Account all Buyer Damages for which Buyer has asserted a claim (subject
to the limitations of Section 10.5) and as to which (i) Seller has not contested
the claim as provided below or (ii) all disagreements between Buyer and Seller
shall have been resolved by mutual agreement or a final, nonappealable decision
of a court of competent jurisdiction, in accordance with the Escrow Agreement.
Buyer may assert claims for Buyer Damages by written notice to the Seller and
the Escrow Agent, and payment of any such claim shall be effected on the later
to occur of the expiration of fifteen (15) Business Days from the date of such
notice or, if such claim is contested in writing within such fifteen (15)
Business Day period, the date the dispute is resolved either by mutual agreement
or a final, nonappealable decision of a court of competent jurisdiction.
(c) The parties shall take all actions necessary to cause
the Escrow Agent to deliver any remaining amounts of the Escrow Amount to Seller
on the Escrow Termination Date, in the manner reasonably designated by Seller to
the Escrow Agent in writing at least ten (10) days prior to such date; PROVIDED
that the parties shall authorize the Escrow Agent to withhold from delivery of
any remaining amounts of the Escrow Amount the equivalent of any amounts then in
dispute related to Buyer Damages (subject to the limitations of Section 10.5);
PROVIDED FURTHER, that the withheld Escrow Amount, to the extent not applied in
satisfaction of such indemnification obligations, shall be paid to Seller
promptly upon resolution of such dispute. Nothing in this Section 2.3 shall be
construed as limiting the liability of Seller to the Escrow Amount, nor shall
payments from the Escrow Amount be considered as liquidated damages for any
breach under this Agreement or any other Seller Transaction Document.
2.4 TRANSFER TAXES; PRORATIONS; COOPERATION.
(a) Notwithstanding any legal requirements to the
contrary, Buyer shall be responsible for and shall pay any transfer taxes when
due, and shall, at its own expense, file all necessary tax returns and other
documentation with respect to all such transfer taxes; PROVIDED, that, if
required by any legal requirement, Buyer will join in the execution of any such
tax returns and other documentation.
(b) Seller shall be responsible for and shall pay any
taxes arising or resulting from or in connection with the conduct of the
Business or the ownership of the Purchased Assets attributable to the
Pre-Closing Period (as defined below). Buyer shall be responsible for and shall
pay any taxes arising or resulting from or in connection with the conduct of the
Business or the ownership of the Purchased Assets attributable to the
Post-Closing period. "POST-CLOSING
9
PERIOD" means any taxable period beginning after the close of business on the
Closing Date or, in the case of any tax period which includes, but does not
begin, after the close of business on the Closing Date, the portion of such
period beginning after the close of business on the Closing Date, and
"PRE-CLOSING PERIOD" means any taxable period ending on or before the close of
business on the Closing Date or, in the case of any taxable period which
includes, but does not end on, the Closing Date, the portion of such period up
to and including the close of business on the Closing Date.
(c) All real property, personal property, ad valorem or
other similar taxes (not including income taxes) levied with respect to the
Purchased Assets or the Business for a taxable period which includes (but does
not end on) the Closing Date shall be apportioned between Buyer and Seller based
on the number of days included in such period through and including the Closing
Date and the number of days included in such period after the Closing Date.
(d) Unless Internal Revenue Code of 1986, as amended (the
"CODE") or Treasury Regulations require otherwise, the parties shall treat the
Seller as the owner of the Escrow Amount and earnings thereon for tax purposes
unless and until such amount (or portion thereof) is returned to Buyer.
(e) After the Closing, Seller and Buyer will each afford
(or cause its respective affiliates to afford) to the other or to such other's
representatives or agents reasonable access during normal business hours (on
terms not unreasonably disruptive to the business, operations or employees of
the party or parties of which access is sought) to the records and all other
data and information relating to taxes pertaining to any Pre-Closing Period and
to Seller's employees, or such other employees providing services in respect of
the Business and auditors for the purpose of obtaining information relating to
taxes, to the extent such access is reasonably necessary: (i) to prepare and
complete any tax returns required to be made hereunder; (ii) to prosecute or
defend on behalf of Seller's litigation or administrative controversies
controlled by Seller or Purchaser; and (iii) to comply with requests made by any
tax authority conducting an audit, investigation or inquiry relating to Seller's
activities. After the Closing, Buyer and Seller agree (x) to retain all books
and records with respect to tax matters pertinent to Seller relating to any
Pre-Closing Period until the expiration of the statute of limitations (and, to
the extent notified by Buyer or Seller, any extensions thereof) of the
respective tax periods, and to abide by all record retention agreements entered
into with any governmental authority; and (y) if the other party reasonably
requests, to allow the other party hereto to make copies of such books and
records.
2.5 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the various classes of Purchased Assets (as such classes are defined for
the purposes of Section 1060 of the Code) at Closing consistent with the
allocation schedule attached hereto as SCHEDULE 2.5, which is derived from the
Interim Balance Sheet. In the event the Purchase Price is adjusted post-Closing
pursuant to SECTION 2.2, the amounts allocated to each class of the Purchased
Assets on SCHEDULE 2.5 shall be adjusted to reflect the changes in the
respective asset classes that necessitated adjustment of the Purchase Price.
Promptly following the determination of the Final Working Capital Amount, the
parties shall cooperate in the execution of Form 8594 to be filed with the
Internal Revenue Service which reflects the final allocation of the Purchase
Price. All allocations made pursuant to this SECTION 2.5 shall be made in
accordance with the requirements
10
of Section 1060 of the Code. None of the parties shall take a position on any
tax return (including IRS Form 8594), before any tax authority or in any
judicial proceeding that is in any manner inconsistent with such allocation
without the written consent of the other parties to this Agreement or unless
specifically required pursuant to a determination by an applicable tax
authority. The parties shall promptly advise each other of the existence of any
tax audit, controversy or litigation related to any allocation hereunder.
ARTICLE 3. THE CLOSING
3.1 TIME AND PLACE OF CLOSING. The closing of the purchase and sale
provided for in this Agreement (the "CLOSING") shall occur at the offices of
Xxxxxxxxx Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxxxx, Xxxxxxxx
00000-0000, at 10:00 A.M. on June 25, 2004 assuming that all conditions to
closing set forth in Article 8 are satisfied or waived (other than conditions
that are intended to be satisfied at the Closing), or at such other date, time
or place as the parties may agree (the "CLOSING DATE").
3.2 CLOSING DELIVERIES BY SELLER. At the Closing, Seller shall (i) take
all steps reasonably necessary to place Buyer in actual possession and operating
control of the Business and the Purchased Assets (other than Government
Contracts, which shall be handled in accordance with Section 1.4), and (ii)
deliver the following items, duly executed by Seller as applicable, all of which
shall be in form and substance reasonably acceptable to Buyer:
(a) The Escrow Agreement;
(b) UPDATED SCHEDULES. Updated versions of Schedules 1.1(a)
and 1.2 reflecting the Purchased Assets and Assumed Liabilities as of the
Closing Date;
(c) GENERAL ASSIGNMENT AND XXXX OF SALE. General
Assignment and Xxxx of Sale covering all of the applicable Purchased Assets,
substantially in the form attached hereto as EXHIBIT 3.2(A) (the "GENERAL
ASSIGNMENT AND XXXX OF SALE");
(d) OTHER CONVEYANCE INSTRUMENTS. Such other specific
instruments of sale, transfer, conveyance and assignment as Buyer may reasonably
request;
(e) ASSIGNMENTS OF LEASES. Assignments of real property
leases and personal property leases;
(f) CONSENTS. Duly executed consents of all third parties
required by Seller to consummate the transaction, in form and substance
reasonably satisfactory to Buyer, including those consents listed in SECTION 4.3
of the Seller Disclosure Schedule other than government consents required for
conveyance of Government Contracts;
(g) PAYOFF AND RELEASE LETTERS. Payoff and release
letters from creditors of Seller, together with UCC-3 termination statements,
with respect to any financing statements filed against any of the Purchased
Assets, terminating all encumbrances (including tax liens other than Permitted
Liens, as defined in Section 3.4(b) below) on any of the Purchased Assets;
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(h) EMPLOYMENT AGREEMENT. Employment agreement and
noncompetition agreement between Shareholder and Buyer on customary and
reasonable terms to the parties;
(i) OPINION OF SELLER'S COUNSEL. An opinion, dated as of
the Closing Date, from Xxxxxxxxx Xxxxxxxxx, A Professional Corporation, Seller's
legal counsel, substantially in the form attached hereto as EXHIBIT 3.2(I);
(j) OFFICER'S CERTIFICATE. A certificate executed on
behalf of Seller by its President or Chief Executive Officer, dated as of the
Closing Date, certifying that:
(i) the representations and warranties of Seller set
forth in this Agreement, or in any written statement or certificate that shall
be delivered to Buyer by Seller under this Agreement,
(x) that are not qualified as to materiality are
true and correct in all material respects, and
(y) that are qualified as to materiality are true
in all are true and correct in all respects, on and as of the date made and as
of the Closing Date as if made on the date thereof (except to the extent such
representation or warranty specifies an earlier date), and
(ii) Seller has performed in all material respects all
obligations and covenants required to be performed by it prior to the Closing
Date under this Agreement and any other agreement or document entered into in
connection herewith;
(k) SECRETARY'S CERTIFICATE. A certificate of Seller's
Secretary certifying as to:
(i) the Articles of Incorporation and bylaws of Seller
as in effect as of the Closing Date,
(ii) resolutions of Seller's stockholder and its board
of directors authorizing the execution, delivery and performance of this
Agreement and the other Seller Transaction Documents, and
(iii) the incumbency of Seller's officers executing this
Agreement and all other Seller Transaction Documents;
(l) CERTIFICATE OF GOOD STANDING. A certificate from the
Virginia State Corporation Commission as to Seller's good standing;
(m) CERTIFICATE OF AMENDMENT. Articles of Amendment to
Seller's Articles of Incorporation to be filed by Buyer after the Closing Date
with the clerk of the Virginia State Corporation Commission, changing Seller's
corporate name to one dissimilar to Performance Group, Inc.;
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(n) BOOKS AND RECORDS. The books and records of the
Seller, except for books and records designated as Excluded Assets; and
(o) FIRPTA CERTIFICATION. Certification by Seller of
United States person status substantially in the form attached hereto as EXHIBIT
3.2(O).
3.3 CLOSING DELIVERIES BY BUYER. At the Closing, Buyer shall
deliver the following items, duly executed by Buyer as applicable, all of which
shall be in a form and substance reasonably acceptable to Seller:
(a) WIRE TRANSFER. A wire transfer to Seller's bank in
accordance with wire instructions Seller shall provide at least three business
days prior to Closing for credit to Seller's account, in the amount of the
Purchase Price less the Escrow Amount, and a wire transfer to the Escrow Agent
in the amount of the Escrow Amount to be held in accordance with the terms and
conditions of the Escrow Agreement;
(b) OFFICER'S CERTIFICATE. A certificate executed on
behalf of Buyer by its President or Chief Executive Officer, dated as of the
Closing Date, certifying that:
(i) the representations and warranties of Buyer set
forth in this Agreement, or in any written statement or certificate that shall
be delivered to Seller by Buyer under this Agreement,
(x) that are not qualified as to materiality are
true and correct in all material respects, and
(y) that are qualified as to materiality are true
in all are true and correct in all respects, on and as of the date made and as
of the Closing Date as if made on the date thereof (except to the extent such
representation or warranty specifies an earlier date), and
(ii) Buyer has performed all obligations and
covenants required to be performed by it under this Agreement and any other
agreement or document entered into in connection herewith prior to the Closing
Date;
(c) EMPLOYMENT AGREEMENT. The Employment Agreement between
Shareholder and Buyer described in Section 3.2(h);
(d) OPINION OF BUYER'S COUNSEL. An opinion, dated as of the
Closing Date, from Buyer's in-house legal counsel substantially in the form
attached hereto as EXHIBIT 3.3(D); and
(e) CONSENT OF DIRECTORS. Resolutions of Buyer's board of
directors authorizing the execution, delivery and performance of this Agreement
and the other Buyer Transaction Documents.
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3.4 CLOSING DELIVERIES BY BUYER AND SELLER. At the Closing, Buyer
and Seller shall deliver the following items, duly executed:
(a) ASSIGNMENT AND ASSUMPTION AGREEMENT. Assignment and
Assumption Agreement, covering all of the Assumed Liabilities, substantially in
the form attached hereto as EXHIBIT 3.4(A) (the "ASSIGNMENT AND ASSUMPTION");
(b) XXXXXXXX LEASE. A lease for the Seller's Xxxxxxxx
facility on customary and reasonable commercial terms acceptable to the parties.
(c) OTHER DOCUMENTATION. Such other certificates,
instruments or documents required pursuant to the provisions of this Agreement
or otherwise reasonably necessary or appropriate to transfer the Purchased
Assets and Assumed Liabilities in accordance with the terms hereof and
consummate the transaction, and to vest in Buyer full and complete title to the
Purchased Assets, free and clear of all encumbrances other than (i) liens,
taxes, assessments and other governmental charges related to the Purchased
Assets not yet due and payable, (ii) statutory, mechanics', laborers' and
materialmen liens arising in the ordinary course of business for sums not yet
due, (iii) statutory and contractual landlord liens under leases pursuant to
which the Seller is a lessee and not in default, and (iv) liens relating to
purchase money security interests that are not material in amount (collectively,
the "PERMITTED LIENS").
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the corresponding sections of the disclosure
schedule of Seller delivered to Buyer concurrently with the execution and
delivery of this Agreement (the "SELLER DISCLOSURE SCHEDULE") (provided, that if
any fact or item disclosed in any section of the Seller Disclosure Schedule
shall be relevant to any other section of this Agreement or the Seller
Disclosure Schedule, then such fact or item shall be deemed to be disclosed with
respect to such other section of this Agreement or the Seller Disclosure
Schedule, as applicable, but only to the extent it reasonably informs or
notifies the reader of its applicability to the section in which it was required
to be disclosed) (FURTHER PROVIDED, that as used in the this Agreement, the term
"knowledge" shall mean the actual knowledge of Shareholder), Seller and
Shareholder, jointly and severally, hereby represent and warrant to Buyer that,
as of the date hereof:
4.1 ORGANIZATION AND QUALIFICATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. Except as set forth in SECTION 4.1 of the Seller Disclosure Schedule,
Seller is duly qualified or licensed as a foreign corporation to conduct
business and is in good standing in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing, individually or in the
aggregate, would not have a material adverse effect.
4.2 AUTHORITY. Seller has all necessary power and authority to execute
and deliver this Agreement and the other documents to be executed and delivered
by Seller hereunder (the "Seller Transaction Documents"), to perform its
obligations hereunder, and to consummate the
14
transaction. The execution and delivery of this Agreement and the other Seller
Transaction Documents and the consummation by Seller of the transaction have
been duly and validly authorized by all requisite action and no other corporate
proceedings on the part of Seller are necessary to authorize this Agreement or
to consummate the transaction. This Agreement has been, and at Closing the other
Seller Transaction Documents will be, duly and validly executed and delivered by
Seller. This Agreement constitutes, and at Closing the other Seller Transaction
Documents will constitute, the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles related to or
limiting creditors' rights generally and by the availability of equitable
remedies and defenses.
4.3 NO CONFLICTS; REQUIRED CONSENTS. No consents other than those set
forth in SECTION 4.3 of the Seller Disclosure Schedule are required with respect
to Seller's execution and delivery of this Agreement, the other Seller
Transaction Documents, and the consummation of the transaction hereunder. The
execution, delivery and performance of this Agreement and the other Seller
Transaction Documents by Seller do not and will not, with or without notice or
lapse of time,
(a) conflict with or violate Seller's Articles of
Incorporation or bylaws,
(b) conflict with or violate any legal requirement
applicable to Seller or by which any property or asset of Seller is bound or
affected, except where the existence of such conflict or violation would not,
individually or in the aggregate, have a material adverse effect,
(c) assuming the consents listed in SECTION 4.3 of the
Seller Disclosure Schedule are obtained, result in any breach of or constitute a
default under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of any encumbrance on
any property or asset of Seller pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except where the existence of such breach, default or
right or the creation of such encumbrance would not, individually or in the
aggregate, have a material adverse effect,
(d) violate or conflict with any other material restriction
of any kind or character to which Seller is subject, except where the existence
of violation or conflict would not, individually or in the aggregate, have a
material adverse effect, or
(e) require Seller to make or deliver any filing or notice
to, a governmental authority.
4.4 FINANCIAL STATEMENTS. Seller has delivered to Buyer the
following financial statements (collectively, the "FINANCIAL STATEMENTS"):
(i) The audited balance sheets, and the related
statements of operations and cash flows, of Seller as of and for the fiscal
years ended December 27, 2002 and December 26, 2003, together with the notes
thereto; and
15
(ii) The unaudited balance sheets, and the related
unaudited statements of operations, changes in stockholders' equity and cash
flows, of Seller (the "INTERIM BALANCE SHEET") as of and for the four months
ended April 30, 2004 (the "INTERIM BALANCE SHEET DATE").
(a) All of the Financial Statements:
(i) are true, accurate and complete in all material
respects;
(ii) are consistent with the books and records of
Seller;
(iii) present fairly and accurately the financial
condition of Seller as of the respective dates thereof and the results of
operations, changes in stockholders' equity and cash flows of Seller for the
periods covered thereby; and
(iv) have been prepared in accordance with GAAP,
applied on a consistent basis throughout the periods covered, except for the
Interim Balance Sheet, which has been prepared consistent with Seller's past
practice.
4.5 ABSENCE OF UNDISCLOSED LIABILITIES. Seller has no debt,
liability or obligation, whether direct or indirect ("Liabilities"), other than:
(a) those set forth in the Interim Balance Sheet;
(b) those incurred in the ordinary course of business
that were (i) incurred prior to the Interim Balance Sheet Date and not required
to be set forth in the Interim Balance Sheet under GAAP, or (ii) incurred since
the date of the Interim Balance Sheet; and
(c) those that do not exceed $5,000 individually or $25,000
in the aggregate.
4.6 ABSENCE OF CHANGES. Since the Interim Balance Sheet Date:
(a) Seller has conducted the Business in the ordinary course
of business;
(b) To Seller's knowledge, no event or circumstance has
occurred that has had or is reasonably likely to have a material adverse effect
on Seller; and
(c) Except as set forth in SECTION 4.6(C) of the Seller
Disclosure Schedule, Seller has not taken any action, agreed to take any action,
or omitted to take any action that would constitute a breach of SECTION 6.1 or
6.2 if such action or omission were taken between the date of this Agreement and
the Closing Date.
4.7 ACCOUNTS RECEIVABLE.
(a) SCHEDULE 1.1(A) sets forth an accurate and complete
list of all Receivables existing as of Closing that are included as the
Purchased Assets. Each Receivable is:
(i) a valid and legally binding obligation of the
account debtor enforceable in accordance with its terms, free and clear of all
encumbrances, and not subject to
16
setoffs, adverse claims, counterclaims, assessments, defaults, prepayments,
defenses, and conditions precedent, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws and
equitable principles related to or limiting creditors' rights generally and by
the availability of equitable remedies and defenses;
(ii) a true and correct statement of the account for
merchandise actually sold and delivered to, or for services actually performed
for and accepted by, such account debtor; and
(iii) fully collectible and will be collected within
one hundred twenty (120) days, subject to trade discounts provided in the
ordinary course of business and any allowance for doubtful accounts contained in
the Interim Balance Sheet.
4.8 MATERIAL CONTRACTS. SECTION 4.8(A) of the Seller Disclosure
Schedule provides a true and complete list of each of the following contracts to
which Seller is party (collectively, the "MATERIAL Contracts"):
(a) True and complete copies of each written Material
Contract and true and complete written summaries of each oral Material Contract
(including all amendments, supplements, modifications and waivers thereof) have
been delivered to Buyer by Seller.
(b) Each Material Contract is currently valid and in full
force and effect, and is enforceable by Seller in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
related to or limiting creditors' rights generally and by the availability of
equitable remedies and defenses.
(c) Seller is not in default, and no party has notified
Seller that it is in default, under any Material Contract. No event has
occurred, and no circumstance or condition exists, that could reasonably be
expected to, with or without notice or lapse of time: (i) result in a violation
or breach of any of the provisions of any Material Contract by Seller that would
result in a material adverse effect; (ii) give any person the right to declare a
default or exercise any remedy under any Material Contract; (iii) give any
person the right to accelerate the maturity or performance of any Material
Contract or to cancel, terminate or modify any Material Contract; or (iv)
otherwise have a material adverse effect on Seller in connection with any
Material Contract.
(d) Seller has not waived any of its rights under any
Material Contract.
(e) The performance of the Material Contracts has not
resulted in any violation of or failure by Seller to comply with any legal
requirement.
(f) The Material Contracts constitute all of the contracts
necessary to enable Seller to conduct the Business in the manner in which such
Business is currently being conducted.
4.9 INSURANCE. SECTION 4.9 of the Seller Disclosure Schedule sets forth
an accurate and complete list of all insurance policies, self-insurance
arrangements and indemnity bonds,
17
currently in effect, that insure the Business and/or the Purchased Assets
(collectively, the "INSURANCE POLICIES").
4.10 TITLE; SUFFICIENCY; CONDITION OF ASSETS.
(a) Seller has good and valid title to all of the
Purchased Assets free and clear of any lien, pledge, security interest or other
encumbrances other than Permitted Liens. The Purchased Assets are not subject to
any preemptive right or right of first refusal. The Purchased Assets are in good
operating condition and repair, ordinary wear and tear excepted.
(b) The sale, transfer and assignment of the Purchased
Assets as contemplated by this Agreement will give Buyer possession of, and the
right to use, all the assets required for conducting the Business as presently
conducted. Upon Closing, assuming the consents set forth in SECTION 4.3 of the
Seller Disclosure Schedule have been obtained, Buyer will be entitled to the
continued possession and use of all Purchased Assets, except as provided in
SECTION 1.4 regarding novation of Government Contracts. Except for the Purchased
Assets, there are no other assets properties or rights, including intellectual
property rights, that are required by Seller to conduct the Business in a manner
substantially consistent in all material respects with the manner in which
Seller currently conducts the Business.
4.11 REAL PROPERTY LEASES. Seller does not own any real property.
SCHEDULE 1.1(A) sets forth an accurate and complete list of the real property
leases included in the Purchased Assets. Seller has delivered to Buyer accurate
and complete copies of each real property lease. All real property leases, and
all amendments and modifications thereto, are in full force and effect and have
not been modified or amended, and there exists no default under any such lease
by Seller, nor any event which, with notice or lapse of time or both, would
constitute a default thereunder by Seller or, to Seller's knowledge, by any
third party.
4.12 INTELLECTUAL PROPERTY. SCHEDULE 1.1(A) sets forth an accurate and
complete list of all trade names, trademarks and service marks, patents, patent
rights, and copyrights, whether domestic or foreign (the "SELLER INTELLECTUAL
PROPERTY") material to the conduct of the Business owned or registered in
Seller's name. Each Item of Seller Intellectual Property is valid, subsisting
and in full force and effect, has not been abandoned or passed into the public
domain and is free and clear of any lien, pledge, security interest or other
encumbrance. Each item of Seller Intellectual Property is exclusively owned by
Seller and was written or created solely by employees of Seller acting within
the scope of their employment or by third parties, all of which employees and
third parties have validly and irrevocably assigned all of their rights,
including intellectual property rights therein, to Seller and no third party
owns or has any rights to any such Seller Intellectual Property.
4.13 CUSTOMERS AND SUPPLIERS.
(a) CUSTOMERS. There has not been any material adverse
change in the business relationship of Seller with any material customer who
accounted for more than five percent (5%) of Seller's gross sales during the
period from January 1, 2001 to Closing. SECTION 4.13(A) of the Seller Disclosure
Schedule sets forth an accurate and complete list of the 10 largest
18
customers of the Business determined on the basis of sales revenues for each
of the last three (3) fiscal years.
(b) SUPPLIERS. There has not been any material adverse
change in the business relationship of Seller with any sole source supplier or
any supplier from whom Seller purchased more than five percent (5%) of the total
goods or services which it purchased during the period from January 1, 2001 to
Closing. SECTION 4.13(B) of the Seller Disclosure Schedule sets forth an
accurate and complete list of the 10 largest suppliers of the Business
determined on the basis of dollar volume for each of the last three fiscal
years.
4.14 EMPLOYEES.
(a) STATUS OF EMPLOYEES. No employee of Seller has been
granted the right to continued employment by Seller or to any material
compensation following termination of employment with Seller. Except as set
forth in SECTION 4.14(A) of the Seller Disclosure Schedule, Seller has no
knowledge that any Key Employee intends to terminate his or her employment or
other engagement with Seller, nor does Seller have a present intention to
terminate the employment or engagement of any Key Employee.
(b) COMPENSATION. SECTION 4.14(B) of the Seller
Disclosure Schedule sets forth an accurate, correct and complete list of all:
(i) employees of Seller, including each employee's
name, title or position, present annual compensation (including bonuses,
commissions and deferred compensation), accrued and unused paid vacation leave,
years of service, interests in any incentive compensation plan, and estimated
entitlements to receive supplementary retirement benefits or allowances (whether
pursuant to a contractual obligation or otherwise);
(ii) individuals who are currently performing
services for Seller related to the Business who are classified as "consultants"
or "independent contractors";
(iii) bonuses, severance payments, termination pay
and other special compensation of any kind paid to, accrued with respect to, or
that would be payable to (as a result of the transaction), any present or former
officer, director, employee or consultant of Seller since the Interim Balance
Sheet Date;
(iv) increases in any employee's wage or salary since
the Interim Balance Sheet Date; and
(v) increases or changes in any other benefits or
insurance provided to any employees since the Interim Balance Sheet Date. No
employee of Seller is eligible for payments that would constitute "parachute
payments" under Section 280G of the Code.
(c) DISPUTES. There are no suits, proceedings, court
orders, arbitrations or investigations pending or, to the knowledge of Seller,
threatened involving any employee or group of employees, and no employee of
Seller has given written notice to Seller of any circumstance which the Employee
alleges may give rise to any of the foregoing matters. Seller
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has not suffered or sustained any work stoppage and to Seller's knowledge no
such work stoppage is threatened.
(d) COMPLIANCE WITH LEGAL REQUIREMENTS. Seller has
complied in all material respects with all legal requirements related to the
employment of its employees, including provisions related to wages, hours,
leaves of absence, equal opportunity, occupational health and safety, workers'
compensation, severance, employee handbooks or manuals, collective bargaining
and the payment of social security and other taxes.
(e) WARN ACT. Contingent upon Buyer's satisfaction of its
obligations under Section 7.9, Seller is in full compliance with the Worker
Readjustment and Notification Act (the "WARN ACT") (29 U.S.C. ss.2101),
including all obligations to promptly and correctly furnish all notices required
to be given thereunder in connection with any "plant closing" or "mass layoff"
to "affected employees," "representatives" and any state dislocated worker unit
and local government officials. No reduction in the notification period under
the WARN Act is being relied upon by Seller. SECTION 4.14(E) of the Seller
Disclosure Schedule sets forth an accurate, correct and complete list of all
employees terminated (except with cause, by voluntarily departure or by normal
retirement), laid off or subjected to a reduction of more than 50% in hours or
work during the two full calendar months and the partial month preceding this
representation and warranty.
(f) UNIONS. Seller has no collective bargaining
agreements with any of its employees. There is no labor union organizing or
election activity pending or, to the knowledge of Seller, threatened with
respect to Seller.
4.15 SELLER BENEFIT PLANS. Seller has maintained and funded all of its
employee benefit plans (collectively, the "SELLER BENEFIT PLANS") in accordance
with their terms and all applicable laws. Neither Seller nor any member of a
controlled group of which Seller is a member, maintains or contributes to, or
has ever maintained or contributed to, any defined benefit plan or multiemployer
plan which would be subject to regulation under ERISA. Nothing contained in any
of the Seller Benefit Plans will obligate Buyer to provide any benefits to
employees, former employees or beneficiaries of employees or former employees,
or to make any contributions to any plans from and after the Closing.
4.16 COMPLIANCE WITH LAWS; GOVERNMENTAL APPROVALS. Seller is not now,
and during the past five years has not been, in conflict with, or in default,
breach or violation of, any legal requirement applicable to Seller, or by which
any property or asset of Seller is bound or affected, except for any conflict,
default, breach or violation that would not, individually or in the aggregate,
have a material adverse effect. Seller is in possession of all governmental
approvals necessary for Seller to own, lease and operate its properties or to
carry on the Business as it is now being conducted, except where the failure to
obtain such governmental approval would not, individually or in the aggregate,
have a material adverse effect. No suspension or cancellation of any
governmental approvals is pending or, to the knowledge of Seller, threatened,
and except for those governmental approvals set forth in SECTION 4.16 of the
Seller Disclosure Schedule and those pertaining to the novation of Government
Contracts, no other governmental approval is required to be obtained or filed in
connection with the execution and delivery of this Agreement and the other
Seller Transaction Documents.
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4.17 LITIGATION. There is no proceeding or lawsuit, of any kind,
pending or, to the knowledge of Seller, threatened against or affecting Seller,
or any property or asset of Seller. To Seller's knowledge, no event has
occurred, and no condition or circumstance exists, that could reasonably be
expected to directly or indirectly give rise to or serve as a basis for the
commencement of any such proceeding or lawsuit. Neither Seller nor any property
or asset of Seller is subject to any order or any proposed order that would
prevent or materially delay the consummation of the transaction or would have a
material adverse effect.
4.18 ENVIRONMENTAL MATTERS.
(a) Seller is in compliance in all material respects with
all applicable environmental and safety laws and regulations that relate to the
Purchased Assets, any leased real property or the operation of the Business,
including, but not limited to, possession of all, and compliance with any,
permits or other authorizations of any governmental authority required under
applicable law or the terms and conditions thereof, except where noncompliance
with environmental laws or failure to possess or comply with governmental
approvals or permits would not result in a material adverse effect to the
Business;
(b) Seller has not received any communication or notice,
whether from a governmental authority or any other person, alleging any
violation of or noncompliance with any environmental or safety law by Seller or
for which it is responsible, and which relate to the Leased Real Property or the
operation of the Business;
(c) There is no pending or, to the knowledge of Seller,
no threatened claim, action, investigation or notice against or involving Seller
relating to the Leased Real Property or the operation of the Business by any
person or entity alleging liability under or a violation of any environmental or
safety laws or liability or for investigatory, cleanup or governmental response
costs, or natural resources or property damages, or personal injuries,
attorneys' fees or penalties relating to the presence or release into the
environment of any hazardous materials or substances controlled or regulated
under applicable law (an "ENVIRONMENTAL CLAIM"); and
(d) To the knowledge of Seller, there are no present
facts or circumstances that are reasonably likely to form the basis of any
Environmental Claim.
4.19 TAXES.
(a) Seller has timely filed all tax returns relating to
the Business that it was required to file, and such tax returns are true,
correct and complete in all respects. All taxes shown to be payable on such tax
returns or on subsequent assessments with respect thereto have been paid in full
on a timely basis, and no other taxes relating to the Business are payable by
Seller with respect to any period ending prior to the date of this Agreement.
Seller has withheld and paid all taxes relating to the Business required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other third party. There are no
liens for taxes on the Purchased Assets, other than liens for taxes not yet due
and payable.
(b) To the knowledge of Seller, no audit of any tax
return relating to the Business is currently pending or threatened. No written
claim, and to the knowledge of Seller
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no other claim, has ever been made by any governmental authority in a
jurisdiction where Seller does not file tax returns relating to the Business
that it is or may be subject to taxation by that jurisdiction. Seller has
delivered or made available to Buyer correct and complete copies of all Seller
tax returns filed, examination reports, and statements of deficiencies assessed
or agreed to by Seller with respect to periods ending on or after December 31,
2002. Seller has not waived any statute of limitations in respect of any tax or
agreed to an extension of time with respect to any tax assessment or deficiency.
(c) The Seller and Shareholder is a "United States
person" within the meaning of Section 7701(a)(30) of the Code.
4.20 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transaction based upon arrangements made by or on behalf of Seller except for
the fee arrangements between Alpha Omega Partners and Seller. Said amounts shall
be paid at Closing by Seller. Seller shall be responsible for, and shall
indemnify Buyer in connection with, such fee arrangements.
4.21 FRAUDULENT CONVEYANCE. Seller is not entering into the transaction
with the intent to hinder, delay or defraud any person to which it is, or may
become, indebted. The Purchase Price is not less than the reasonably equivalent
value of the Purchased Assets less the Assumed Liabilities. Seller's assets, at
a fair valuation, exceed its liabilities, and Seller is able to meet its debts
as they mature and will not become insolvent as a result of the transaction. For
a period of 90 days after the Closing, (i) Seller will be able to meet its debts
as they mature, and (ii) Seller will have sufficient capital and property to
conduct the business in which it will be engaged, if any.
4.22 TRANSACTIONS WITH AFFILIATES. Except as set forth in SECTION 4.22
of the Seller Disclosure Schedule, there are no existing contracts,
transactions, indebtedness or other arrangements, or any related series thereof,
between Seller, on the one hand, and any of the directors, officers or other
affiliates of Seller, on the other hand.
4.23 PRODUCT WARRANTIES. All of the Purchased Assets manufactured, sold
or delivered by Seller are in conformity with all applicable contractual
commitments and applicable law and all express and implied warranties to the
extent not disclaimed, and Seller is not liable (and, to Seller's knowledge,
there is no reasonable basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against it giving
rise to any such liability) for replacement thereof or other damages in
connection therewith in excess of any warranty reserve specifically established
with respect thereto and included in the Interim Balance Sheet. None of the
Purchased Assets manufactured, sold or delivered by Seller is subject to any
guaranty, express warranty or other indemnity. Seller has not been notified of
any claims for (and Seller does not have any knowledge of any threatened claims
for) any extraordinary product returns, warranty obligations or product services
relating to any of the Purchased Assets.
4.24 PRODUCT LIABILITIES. Seller has not had nor does Seller have any
liability (and, to Sellers' knowledge, there is no reasonable basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against it giving rise to any liability)
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arising out of any injury to individuals or property as a result of the
ownership, possession or use of any of the Purchased Assets.
4.25 FULL DISCLOSURE. No statement (including the representations,
warranties and covenants) by Seller contained in this Agreement, the Seller
Disclosure Schedule, the exhibits and schedules attached hereto, the Seller
Transaction Documents, and any document, written statement or certificate
furnished to Buyer and its representatives by Seller pursuant hereto contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the corresponding sections of the disclosure
schedules of Buyer delivered to Seller concurrently with the execution and
delivery of this Agreement (the "BUYER DISCLOSURE SCHEDULE") (provided, that if
any fact or item disclosed in any section of the Buyer Disclosure Schedule shall
be relevant to any other section of this Agreement, then such fact or item shall
be deemed to be disclosed with respect to such other section of this Agreement,
but only to the extent to which it reasonably informs or notifies the reader of
its applicability to the section in which it was required to be disclosed),
Buyer hereby represents and warrants to Seller that, as of the date hereof:
5.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. Buyer is duly qualified or licensed as a foreign corporation to
conduct business and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where the
failure to be so duly qualified or licensed and in good standing would not have
a material adverse effect.
5.2 AUTHORITY. Buyer has all necessary power and authority to execute
and deliver this Agreement and the other documents to be executed by Buyer
hereunder (the "BUYER TRANSACTION DOCUMENTS"), to perform its obligations
hereunder, and to consummate the transaction. The execution and delivery of this
Agreement and the other Buyer Transaction Documents and the consummation by
Buyer of the transaction have been duly and validly authorized by all requisite
action and no other corporate proceeding on the part of Buyer is necessary to
authorize this Agreement and the other Buyer Transaction Documents or to
consummate the transaction. This Agreement has been, and at Closing the other
Buyer Transaction Documents will be, duly and validly executed and delivered by
Buyer. This Agreement constitutes, and at Closing the other Buyer Transaction
Documents will constitute, the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles related to or
limiting creditors' rights generally and by the availability of equitable
remedies and defenses.
5.3 NO CONFLICTS; REQUIRED CONSENTS. No consents other than those set
forth in SECTION 5.3 of the Buyer Disclosure Schedule are required with respect
to Buyer's execution and
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delivery of this Agreement, the other Buyer Transaction Documents, and the
consummation of the transaction. The execution, delivery and performance of this
Agreement and the other Buyer Transaction Documents by Buyer do not and will
not, with or without notice or lapse of time,
(a) conflict with or violate Buyer's Certificate of
Incorporation or bylaws or equivalent organizational documents,
(b) conflict with or violate any legal requirement
applicable to Buyer or by which any property or asset of Buyer is bound or
affected, except where the existence of such conflict or violation would not,
individually or in the aggregate, have a material adverse effect,
(c) assuming the consents listed in SECTION 5.3 of the
Buyer Disclosure Schedule are obtained, result in any breach of or constitute a
default under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of any Encumbrance on
any property or asset of Buyer pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation, except where the existence of such breach, default or right or the
creation of such encumbrance would not, individually or in the aggregate, have a
material adverse effect,
(d) violate or conflict with any other material
restriction of any kind or character to which Buyer is subject, except where the
existence of violation or conflict would not, individually or in the aggregate,
have a material adverse effect, or
(e) require Buyer to obtain any Consent of, or make or
deliver any filing or notice to, a governmental authority.
5.4 FINANCIAL CAPACITY. At the Closing, Buyer shall have
sufficient funds, to enable Buyer to pay the Purchase Price and to perform all
of its obligations hereunder.
5.5 NOVATION EXPERIENCE. Buyer has not failed to attain novation to
Buyer of any government contract in the past and no current or reasonably
foreseeable circumstances involving Buyer exists which could reasonably be
expected to contribute materially to the inability to attain novation of any
Government Contracts in connection with the transactions contemplated by this
Agreement.
5.6 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transaction based upon arrangements made by or on behalf of Buyer except for the
fee arrangements between Tango Equity and Buyer. Said amounts shall be paid at
Closing by Buyer. Buyer shall be responsible for, and shall indemnify Seller in
connection with, such fee arrangements.
ARTICLE 6. CONDUCT PRIOR TO CLOSING
6.1 SELLER'S CONDUCT OF THE BUSINESS. From April 20, 2004 until the
Closing Date, Seller covenants and agrees that the Business shall be conducted
only in, and Seller shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and Seller shall use its
best efforts without requirement to incur any expenses other than in the
ordinary course to preserve substantially intact the business organization of
Seller, to keep
24
available the services of the current officers, employee and consultants of
Seller and to preserve the current relationships of Seller with customers,
suppliers and other persons with which Seller has significant business
relations. Seller shall promptly notify Buyer of any event or occurrence not in
the ordinary course of business of Seller, and any event of which Seller is
aware which reasonably would be expected to have a material adverse effect on
Seller (even if the likelihood of such event has previously been disclosed or
could result from any item set forth in the Seller Disclosure Schedule). Without
limiting the generality of the foregoing, except as expressly contemplated by
this Agreement or disclosed in the Seller Disclosure Schedule, Seller shall not,
from the date of this Agreement until the Closing Date, directly or indirectly,
do or propose to do any of the following without the prior written consent of
Buyer:
(a) Issue, deliver, or sell any shares of Seller's stock;
(b) Cause or permit any amendments to its Articles of
Incorporation or bylaws that would have an adverse effect on the transaction;
(c) Enter into any commitment or transaction not in the
ordinary course of business;
(d) Terminate any employees or xxxxx xxxxxxxxx or
termination pay to any director, officer, employee or consultant;
(e) Enter into any transaction with its officers,
directors or stockholders or their affiliates other than a distribution on its
capital stock;
(f) Amend or otherwise modify the material terms of any of
Seller's contracts;
(g) Sell, lease, license or otherwise dispose of any of
Seller's assets outside of the ordinary course of business;
(h) Commence a proceeding of any nature other than for the
routine collection of bills;
(i) Acquire or agree to acquire by merging, consolidating
or entering into a joint venture arrangement with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to the financial condition, results
of operations, business or properties of Seller taken as a whole;
(j) Adopt, amend or terminate any employee benefit plans,
programs, policies or other arrangements, or enter into any employment contract,
pay any special bonus or special remuneration to any director, employee or
consultant, or increase the salaries or wage rates of its employees;
(k) Incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
25
(l) Fail to pay or otherwise satisfy its monetary
obligations as they become due, except such as are being contested in good
faith;
(m) Waive or commit to waive any rights or forgive any
indebtedness owed to Seller;
(n) Take any action or fail to take any action that would
have a material adverse effect on the Business; or
(o) Enter into any contract or agree, in writing or
otherwise, to take any of the actions described above in this SECTION 6.1, or
any action that would make any of its representations or warranties contained in
this Agreement untrue or incorrect in any material respect or prevent it from
performing or cause it not to perform its covenants hereunder.
6.2 NO SOLICITATION. Until the earlier of (a) the Closing and (b)
the termination of this Agreement pursuant to its terms, Seller shall not, and
Seller shall cause its representatives not to, directly or indirectly:
(a) initiate, solicit or encourage (including by way of
furnishing information regarding the Business or the Purchased Assets or Assumed
Liabilities) any inquiries, or make any statements to third parties, which may
reasonably be expected to lead to any proposal concerning the sale of Seller,
the Business or the Purchased Assets or Assumed Liabilities (whether by way of
merger, purchase of capital shares, purchase of assets or otherwise) (a
"COMPETING TRANSACTION"); or
(b) hold any discussions or enter into any agreements
with, or provide any information or respond to, any third party concerning a
potential Competing Transaction or cooperate in any way with, agree to, assist
or participate in, solicit, consider, entertain, facilitate or encourage any
effort or attempt by any third party to do or seek any of the foregoing.
(c) if at any time prior to the earlier of (x) the
Closing and (y) the termination of this Agreement pursuant to its terms, Seller
receives a third party proposal for a Competing Transaction (a "COMPETING
PARTY"), Seller shall promptly inform Buyer regarding such contact and furnish
Buyer with a copy of any inquiry or proposal, or, if not in writing, a
description thereof, including the name of such Competing Party, and Seller
shall keep Buyer informed of the status and details of any future notices,
requests, correspondence or communications related thereto.
ARTICLE 7. ADDITIONAL AGREEMENTS
7.1 STOCKHOLDER VOTE. Seller shall promptly after the date hereof
obtain the consent of its Shareholder and shall take all action required by
Virginia Law and its Articles of Incorporation and bylaws for the purpose of
approving this Agreement, the other Seller Transaction Documents and the
consummation of the transactions contemplated hereby and thereby.
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7.2 CERTAIN NOTIFICATIONS. Seller shall give prompt notice to Buyer,
and Buyer shall give prompt notice to Seller, of:
(a) the occurrence or non-occurrence of any event, the
occurrence or non-occurrence of which reasonably could be expected to cause any
representation or warranty of such party contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the Closing Date,
and
(b) any failure of Seller or Buyer, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder.
7.3 ACCESS TO INFORMATION. From the date of this Agreement until the
Closing Date, upon reasonable notice, Seller shall:
(a) allow Buyer the opportunity to interview Seller's
employees and other personnel and affiliates who provide services in the conduct
of the Business, provided that Shareholder shall initiate and participate in all
meetings, and
(b) assist and cooperate with Buyer in the development of
integration plans for implementation by Buyer following the Closing.
7.4 BEST EFFORTS. From the date of this Agreement until the Closing,
each of Seller and Buyer shall use their respective best efforts to cause to be
fulfilled and satisfied all of the other party's conditions to Closing set forth
in ARTICLE 8.
7.5 CONSENTS. Except with respect to consents related to novation of
Government Contracts, which are governed by Section 1.4 hereof, Seller will use
best efforts to obtain prior to Closing all consents from governmental
authorities or under any contracts or other agreements as may be required in
connection with the transaction so as to preserve all rights of and benefits to
Seller thereunder. At the request of Seller, Buyer shall provide Seller with
such assistance and information as is reasonably requested by Seller to obtain
such Consents. Any costs incurred in obtaining the consents shall be borne by
the Seller, except as otherwise provided in Section 1.4 hereof.
7.6 EXPENSES. Whether or not the transaction is consummated, except as
otherwise provided herein, all fees and expenses incurred in connection with the
transaction including, but not limited to, all legal, accounting, financial,
advisory, consulting and all other fees and expenses of third parties incurred
by a party in connection with the negotiation and effectuation of the terms and
conditions of this Agreement and the transaction contemplated hereby, shall be
the obligation of the respective party incurring such fees and expenses.
7.7 CONFIDENTIALITY. Buyer and Seller have executed a Confidentiality
Agreement dated February 18, 2004 (the "CONFIDENTIALITY AGREEMENT"). The parties
hereby ratify and affirm the Confidentiality Agreement and incorporate its
provisions herein such that all confidential information received by a party in
connection with the transaction hereunder shall be governed by the terms of the
Confidentiality Agreement.
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7.8 BULK SALES LAW WAIVER. Subject to SECTION 10.2, each party hereto
agrees to waive compliance by the other with any applicable bulk sales laws in
connection with the transaction.
7.9 EMPLOYEES.
(a) Buyer shall offer employment to each employee of
Seller. All such individuals who accept Buyer's offer of employment and who
become employees of Buyer are referred to herein as the "TRANSFERRED EMPLOYEES."
Seller shall terminate the employment of each Transferred Employee, effective at
11:59 p.m. Eastern Time on the Closing Date. On the Closing Date, or as soon as
practicable thereafter, Seller shall pay each such person all accrued wages,
salary, commission, bonuses, and other employee compensation payments for all
periods prior to and including the Closing Date. The Transferred Employees shall
become employees of Buyer effective at 12:01 a.m. Eastern Time on the day after
the Closing Date. Seller shall maintain health insurance coverage for
Transferred Employees through June 30, 2004 and Buyer shall reimburse Seller for
premiums paid for such coverage during the period from the Closing Date through
June 30, 2004. Buyer shall provide Transferred Employees with benefits
(including hospital, medical, dental, life and disability benefits) reasonably
comparable to the benefits afforded to employees of Buyer, which shall be no
less favorable to the Transferred Employees than the benefits Seller offers to
its employees immediately prior to the Closing Date immediately upon Closing
(except for health insurance) and the Buyer shall waive any waiting periods or
pre-existing condition exclusions applicable to such benefits and shall credit
to each Transferred Employee his or her accrued vacation as of the Closing Date.
Buyer shall provide Transferred Employees with credit for service with Seller in
determining eligibility and vesting (but not benefit accrual) under any defined
benefit retirement plan of Buyer and in determining eligibility and vesting
under any defined contribution plans of Buyer.
(b) As soon as possible following execution of this
Agreement, the CEO of Buyer and other appropriate Buyer personnel will
participate in employee meetings to be held in Fredericksburg, Virginia and a
designated location in each of New York and Texas. In the course of these
meetings, Buyer personnel will use their best efforts to address issues and
concerns presented by employees and otherwise assist the Seller in satisfying
the closing conditions set forth in Section 8.1(g).
7.10 KNOWLEDGE OF BREACH. Buyer shall promptly notify Seller prior to
Closing in the event that Buyer learns of any information which in its
reasonable determination would be considered a material breach of any of the
representations and warranties given by Seller or the Shareholder under Article
IV.
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ARTICLE 8. CONDITIONS TO CLOSING
8.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligations
of Buyer to consummate the transaction are subject to the satisfaction of the
following conditions, unless waived by Buyer in writing:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller set forth in this Agreement, or in any written
statement or certificate that shall be delivered to Buyer by Seller under this
Agreement,
(i) that are not qualified as to materiality are true
and correct in all material respects, and
(ii) that are qualified as to materiality are true in
all are true and correct in all respects, on and as of the date made and as of
the Closing Date as if made on the date thereof (except to the extent such
representation or warranty specifies an earlier date).
(b) PERFORMANCE OF OBLIGATIONS. Seller shall have
performed in all material respects all obligations and covenants required to be
performed by it under this Agreement and any other agreement or document entered
into in connection herewith prior to the Closing Date.
(c) NO MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change in the assets, liabilities, business, financial
condition of Seller from the date hereof through the date that each of the
conditions set forth in Sections 8.1(g), (h) and (i) below have been satisfied
(the "CLOSING CONDITION SATISFACTION DATE"), and Seller shall not have suffered
any material loss or damage to any of its assets, whether or not covered by
insurance, between the Interim Balance Sheet Date and the Closing Condition
Satisfaction Date; provided, notwithstanding the foregoing, Buyer shall not be
obligated to consummate the transaction hereunder if a material adverse change
or material loss or damage occurs between the Closing Condition Satisfaction
Date and the Closing Date which is directly caused by an act or omission of
Seller or Shareholder;
(d) STOCKHOLDER CONSENT. Seller shall have obtained the
consent of its Shareholder approving this Agreement, the Seller Transaction
Documents and the consummation of the transaction.
(e) LEGAL REQUIREMENTS. No legal requirement shall be in
effect which prohibits or materially restricts the consummation of the
transaction at the Closing, or which otherwise adversely affects in any material
respect the right or ability of Buyer to own, operate or control the Business or
the Purchased Assets, in whole or material part, and no proceeding of any nature
is pending or threatened in writing by a governmental authority which is
reasonably likely to result in a legal requirement having such an effect, other
than with respect to novation of existing Government Contracts.
(f) CLOSING DELIVERIES. Seller shall have delivered to
Buyer all of the closing documents and agreements set forth in SECTIONS 3.2 and
3.4.
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(g) EMPLOYEES.
(i) The persons identified on SCHEDULE 8.1(G) ("Key
Employees") shall have entered into employment agreements with Buyer on or
before June 15, 2004 and effective as of the Closing Date(unless a delay is
caused by Buyer's failure to timely provide proposed benefit or employment
packages to Seller).
(ii) Seller shall have delivered on or before June
15, 2004 (unless a delay is caused by Buyer's failure to timely provide proposed
benefit or employment packages to Seller) Employee Acceptance Letters signed by
all employees other than those employees whose election not to accept employment
with Buyer, considered in the aggregate, would not have a material adverse
effect on the overall ability of Buyer to perform all Government Contracts
which, individually, either (i) represented in excess of 10% of revenue in the
fiscal year ended December 31, 2003, or (ii) are reasonably expected to
represent in excess of 10% of revenue of the Business in the fiscal year which
will end December 31, 2004, assuming conduct of the Business consistent with
2003.
(iii) Buyer shall have had a reasonable opportunity
to conduct meetings with the Key Employees on or before June 15, 2004 and shall
not have determined on or before June 15, 2004 that, with respect to the Key
Employees considered in the aggregate, there are circumstances which could
reasonably be expected to have a material adverse effect on the Buyer's conduct
of the Business after the Closing.
(h) PRELIMINARY NOVATION APPROVAL. Seller shall have
obtained the Preliminary Novation Approval.
(i) CONSENT TO SUBCONTRACTS. Seller shall have obtained
the consent of each governmental authority required for Seller to enter into a
Subcontract with respect to the applicable Government Contract.
8.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations
of Seller to consummate the transaction are subject to the satisfaction of the
following conditions, unless waived by Seller in writing:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer set forth in this Agreement, or in any written statement
or certificate that shall be delivered to Seller by Buyer under this Agreement,
(i) that are not qualified as to materiality are true
and correct in all material respects, and
(ii) that are qualified as to materiality are true in
all are true and correct in all respects, on and as of the date made and as of
the Closing Date as if made on the date thereof (except to the extent such
representation or warranty specifies an earlier date), and
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(b) PERFORMANCE OF OBLIGATIONS. Buyer shall have
performed in all material respects all obligations and covenants required to be
performed by it under this Agreement and any other agreement or document entered
into in connection herewith prior to the Closing Date.
(c) DELIVERIES. Buyer shall have delivered to Seller all
of the closing documents and agreements set forth SECTIONS 3.3 and 3.4.
(d) NO MATERIAL ADVERSE CHANGE. There shall not have
occurred or arisen with respect to Buyer or any of its affiliates an event or
circumstance which is reasonably likely to have a material adverse effect on the
ability of Buyer and Seller to accomplish novation of the Principal Government
Contract.
(e) PRELIMINARY NOVATION APPROVAL. Seller shall have
obtained the Preliminary Novation Approval.
(f) CONSENT TO SUBCONTRACTS. Buyer shall have obtained
the consent of each governmental authority required for Buyer to enter into a
Subcontract with respect to the applicable Government Contract.
ARTICLE 9. TERMINATION
9.1 CIRCUMSTANCES FOR TERMINATION. At any time prior to the
Closing, this Agreement may be terminated by written notice:
(a) by the mutual written consent of Buyer and Seller;
(b) by either Buyer or Seller if the other party is in
material breach of any provision of this Agreement and such breach is not cured
within fifteen (15) days of written notice thereof from the non-breaching party,
which breach would give rise to a failure to satisfy any condition set forth in
SECTION 8.1(A) and (B), and SECTION 8.2(A) and (B), PROVIDED, that the
terminating party is not, on the date of termination, in material breach of any
material provision of this Agreement;
(c) by either Buyer or Seller if the Closing has not
occurred on or prior to June 30, 2004 (the "OUTSIDE CLOSING DATE") for any
reason, PROVIDED, that the terminating party shall not have breached its
obligations hereunder in any manner that shall have contributed to the failure
to consummate the Closing by such date;
(d) by Seller if the Buyer has provided notice under
Section 7.10 of information that would lead to a material breach of a
representation or warranty under Article IV and the Seller and Buyer have after
discussions in good faith failed to agree on a resolution or waiver of such
breach; and
(e) by either Buyer or Seller if satisfaction of a
closing condition of the terminating party in ARTICLE 8 is impossible, PROVIDED,
that the terminating party is not, on the date of termination, in material
breach of any material provision of this Agreement.
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9.2 EFFECT OF TERMINATION. If this Agreement is terminated in
accordance with SECTION 9.1, all obligations of the parties hereunder shall
terminate, except for the obligations set forth in this ARTICLE 9 and SECTION
7.6; PROVIDED, that such termination shall not release either party from any
liability that has already accrued as of the effective date of such termination,
and shall not constitute a waiver or release of, or otherwise be deemed to
prejudice or adversely affect, any rights, remedies or claims, whether for
damages or otherwise, which a party may have hereunder, at law, equity or
otherwise or which may arise out of or in connection with such termination.
ARTICLE 10. INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Seller, Buyer or Shareholder in this Agreement or any other
transaction document shall survive the Closing until the one year anniversary of
the Closing Date (the "SURVIVAL DATE"); PROVIDED, that:
(a) all representations and warranties relating to taxes
shall survive indefinitely;
(b) all representations and warranties of Seller or Buyer
contained in SECTION 4.20 or SECTION 5.7 shall survive indefinitely;
(c) any claim for indemnification based upon a breach of
any such representation or warranty and asserted prior to the Survival Date by
written notice in accordance with SECTION 10.4 shall survive until final
resolution of such claim; and
(d) Subject to Buyer's compliance with Section 7.10, the
representations and warranties contained in this Agreement (and any right to
indemnification for breach thereof) shall not be affected by any investigation,
verification or examination by any party hereto or by any representative of any
such party or by any such party's knowledge of any facts with respect to the
accuracy or inaccuracy of any such representation or warranty.
10.2 INDEMNIFICATION BY SELLER AND SHAREHOLDER. Subject to the
limitations set forth in this ARTICLE 10, Seller and Shareholder, jointly and
severally, shall indemnify, defend and hold harmless Buyer and its
representatives from and against any and all Damages, whether or not involving a
third-party claim, including reasonable attorneys' fees (collectively, "BUYER
DAMAGES"), arising out of, relating to or resulting from:
(a) any breach of a representation or warranty of Seller
or Shareholder contained in this Agreement or in any other transaction document;
(b) any breach of a covenant of Seller or Shareholder
contained in this Agreement or in any other transaction document;
(c) any Excluded Liability or Seller's or Shareholder's use
of any Excluded Asset;
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(d) any noncompliance with applicable bulk sales or
fraudulent transfer legal requirements in connection with the Transaction; or
(e) any taxes of Seller for any period or with respect to
the Business or the Purchased Assets during any Pre-Closing Period.
PROVIDED, however, that subject to the requirements of SECTION 1.4, return of
the Novation Amount to Buyer shall be Buyer's sole remedy for failure to
complete novation of the Principal Government Contract and Buyer shall not be
entitled to any indemnification or other remedy with respect thereto.
10.3 INDEMNIFICATION BY BUYER. Subject to the limitations set forth in
this ARTICLE 10, Buyer shall indemnify, defend and hold harmless Seller and its
representatives (collectively, the "SELLER INDEMNIFIED Persons") from and
against any and all Damages, whether or not involving a third-party claim,
including reasonable attorneys' fees (collectively, "SELLER DAMAGES"), arising
out of, relating to or resulting from:
(a) any breach of a representation or warranty of Buyer
contained in this Agreement or in any other transaction document;
(b) any breach of a covenant of Buyer contained in this
Agreement or in any other transaction document; or
(c) any Assumed Liability or Seller's use of the
Purchased Assets or Seller's operation of the Business following the Closing.
10.4 PROCEDURES FOR INDEMNIFICATION.
(a) Promptly after receipt by a party entitled to
indemnification hereunder (the "INDEMNITEE") of written notice of the assertion
or the commencement of any Proceeding by a third-party with respect to any
matter referred to in SECTIONS 10.2 or 10.3, the Indemnitee shall give written
notice thereof to the party obligated to indemnify Indemnitee (the
"INDEMNITOR"), which notice shall include a description of the Proceeding, the
amount thereof (if known and quantifiable) and the basis for the Proceeding, and
thereafter shall keep the Indemnitor reasonably informed with respect thereto;
PROVIDED, that failure of the Indemnitee to give the Indemnitor notice as
provided herein shall not relieve the Indemnitor of its obligations hereunder
except to the extent that the Indemnitor is prejudiced thereby. A claim for
indemnification for any matter not involving a third-party Proceeding may be
asserted by notice to the party from whom indemnification is sought and shall be
paid promptly after (i) the Indemnitor's receipt of such notice, or (ii) if the
claim is disputed by the Indemnitor, after resolution of the dispute by mutual
agreement of the parties or otherwise; provided, however, that prior to the
Escrow Termination Date, all Buyer claims for indemnification shall satisfy the
requirements of SECTION 2.3 hereof and the Escrow Agreement and all Buyer
Damages shall be paid from the Escrow Amount to the extent of the then-remaining
balance thereof. Any Indemnitor shall be entitled to participate in the defense
of such action, lawsuit, proceeding, investigation or other claim giving rise to
an Indemnitee's claim for indemnification at such Indemnitor's expense, and at
its option (subject to the limitations set forth below) shall be entitled to
assume the defense thereof by appointing a nationally recognized and reputable
counsel reasonably acceptable to the
33
Indemnitee to be the lead counsel in connection with such defense; PROVIDED that
the Indemnitee shall be entitled to participate in the defense of such claim and
to employ counsel of its choice for such purpose; PROVIDED that the fees and
expenses of such separate counsel shall be borne by the Indemnitee (other than
any fees and expenses of such separate counsel that are incurred between the
date Indemnitee provides to the Indemnitor notice of the claim and the date the
Indemnitor effectively assumes control of such defense which, notwithstanding
the foregoing, shall be borne by the Indemnitor, and except that the Indemnitor
shall pay all of the fees and expenses of such separate counsel if the
Indemnitee has been advised by counsel that a reasonable likelihood exists of a
conflict of interest between the Indemnitor and the Indemnitee).
(b) The Indemnitor shall not be entitled to assume
control of such defense (unless otherwise agreed to in writing by the
Indemnitee) and shall pay the fees and expenses of counsel retained by the
Indemnitee if (1) the claim for indemnification relates to or arises in
connection with any criminal or quasi-criminal proceeding, action, indictment,
allegation or investigation; (2) the claim seeks an injunction or equitable
relief against the Indemnitee; (3) the Indemnitee has been advised by counsel
that a reasonable likelihood exists of a conflict of interest between the
Indemnitor and the Indemnitee; (4) the claim involves environmental matters in
which case the Indemnitee shall have sole control and management authority over
the resolution of such claim (including hiring legal counsel and environmental
consultants, conducting environmental investigations and cleanups, negotiating
with governmental agencies and third parties and defending or settling claims
and actions); PROVIDED that the Indemnitee shall keep the Indemnitor apprised of
any major developments relating to any environmental claim; (5) upon petition by
the Indemnitee, the appropriate court rules that the Indemnitor failed or is
failing to vigorously prosecute or defend such claim, or (6) the Indemnitee
reasonably believes that the Buyer Damages or the Seller Damages, as the case
may be, relating to the claim could exceed the maximum amount that such
Indemnitee could then be entitled to recover under the applicable provisions of
ARTICLE 10. If the Indemnitor shall control the defense of any such claim, the
Indemnitor shall obtain the prior written consent of the Indemnitee before
entering into any settlement of a claim or ceasing to defend such claim if,
pursuant to or as a result of such settlement or cessation, injunctive or other
equitable relief will be imposed against the Indemnitee or if such settlement
does not expressly and unconditionally release the Indemnitee from all
liabilities and obligations with respect to such claim, without prejudice.
10.5 LIMITATIONS ON INDEMNIFICATION.
(a) Notwithstanding anything herein to the contrary,
Seller and/or Shareholder shall not be obligated to indemnify Buyer under this
ARTICLE 10 unless the aggregate of all Buyer Damages exceeds One Hundred
Thousand Dollars ($100,000) (the "SELLER'S BASKET"), in which case the Buyer
shall be entitled to recover all Buyer Damages in excess of the Seller's Basket,
but not in excess of $1,000,000 (the "SELLER'S INDEMNIFICATION CAP"); PROVIDED,
that the Seller's Indemnification Cap and the Seller's Basket shall not apply to
any Seller and/or Shareholder indemnification obligation (x) arising out of,
relating to or resulting from fraud or intentional misrepresentation by Seller;
(y) arising out of, relating to or resulting under SECTION 10.2(B), (C) or (D)
or from a breach of any of Seller's representations or warranties in SECTION
4.19.(TAX), SECTION 4.15(SELLER BENEFIT PLANS), SECTION 4.20 (BROKERS) or
SECTION 4.18 (ENVIRONMENTAL MATTERS); or (z) if the Transaction does not close
or novation of Government Contracts is not completed due to willful and
intentional breach by the Seller.
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(b) Notwithstanding anything herein to the contrary,
Buyer shall not be obligated to indemnify Seller under this ARTICLE 10 unless
the aggregate of all Seller Damages exceeds One Hundred Thousand Dollars
($100,000) (the "BUYER'S BASKET"), in which case Seller shall be entitled to
recover all Seller Damages in excess of the Buyer's Basket, but not in excess of
$1,000,000 (the "BUYER'S INDEMNIFICATION CAP"); PROVIDED, that the Buyer's
Indemnification Cap and the Buyer's Basket shall not apply to any Buyer
indemnification obligation (x) arising out of, relating to or resulting from
fraud or intentional misrepresentation by Buyer; (y) arising out of, relating to
or resulting from the Assumed Liabilities or a breach by Buyer of the
representations contained in Sections 5.5 and 5.7; or (z) if the Transaction
does not close or novation of Government contracts in not completed due to
willful and intentional breach by the Buyer.
10.6 INSURANCE; THIRD PARTY PAYMENTS; TAX BENEFITS OR DETRIMENT. Any
indemnity payment due hereunder (i) shall be reduced by any insurance proceeds
realized by and paid to the Indemnitee (net of any related costs and expenses,
including any correspondent increase in insurance premiums or other charge
backs), (ii) shall be reduced by any Indemnitee proceeds realized by and paid to
the Indemnitee (net of any related costs and expenses) by third parties, and
(iii) shall be increased or decreased by an amount equal to the tax detriments
or benefits, if any, attributable to such claim. The Indemnitor shall have all
rights of subrogation with respect to any claim for which indemnification is
provided hereunder, up to the amount of indemnification payments paid on such
claim. If an Indemnitor makes indemnification payments hereunder for a claim
that is the subject of a later payment by another person or entity (other than a
party hereto in their capacity as an Indemnitor), including insurance proceeds
and the realization of net tax benefits, the Indemnitee shall pay over to the
Indemnitor the lesser of (x) the amount paid by such other person or entity to
the Indemnitee or (y) the amount paid to the Indemnitee by the Indemnitor in
respect of such claim.
10.7 EXCLUSIVE REMEDY. Except for claims arising out of, relating to or
resulting from fraud or intentional misrepresentation, indemnification provided
in this Article 10 shall constitute the exclusive remedy with respect to breach
of the representations, warranties, covenants and agreements contained in this
Agreement, or based directly or indirectly on any rights or obligations
established by this Agreement, whether any claims or causes of action asserted
with respect to such matters are brought in contract, tort or any other legal
theory whatsoever; provided, however, that nothing herein shall limit the right
of termination under Article 9 prior to Closing or any right to seek injunctive
relief for performances required but not yet fulfilled hereunder.
ARTICLE 11. MISCELLANEOUS PROVISIONS
11.1 AMENDMENTS AND WAIVERS. This Agreement may not be amended,
supplemented or modified, except by an agreement in writing signed by each of
the parties. Either party may waive compliance by the other party with any term
or provision of this Agreement; PROVIDED, that such waiver shall not operate as
a waiver of, or estoppel with respect to, any other or subsequent failure. No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.
35
11.2 NOTICES. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received (i) when delivered personally
or by telecopy, (ii) one (1) day following the day when deposited with a
reputable, established overnight courier service for delivery to the intended
addressee, or (iii) three (3) days following the day when deposited with the
United States Postal Service as first class, registered or certified mail,
postage prepaid and addressed as set forth below:
IF TO BUYER:
Essex Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, CEO and President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
IF TO SELLER:
Performance Group, Inc.
X.X. Xxx 000
0000 Xxxxx Xxxxxxxx Xxxx (HAND AND OVERNIGHT DELIVERIES ONLY)
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxx
Telephone No.: (000) 000-0000
WITH A COPY, which shall not constitute notice, given in the
manner prescribed above, to:
X. Xxxxxxxx English, Esq.
Xxxxxxxxx Xxxxxxxxx, A Professional Corporation
000 X. Xxxx Xxxxxx (23219)
X.X. Xxx 000
Xxxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Any party may alter its notice address by notifying the other parties
of such change of address in conformity with the provisions of this section.
11.3 GOVERNING LAW. This Agreement is to be construed in accordance
with and governed by the internal laws of the Commonwealth of Virginia, without
giving effect to any choice of law rule that would cause the application of the
laws of any jurisdiction other than the internal laws of the Commonwealth of
Virginia to the rights and duties of the parties.
11.4 EXHIBITS AND SCHEDULES. All Exhibits and Schedules attached hereto
are hereby incorporated by reference into, and made a part of, this Agreement.
11.5 ASSIGNMENTS PROHIBITED; SUCCESSORS AND ASSIGNS. Neither party
shall assign, or suffer or permit an assignment (by operation of law or
otherwise) of, its rights or obligations
36
under or interest in this Agreement without the prior written consent of the
other party. Any purported assignment or other disposition, except as permitted
herein, shall be null and void. For purposes of this section, the terms "assign"
and "assignment" shall be deemed to include (i) a merger in which a party hereto
is not the surviving entity, (ii) a consolidation or division of a party hereto,
(iii) a sale of all or substantially all of the assets of a party hereto, or
(iv) a change of control resulting from a sale or repurchase of shares or
similar transaction involving a party hereto. Subject to the foregoing, this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective successors and permitted assigns.
11.6 COUNTERPARTS. This Agreement may be executed (including, without
limitation, by facsimile signature) in one or more counterparts, with the same
effect as if the parties had signed the same document. Each counterpart so
executed shall be deemed to be an original, and all such counterparts shall be
construed together and shall constitute one agreement.
11.7 SEVERABILITY. If any provision of this Agreement, or the
application of any such provision to any person or set of circumstances, shall
be determined to be invalid, unlawful, void or unenforceable to any extent, the
remainder of this Agreement, and the application of such provision to persons or
circumstances other than those as to which it is determined to be invalid,
unlawful, void or unenforceable, shall not be impaired or otherwise affected and
shall continue to be valid and enforceable to the fullest extent permitted by
law.
11.8 ENTIRE AGREEMENT. This Agreement contains the entire understanding
among the parties hereto with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written among the
parties. The parties intend that this Agreement be the several, complete and
exclusive embodiment of their agreement, and that any evidence, oral or written,
of a prior or contemporaneous agreement that alters or modifies this Agreement
shall not be admissible in any proceeding concerning this Agreement. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.
11.9 CONSTRUCTION. Each party acknowledges that: (a) it has read this
Agreement; (b) it has been represented in the preparation, negotiation and
execution of this Agreement by legal counsel of its own choice or has
voluntarily declined to seek such counsel; and (c) it understands the terms and
consequences of this Agreement and is fully aware of the legal and binding
effect of this Agreement.
11.10 WAIVER OF JURY TRIAL. THE PARTIES HEREBY EXPRESSLY WAIVE THE
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY OR AGAINST
EITHER OF THEM RELATING TO THIS AGREEMENT
11.11 FURTHER ASSURANCES. Each party agrees (a) to furnish upon request
to each other party such further information, (b) to execute and deliver to each
other party such other documents, and (c) to do such other acts and things, all
as another party may reasonably request for the purpose of carrying out the
intent of this Agreement and the transactions contemplated by this Agreement.
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11.12 CONFIDENTIALITY; PUBLICITY. Except as otherwise set forth herein,
the parties acknowledge that the transaction described herein is of a
confidential nature and shall not be disclosed prior to the Closing except to
consultants, advisors and Affiliates, or as required by law.
[SIGNATURES FOLLOW ON A SEPARATE PAGE]
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IN WITNESS WHEREOF, each of the parties has caused this Asset Purchase
Agreement to be executed on its behalf by their respective officers thereunto
duly authorized all as of the date first written above.
"Buyer"
ESSEX CORPORATION,
a Virginia corporation
By: /S/ XXXXXXX X. XXXXXXXXX
------------------------------
Name: XXXXXXX X. XXXXXXXXX
------------------------------
Title: CEO, PRESIDENT
------------------------------
"Seller"
PERFORMANCE GROUP, INC.,
a Virginia corporation
By: /S/XXXXXX X. XXXX
------------------------------
Name: XXXXXX X. XXXX
------------------------------
Title: PRESIDENT, PGI
------------------------------
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