--------------------------------------------------
STOCK PURCHASE AGREEMENT
among
INTEGRATED SYSTEMS CONSULTING GROUP, INC.
and
XXXXX XXXXXXXX
XXXXXXX XXXXXXXXX
XXXXXXX XXXXXXX
XXXX XXXXXXX
and
XXXXXX X. XXXXXX
---------------------------------------------------
-----------------
February 27, 1998
-----------------
TABLE OF CONTENTS
1. PURCHASE AND SALE OF STOCK.................................................1
1.1. Purchase and Sale of Shares at the Closing............................1
2. PURCHASE PRICE.............................................................2
2.1. Purchase Price........................................................2
2.2. Payment of Cash.......................................................2
2.3. Adjustment of Purchase Price..........................................2
2.4. Escrow Fund...........................................................4
2.5. Escrow Agent; Duties and Responsibilities.............................5
3. CONTINGENT PURCHASE PRICE..................................................5
3.1. Definitions...........................................................5
3.2. Contingent Purchase Price.............................................6
3.3. Payment of Contingent Payments........................................6
3.4. Nature of Consideration...............................................7
3.5. Wire Transfers........................................................7
4. CLOSING....................................................................7
4.1. Closing...............................................................7
4.2. Action by Sellers.....................................................8
4.3. Action by Purchaser...................................................8
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS.......................8
5.1. Ownership of the Shares...............................................8
5.2. Organization and Qualification of the Company.........................9
5.3. Capitalization........................................................9
5.4. No Subsidiaries.......................................................9
5.5. Validity of Contemplated Transaction.................................10
5.6. Approvals and Consents...............................................10
5.7. Financial Statements.................................................10
5.8. No Undisclosed Liabilities...........................................10
5.9. No Material Changes..................................................11
5.10. Tax Matters.........................................................13
5.11. Permits and Licenses................................................15
5.12. Compliance with Laws and Regulations................................15
5.13. Environmental Matters...............................................15
5.14. Real Property.......................................................15
5.15. Marketable Title to Assets..........................................15
5.16. Accounts Receivable.................................................16
5.17. Material Contracts..................................................16
5.18. Litigation..........................................................17
5.19. Insurance...........................................................17
5.20. Compensation........................................................17
5.21. Banking Arrangements................................................17
5.22. Patents, Trademarks, Licenses.......................................18
5.23. Intangible Assets...................................................18
5.24. Absence of Creditors' Arrangements and Bankruptcies.................18
5.25. Employee Benefit Plans..............................................18
5.26. Labor Contracts and Relations.......................................20
5.27. Minute Books, Stock Records, Officers, Directors....................20
5.28. Interest in Competitors and Others..................................20
5.29. No Change in Contractual Relations..................................20
5.30. Brokers.............................................................21
5.31. Disclosure..........................................................21
ii
5.32. Access, Information and Documents...................................21
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER....................21
6.1. Organization.........................................................21
6.2. Corporate Action.....................................................21
6.3. Validity of Contemplated Transaction.................................21
6.4. Approvals and Consents...............................................22
6.5. Brokers..............................................................22
6.6. Litigation...........................................................22
6.7. Disclosure...........................................................22
7. CONDUCT OF BUSINESS AND AFFAIRS OF THE COMPANY PENDING CLOSING............23
7.1. Ordinary Course......................................................23
7.2. Preserve Business and Organization...................................23
7.3. Charter and Bylaws...................................................23
7.4. Capitalization.......................................................23
7.5. Dividends............................................................23
7.6. Transfer of Assets...................................................23
7.7. Payment of Liabilities...............................................24
7.8. Liens................................................................24
7.9. Employee Benefits....................................................24
7.10. Compensation........................................................24
7.11. Capital Expenditures and Dispositions...............................24
7.12. Banking Arrangements................................................24
7.13. Waiver or Termination...............................................24
7.14. Default.............................................................24
7.15. Compliance with Laws................................................25
iii
7.16. Fees and Expenses...................................................25
7.17. Representations, Warranties and Covenants...........................25
7.18. Commitments.........................................................25
7.19. Disclosure and Discussions..........................................25
8. CERTAIN COVENANTS PENDING CLOSING.........................................25
8.1. Reasonable Efforts...................................................26
8.2. Expenses and Taxes...................................................26
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER..........................26
9.1. Performance of Agreements............................................26
9.2. Representations and Warranties.......................................26
9.3. Good Standing Certificates...........................................27
9.4. No Material Adverse Change...........................................27
9.5. No Adverse Legal Proceedings.........................................27
9.6. Opinion of Sellers' Counsel..........................................27
9.7. Opinion of Purchaser's Counsel.......................................27
9.8. Personnel Matters....................................................27
9.9. Consents and Approvals...............................................28
9.10. Escrow Agreement....................................................28
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS...........................28
10.1. Performance of Agreements...........................................28
10.2. Representations and Warranties of Purchaser.........................28
10.3. Good Standing Certificate...........................................28
10.4. Opinion of Counsel to Purchaser.....................................29
10.5. No Adverse Proceedings..............................................29
10.6. Employment Agreement................................................29
10.7. Escrow Agreement....................................................29
iv
11. INDEMNIFICATION..........................................................29
11.1. Indemnification by Sellers..........................................29
11.2. Indemnification by Purchaser........................................30
11.3. Notice..............................................................30
11.4. Purchaser's Right of Set-Off........................................31
12. CERTAIN UNDERTAKINGS BY SELLERS..........................................31
12.1. Changes in Directors and Officers...................................31
12.2. Non-Competition.....................................................31
12.3. Nondisclosure.......................................................33
12.4. Employment..........................................................33
13. SELLERS' AGENTS..........................................................33
13.1. Appointment of Agent................................................33
13.2. Appointment Irrevocable.............................................34
13.3. Appointment Binding on Sellers' Successors and Heirs................35
14. DEFAULT BY A SELLER......................................................35
14.1. Default by a Seller.................................................35
15. NATURE AND SURVIVAL OF REPRESENTATIONS...................................35
16. CONDUCT OF PARTIES AFTER CLOSING.........................................36
17. TERMINATION OF AGREEMENT.................................................36
17.1. Termination.........................................................36
17.2. Consequence of Termination..........................................36
18. MISCELLANEOUS............................................................36
18.1. Schedules...........................................................36
18.2. Tax Consequences....................................................37
v
18.3. Notice..............................................................37
18.4. Amendments..........................................................38
18.5. Assignment..........................................................38
18.6. Headings............................................................38
18.7. Severability........................................................38
18.8. Entire Agreement....................................................38
18.9. Time................................................................39
18.10. Parties in Interest................................................39
18.11. Applicable Law.....................................................39
18.12. Additional Acts....................................................39
18.13. Counterpart Executions.............................................39
vi
SCHEDULES
REFERRED TO IN AGREEMENT
Principal
Section Reference Title
5.2......................Schedule of Charter Documents (Certified Copies of
Articles of Incorporation and bylaws of the Company)
5.2......................Schedule of Corporate Organization
5.6, 9.9.................Schedule of Required Approvals and Consents
5.7......................Schedule of Financial Statements
5.11.....................Schedule of Permits
5.14.....................Schedule of Real Property
5.15.....................Schedule of Mortgages, Liens and Other Encumbrances
5.15.....................Schedule of Properties and Assets
5.17.....................Schedule of Material Contracts (Copies of Material
Contracts)
5.19.....................Schedule of Insurance
5.20.....................Schedule of Compensation
5.21.....................Schedule of Banking Arrangements
5.22, 5.23...............Schedule of Intellectual Property
5.25.....................Schedule of Employee Plans
5.27.....................Schedule of Officers and Directors
9.6, 9.8, 9.10, 10.4.....Schedule of Ancillary Documents
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made
this 27th day of February, 1998 by and among Integrated Systems Consulting
Group, Inc., a Pennsylvania corporation (the "Purchaser") and Xxxx Xxxxxxx
("Xxxxxxx"), Xxxxx Xxxxxxxx ("Xxxxxxxx"), Xxxxxxx X. Xxxxxxx ("Xxxxxxx"),
Xxxxxx X. Xxxxxx ("Xxxxxx") and Xxxxxxx Xxxxxxxxx ("Spitalney" and, together
with Wellman, Malhotra, Xxxxxxx and Wenger, the "Sellers").
BACKGROUND
Sellers collectively own all of the issued and outstanding
shares of capital stock of the Wavefront Consulting, Inc., a Virginia
corporation (the "Company"), consisting of an aggregate of 430 shares of
common stock, par value $1.00 per share (the "Shares"), in the respective
amounts set forth in the Capitalization Table in Section 1.1 hereof. Sellers
desire to sell to Purchaser, and Purchaser desires to purchase from Sellers,
all of the Shares in accordance with the terms, conditions and provisions of
this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises, covenants and agreements herein contained, the parties,
intending to be legally bound hereby, agree as follows:
1. PURCHASE AND SALE OF STOCK
1.1. Purchase and Sale of Shares at the Closing.
Upon the terms and subject to the conditions of this
Agreement and in reliance upon the representations and warranties made by each
of the Sellers to Purchaser herein, at the Closing (defined in Section 4.1)
each of the Sellers shall sell to Purchaser, and Purchaser shall purchase and
receive from each of the Sellers, the number of Shares set forth opposite each
Seller's name below (the "Capitalization Table"), free and clear of any lien,
claim or encumbrance:
Number of Percentage of
Name of Seller Shares Total Shares
-------------- ------ ------------
Xxxx Xxxxxxx 100 23.25%
Xxxxx Xxxxxxxx 100 23.25%
Xxxxxxx X. Xxxxxxx 100 23.25%
Xxxxxx X. Xxxxxx 100 23.25%
Xxxxxxx Xxxxxxxxx 30 7.00%
2. PURCHASE PRICE
2.1. Purchase Price.
2.1.1. As full consideration for all of the Shares purchased by
Purchaser pursuant to this Agreement, Purchaser shall (i)
pay to Sellers at the Closing (as defined in Section 4.1)
$3,650,000 in cash, which shall be payable and deliverable
in accordance with Section 2.2, subject to adjustment as
provided in Section 2.3 and subject to an escrow hold-back
as provided in Section 2.4 (the "Closing Cash"), and (ii)
pay to Sellers the additional contingent purchase price, if
any, determined and paid as provided in Article 3 (the
"Contingent Cash") (the items set forth in subparagraphs (i)
and (ii) of this Section 2.1 collectively shall be referred
to as the "Purchase Price").
2.1.2. All consideration delivered by Purchaser hereunder shall be
in payment for the shares and shall not be deemed
remuneration for any services provided by Sellers as
employees of Purchaser after the Closing.
2.1.3. Purchaser shall pay the cash portions of the Purchase Price
by wire transfer to a single account designated by Seller.
Sellers will be responsible for disbursement of the cash
among themselves.
2.2. Payment of Cash.
The Purchaser will pay the Closing Cash at the Closing by
interbank wire transfer to the bank account designated by the Sellers and
shall pay the Contingent Cash in accordance with Article 3 by interbank wire
transfer to the bank account designated by Sellers.
2.3. Adjustment of Purchase Price.
2.3.1. As soon as possible (but in no event more than 60 days)
after the Closing, the Sellers will, at their cost, deliver
to the Purchaser financial statements of the Company audited
and reported upon (with a "clean" opinion) by KPMG Peat
Marwick LLP (or such other independent accounting firm of
similar stature and acceptable to the Purchaser) (the
"Closing Financial Statements"). The firm KPMG Peat Marwick
LLP (or such other firm, as the case may be) is referred to
herein as the "Auditor." Such financial statements will be
prepared (at the Sellers' expense) in accordance with
generally accepted accounting principles consistently
applied and in accordance with the Purchaser's historical
practices and will be in compliance with the accounting and
reporting requirements of the U.S. Securities and Exchange
Commission. The Closing Financial Statements will be as of
the "Effective Date" (defined below) and for the period from
January 1, 1998 to the Effective Date and will be in the
2
same format and contain the same components as the "December
31, 1997 Financial Statements" (defined in Section 5.7). The
balance sheet included in the Closing Financial Statements
is referred to herein as the "Closing Balance Sheet." Along
with the Closing Financial Statements, the Seller will
deliver an accounts receivable trial balance and aging
report as of the Closing Date.
2.3.2. The "Effective Date" shall be the effective date of the
consummation of the purchase and sale of the Shares
hereunder, which shall be (i) the same as the Closing Date
if the Closing occurs on the last calendar day of a month or
(ii) the calendar month-end closest to the Closing Date if
the Closing occurs on a day other that a calendar month-end
(or such other date as shall be agreed upon by the parties
hereto).
2.3.3. The term "Net Assets" shall mean the amount by which the
assets of the Company exceed the Company's liabilities at
the Effective Date as reflected on the Closing Financial
Statements. The term "Net Income" shall mean the net income
of the Company as reflected on the Closing Financial
Statements for the period commencing January 1, 1998 through
the Effective Date. The term "Expected Net Assets" shall
mean the number that is equal to the sum of Net Income plus
$625,000. The Purchase Price shall be adjusted as follows:
(a) No adjustment shall be made if the difference
between Net Assets and Expected Net Assets is less
than $50,000.
(b) If Net Assets exceeds Expected Net Assets, then the
Purchase price shall be increased by the amount (if
any) by which the difference between Net Assets and
Expected Net Assets exceeds $50,000.
(c) If Net Assets is less than Expected Net Assets,
then the Purchase price will be decreased by the
amount (if any) by which the difference between Net
Assets and Expected Net Assets exceeds $50,000.
2.3.4. If the Purchase Price is adjusted under Section 2.3.3(c),
then within ten days after the Sellers deliver to the
Purchaser the Closing Financial Statements, the Sellers
shall pay to the Purchaser in cash the amount of the
adjustment. If the Purchase Price is adjusted under Section
2.3.3(b), then within ten days after the Sellers deliver to
the Buyer the Closing Financial Statements, the Buyer shall
pay to the Sellers in cash the amount of the adjustment.
2.3.5. In addition to the foregoing, the Purchase Price shall be
adjusted to account for certain uncollected accounts
receivable as described in this Section 2.3.5. The accounts
receivable trial balance and aging report delivered to the
Purchaser with the Closing Financial Statements shall
identify all accounts receivable that are (i) more than 90
days past due as of the Effective Date or (ii) otherwise
3
doubtful of collection as of the Effective Date, as
determined in accordance with the Purchaser's historical
practices (collectively, the "Doubtful Accounts"). The term
"Doubtful Accounts Settlement Date" shall mean the last day
of the third month following the Closing Date. Promptly (but
in no event more than 30 days) after the Doubtful Accounts
Settlement Date, the Purchaser will render an accounting to
the Sellers as to the status of the Doubtful Accounts as of
the Doubtful Accounts Settlement Date. At such time, the
Purchaser will transfer to the Sellers all Doubtful Accounts
that were uncollected as of the Doubtful Accounts Settlement
Date and the Purchase Price shall be reduced by an amount
equal to such uncollected Doubtful Accounts. Upon such
transfer, the Purchaser will notify the "Escrow Agent"
(defined in Section 2.5) to release to it out of the "Escrow
Fund" (defined in Section 2.4), to the extent claims have
not otherwise been made against the Escrow Fund, an amount
of cash equal to such uncollected Doubtful Accounts. The
Sellers will be responsible for any amount by which the
Escrow Fund is deficient for this purpose, which deficiency
shall be paid within ten days after the Purchaser's notice
provided for in the preceding sentence.
2.4. Escrow Fund.
At the Closing the Purchaser, on behalf of the Sellers, will
pay $380,000 out of the Purchase Price to the Escrow Agent (defined in Section
2.5) to be held, together with interest earned thereon (in the aggregate, the
"Escrow Fund"), and disbursed by the Escrow Agent as described in this Section
2.4.
2.4.1. The term "Escrow Release Date" shall mean August 31, 1998;
provided, however, that the Escrow Release Date shall not
occur prior to, and shall be delayed until, the effectuation
of all Purchase Price adjustments pursuant to Section 2.3.
On or after the Escrow Release Date, the Escrow Agent will
pay to the Sellers the amount of the Escrow Fund that
exceeds the amount of any then pending claims made for
breach of the Sellers' covenants, representations or
warranties hereunder or claims otherwise made pursuant to
the Purchase Price adjustment provisions of Section 2.3 or
the indemnification provisions of Section 11.1 ("Claims").
If at such date one or more such Claims shall be pending,
then thereafter upon the resolution of each such Claim, the
Escrow Agent will pay to the Sellers the amount (if any) of
the Escrow Fund then held in excess of any then pending
Claims. The Escrow Agent will pay to the Purchaser from the
Escrow Fund the amount of any Claims determined to be due to
the Purchaser.
2.4.2. For the purpose of disbursing funds under Section 2.4.1, the
Escrow Agent shall be entitled to rely, as to the existence
and amount of Claims, if any, and other relevant matters, on
the facts certified in a written notice provided by the
Sellers or the Purchaser, a copy of which is
4
contemporaneously given to the other party (delivered in the
same manner as delivered to the Escrow Agent) and to which
the other party does not object within ten days. In the
event of an objection from either party, the Escrow Agent
will make any such disbursement only upon (iii) instructions
signed by or on behalf of the Sellers and the Purchaser or
(iv) the order of a court of competent jurisdiction.
2.5. Escrow Agent; Duties and Responsibilities.
The Escrow Agent will be the law firm of Saul, Ewing, Xxxxxx
& Xxxx LLP. The Escrow Agent will invest any funds to be held by it pursuant
to this Agreement in an interest bearing deposit account of any commercial or
savings bank with an office in Philadelphia, Pennsylvania. In any action taken
under this Agreement, the Escrow Agent shall not be liable for any mistake of
fact or error of judgment, or for any act or omission of any kind, unless the
Escrow Agent shall have been grossly negligent or guilty of willful misconduct
or bad faith. The Sellers and the Purchaser will indemnify the Escrow Agent
against, and hold it harmless from, all damages, costs and expenses, including
counsel fees, incurred by the Escrow Agent in connection herewith, except such
as result from the Escrow Agent's breach of its duties hereunder, and the
Escrow Agent shall have a security interest in the Escrow Fund for the payment
thereof. In the event of a dispute between the parties in connection herewith
such that the Escrow Agent deems it necessary for its protection so to do, the
Escrow Agent may deposit the Escrow Fund into a court of competent
jurisdiction and thereupon shall have no further duties in connection herewith
to any party.
3. CONTINGENT PURCHASE PRICE
3.1. Definitions.
For purposes of this Article 3, the following terms shall
have the meanings ascribed below:
3.1.1. "1998 Excess Operating Income" shall mean the excess of (a)
Operating Income calculated for the period commencing
January 1, 1998 and ending December 31, 1998 over (b) the
sum of (i) $625,000 plus (ii) Added Income generated by the
Acquired Operation for the one-year period commencing on
January 1, 1998 and ending December 31, 1998.
3.1.2. "1999 Excess Operating Income" shall mean the excess of (a)
Operating Income calculated for the period commencing
January 1, 1999 and ending December 31, 1999 over (b) the
sum of (i) $875,000 plus (ii) Added Income generated by the
Acquired Operation for the one-year period commencing on
January 1, 1999 and ending December 31, 1999.
5
3.1.3. "Acquired Operation" shall mean the business of the Company
after the Closing, as combined with the operations of the
Purchaser's Virginia office. The Purchaser plans to operate
the Acquired Operation as a separate business unit. The
Purchaser will assess a fee to the Acquired Operation for
the provision of accounting systems, controls and financial
reporting services equal to .75% of the revenues of the
Acquired Operation. The Purchaser may also provide such
additional business services, such as human resources,
benefits, recruiting, and the like, as may be requested by
the Acquired Operation at mutually agreed upon costs.
3.1.4. "Added Income" shall mean $91,000.
3.1.5. "Operating Income" shall mean the income of the Acquired
Operation before income taxes, interest and amortization of
intangible assets arising from the Acquisition.
3.2. Contingent Purchase Price.
In addition to the Closing Cash, Purchaser hereby agrees to
pay to Sellers the amounts, if any, calculated pursuant to this Section 3.2,
provided that such amounts shall be paid in the manner and at the times set
forth in Section 3.3:
3.2.1. First Contingent Payment. Purchaser shall pay to Sellers an
amount equal to One Hundred Thirty-Five Percent (135%) of
the 1998 Excess Operating Income (the "First Contingent
Payment").
3.2.2. Second Contingent Payment. Purchaser shall pay to Sellers an
amount equal to One Hundred Thirty-Five Percent (135%) of
the 1999 Excess Operating Income (the "Second Contingent
Payment").
3.3. Payment of Contingent Payments.
3.3.1. Payment of First Contingent Payment. The First Contingent
Payment shall be paid by Purchaser to Sellers as follows:
(a) If the First Contingent Payment is less than or
equal to $420,000, then Purchaser shall pay to
Sellers the First Contingent Payment within 120
days after December 31, 1998.
(b) If the First Contingent Payment exceeds $420,000,
then Purchaser shall pay to Sellers $420,000 of the
First Contingent Payment within 120 days after
December 31, 1998, and the amount in excess of
$420,000 (the "Excess First Contingent Amount")
shall be paid as follows:
6
(i) if the Second Year Contingent Payment is
greater than zero, then Purchaser shall
pay the Excess First Contingent Amount to
Sellers within 120 days after December 31,
1999; or
(ii) if the Second Year Contingent Payment is
zero, then Sellers shall not be entitled
to receive the Excess First Contingent
Amount and such Excess First Contingent
Amount shall be retained by Purchaser.
3.3.2. Second Contingent Payment. The Second Contingent
Payment, if any, shall be paid by Purchaser to
Sellers within 120 days after December 31, 1999.
3.4. Nature of Consideration.
The parties have agreed upon the Contingent Cash portion of
the Purchase Price as a method of determining and paying a portion of the full
current value of the Shares. It is acknowledged and agreed that the Contingent
Cash portion of the Purchase Price represents consideration in exchange for a
portion of the value of the Shares as of the date of this Agreement.
3.5. Wire Transfers.
The parties intend that the wire transfers of the Contingent
Cash payments under this Article 3 shall be made to an escrow account of
Xxxxx, Rothman, Goldstein, Xxxxxxxxx & Xxxxxx, Chartered, counsel for Sellers,
for further disbursement among Sellers in accordance with Sellers'
instructions.
4. CLOSING
4.1. Closing.
The closing for the purchase and sale of the Shares
contemplated by this Agreement (the "Closing") shall be held on February 28,
1998 (the "Closing Date") at the law offices of Saul, Ewing, Xxxxxx & Xxxx
XXX, Xxxxxx Xxxxxx Xxxx, 00xx Xxxxx, 1500 Market Street, Philadelphia,
Pennsylvania, or at such other time and such other place as shall be agreed
upon by Purchaser and Sellers, provided that, if all of the conditions stated
in Article 9 are not, or it shall reasonably appear to Purchaser that they
will not be, fulfilled on or before the Closing Date, then at the written
election of Purchaser, delivered on or before the Closing Date to Sellers,
Purchaser may postpone the Closing Date to such date and time, but not more
than 30 days after the Closing Date, as Purchaser shall state in such notice;
provided further, however, that if the nonfulfillment of any of the conditions
stated in Article 9 does not arise from any act or omission or fault on the
part of Sellers, then Purchaser shall not be entitled to this election.
7
4.2. Action by Sellers.
Subject to the fulfillment of all the conditions set forth
in Article 10 hereof, except such conditions as may be waived by Sellers, at
the Closing each Seller shall deliver to Purchaser:
4.2.1. the stock certificate or certificates, registered in the
name of the Seller representing Seller's ownership of
Shares, in proper form for transfer and duly endorsed in
blank or accompanied by such instruments of transfer as
shall, in the opinion of counsel for Purchaser, be effective
to vest in Purchaser (or its nominee) good and marketable
title to such Shares and the right, upon presentation
thereof to the Company, to become the registered holder of
such Shares;
4.2.2. each of the certificates, documents, instruments and
opinions contemplated to be delivered by Sellers pursuant to
Article 9 hereof.
4.3. Action by Purchaser.
Subject to the fulfillment of all of the conditions set
forth in Article 9 hereof, except such conditions as may be waived by the
Purchaser, at the Closing, Purchaser shall deliver to Sellers:
4.3.1. evidence of wire transfers to the accounts designated by the
Sellers and the Escrow Agent of the Closing Cash; and
4.3.2. each of the certificates, documents, instruments and
opinions contemplated to be delivered by Purchaser pursuant
to Article 10 hereof.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS
The Sellers, jointly and severally, represent and warrant
and, where applicable, covenant to Purchaser as follows:
5.1. Ownership of the Shares.
Each Seller (i) is the record and beneficial owner of the
Shares set forth opposite his name on the Capitalization Table, (ii) has good,
marketable and valid title to such Shares, free and clear of all liens,
security interests, restrictions, encumbrances, claims, negative pledges or
options, and (iii) has the full right, power and authority to sell, assign and
transfer such shares to Purchaser pursuant to the provisions of this
Agreement. Upon delivery of the certificates representing each Seller's
Shares, together with duly executed stock powers pursuant to this Agreement,
8
Purchaser shall acquire good, marketable and valid title to such Shares, free
and clear of all liens, security interests, restrictions, encumbrances,
claims, negative pledges or options.
5.2. Organization and Qualification of the Company.
The Company (i) is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its incorporation
as stated in the Schedule of Corporate Organization, (ii) is duly qualified as
a foreign corporation and is in good standing in each of the jurisdictions (if
any) listed in the Schedule of Corporate Organization, which jurisdictions are
the only jurisdictions where the operation of its business or the ownership or
leasing of its properties and assets require it to be so qualified and in good
standing, and (iii) has the corporate power, holds all licenses, permits and
authority necessary to carry on its business as now being conducted. The
copies (certified by the Secretary of the Company) of the Certificate (or
Articles) of Incorporation and bylaws of the Company attached to the Schedule
of Charter Documents are correct and complete as of the date of this
Agreement.
5.3. Capitalization.
The Schedule of Corporate Organization sets forth (i) the
authorized, (ii) the issued and (iii) the outstanding shares of capital stock
of the Company, (iv) the issued shares of stock reacquired by the Company and
held in its treasury, (v) the options or other rights to acquire shares of
such stock outstanding or committed to be issued, (vi) the number of shares
reserved for issuance and (vii) the record holders of such outstanding shares,
and such information is true and correct. There are no outstanding options or
rights to purchase or otherwise acquire from the Company or any commitment of
any character by the Company to issue or sell any shares of its capital stock
or any securities or obligations convertible into or exchangeable for, or
otherwise entitling any person to acquire from the Company any shares of its
capital stock. All of the issued shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and non-assessable.
5.4. No Subsidiaries.
The Company does not directly or indirectly control any
other corporation or business organization or hold any equity interest in any
other business.
5.5. Validity of Contemplated Transaction.
The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby do not and will
not violate any applicable law or constitute a default or result in a right of
acceleration, termination or similar right by any party to any contract,
agreement or instrument to which the Company is a party (or would, but for the
passage of time or the giving of notice, constitute a default or result in
such a right of acceleration, termination or similar right) under the
Certificate (or Articles) of Incorporation or bylaws of the Company or any
contract, agreement or instrument to which the Company or any Seller is a
party.
9
5.6. Approvals and Consents.
Except as set forth in the Schedule of Required Approvals
and Consent, no approval, consent or authorization of, or declaration or
filing with, any governmental or judicial authority or any other person is
required in connection with the execution and delivery of this Agreement or
the performance by Sellers of their respective obligations hereunder or the
consummation by Sellers of the transactions contemplated hereby.
5.7. Financial Statements.
The Company has delivered to Purchaser financial statements
consisting of a balance sheet for the Company for the years ending December
31, 1997, and for the years then ended, income statements and statements of
changes in financial condition of the Company, statement of earnings and
statement of shareholders' equity (such balance sheets, income statements,
statements of financial condition, statement of earnings and state of
shareholders' equity being referred to herein as the "Financial Statements").
All such financial statements are correct and complete, fairly present the
financial condition, assets and liabilities of the Company as of their
respective dates and the results of their operations for such periods, and
have been prepared in accordance with generally accepted accounting principles
consistently applied, in accordance with the Company's historical practices.
Correct and complete copies of the Financial Statements are attached to the
Schedule of Financial Statements. Prior to the Effective Date, the Sellers
will cause the Company to deliver to the Purchaser the foregoing Financial
Statements audited and reported upon (with a "clean" opinion) by the Auditor,
and such audited Financial Statements (the "Audited Financial Statements")
will not be materially adversely different from the internal Financial
Statements delivered previously and shall be in compliance with the accounting
and reporting requirements of the U.S. Securities and Exchange Commission. The
Sellers shall deliver the audited Closing Financial Statements referred to in
Section 2.3.1 within 60 days after the Effective Date.
5.8. No Undisclosed Liabilities.
The Company has no liabilities or obligations of any nature,
whether due or to become due, absolute, contingent or otherwise, including
liabilities for taxes (including any interest or penalties relating thereto)
in respect of or measured by the income of the Company since the last date of
the Financial Statements (the "Financial Statement Date"), except for (i)
those reflected or reserved against (which reserves are adequate) in the
Financial Statements, (ii) those incurred, consistent with past practices,
reasonably and in the ordinary course of business since the Financial
Statement Date, and (iii) those which are specifically disclosed in this
Agreement or on a Schedule attached hereto. Each liability of the Company in
excess of $5,000 as of the date hereof is listed in the Schedule of Financial
Statements. There is no basis for the assertion against the Company as of the
Financial Statement Date of any liability not fully reflected or reserved
10
against in the Company's balance sheet as of such date, except for (i)
liabilities arising since the Financial Statement Date in the ordinary course
of business of the Company and (ii) other liabilities disclosed expressly and
specifically in this Agreement.
5.9. No Material Changes.
Since the Financial Statement Date there has not been:
(a) any change in the financial or other condition,
assets, liabilities or business of the Company,
except changes in the ordinary course of business,
none of which individually or in the aggregate has
been materially adverse to the Company;
(b) any damage, destruction or loss (whether or not
covered by insurance) which has or may adversely
affect the business, prospects or any property of
the Company;
(c) any declaration, setting aside or payment of a
dividend or other distribution in respect of any of
the capital stock of the Company, or any direct or
indirect redemption, purchase or other acquisition
of any of such stock;
(d) except as specifically disclosed in the Schedule of
Compensation, any increase in the compensation
payable or to become payable by the Company to any
of its officers, employees or agents (including
without limitation any bonus or other contingent
arrangement) or any known payment or arrangement
made to or with respect to any of the above, except
any increase necessarily incurred by the Company by
reason of any law or regulation affecting minimum
wages payable to employees thereof;
(e) any strike, lockout, labor trouble, or any similar
event or condition of any character involving
employees of the Company that has or may have an
adverse affect on the business or prospects of the
Company;
(f) a failure by the Company to maintain in full force
and effect all policies of insurance then in effect
or any renewals thereof or replacements, or to give
any notice or present any claim under any such
policy when due;
(g) a sale or transfer by the Company of any of its
assets other than in the ordinary course of its
business;
(h) incurrence by the Company of indebtedness for money
borrowed;
11
(i) any mortgage, pledge, hypothecation or other
encumbrance of any of the assets, tangible or
intangible, of the Company;
(j) any agreement or arrangement to which the Company
is a party granting to any person any rights to
purchase any of the assets of the Company other
than in the ordinary course of business;
(k) any capital expenditure or commitment therefor by
the Company in excess of $10,000 in any one case or
$25,000 in the aggregate;
(l) any other material expenditure or any commitment by
the Company other than in the ordinary course of
its business;
(m) any other material transaction by the Company other
than in the ordinary course of its business;
(n) any failure or refusal by the Company to pay any of
its obligations, including obligations to vendors
and persons rendering services to the Company; or
(o) any failure or refusal by the Company to make, in a
timely manner, all filings and declarations with
and notices to governmental authorities required to
be made in connection with the conduct of the
Company's business.
5.10. Tax Matters.
5.10.1. The Company has duly and timely filed all federal, state and
local Tax Returns (defined below) required to be filed by it
and all such Tax Returns are true, correct and complete and
true, correct and complete copies of such Tax Returns have
been delivered to Purchaser prior to the date hereof.
5.10.2. The amount of the Company's liability for unpaid Taxes for
all periods ending on or before the date of this Agreement
does not exceed the amount of the current liability accruals
for Taxes (defined below) as such accruals are reflected on
the Financial Statements.
5.10.3. The Company has paid, or will pay, in full and on a timely
basis all Taxes due and payable for all periods ending on or
before the Effective Date, and no other Taxes are payable by
the Company with respect to items or periods covered by the
Tax Returns (whether or not shown on or reportable on such
Tax Returns) or with respect to any period prior to the date
of this Agreement.
12
5.10.4. The Company has withheld and paid over all Taxes required to
have been withheld and paid over, and complied with all
information reporting and backup withholding requirements,
including the maintenance of required records with respect
thereto, in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other third
party.
5.10.5. There are no liens on any of the assets of the Company with
respect to Taxes, and no event has occurred which with the
passage of time or the giving of notice, or both, could
result in a lien with respect to Taxes on any assets of the
Company;
5.10.6. The Company's income tax liabilities have not been audited
by any governmental or taxing authority, nor is any such
audit in process, pending, or threatened (either in writing
or verbally, formally or informally).
5.10.7. No deficiencies exist or have been asserted (either in
writing or verbally, formally or informally) or are expected
to be asserted with respect to the Taxes of the Company, and
the Company has not received notice or expects to receive
notice that it has not filed a Tax Return or paid Taxes
required to be filed or paid by it.
5.10.8. The Company is not a party to any action or proceeding for
the assessment or collection of Taxes, nor has such event
been asserted or threatened against the Company.
5.10.9. No waiver or extension of any statute of limitation is in
effect with respect to Taxes or the Tax Returns of the
Company.
5.10.10. The Company has not filed any consent or agreement under
Section 341(f) of the Code.
5.10.11. The Company is not, and has not been, a United States real
property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code.
5.10.12. Purchaser is not required to withhold tax on the purchase of
the Shares by reason of Section 1445 of the Code, and none
of the Sellers is a "foreign person" as that term is defined
in Section 1445 of the Code.
5.10.13. The Company is not a party to any venture, partnership,
contract or arrangement under which it could be treated as a
partner for federal income tax purposes.
13
5.10.14. The Company does not have and has not had a permanent
establishment located in any tax jurisdiction other than the
United States and the Company is not liable for the payment
of taxes in any such jurisdiction located outside the United
States.
5.10.15. The Company has not agreed to make, nor is it required to
make, any adjustment under Section 481(a) of the Code by
reason of a change in accounting method or otherwise.
5.10.16. For purposes of this Section 5.10:
(a) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(b) "Taxes" shall mean all taxes, however denominated,
including interest and penalties thereon and other
additions to tax that may become payable in respect
thereof, imposed by any federal, state, local or
foreign government or any agency, which taxes shall
include, without limiting the generality of the
foregoing, all income or profits taxes (including,
but not limited to, federal and state income
taxes), real property taxes, payroll and employment
taxes, social security taxes, sales and use taxes,
business license taxes, personal property taxes,
stamp taxes, transfer taxes and other government
charges, and other obligations of the same nature
as any of the foregoing.
(c) "Tax Returns" shall mean all reports, estimates,
declarations of estimated taxes, information
returns and reports and returns relating to or
required to be filed in connection with, any Taxes.
5.11. Permits and Licenses.
There is set forth on the Schedule of Permits a complete
list of the permits, licenses and approvals issued or granted by any
governmental authority, commercial enterprise or other person ("Permits") held
by the Company, excluding licenses within the definition of "Intellectual
Property" (defined in Section 5.22) and listed in the Schedule of Intellectual
Property. The Schedule of Permits sets forth the expiration and/or renewal
date for each of the Permits.
5.12. Compliance with Laws and Regulations.
The Company is not, nor has it been (by virtue of any
action, omission, occurrence of any event, the existence of any circumstances
or any contract to which it is a party), in violation of any law, ordinance,
regulation, order, judgment or decree (collectively, "Law") or Permit.
14
5.13. Environmental Matters.
There has not existed or occurred on any real property owned
or leased by the Company during the period that such property was owned or
leased by the Company (i) a condition that involves the material risk of
damage to the environment or (ii) the release, disposal, seepage or discharge
of hazardous or toxic materials into the air, the ground, any river, lake,
ocean or other body of water or into any system for the removal of sewage or
other wastes from such property that involves a material risk of damage to the
environment, and no hazardous or toxic materials have been generated,
manufactured, refined, transported, treated, stored, handled, disposed of,
transferred, produced or processed on any such property in a manner that
violates the Comprehensive Environmental Response, Compensation and Liability
Act of 1986, as amended, the Hazardous Materials Transportation Act, as
amended, or any other law, or otherwise may result in liability for Purchaser.
5.14. Real Property.
Set forth in the Schedule of Real Property is a correct
summary description of all real properties owned by or leased to the Company.
All structures on such properties and the equipment therein are in good
operating condition, and their condition, construction and use conform to all
applicable building, zoning and other laws, ordinances and regulations.
5.15. Marketable Title to Assets.
The Company has good and marketable title to all its
properties and assets, including those reflected on the most recent balance
sheet of the Financial Statements, and except as set forth on the Schedule of
Mortgages, Liens and Other Encumbrances hereto such properties and assets are
not subject to any mortgage, pledge, lien, restriction, claim, encumbrance or
security interest. Set forth in the Schedule of Properties and Assets is a
correct and complete list of all of the Company's properties and assets.
5.16. Accounts Receivable.
All accounts receivable of the Company have been incurred in
the ordinary course of the business of Company, and all such accounts
receivable existing at the Effective Date will, except to the extent of the
reserve for doubtful accounts reflected in the most recent balance sheet in
the Financial Statements, be fully collectible within 120 days therefrom.
5.17. Material Contracts.
5.17.1. Set forth in the Schedule of Material Contracts is a
complete and accurate list of all material contracts to
which the Company is legally bound, and each such contract
is valid and binding on each of the parties thereto in
accordance with its terms, was made in the ordinary course
of business and contains no provision or covenant
prohibiting or limiting the ability of the Company to
15
operate its business. Correct and complete copies of all
such written contracts and complete summaries of all such
oral contracts (collectively, the "Material Contracts") are
attached to the Schedule of Material Contracts.
5.17.2. Except as set forth in the Schedule of Material Contracts,
the Company does not have any oral or written (i)
employment, severance or collective bargaining or similar
agreement with or relating to any employee or any
consulting, brokerage or agency agreement not terminable
without cost on no more than 30 days' notice, (ii) agreement
or arrangement with any officer or director, (iii)
agreement, plan or arrangement providing for any bonus,
stock option, stock ownership, stock purchase, stock
appreciation right, pension or retirement benefit, vacation,
insurance or other employee benefit; (iv) agreement,
contract, indenture or other instrument relating to the
borrowing of money or the guaranty of any obligation for the
borrowing of money or to the grant of any mortgage, lien,
security interest or other encumbrance in or on any of its
property, (v) lease of or contract for installment or other
deferred purchase or sale of any real or personal property,
(vi) license of any patent, copyright, trademark, trade
secret or other intellectual property (which licenses may be
disclosed on the Schedule of Material Contracts by cross
reference to the Schedule of Intellectual Property), (vii)
agreement or arrangement for the future purchase or delivery
of goods or rendition of service, including without
limitation any such agreement or arrangement with any
customer of or supplier to the Company, or (viii) other
contract, arrangement or commitment which does or may have a
material effect on the business, assets, condition or
prospects of the Company.
5.17.3. The Company is not a party to or bound by any presently
existing agreement or other arrangement that has had, or is
anticipated by management of the Company to have, a material
adverse effect on the business, assets, earnings, condition
or prospects of the Company.
5.17.4. No event has occurred which constitutes a default or may
result in a right of acceleration, termination or any
similar right by any party (or would, but for the passage of
time or the giving of notice, constitute a default or result
in such a right of acceleration, termination or similar
right) under any Material Contract.
5.18. Litigation.
There is no litigation, proceeding or investigation pending
or, to the knowledge of any of the Sellers, threatened, against or affecting
the Company, the Shares or any of the assets of the Company, whether or not
fully covered by insurance.
16
5.19. Insurance.
Set forth in the Schedule of Insurance is a complete list of
all insurance policies (including without limitation fire, casualty,
liability, worker's compensation and product liability) currently held by the
Company and any claims pending by the Company under each such policy. True
copies of each insurance policy have been made available to Purchaser. All
premiums due have been paid and all such policies are in full force and
effect.
5.20. Compensation.
Set forth in the Schedule of Compensation is a correct
statement of the names of all persons whose compensation from the Company for
the calendar years 1996 and 1997 did, or for the year 1998 may, exceed
$25,000, and the full amount paid or payable to each such person for services
rendered or to be rendered in such years and the basis therefore.
5.21. Banking Arrangements.
Set forth in the Schedule of Banking Arrangements a complete
and accurate list of each bank in which the Company has an account or safe
deposit box and the names of all persons authorized to draw thereon or to have
access thereto.
5.22. Patents, Trademarks, Licenses.
Set forth in the Schedule of Intellectual Property is a
correct list and summary description of all (i) patents and patent
applications, (ii) trademarks (whether or not registered) and applications to
register the same, (iii) service marks (whether or not registered) and
applications to register the same, (iv) trade names, (v) copyrights (whether
or not registered) and applications to register the same, (vi) know-how
relating to the Company's consulting practice, (vii) trade secrets and (viii)
licenses (relating to patents, trademarks, service marks, trade names,
copyrights, know how, trade secrets or other intellectual property) presently
owned, held or used by the Company (collectively, "Intellectual Property").
Except as described in the Schedule of Intellectual Property, all Intellectual
Property listed therein is owned by the Company free and clear of all liens,
claims or other encumbrances and is not known to be the subject of any
challenge. Except as described in the Schedule of Intellectual Property, there
are no unresolved claims made and there has not been communicated to the
Company the threat of any claim that the holder of such Intellectual Property
is in violation or infringement of any patent, trademark, service xxxx,
tradename or other right of any other person. The Company is the owner of (and
as such has rights to the unrestricted use of ), or has a valid license to
use, the patents, licenses, tradenames, trademarks, service marks, copyrights,
know-how, and other proprietary and trade rights necessary for the conduct of
the business of the Company as now conducted, without any conflict with the
rights of others. The Company has not knowingly forfeited or otherwise
relinquished any such patent, license, tradename, trademark, service xxxx,
copyright, know-how or other proprietary right necessary for the conduct of
the business of the Company as currently conducted.
17
5.23. Intangible Assets.
Set forth in the Schedule of Intellectual Property is a
correct list and summary description of all intangible personal property
rights (other than the Intellectual Property) owned or held by the Company
having an acquisition cost or value on the Company's books as of December 31,
1997 of at least $25,000 or otherwise being material to the conduct of the
business of the Company (e.g., software, software systems, data bases and
other information systems employed in the discovery and development of
pharmaceutical compounds).
5.24. Absence of Creditors' Arrangements and Bankruptcies.
The Company does not have any arrangement with creditors not
made in the ordinary course of business, nor has any involuntary or voluntary
petition in bankruptcy been filed by or against the Company.
5.25. Employee Benefit Plans.
5.25.1. Each employee pension or welfare plan maintained by the
Company (the "Plans") is listed on the Schedule of Employee
Plans. The contributions made or required (whether or not
waived) by the Company for the most recently ended annual
accounting period of each Plan are as set forth on such
Schedule opposite the name of the Plan to which the
contribution relates. All such contributions which currently
are, or within 90 days of the date hereof will become, due
from the Company have been paid, except as specifically
noted on such Schedule.
5.25.2. All such plans are in compliance with the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), the Code (as defined in Section 5.10) and all
applicable rules and regulations of the Internal Revenue
Service, the United States Department of Labor ("Department
of Labor") and the Pension Benefit Guaranty Corporation
("PBGC").
5.25.3. Favorable determination letters from the Internal Revenue
Service have been received, or have been applied for, with
respect to each of such plans which are subject to Title II
of ERISA. No such plan:
(a) Has incurred an "Accumulated Funding Deficiency"
(within the meaning of Section 302(a)(2) of ERISA
and Section 412(a) of the Internal Revenue Code),
whether or not waived;
18
(b) Has been a plan with respect to which a "reportable
event" (within the meaning of Section 4043(b) of
ERISA) has occurred; or
(c) Has engaged in any transaction which violates
Section 406 or Section 407 of ERISA or which could
result in a liability of the Company under Sections
409, 501 or 502 of ERISA or Section 4975 of the
Code or pursuant to any agreement or statute with
respect to liabilities incurred by any person under
such sections. No material liability to the PBGC
has been, or to the knowledge of any Seller is
expected to be, incurred with respect to any such
plan by the Company and there has been no event or
condition which presents a risk of termination of
any plan by the PBGC.
5.25.4. The Company is not now, nor has it ever been a contributing
employer to a "multi-employer pension plan" within the
meaning of Section 4001(a) of ERISA.
5.25.5. The Company has no obligation to bear the cost of providing
benefits under any employee welfare plan (as defined in
Section 3(1) of ERISA) on behalf of any person subsequent to
the termination of his or her employment with the Company.
5.26. Labor Contracts and Relations.
The Company has not been (a) a party to any contract or
arrangement with a labor union or any local or subdivision thereof, (b)
charged with any unresolved unfair labor practice, discrimination or other
violation of laws relating to employment practices, or (c) to the knowledge of
any of the Sellers, had any present union organizing activities among the
employees of the Company. The Company has not taken any action or failed to
take any action which would provide a reasonable basis for any claim of any
such unfair labor practice or other violation. The Company has complied with
all the laws relating to the employment of labor applicable to it, including
any provisions thereof relating to wages, hours, collective bargaining and the
payment of social security and similar taxes and the Company is not liable for
any arrears in wages or any taxes or penalties for failure to comply with any
of the foregoing.
5.27. Minute Books, Stock Records, Officers, Directors.
Sellers and the Company have made available for inspection
by Purchaser the minute books and capital stock records of the Company, which
contain all of the Company's minutes and stock records. Such minute books
contain minutes of all meetings of the board of directors, committees of the
board of directors and the stockholders of the Company, and such minutes
reflect all actions taken at such meetings and contain references to all
matters discussed at such meetings that may have a material adverse effect on
the Company taken as a whole. The Schedule of Officers and Directors sets
forth a complete list of all the current officers and directors of the
Company.
19
5.28. Interest in Competitors and Others.
Except for ownership of less than 1% of the outstanding
shares of stock of any class of any corporation that are listed on the New
York Stock Exchange, the American Stock Exchange were quoted on NASDAQ, none
of the Sellers has any interest in any corporation, partnership,
proprietorship, firm or association that competes in any manner with the
Company or has an existing contractual relationship with the Company.
5.29. No Change in Contractual Relations.
None of the Sellers knows (or has any reason to believe) (i)
that any customer or client of the Company or any other person doing business
with the Company intends (and no person or entity dealing with the Company has
given the Company any indication that it intends) to reduce or otherwise
materially modify its business with the Company or (ii) that any person who is
a party to a Material Contract with any the Companies intends to or may
breach, terminate or not renew such Material Contract, whether before or after
the Closing.
5.30. Brokers.
None of the Sellers has made any agreement or taken any
action that may cause anyone to become entitled to a commission as a result of
the transactions contemplated by this Agreement.
5.31. Disclosure.
No representation or warranty by the Sellers contained in
this Agreement and no statement contained in any certificate or other
instrument furnished or to be furnished to the Purchaser pursuant hereto or in
connection with the transactions contemplated hereby, contains or at the
Closing will contain, any untrue statement of a material fact, or omits, or
will at the Closing omit, to state a material fact necessary to provide the
Purchaser with material information as to the Company or the ownership of
their shares of its capital stock.
5.32. Access, Information and Documents.
Sellers will, and will cause the Company to, give to
Purchaser and to Purchaser's counsel, accountants and other representatives
full access during normal business hours to the Company's properties, books,
contracts, commitments and records and will furnish to Purchaser all such
documents and copies of documents (certified if requested) and information
with respect to their affairs as Purchaser may reasonably request.
20
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
Purchaser represents, warrants and, where applicable
covenants, to Sellers as follows:
6.1. Organization.
Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania and has the corporate power to engage in the transactions
contemplated by this Agreement.
6.2. Corporate Action.
Purchaser has taken all such corporate action as may be
necessary or appropriate to enable it to perform its obligations hereunder.
6.3. Validity of Contemplated Transaction.
The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby do not and will
not violate any applicable law or constitute a default or result in a right of
acceleration, determination, termination or similar right by any party to any
contract, agreement or instrument to which Purchaser is a party (or would, but
for the passage of time or the giving of notice, constitute a default or
result in such a right of acceleration, termination or similar right) under
the Certificate (or Articles) of Incorporation or bylaws of Purchaser or any
contract, agreement or instrument to which Purchaser is a party.
6.4. Approvals and Consents.
No approval, consent or authorization of, or declaration of
filing with, any governmental or judicial authority or any other person is
required in connection with the execution and delivery of this Agreement or
the performance by Purchaser of its obligations hereunder or the consummation
by Purchaser of the transactions contemplated hereby, except as such approval,
consent, authorization, declaration or filing shall have been made prior to
the Closing.
6.5. Brokers.
Purchaser has not made any agreement or take any action that
may cause anyone to become entitled to a commission as a result of the
transactions contemplated by this Agreement.
21
6.6. Litigation.
There is no litigation, proceeding or investigation pending
or, to the knowledge of Purchaser, threatened against or affecting Purchaser
or any of its assets, whether or not fully covered by insurance, that is of
such nature or extent that it would be required to be disclosed in Purchaser's
reports filed under the Securities Exchange Act of 1934 and that is not so
disclosed.
6.7. Disclosure.
No representation or warranty by Purchaser contained in this
Agreement and no statement contained in any certificate or other instrument
furnished or to be furnished to Sellers pursuant hereto or in connection with
the transactions contemplated hereby contains, or at the Closing will contain,
any untrue statement of a material fact or omits, or at the Closing will omit,
to state a material fact necessary to make the statements contained in such
materials not misleading.
7. CONDUCT OF BUSINESS AND AFFAIRS OF THE COMPANY PENDING CLOSING
From and after the date hereof and to and including the
Closing Date, except as Purchaser may otherwise agree in writing, Sellers will
cause the Company to comply with the following:
7.1. Ordinary Course.
The Company will conduct its business only in the ordinary
course, consistent with past practices and policies, and not make any material
change in the nature or manner of conducting the business conducted by it.
7.2. Preserve Business and Organization.
The Company will use its best efforts to preserve its
organization intact, to keep available to Purchaser the services of its
present officers and employees and to preserve for the benefit of Purchaser
the goodwill of its customers, suppliers, and others having business relations
with it.
7.3. Charter and Bylaws.
The Company will not adopt any amendment to its Certificate
(or Articles) of Incorporation or its bylaws.
22
7.4. Capitalization.
The Company will not make any change in its authorized,
issued or outstanding shares of capital stock or issue any rights or options
to acquire shares of its capital stock.
7.5. Dividends.
The Company will not declare or pay any dividend or other
distribution or payment in respect of its capital stock, or make any payment
to redeem, purchase or otherwise acquire any shares of its capital stock.
7.6. Transfer of Assets.
The Company will not transfer any of its assets other than
in the ordinary course of business.
7.7. Payment of Liabilities.
The Company will not pay, discharge or satisfy any liability
or obligation other than in the ordinary course of business, consistent with
past practices.
7.8. Liens.
The Company will not permit any of its assets to be subject
to any mortgage, lien, security interest or other encumbrance, except for the
encumbrances set forth on the Schedule of Mortgages, Liens and other
Encumbrances.
7.9. Employee Benefits.
The Company will not enter into any new employee benefit or
welfare plan or arrangement nor make any material modification to any such
existing plans or arrangements.
7.10. Compensation.
The Company will not increase the compensation payable or to
become payable to any officer or to any employee whose compensation does or
may exceed $75,000 per annum or, except as is consistent with past practices,
any other employee.
7.11. Capital Expenditures and Dispositions.
The Company will not purchase, lease or otherwise acquire or
transfer, lease or otherwise dispose of any item of real or personal property
(other than inventory) other than in the ordinary course of business, except
for purchases and dispositions of a value in any one case not exceeding
$5,000.
23
7.12. Banking Arrangements.
The Company will not make any change in any of the banking
and safe deposit box arrangements referred to in Section 5.21.
7.13. Waiver or Termination.
The Company will not waive any substantial claim or right or
terminate any Material Contract or commitment (except as specifically provided
for herein).
7.14. Default.
The Company will not do or omit to do any act nor permit any
event to occur or condition to exist which will result in or cause a breach of
any Material Contract, or other commitment of the Company, the breach of which
would have a material adverse effect on the business, condition or prospects
of the Company.
7.15. Compliance with Laws.
The Company will use its best efforts to comply with all
laws applicable to it.
7.16. Fees and Expenses.
The Company will not pay, or incur any liability to pay, any
fees or other expenses in connection with the negotiation or entering into of
this Agreement and the consummation of the transactions contemplated hereby
(including without limitation fees and expenses of counsel and accountants).
7.17. Representations, Warranties and Covenants.
Neither the Company nor any of the Sellers will take any
action that would result in the inaccuracy or breach at Closing of any of the
representations, warranties or covenants of Sellers set forth in Article 5.
7.18. Commitments.
The Company will not (i) enter into any commitment to do any
act which would violate any provision of this Article or (ii) enter into any
contract or commitment, the performance of which may extend beyond the
Closing, except those made in the ordinary course of business the terms of
which are consistent with its past practice and reasonable in light of current
conditions.
24
7.19. Disclosure and Discussions.
Unless and until this Agreement is terminated in accordance
with the provisions hereof, Sellers will not, and will not authorize or permit
the Company or any of its employees, officers or directors to, enter into,
participate in, request, solicit, or engage in any discussions, negotiations,
understandings, agreements or communications with any person or entity other
than Purchaser relating to offers, inquiries, negotiations or proposals with
respect to the sale of the assets or stock of the Company, or any type of
business combination or merger.
8. CERTAIN COVENANTS PENDING CLOSING
8.1. Reasonable Efforts.
Subject to the terms and conditions of this Agreement, the
Sellers will use reasonable efforts to take all actions that are to be taken
by Sellers hereunder that are necessary, proper or desirable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including using reasonable efforts to obtain
promptly all necessary waivers, consents, licenses and approvals and effecting
all necessary registrations and filings and to satisfy the conditions set
forth in Article 9. Subject to the terms and conditions of this Agreement, the
Purchaser will use reasonable efforts to take all actions that are to be taken
by the Purchaser hereunder that are necessary, proper or desirable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including exercising reasonable
efforts to satisfy the conditions set forth in Article 10.
8.2. Expenses and Taxes.
The Sellers will pay all transfer, sales, documentary and
similar taxes payable in connection with the transfers of the Shares to the
Purchaser. Each of the Purchaser on the one hand and the Seller on the other
will pay all of their respective other expenses incurred in connection with
this Agreement and the transaction contemplated hereby, including all related
accounting and legal fees. No such taxes, fees or expenses shall be regarded
for the purposes of this Agreement as having arisen in the ordinary course of
business.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to complete the transactions
contemplated by this Agreement are subject to the fulfillment prior to or at
Closing of the following conditions (any of which may, at its option, be
waived by Purchaser):
25
9.1. Performance of Agreements.
Sellers shall have performed all agreements and covenants
and complied with and satisfied all conditions required by this Agreement to
be performed, complied with or satisfied by them at or prior to the Closing,
and Purchaser shall have received a certificate to that effect signed by
Sellers.
9.2. Representations and Warranties.
The representations and warranties made by the Sellers
contained in this Agreement shall be true as of the date of this Agreement and
at and as of the Closing Date as though made on and as of the Closing Date,
and Purchaser shall have received a certificate to that effect signed by
Sellers.
9.3. Good Standing Certificates.
Purchaser shall have received (i) Articles (or Certificate)
of Incorporation of the Company certified by the Secretary of State of
Virginia within 30 days preceding the Closing, (ii) a certificate of authority
of the Company to do business as a foreign corporation in Maryland, certified
by the appropriate agency of that jurisdiction within 30 days preceding the
Closing and (iii) a good standing certificate for the Company as of a date
within 5 days preceding the Closing issued by the Secretary of State of
Virginia and the appropriate agency of the State of Maryland.
9.4. No Material Adverse Change.
Since the Financial Statement Date there shall not have
occurred any material adverse change in the financial or other condition,
business, properties, results of operations or prospects of the Company, and
Purchaser shall have received a certificate to that effect dated as of the
Closing Date and signed by Sellers.
9.5. No Adverse Legal Proceedings.
No injunction, restraining order or other order issued by a
court of competent jurisdiction or governmental authority that prohibits the
consummation of any of the transactions contemplated by this Agreement shall
be in effect, and there shall not be pending any administrative, regulatory or
judicial proceeding which seeks to prohibit, restrain or invalidate the
consummation of any such transaction or to recover damages from any of the
parties hereto by reason thereof.
26
9.6. Opinion of Sellers' Counsel.
Xxxxx, Rothman, Goldstein, Xxxxxxxxx & Xxxxxx, Chartered,
counsel for Sellers, shall have delivered to Purchaser their opinion, dated
the Closing Date and in the form attached to the Schedule of Ancillary
Documents.
9.7. Opinion of Purchaser's Counsel.
The Buyer shall have received from its counsel, Saul, Ewing,
Xxxxxx & Xxxx LLP, their opinion with respect to such matters as the Purchaser
shall have reasonably requested.
9.8. Personnel Matters.
Each of the Sellers shall have executed and delivered to the
Purchaser an Employment Agreement in the form attached to the Schedule of
Ancillary Documents (an "Employment Agreement"). The Company shall have no
fewer than 22 employees (not counting the Sellers) at least 85% of whom shall
be persons who were employed by the Company on the date of execution of this
Agreement.
9.9. Consents and Approvals.
Sellers shall have obtained all the consents, approvals and
authorizations and shall have made all the filings and registrations set forth
in the Schedule of Required Approvals and Consents.
9.10. Escrow Agreement.
The Sellers shall have executed and delivered an Escrow
Agreement in the form attached to the Schedule of Ancillary Documents (the
"Escrow Agreement").
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
The obligations of Sellers to complete the transactions
contemplated by this Agreement are subject to the fulfillment prior to or at
Closing of the following conditions (any of which conditions may be waived by
any Seller as to the sale of such Seller's Shares):
27
10.1. Performance of Agreements.
Purchaser shall have performed all agreements and covenants
and complied with and satisfied all conditions required by this Agreement to
be performed or complied with by it at or prior to the Closing, and Sellers
shall have received a certificate to that effect, dated the Closing Date and
signed by the President or any Vice President of Purchaser.
10.2. Representations and Warranties of Purchaser.
The representations and warranties of Purchaser contained in
this Agreement shall be true as of the date of this Agreement and at and as of
the Closing Date as though made on and as of the Closing Date, and Sellers
shall have received a certificate to that effect, dated the Closing Date and
signed by the President or any Vice President of Purchaser.
10.3. Good Standing Certificate.
The Seller shall have received Articles of Incorporation of
the Purchaser certified by the Secretary of the Commonwealth of Pennsylvania
within 30 days preceding the Closing and the subsistence certificate for the
Company as of a date within five days preceding the Closing issued by the
Secretary of the Commonwealth of Pennsylvania.
10.4. Opinion of Counsel to Purchaser.
Saul, Ewing, Xxxxxx and Xxxx LLP, counsel for Purchaser
shall have delivered to Sellers an opinion, dated the Closing Date and in the
form attached to the Schedule of Ancillary Documents.
10.5. No Adverse Proceedings.
No injunction, restraining order or other order issued by a
court of competent jurisdiction or governmental authority that prohibits the
consummation of any of the transactions contemplated by this Agreement shall
be in effect, and there shall not be pending any administrative, regulatory or
judicial proceeding which seeks to prohibit, restrain or invalidate the
consummation of any such transaction or to recover damages from any of the
parties hereto by reason thereof.
10.6. Employment Agreement.
The Purchaser shall have executed and delivered an Employment
Agreement for each of the Sellers.
10.7. Escrow Agreement.
The Purchaser shall have executed and delivered the Escrow
Agreement.
28
11. INDEMNIFICATION
11.1. Indemnification by Sellers.
To the extent and in the manner herein provided, Sellers,
jointly and severally, will indemnify and hold Purchaser harmless from and
against any and all damages, losses, obligations, deficiencies, liabilities,
suits, proceedings, actions, claims, judgments and assessments, including
reasonable attorney's fees (collectively, "Indemnifiable Losses"), resulting
from, relating to, or arising out of (i) any misrepresentation, breach of
warranty or non-fulfillment of any agreement or covenant on the part of the
Company or Sellers contained in this Agreement or in any statement or
certificate furnished or to be furnished to Purchaser pursuant hereto or in
connection with the transactions contemplated hereby, or any misrepresentation
in or omission from any Schedule or Financial Statement to be furnished to
Purchaser under this Agreement; (ii) any liabilities or obligations of the
Company which arose, accrued or are based on an occurrence or event prior to
the Closing Date to the extent not fully reflected on or fully reserved for in
the Financial Statements or the Interim Financial Statements, or revealed in a
schedule to this Agreement; (iii) any failure by the Company to comply prior
to the Closing Date with any statute, law or regulation, including ERISA; and
(iv) any liabilities arising out of the Company's failure to retain adequate
accounting, financial and tax-related records prior to the Closing Date.
11.2. Indemnification by Purchaser.
Purchaser will indemnify and hold Sellers harmless from and
against Indemnifiable Losses which Sellers suffer or incur as a result of,
relating to, or arising out of any misrepresentation, breach of warranty or
non-fulfillment of any agreement on the part of Purchaser contained in this
Agreement or in any statement or certificate furnished or to be furnished to
Sellers pursuant hereto or in connection with the transactions contemplated
hereby.
11.3. Notice.
11.3.1. In the event that the person or entity seeking
indemnification under this Article 11 (the "Indemnified
Party") shall suffer an Indemnifiable Loss, he or it shall,
within thirty (30) days after incurring such Indemnifiable
Loss, give written notice thereof (the "Indemnity Notice")
to the other party ("Indemnifying Party") of the amount of
the Indemnifiable Loss, together with sufficient information
to enable the Indemnifying Party to determine the accuracy
and nature of the events giving rise to such Indemnifiable
Loss. Within fifteen (15) days after the receipt of the
Indemnity Notice, the Indemnifying Party shall either (i)
pay to the Indemnified Party an amount equal to the
Indemnifiable Loss or (ii) object to such claim, in which
case the Indemnifying Party shall give written notice of
such objection to the Indemnified Party.
29
11.3.2. In the event the facts giving rise to the claim for
indemnification under this Article 11 shall involve any
action, claim or demand or any threatened action, claim or
demand by any third party against the Indemnified Party, or
shall involve after Closing the discovery of facts or
circumstances which make any of the representations and
warranties contained in this Agreement materially untrue or
misleading, then, the Indemnified Party, within the earlier
of, as applicable, ten (10) days after receiving notice of
the filing of a lawsuit or proceeding by a third party or
sixty (60) days after receiving notice of the existence of a
claim or demand giving rise to the claim for
indemnification, shall send written notice of such claim to
the Indemnifying Party (the "Claim Notice"). The failure of
the Indemnified Party to give the Indemnifying Party the
Claim Notice shall not release the Indemnifying Party from
liability under this Article 10, provided, however, that the
Indemnifying Party shall not be liable for damages incurred
by the Indemnified Party which would not have been incurred
but for the delay in the delivery of, or failure to deliver,
the Claim Notice.
11.3.3. Subject to Section 11.3.4 hereof, the Indemnifying Party
shall have the right, exercisable by written notice to the
Indemnified Party within fifteen (15) days after the receipt
of the Claim Notice by the Indemnifying Party, to defend
such claim in the name of the Indemnified Party, at is own
expense and using its own counsel reasonably acceptable to
the Indemnified Party pursuant to an arrangement
satisfactory to the Indemnified Party; provided, that the
Indemnifying Party shall not have the right to assume the
defense of such action if (i) the named parties to the
action (including any impleaded parties) include both the
Indemnified Party and the Indemnifying Party, or (ii) the
Indemnified Party is advised by counsel that a conflict will
arise in the event both the Indemnified Party and the
Indemnifying Party are represented by the same counsel with
respect to such claim, in either of which case, the
Indemnified Party shall have the right to actively
participate in such action and any Indemnifiable Losses in
connection therewith shall be reimbursed by the Indemnifying
Party.
11.3.4. The Indemnified Party shall be entitled to participate in
the defense of any claim or litigation, at its own expense,
by giving the Indemnified Party written notice of its
intention to do so within ten (10) days after the receipt of
the Claim Notice.
11.3.5. Whether or not the Indemnified Party elects to participate
in the defense of the action or litigation, the Indemnifying
Party shall not settle the claim or litigation without the
prior written consent of the Indemnified Party.
30
11.4. Purchaser's Right of Set-Off.
Any Indemnifiable Losses incurred by Purchaser, for which
Purchaser is entitled to indemnification shall be applied in reduction of
amounts due to Sellers under this Agreement (including the Contingent Cash and
the Escrow Fund).
12. CERTAIN UNDERTAKINGS BY SELLERS
12.1. Changes in Directors and Officers.
At the Closing the Company and Sellers will deliver to
Purchaser, except as otherwise requested by Purchaser, the written resignation
of each director and officer of the Company.
12.2. Non-Competition.
For 24 months after the Closing Date, each Seller (unless
acting as an officer or employee of the Purchaser or with the prior written
consent of the Purchaser) (or unless Purchaser shall have violated the terms
of this Agreement), within any state of the United States in which the
Purchaser is engaged in business on the Closing Date (after completion of the
transactions contemplated herein):
12.2.1. directly or indirectly own, manage, operate, join or
participate in the ownership, management, operation or
control, or be connected with as partner, stockholder,
director, officer, agent, employee or consultant, any
business, firm, or corporation that provides or proposes to
provide information technology consulting services within
the practice areas engaged in by the Company on the Closing
Date; provided, however, that this Section 12.2.1 shall not
preclude any Seller from becoming an officer, agent,
employee or consultant of or to any organization that is
larger than the Purchaser (in terms of total assets or total
revenues) at the time of commencement of such officer,
agent, employee or consultant position if the services
provided by the Seller in such position do not involve or
relate to information technology consulting services within
the practice areas engaged in by the Company on the Closing
Date; and further provided that this Section 12.2.1 shall
not preclude any Seller from owning passively as part of the
Seller's investment portfolio up to 1% of the outstanding
capital stock of any corporation;
12.2.2. enter into or engage in any employment or contractual
relationship with, or solicit or provide consulting services
to, any client who was or who had been served by the Company
on the Closing Date or during the 12 months prior thereto to
the extent that such employment, contractual relationship,
or consulting services involves information technology
consulting services within the practice areas engaged in by
the Company on the Closing Date;
31
12.2.3. directly or indirectly solicit, divert, or take away any
client, past client, or potential client of the Company as
the same existed immediately prior to the Closing Date. For
purposes of this paragraph, a "potential client" shall mean
any corporation, partnership, individual (or department,
unit or affiliate thereof) that has received an oral or
written proposal for services from the Company within the 12
months preceding the Closing Date and a "past client" shall
mean any corporation, partnership, individual (or
department, unit or affiliate thereof) which has utilized
the services of the Company within the 12 months preceding
the Closing Date; or
12.2.4. solicit any employee to leave the employ of the Company or
the Purchaser.
Notwithstanding the foregoing, in the event any Seller's
employment with Purchaser is terminated without cause (within the meaning of
such Seller's Employment Agreement), the restrictions contained in Section
12.2.1 and 12.2.2 shall terminate as to such Seller on the earlier to occur of
(i) one year after the Closing Date or (ii) six months after the date of
termination of employment.
12.3. Nondisclosure.
Such Seller has had possession of or access to confidential
information relating to the business of the Company, including, but not
limited to, information regarding new products or product design or
development, writings, reports, manuals, financial information, accounts
receivable information, business plans, customer lists, the identity of or
other facts relating to prospective customers, inventory lists, arrangements
with suppliers and customers, and other material embodying trade secrets,
customer or product information or technical or business information of the
Seller. All such information is referred to collectively as the "Company's
Confidential Information." After the Closing, each Seller will not (i) use or
exploit in any manner, the Company's Confidential Information for himself or
any entity other than the Purchaser, (ii) remove any of the Company's
Confidential Information or any reproduction thereof from the possession or
control of the Purchaser, or (iii) disclose any of the Company's Confidential
Information to any person for any reason whatsoever, except as such Seller's
duties as an employee of the Purchaser may legitimately and in good faith
require. Such Seller shall treat all of the Company's Confidential Information
in a confidential manner. All of the Company's Confidential Information as of
the Closing is and shall remain the exclusive property of the Purchaser, and
such Seller shall return all of the same, and all reproductions thereof, that
are in his possession immediately upon the Purchaser's request and in any case
upon the termination for any reason or cause of his employment with the
Purchaser.
32
12.4. Employment.
At or before the Closing, each Seller shall have entered
into an agreement of employment ("Employment Agreement") with Purchaser in
substantially the form attached to the Schedule of Ancillary Agreements.
13. SELLERS' AGENTS
13.1. Appointment of Agent.
Each Seller hereby appoints Xxxx Xxxxxxx and Xxxxx Xxxxxxxx,
together, the agents of such Seller (the "Agents") to do each of the
following:
13.1.1. Deliver at the Closing certificates for the Shares to be
sold by such Seller pursuant hereto.
13.1.2. Sign on behalf of such Seller and deliver to the Purchaser
all such agreements, certificates or other documents
required hereby to be delivered by such Seller at the
Closing.
13.1.3. Date and deliver to the Purchaser at the Closing on behalf
of such Seller any agreement, certificates or other
documents executed by such Seller and deposited with the
Agents for such purpose.
13.1.4. Take such action on behalf of such Seller as such Agents may
deem appropriate or desirable, in respect of
(a) extending the time for performance of any
obligation or other acts to be performed under this
Agreement;
(b) waiving any inaccuracy in any representation of the
Purchaser contained in this Agreement or in any
document delivered pursuant thereto;
(c) waiving compliance with or modifying any of the
covenants of the Purchaser contained in this
Agreement;
(d) waiving or modifying the requirements of
performance of any of the obligations of the
Purchaser contained in this Agreement;
(e) agreeing or consenting to any assignment of any
party's interest in this Agreement;
33
(f) approving the opinions of counsel, certificates and
other documents referred to in this Agreement which
are subject to approval by the Sellers.
13.1.5. Take such other action on behalf of such Seller (without
limitation to the matters specifically described in the
preceding clause) at, preceding or after the Closing under
this Agreement as such Agents may deem appropriate or
desirable to consummate the transactions contemplated by
this Agreement.
13.2. Appointment Irrevocable.
The appointment herein of the Agents shall be irrevocable
and shall, to the extent permitted by law, continue effective even after the
death or incompetence of such Seller. No action taken by any Seller in
contradiction to any action taken by the Agents shall be effective. Such
Seller may agree with such Agents (separately from this Agreement) as to
limitations on the actions to be taken by such Agents, but the authority of
the Agents shall be unaffected thereby and the Purchaser and each other party
hereto may rely on such Agents' authority contained herein even if they are
aware of the terms of such Seller's separate agreement of limitation. Such
Seller hereby releases the Agents from, and such Seller agrees to indemnify
the Agents against, liability for any action taken or not taken by the Agents
in such person's capacity as such agent, except for liability to any Seller
for loss which such Seller may suffer resulting from (i) the gross negligence
of the Agents in carrying out the agent's duties hereunder or (ii) the breach
of any separate written agreement referred to in the third sentence of this
Section. The Agents (or, either of them) may resign as such agent of any
Seller at any time upon giving notice to such Seller and, if no other Agent
shall then be in office, upon the appointment and qualification of such
Agent's successor. The Agents may be discharged and replaced by another person
to act as Agent by vote of the Sellers holding a majority of the Shares
subject to this Agreement.
13.3. Appointment Binding on Sellers' Successors and Heirs.
The agreements and appointment contained in this Article
shall be binding upon the Sellers, and the successors and assigns of any
Sellers having succession and the heirs, personal representatives and assigns
of the individual Sellers who are natural persons.
14. DEFAULT BY A SELLER
14.1. Default by a Seller.
If any Seller fails to deliver to Purchaser at the Closing
any of the Shares to be sold by such Seller pursuant hereto or otherwise fails
to perform any obligation or agreement to be performed or complied with by
such Seller at or prior to the Closing, such failure will not relieve the
other Sellers of their obligations hereunder and Purchaser, at its option and
34
without prejudice to its rights against any such defaulting Seller, may either
(i) acquire the Shares which it is entitled to acquire hereunder at the
Closing from Sellers not defaulting or (ii) refuse to acquire any Shares and
thereupon terminate its obligations hereunder.
15. NATURE AND SURVIVAL OF REPRESENTATIONS
All statements contained in any certificate or other
instrument delivered by or on behalf of Sellers or the Company or Purchaser
pursuant to this Agreement or in connection with the transactions contemplated
hereby shall be deemed representations and warranties by such parties. All
representations, warranties and agreements made by any of Sellers, the Company
or Purchaser shall survive the Closing and shall not be limited or invalidated
or rendered unenforceable by any investigation or knowledge to the contrary by
the party in whose favor the representation, warranty or agreement has been
made.
16. CONDUCT OF PARTIES AFTER CLOSING
Sellers and Purchaser will cooperate upon and after the
Closing Date in effecting the orderly transfer of the operations of the
Company to Purchaser. In addition, after the Closing Date, at the request of
Purchaser, Sellers shall execute and deliver from time to time such further
instruments of assignment, conveyance and transfer and shall take such other
actions as may be reasonably required to convey and deliver more effectively
to Purchaser the Shares or to confirm and perfect Purchaser's title to the
Shares, and otherwise to accomplish the orderly transfer of ownership of the
Company to Purchaser.
17. TERMINATION OF AGREEMENT
17.1. Termination.
Notwithstanding anything to the contrary in this Agreement,
this Agreement may be terminated by written notice of termination at any time
prior to the Closing Date only as follows:
(a) by mutual written consent of Purchaser and Sellers;
(b) by a party hereto by giving written notice to the
other party of such termination on the Closing Date
if, as of the Closing Date, any condition precedent
to the performance of the obligations of the party
giving such notice shall not have been fulfilled
and shall not have been waived by such party; or
(c) by a non-defaulting party if a material breach of
any representation, warranty, covenant or
obligation to such party by another party contained
35
herein shall occur and shall remain uncured (i) for
a period of ten (10) days after notice of such
breach is given to the defaulting party or (ii) if
earlier, at the Closing Date.
17.2. Consequence of Termination.
In the event of the termination of this Agreement pursuant
to the provisions of this Article 17, this Agreement shall become null and
void and no effect, without any liability on the part of any of the parties
hereto.
18. MISCELLANEOUS
18.1. Schedules.
Each Schedule referred to herein and listed in the Table of
Contents hereof has been delivered to Purchaser by Sellers (except the
Schedule of Ancillary Documents, which has been mutually prepared by the
parties) and has been identified by a legend thereon referring to this
Agreement, signed for purposes of such identification by representatives of
the parties. Schedules are not attached hereto.
18.2. Tax Consequences.
It is expressly understood that neither party makes any
warranty or representation respecting the income or other tax consequences of
this Agreement or the consummation of the transactions contemplated hereby.
18.3. Notice.
All notices and other communications to be given hereunder
shall be in writing and shall be deemed to be given only if sent by hand
delivery, facsimile, overnight courier or by certified or registered mail,
postage prepaid and in each case addressed to the recipient's address set
forth in this Section 18.3 (or to such other address as a party may
hereinafter designate in writing to the other parties), and provided that any
such notice shall be effective upon actual receipt if sent by hand-delivery or
facsimile, one business day after dispatching with an overnight courier or two
business days after mailing.
If to Purchaser:
Integrated Systems Consulting Group, Inc.
Attn: Xxxxxx X. Xxxxxxx
000 X. Xxxxxxxxxx Xxxx
Xxxxx, XX 00000
Telephone: 000-000-0000
36
Facsimile: 000-000-0000
with a copy to:
Xxxx Xxxxx Xxxxx, Esquire
Saul, Ewing, Xxxxxx & Xxxx LLP
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Sellers:
To the addresses set forth on the signature page
hereof.
With a copy to:
Xxxxxx X. Xxxxxx, Esquire
0000 Xxxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
18.4. Amendments.
Neither this Agreement nor any provision hereof may be
amended except by an instrument in writing signed by all of the parties.
18.5. Assignment.
No Seller may assign any of its rights or delegate any of
its obligations hereunder without the prior written consent of the Purchaser
and the Purchaser may not assign its rights or obligations hereunder without
the prior written consent of Sellers, except that the Company may assign its
rights and obligations hereunder to an affiliate or its nominee.
18.6. Headings.
All headings used in this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
37
18.7. Severability.
Any provision of this Agreement which is determined to be
invalid or unenforceable by a court of competent jurisdiction shall be
ineffective to the extent of such invalid or unenforceable provision but shall
not invalidate or render unenforceable any of the remaining provisions hereof.
18.8. Entire Agreement.
This Agreement supersedes all prior agreements and
understandings by and among the parties and constitutes the entire
understanding among the parties hereto with respect to the purchase and sale
of the Shares, the parties are not bound by any agreement, understandings,
provisions, conditions, representations and warranties other than those
specifically set forth in this Agreement.
18.9. Time.
Time is of the essence with respect to all provisions of
this Agreement.
18.10. Parties in Interest.
This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs, and to
the extent permitted, their assigns. Nothing in this Agreement is intended to
create rights enforceable against any party hereto by any so-called third
party beneficiary, and it is expressly intended that no covenant herein shall
be enforceable by any employee or former employee or the Company, any party to
a contract or other arrangement with the Company or any creditor of the
Company.
18.11. Applicable Law.
This Agreement shall be construed under and interpreted in
accordance with the laws of the Commonwealth of Pennsylvania.
18.12. Additional Acts.
In addition to the acts contemplated herein, the parties
hereby agree to perform, execute, and/or deliver or cause to be performed,
executed and/or delivered at Closing any and all such further acts as the
parties may agree are necessary to consummate the purchase and sale hereunder.
18.13. Counterpart Executions.
This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed an original for all
purposes, and all such counterparts shall collectively constitute but one in
the same agreement. Any and all counterparts executed hereunder may be
executed by facsimile.
38
IN WITNESS WHEREOF, the undersigned parties have executed
this Stock Purchase Agreement effective as of the date first above written.
INTEGRATED SYSTEMS CONSULTING SELLERS:
GROUP, INC.
/s/ Xxxxx Xxxxxxxx
-----------------------------------
By: /s/ Xxxxx X. Xxxxxxx XXXXX XXXXXXXX
-------------------------------- Address: 00000 Xxxxxx Xxx Xxxx
Xxxxx X. Xxxxxxx Xxxxxxx, XX 00000
Executive Vice President
/s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
XXXXXXX XXXXXXXXX
Address: 0 X. Xxxxxxx Xxx.
Xxxxxxxxxx, XX 00000
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
XXXXXXX X. XXXXXXX
Address: 00000 Xxxxxxxx Xxxxx Xx.
Xxxxx, XX 00000
/s/ Xxxx Xxxxxxx
-----------------------------------
XXXX XXXXXXX
Address: 00000 Xxx Xxx Xxx
Xxxxxxxxx, XX 00000
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
XXXXXX X. XXXXXX
Address: 00000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
END OF EXECUTIONS
