1
EXHIBIT 2.7
ASSET PURCHASE AGREEMENT
Dated as of November 12, 1998,
by and among
METAMOR WORLDWIDE, INC.,
METAMOR TECHNOLOGIES, LTD.,
NEW TECHNOLOGY PARTNERS, INC.
and
THE SHAREHOLDERS OF NEW TECHNOLOGY PARTNERS, INC.
2
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions..............................................1
ARTICLE 2
PURCHASE AND SALE OF ASSETS; PURCHASE PRICE
2.1 Purchase and Sale of Purchased Assets............................2
2.2 Consideration....................................................2
2.3 Buyer's Assumed Obligations......................................2
2.4 Seller's Retained Liabilities....................................3
2.5 Earn-Out Payments................................................3
2.6 Date and Form of Payment.........................................3
2.7 Net Working Capital Adjustment...................................4
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE SHAREHOLDERS
3.1 Organization; Authorization......................................5
3.2 Consents; Absence of Conflicts...................................5
3.3 Litigation.......................................................6
3.4 Compliance with Laws.............................................6
3.5 Title and Sufficiency of Purchased Assets. .....................6
3.6 Intercompany Obligations.........................................6
3.7 Books and Records................................................6
3.8 Contracts........................................................6
3.9 Taxes............................................................7
3.10 Bills and Invoices...............................................7
3.11 Employee Benefit Plans...........................................7
3.12 Employees and Employee Relations.................................8
3.13 Immigration Act..................................................8
3.14 Financial Information; Subsequent Events.........................9
3.15 Consultants.....................................................11
3.16 Anticipated Demand for Services.................................11
3.17 Tangible Assets.................................................11
3.18 Real Property...................................................11
3.19 Intellectual Property...........................................12
3.20 Notes and Accounts Receivable...................................14
3.21 Insurance.......................................................14
3.22 Brokers' Fees...................................................15
3.23 Disclosure......................................................15
ARTICLE 3A
REPRESENTATIONS AND WARRANTIES OF BUYER
3.1A Organization; Authorization; Qualification......................16
3.2A Absence of Conflicts............................................16
-i-
3
ARTICLE 4
CLOSING CONDITIONS; CLOSING
4.1 Closing.....................................................16
4.2 Conditions to Closing.......................................16
4.3 Documents to Become Effective at Closing....................18
4.4 Action to be Taken by Seller at the Closing.................18
4.5 Actions To Be Taken by Buyer at the Closing.................19
ARTICLE 5
INDEMNIFICATION
5.1 Buyer's Indemnities.........................................20
5.2 Seller's and Shareholders' Indemnities......................20
5.3 Exceptions to Buyer and Seller Indemnities..................21
5.4 Payment; General Right of Offset............................21
ARTICLE 6
MISCELLANEOUS AGREEMENTS
6.1 Pre-Closing Covenants.......................................22
6.2 Employment of NTPC Employees................................23
6.3 Employee Benefit Matters....................................23
6.4 Warn Act....................................................25
6.5 Change of Name..............................................25
6.6 Website.....................................................26
6.7 Domain......................................................26
6.8 Exclusive Designation.......................................26
6.9 Receipt of Payment..........................................26
6.10 Forwarding Services.........................................27
6.11 Further Assurances..........................................27
6.12 Payment of Obligations......................................27
6.13 Transition Assistance.......................................27
6.14 Covenant Not to Compete.....................................27
6.15 Confidentiality.............................................28
6.16 Conduct of Business During Earn-Out Period..................28
6.17 Access......................................................28
6.18 Brokerage Fees..............................................29
6.19 Assignment..................................................29
6.20 Notices.....................................................29
6.21 Choice of Law...............................................30
6.22 Entire Agreement; Amendments and Waivers....................30
6.23 Facsimile/Counterparts......................................30
6.24 Expenses of this Agreement..................................31
6.25 Invalidity..................................................31
6.26 Headings; References........................................31
6.27 No Third Party Beneficiaries................................31
6.28 No Merger...................................................31
6.29 Survival of Representations and Warranties..................31
6.30 Further Assurances..........................................31
-ii-
4
EXHIBITS
Exhibit A Definitions
Exhibit B Purchased Assets
Exhibit C Assumed Obligations
Exhibit D Form of Legal Opinion by Counsel to Seller
Exhibit E Employment Agreement
Exhibit F Non-Competition/No Solicitation Agreement
Exhibit G Transition Agreement
Exhibit H Sublease Agreement
Exhibit I Form of General Conveyance, Assignment, Xxxx of Sale
and Assumption Agreement
ANNEX I Determination of Adjusted EBIT
ANNEX II Estimated Net Working Capital
SCHEDULES
Schedule 3.2 Consents Needed
Schedule 3.11 Employee Benefit Plans
Schedule 3.12 Employees
Schedule 3.14 Financial Statements
Schedule 3.15 Consultants (Independent Contractors)
Schedule 3.18 Real Property Leases
Schedule 3.19 Intellectual Property
Schedule 3.21 Insurance
-iii-
5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of November
12, 1998, is entered into by and among Metamor Worldwide, Inc., a Delaware
corporation ("METAMOR") and Metamor Technologies, Ltd., an Illinois corporation
and a wholly-owned subsidiary of Metamor, ("BUYER"), New Technology Partners,
Inc., a Delaware corporation ("SELLER"), and the shareholders of Seller as set
forth on the signature page hereto ("SHAREHOLDERS").
WHEREAS, Seller owns and operates a division known under the names NTP
Consulting and New Technology Partners Consulting (together, "NTPC"), which is
an information technologies consulting business (the "BUSINESS");
WHEREAS, Seller owns and operates a division known under the name NTP
Software, which is engaged in the development of software for commercial sale
and the provision of installation and maintenance services solely associated
with such software (the "RETAINED BUSINESS");
WHEREAS, as part of the Business, Seller has employees and/or engages
consultants who provide information technology services both as employees of
Seller or as independent contractors (collectively, the "CONSULTANTS");
WHEREAS, Seller employs individuals in NTPC whose principal duties
relate to the Business (some of whom, but not all, are Consultants) ("NTPC
EMPLOYEES");
WHEREAS, together with the Consultants, Seller owns and operates
certain assets that are used or useful to NTPC and the operation of the
Business;
WHEREAS, Seller desires to sell and transfer to Buyer all of the assets
related to the Business, and Buyer desires to purchase all of the assets related
to the Business from Seller, on the terms and conditions described herein;
WHEREAS, Buyer desires to employ or engage in addition to the
Consultants and the NTPC Employees certain key employees ("KEY EMPLOYEES"), and
Seller desires to release the Consultants, the NTPC Employees and the Key
Employees from their employment or engagement with Seller;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 CERTAIN DEFINITIONS. Capitalized terms used in this Agreement but
not defined in the body hereof shall have the meanings ascribed to them in
Exhibit A.
6
ARTICLE 2
PURCHASE AND SALE OF ASSETS; PURCHASE PRICE
2.1 PURCHASE AND SALE OF PURCHASED ASSETS. Subject to the terms and
conditions of this Agreement at the Closing, Seller will grant, bargain, sell,
convey, transfer, assign and deliver to Buyer all tangible and intangible assets
of any nature specifically relating to or primarily used in the Business (the
"PURCHASED ASSETS"). The Purchased Assets which are more specifically set forth
in Exhibit B to this Agreement, include but are not limited to:
(a) all Accounts Receivable;
(b) all Intellectual Property;
(c) all Customer Contracts;
(d) all Consultant Contracts;
(e) all Personal Property;
(f) all Confidential Information;
(g) all Books and Records; provided, however, that the Books and
Records that are intermingled with the books and records of
Seller's other operations such that they can not be reasonably
separated may be held with Seller, as custodian for Buyer,
until such time as duplicate sets can be provided to Buyer
(such period not to exceed 60 days from the date hereof);
(h) all Work in Progress;
(i) the Corporate Names;
(j) all designations, certifications and awards related to the
Business;
(k) all Customer-Related Data;
(l) the Website;
(m) the Domain;
(n) the Phone Number; and
(o) the goodwill and going-concern value of the Business.
The Purchased Assets will be transferred to Buyer free of any and all
Liens.
2.2 CONSIDERATION. The consideration (exclusive of the Assumed
Obligations (as defined below) to be paid by Buyer to Seller for the sale,
transfer, assignment, conveyance and delivery of the Purchased Assets shall be
comprised of $7,556,286.93, payable in cash at the Closing or by wire transfer
contemporaneous with the Closing (the "CASH PORTION OF THE PURCHASE PRICE"), and
an additional Earn-Out Payment (as defined below), provided that the sum of the
Cash Portion of the Purchase Price and the Earn-Out Payment shall never exceed
$9,056,286.93. The Cash Portion of the Purchase Price and the Earn-Out Payment
shall be referred to herein as the "Consideration."
2.3 BUYER'S ASSUMED OBLIGATIONS. Buyer hereby assumes those obligations
set forth in detail in Exhibit C to this Agreement (the "ASSUMED OBLIGATIONS").
Buyer shall assume no liabilities, whether contingent or otherwise, and shall
not be obligated to pay any liability of Seller other than the Assumed
Obligations.
-2-
7
2.4 SELLER'S RETAINED LIABILITIES. Except for the Assumed Obligations,
it is understood and agreed that Seller shall retain all liability for, and
Buyer shall not assume or have any obligation with respect to, any obligations
or liabilities of Seller or its Affiliates that are attributable to the
Purchased Assets or the Business (all such obligations and liabilities being
herein referred to as the "EXCLUDED LIABILITIES"), including, without
limitation, all obligations and liabilities attributable to the following: (i)
any and all obligations arising under law or contract with respect to any
individual in connection with his or her employment by Seller or its Affiliates
or in connection with Seller's or its Affiliates' termination of such
individual's employment at any time; (ii) the performance, nonperformance or
breach by Seller or its Affiliates of any of the Customer Contracts, or any
obligation or commitment arising or accruing thereunder before the Effective
Time; (iii) Seller's or its Affiliates' ownership, use, or operation of the
Purchased Assets prior to the Effective Time; (iv) the violation by Seller or
its Affiliates of any laws, regulations, ordinances or any other legal
requirement to which any of Seller or its Affiliates is subject relating to the
ownership, use or operation by Seller or its Affiliates of the Purchased Assets;
and (v) all Taxes payable with respect to the Purchased Assets and the Business
or the ownership, use or operation thereof by Seller or its Affiliates on or
before the Effective Time.
2.5 EARN-OUT PAYMENTS. Buyer agrees to pay to Seller, if earned, the
following earned payout amount: an earned payout amount (the "EARN-OUT PAYMENT")
equal to the product of 5.5 multiplied by the amount, if any, by which the
Adjusted EBIT of NTPC for the twelve (12) month period ending December 31, 1999
exceeds the Adjusted EBIT of NTPC for the twelve (12) month period ending
December 31, 1998 (the "1998 PERIOD"). In no event shall the Consideration
exceed $9,056,286.93 and, to the extent that the Earn-Out Payment would cause
the aggregate amount of Consideration to exceed $9,056,286.93, such payment
shall be accordingly reduced.
The period from January 1, 1999 to and including December 31, 1999
shall be referred to as the "EARN-OUT PERIOD." Metamor shall ensure that Buyer
has sufficient capital to meet its obligations under this Agreement.
2.6 DATE AND FORM OF PAYMENT. The Earn-Out Payment, if earned, shall be
paid by wire transfer on or before March 15, 2000 (unless such Earn-Out Payment
is subject to a good faith dispute, in which case such Earn-Out Payment shall be
payable within the time period provided for below) and shall be based on the
internally-generated financial statements prepared in accordance with GAAP,
consistently applied (which have been prepared under the direction of Buyer) of
the Business for the Earn-Out Period. Buyer shall deliver to Seller no later
than February 15, 2000, the internally-generated financial statements of the
Business prepared in accordance with GAAP, consistently applied for the 1998
Period and the Earn-Out Period. A computation of the Adjusted EBIT of the
Business for the 1998 Period and the Earn-Out Period shall be prepared by Buyer
in the form of a report in accordance with Annex I hereto and delivered to
Seller on or prior to February 28, 2000.
In the event there is a dispute between Buyer and Seller regarding the
Earn-Out Payment, the Earn-Out Payment shall be determined by Ernst & Young LLP
in accordance with this Agreement (at the joint expense of Buyer and Seller).
Buyer and Seller shall use all reasonable efforts to cause such determination
(each an "E&Y EARN-OUT PAYMENT DETERMINATION") to be submitted in writing
-3-
8
to Buyer and Seller no later than March 15, 2000. The E&Y Earn-Out Payment
Determination shall be final, conclusive and binding on the Parties and an
adjustment to the Earn-Out Payment shall be made accordingly within ten (10)
days from receipt of the E&Y Earn-Out Payment Determination.
2.7 NET WORKING CAPITAL ADJUSTMENT.
The estimated Net Working Capital of the Business as of the Closing
Date (the "ESTIMATED NET WORKING CAPITAL") shall be that amount set forth in
Annex II hereto, as determined by the Parties in accordance with the provisions
hereof, and shall be based on the Business' estimated financial statements as of
the Closing Date, which will have been prepared in accordance with GAAP and
delivered by Seller to Buyer three (3) days before the time of Closing. In the
event that the Estimated Net Working Capital is more than $605,000, Buyer shall
pay to Seller at the Closing the amount of such excess. In the event that the
Estimated Net Working Capital is less than $605,000, Seller shall pay to Buyer
at the Closing the amount of such deficiency from the proceeds to be delivered
at the Closing. Within ten (10) days of the Closing Date, Seller shall deliver
revised financial statements as of the Closing Date, which shall have been
prepared in accordance with GAAP, reflecting the Seller's proposed final figure
for the Net Working Capital of the Business as of the Closing Date (the "FINAL
NET WORKING CAPITAL"). In the event that the Final Net Working Capital as of the
Closing Date is more than the Estimated Net Working Capital, Buyer shall pay to
Seller the amount of such excess (the "EXCESS WORKING CAPITAL"). In the event
that the Final Net Working Capital as of the Closing Date is less than the
Estimated Net Working Capital, Seller shall pay to Buyer the amount of such
shortfall (the "WORKING CAPITAL DEFICIENCY"). In the event the Parties are
unable to agree on the Final Net Working Capital of the Business on or before
twenty (20) days after the Closing, the Final Net Working Capital of the
Business as of the Closing Date shall be determined subsequently by Ernst &
Young LLP (at the joint expense of Buyer and Seller) (the "E&Y DETERMINATION").
Buyer and Seller agree to use their reasonable best efforts to cause the E&Y
Determination to be submitted to Buyer and Seller not later than thirty (30)
days after the Closing Date. The Final Net Working Capital derived from such
calculation by the Parties or by the E&Y Determination, as applicable, shall be
final, conclusive and binding on the Parties, and a payment of any Excess
Working Capital shall be made by Buyer and of any Working Capital Deficiency
shall be made by Seller, as appropriate and in either case within ten (10) days
of receipt of such calculation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE SHAREHOLDERS
Seller and the Shareholders hereby jointly and severally represent and
warrant to Buyer that the statements contained in this Article 3 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article 3), except as
set forth in the disclosure schedules delivered by Seller to Buyer on the date
hereof (the "SCHEDULES"). An event or matter will be deemed to be "MATERIAL," to
have a "MATERIAL" change in or in respect of, to have a "MATERIAL ADVERSE
EFFECT" or to be "MATERIALLY" affected if in the
-4-
9
opinion of Buyer, acting reasonably, the loss that may reasonably be expected to
occur to the Business or Buyer with respect to such event or matter, when taken
together with all other related losses that may reasonably be expected to occur
to the Business or Buyer as a result of any such events or matters, would exceed
$20,000 in the aggregate; provided, however, that any such event or matter which
constitutes a criminal violation of law shall be deemed to have a material
adverse effect on Buyer. For purposes of this paragraph, the word "LOSS" shall
mean any and all direct or indirect payments, obligations, assessments, losses,
losses of income, liabilities, costs and expenses paid or incurred, or
reasonably likely to be paid or incurred, or that are reasonably expected to
occur, including without limitation, penalties, interest on any amount payable
to a third party as a result of the foregoing, and any legal or other expenses
reasonably expected to be incurred in connection with defending any demands,
claims, actions or causes of action that, if adversely determined, could
reasonably be expected to result in losses, and all amounts paid in settlement
of claims or actions; provided, however, that losses shall be net of any
insurance proceeds entitled to be received from a nonaffiliated insurance
company on account of such loss (after taking into account any cost incurred in
obtaining such proceeds). A Customer Contract is "MATERIAL" if during the twelve
months ended the Closing Date such Customer Contract produced $20,000 of Gross
Profit Margin less any bad debt specifically related to such Customer Contract.
Any item intended to be disclosed must be identified with the particular
representation or warranty it is intended to limit and shall not be deemed to
limit any other representation, warranty or covenant in the Agreement. Nothing
in the Schedules shall be deemed adequate to disclose an exception to a
representation or warranty made herein, unless the Schedules identify the
exception with reasonable particularity and describes the relevant facts in
reasonable detail to the satisfaction of Buyer. Without limiting the generality
of the foregoing, the mere listing (or inclusion of a copy) of a document or
other item shall not be deemed adequate to disclose an exception to a
representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other items itself). The
Schedules will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Article 3.
3.1 ORGANIZATION; AUTHORIZATION. Seller has been duly formed and is
validly existing as a corporation under the laws of the State of Delaware and
has full power and authority to own and operate the Business as it is now being
conducted and to own and use the properties and assets related to the Business.
Each of Seller and the Shareholders has the power and authority to enter into
this Agreement and the Transfer Documents to which it is a party and to carry
out the transactions contemplated hereby and thereby. The execution, delivery
and performance by Seller of this Agreement and the Transfer Documents to which
it is a party and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate action. This
Agreement and the Transfer Documents to which Seller and the Shareholders are a
party have been duly executed and delivered by Seller and the Shareholders and
are the valid and binding obligations of Seller and the Shareholders enforceable
against each in accordance with their respective terms.
3.2 CONSENTS; ABSENCE OF CONFLICTS. Except as listed on Schedule 3.2,
neither the execution and delivery of this Agreement or the other Transfer
Documents by Seller, nor the consummation of the transactions contemplated
hereby or thereby will (a) require consent or advance notice under (other than
consents that have been obtained, copies of which have been furnished to
-5-
10
Buyer), violate or breach the terms of, cause a default under, conflict with or
result in acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, any Legal Requirement, any Customer Contract or
any Consultant Contract; (b) entitle any Person to exercise any preferential
purchase or similar right (whether arising by law, contract or otherwise) that
affects any of the Purchased Assets; (c) result in the creation or imposition of
any Lien on any of the Purchased Assets; (d) result in the cancellation,
forfeiture, revocation, suspension or adverse modification of any existing
consent, approval, authorization, license, permit, certificate or order of any
governmental authority that adversely affects the Business; or (e) with the
passage of time or the giving of notice or the taking of any action of any third
party have any of the effects set forth in clause (a), (b), (c) or (d) of this
Section 3.2. Except as listed on Schedule 3.2, neither Seller nor its Affiliates
have received any notice (written or oral) from any Person claiming that any
consent (that has not been obtained and previously furnished to Buyer) is
required to consummate the transactions contemplated by this Agreement or that a
preferential purchase right or similar right exists with respect to any of the
Purchased Assets.
3.3 LITIGATION. There are no actions, suits or proceedings pending or,
to the Knowledge of Seller, threatened against or affecting either the Business
or any of the Purchased Assets or the consummation of the transactions
contemplated hereby, at law or in equity, or before or by any governmental
agency or instrumentality or before any arbitrator of any kind.
3.4 COMPLIANCE WITH LAWS. Seller is in compliance with all applicable
statutes, rules, regulations, ordinances, codes, orders, franchises, permits,
and concessions, as such apply to the Business or the Purchased Assets. The
Purchased Assets are in full compliance with all Legal Requirements.
3.5 TITLE AND SUFFICIENCY OF PURCHASED ASSETS. Seller owns (and, upon
consummation of the transactions contemplated by this Agreement and the Transfer
Documents, Buyer will own) rights to use the Purchased Assets, free and clear of
all Liens. Seller is the initial party to each Contract, or has validly
succeeded to the rights of its predecessor(s) in interest thereto. None of the
rights of Seller in the Contracts has been assigned or collaterally assigned or
is affected by a security interest or similar encumbrance.
3.6 INTERCOMPANY OBLIGATIONS. Neither the Purchased Assets nor the
Assumed Obligations will include any intercompany obligations on any receivable
from or payable to any shareholder, officer, or director of Seller or any
Shareholder or any other Affiliate of Seller or any Shareholder.
3.7 BOOKS AND RECORDS. The Books and Records accurately and completely
reflect all transactions conducted by Seller and their Affiliates in the conduct
of the Business.
3.8 CONTRACTS. Exhibit B lists all Customer Contracts, Consultant
Contracts, purchase orders, service agreements and all other contracts or
agreements that relate to the Business. True and complete copies of each of the
Customer Contracts and Consultant Contracts have been furnished to Buyer. With
respect to each: (a) it is in full force and effect, and neither Seller, nor, to
Seller's Knowledge, any other party thereto, is in breach, default or has
otherwise failed to perform its
-6-
11
obligations thereunder, and Seller does not have Knowledge of any event which
with notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration thereunder; and (b) no party has any
right to offset, discount or otherwise xxxxx any amount owing thereunder. Upon
consummation of the transactions contemplated hereby, Buyer shall succeed to all
of Seller's rights and benefits with respect to each contract or agreement.
Seller is not a party to any verbal contract, agreement, or other arrangement
which, if reduced to written form, would be required to be listed in Exhibit B.
No unfilled Material Customer Contract obligating Seller to perform services
will result in a loss to Seller upon completion of performance. Seller is not a
party to any contract, agreement or other arrangement that was entered into on
terms that would not be considered market standard if such arrangement was
entered into in an arms-length transaction.
3.9 TAXES. All returns and reports (including, without limitation,
information and withholding returns and reports) of or relating to any federal,
foreign, state, county, local or other tax, assessment or other governmental
charge, including, without limitation, interest and penalties (all such returns
and reports referred to as "TAX RETURNS" and such taxes, assessments and other
governmental charges referred to as "TAXES") that were required to be filed by
or with respect to Seller or the Purchased Assets for any period prior to the
Effective Time, have been or will be duly and timely filed. All items of income,
gain, loss, deduction and credit or other items required to be included in the
Tax Returns with respect to the Purchased Assets have been timely filed, and all
Taxes with respect to the Purchased Assets that have become due pursuant to such
Tax Returns have been timely paid in full, including, without limitation, ad
valorem taxes for 1998 and all prior tax years. Seller has delivered to Buyer
true and correct copies of all invoices, if any, for 1998 ad valorem taxes
attributable to the Purchased Assets.
3.10 BILLS AND INVOICES. All bills due and other payments due with
respect to the Purchased Assets have been paid in full or accrued in the
ordinary course of business, and no labor, material or services has been
provided or performed with respect to the Purchased Assets that has not been
paid in full, or will not be paid in full by Seller in the Ordinary Course of
Business.
3.11 EMPLOYEE BENEFIT PLANS. Except as set forth on Schedule 3.11
hereto, Seller does not have and has never had any pension, profit sharing,
deferred compensation or other employee pension or health or welfare benefit
plan or arrangement relating to the operations of the Business. Seller does not
contribute to or have an obligation to contribute to, nor has it had at any time
within six years prior to the Closing Date contributed to or had an obligation
to contribute to, a multiemployer plan within the meaning of Section 3(37) of
ERISA. All employee pension benefit plans and employee health or welfare
benefits plans (as such terms are defined in ERISA, collectively "BENEFIT
PLANS") have been administered in accordance with ERISA and the applicable
provisions of the Internal Revenue Code of 1986, as amended (the "CODE"). There
are no "accumulated funding deficiencies" within the meaning of ERISA or the
Code or any federal excise tax or liability on account of any deficient fundings
in respect of the Benefit Plans. No reportable event(s) (within the meaning of
ERISA) or prohibited transaction(s) (within the meaning of the Code) has
occurred in respect of the Benefit Plans. There are not threatened or pending
any claims by or on behalf of the Benefit Plans or by any employee of Seller
alleging a breach or breaches of fiduciary duties or violations of other
applicable state or federal law which could result in liability on the part of
either Seller or the Benefit Plans under ERISA or any other law, nor is there
any basis
-7-
12
for such a claim. The Benefit Plans satisfy all discrimination testing
requirements. Except as set forth on Schedule 3.11 hereto, all returns, reports,
disclosure statements and premium payments required to be made under ERISA and
the Code with respect to the Benefit Plans have been timely filed or delivered.
There are no outstanding issues with reference to the Benefit Plans, nor have
there been any within the last five (5) years pending before the Internal
Revenue Service, the Department of Labor or the Pension Benefit Guaranty
Corporation.
3.12 EMPLOYEES AND EMPLOYEE RELATIONS. Schedule 3.12 hereto sets forth
a complete (as of the date set forth therein) list of names, positions, and
current annual salaries or wage rates and bonus and other compensation
arrangements as of the date thereof of all of the NTPC Employees. Except as set
forth on schedule 3.12 hereto, all NTPC Employees are full-time employees. The
employee relations between Seller and the NTPC Employees are good. There are no
pending or, to Seller's Knowledge, threatened employee strikes, work stoppages
or labor disputes with respect to the NTPC Employees. No union representation
question exists respecting any of the NTPC Employees, no collective bargaining
agreement exists or is currently being negotiated by Seller, no demand has been
made for recognition by a labor organization by or with respect to the NTPC
Employees, no union organizing activities by or with respect the NTPC Employees
are taking place, and none of the NTPC Employees is represented by any labor
union or organization. There are no unfair practice claims against Seller before
the National Labor Relations Board, or any strikes, disputes, slowdowns, or
stoppages pending or, to Seller's Knowledge, threatened against or involving the
Business, and none has occurred. Seller is in compliance with all federal and
state laws respecting employment and employment practices, terms and conditions
of employment, and wages and hours. Seller is not engaged in any unfair labor
practices. Except as set forth on Schedule 3.12, there are no pending or, to
Seller's Knowledge, threatened Equal Employment Opportunity Commission claims,
wage and hour claims, sexual harassment claims, unemployment compensation
claims, workers' compensation claims or the like against Seller with respect to
the Business. Buyer will not be subjected to any claim or liability for
severance pay as a result of the transactions contemplated by this Agreement.
Except as set forth on schedule 3.12 hereto, no present or former employee of
Seller engaged in the Business has any claim against Seller on account of or for
(a) late or overdue overtime pay for any period on or before the Closing Date,
(b) late or overdue wages, salary, bonuses or amounts accruing under any
employee pension benefit plan, or (c) late or overdue sick pay, severance pay,
claims for unlawful discharge, holiday or vacation pay or paid time off.
3.13 IMMIGRATION ACT. Seller is in compliance with the terms and
provisions of the Immigration Act with respect to all NTPC Employees. For each
employee (as defined in 8 C.F.R. 274a.1(f)) of Seller relating to the Business
for whom compliance with the Immigration Act by Seller is required, Seller has
obtained and retained a complete and true copy of each such employee's Form I9
(Employment Eligibility Verification Form) and all other records or documents
prepared, procured or retained by Seller pursuant to the Immigration Act. Seller
has not been cited, fined, served with a Notice of Intent to Fine or with a
Cease and Desist Order, nor, to Seller's Knowledge, has any action or
administrative proceeding been initiated or threatened against Seller, by
reasons of any actual or alleged failure to comply with the Immigration Act.
-8-
13
3.14 FINANCIAL INFORMATION; SUBSEQUENT EVENTS.
(a) Attached as Schedule 3.14 are the financial statements
(collectively the "FINANCIAL STATEMENTS"), including balance sheets, income
statements and cash flow statements for that portion of Seller's operations that
relate to the Business after giving effect to all intracompany adjustments and
transactions which are set forth in detail in Schedule 3.14, prepared in
accordance with GAAP for each of the years ended December 31, 1996 and 1997 and
the interim eight (8) month period ended August 31, 1998, which is included in
the 1998 proforma financial projections. The Financial Statements include
allocations of general and administrative expenses necessary and appropriate to
reflect the Business' operations on a stand alone basis. The Financial
Statements have been reviewed by Goloboy, Xxxx & Company, P.C. The Financial
Statements fairly present the financial position of the Business as of the
respective dates thereof and the Business results of operations and cash flows
for the periods indicated.
(b) Events subsequent to December 31, 1997: Except as set forth on
Schedule 3.14(b), since December 31, 1997, there has not been any Material
adverse change in the assets, liabilities, business, financial condition,
operations, results of operations, or future prospects of the Business. Without
limiting the generality of the foregoing, since that date:
(i) Seller has not sold, leased, transferred, conveyed,
assigned or disposed of any of its Material assets, tangible or
intangible, relating to the Business other than for a fair
consideration in the Ordinary Course of Business;
(ii) Seller has not entered into any contract, lease,
sublease, license or sublicense (or series of related contracts,
leases, subleases, licenses and sublicenses) relating to the Business
involving more than $20,000 outside the Ordinary Course of Business;
(iii) No party (including Seller) has accelerated, terminated,
modified, or canceled any contract, lease, sublease, license or
sublicense (or series of related contracts, leases, subleases, licenses
and sublicenses) or notified Seller of such relating to the Business
involving more than $20,000 to which Seller is a party or by which it
is bound;
(iv) Seller has not imposed any Liens upon any of its assets,
tangible or intangible relating to the Business;
(v) Seller has not made any capital expenditure (or series of
related capital expenditures) involving more than $25,000 singly or
$100,000 in the aggregate, relating to the Business;
(vi) Seller has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of any other person
(or series of related capital investments, loans, and acquisitions)
involving more than $25,000 individually or $100,000 in the aggregate
relating to the Business;
(vii) Seller has not created, incurred, assumed, or guaranteed
any indebtedness (including capitalized lease obligations) involving
more than $25,000 singly or $100,000 in the aggregate relating to the
Business;
-9-
14
(viii) Seller has not delayed or postponed (beyond its normal
practice) the payment of accounts payable and other liabilities
relating to the Business;
(ix) Seller has not settled, canceled, compromised, waived, or
released any right, claim action or proceeding (or series of related
rights, claims, actions or proceedings) relating to the Business
involving more than $20,000;
(x) Seller has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property relating to
the Business;
(xi) Seller has not experienced any damage, destruction or
loss (whether or not covered by insurance) to its property relating to
the Business;
(xii) Seller has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business relating to the Business giving
rise to any claim or right on its part against the person or on the
part of the person against it;
(xiii) Seller has not entered into any employment contract or
collective bargaining agreement relating to the Business, written or
oral, or modified the terms of any existing such contract or agreement;
(xiv) Seller has not granted an increase outside the Ordinary
Course of Business in the base compensation of any of its directors,
officers, and employees relating to the Business;
(xv) Seller has not adopted any (A) bonus, (B) profit-sharing,
(C) incentive compensation, (D) pension, (E) retirement, (F) medical,
hospitalization, life, or other insurance, (G) severance, or (H) other
plan, contract or commitment for any of its directors, officers, and
employees relating to the Business, or modified or terminated any
existing such plan, contract or commitment;
(xvi) Seller has not made any other change in employment terms
for any of its directors, officers, and full-time staff employees
relating to the Business;
(xvii) Seller has not made or pledged to make any charitable
or other capital contribution outside the Ordinary Course of Business
relating to the Business;
(xviii) There has not been any other Material occurrence,
event, incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving the Business; and
(xix) Seller has not committed to do any of the foregoing.
-10-
15
3.15 CONSULTANTS. Schedule 3.15 lists the names, payment rates and
bonus and other compensation arrangements as of the date hereof for all of the
Consultants who provide services for Seller in relation to the Business as an
independent contractor. Such persons are independent contractors and not
employees of Seller. Buyer will not be subjected to any claim or liability to
such independent Consultants as a result of the transactions contemplated by
this Agreement. No present or former independent contractor of Seller engaged in
the Business has any claim against Seller on account of or for payments due for
any period on or before the Closing Date which will not be paid in the Ordinary
Course of Business.
3.16 ANTICIPATED DEMAND FOR SERVICES. Seller is not aware of any
significant curtailment or decrease in the demand for services relating to the
Business and no party to any of the Customer Contracts has indicated that it
will stop, or decrease the rate of, buying services under such Customer
Contracts.
3.17 TANGIBLE ASSETS. The Purchased Assets include all tangible assets
specifically relating to or primarily used in the conduct of the Business as
presently conducted. To Seller's Knowledge, each such tangible asset is free
from defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to normal
wear and tear), and is suitable for the purposes for which it presently is used.
3.18 REAL PROPERTY. Seller owns no real property relating to the
Business. Schedule 3.18 lists and describes briefly all real property leased or
subleased relating to the Business. Seller has delivered to Buyer correct and
complete copies of the leases and subleases listed in Schedule 3.18 (as amended
to date). With respect to each lease and sublease listed in Schedule 3.18:
(i) The lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) The lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the Closing;
(iii) No party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of time,
would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) No party to the lease or sublease has repudiated any
provision thereof;
(v) There are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(vi) Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold
or subleasehold;
(vii) All facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses
and permits) required in connection with the
-11-
16
operation thereof and have been operated and maintained in accordance
with applicable laws, rules, and regulations; and
(viii) The real property listed in Schedule 3.18 represents
all of the real property necessary to operate the Business in the
manner that it is currently being operated.
3.19 INTELLECTUAL PROPERTY.
(a) Seller is the sole and exclusive owner of all right, title and
interest in and has good, valid and marketable title to, or, as to third party
rights identified in Schedule 3.19, has obtained a license to use all
Non-Software Intellectual Property necessary for the operation of the Business
as presently conducted, free and clear of all mortgages, pledges, Liens,
security interests, conditional sales agreements, encumbrances or charges of any
kind. Each item of Non-Software Intellectual Property will be owned or available
for use by Buyer on identical terms and conditions immediately subsequent to the
Closing hereunder.
(b) Seller is the sole and exclusive owner of all right, title and
interest in and has good, valid and marketable title to all NTPC Software
Programs listed in Schedule 3.19 (representing all NTPC Software Programs owned
or developed by Seller), free and clear of all mortgages, pledges, Liens,
security interests, conditional sales agreements, encumbrances or charges of any
kind. Each NTPC Software Program will be owned by Buyer on identical terms and
conditions immediately subsequent to the Closing hereunder.
(c) Schedule 3.19 sets forth all Third Party Software Programs licensed
by Seller. Seller has obtained a license to use all Third Party Software
Programs used in connection with, and incorporated into, the NTPC Software
Programs or the Client Software Programs or used by Seller in relation to the
Business and all use of each of such licensed Third Party Software Programs by
Seller has been in full compliance with the respective license agreements or
other rights of use.
(d) Seller has delivered to Buyer correct and complete copies of all
trademarks, service marks, trade names, copyrights, patents, registrations,
applications, licenses, agreements, and permissions (as amended to date), and
has made available to Buyer correct and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of each such
item. With respect to each item of Non-Software Intellectual Property used in,
or otherwise necessary for the conduct of, the Business as heretofore conducted:
(i) the identified owner possesses all right, title, and
interest in and to the item;
(ii) the item is not subject to any outstanding judgment,
order, decree, stipulation, injunction, or charge;
(iii) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending or, to the Knowledge of the
Seller and the officers (and employees with responsibility for
Intellectual Property matters) of the Business, is threatened which
challenges the legality, validity, enforceability, use, or ownership of
the item; and
-12-
17
(iv) Seller has never agreed to indemnify any person or entity
for or against any interference, infringement, misappropriation, or
other conflict with respect to the item.
(e) Schedule 3.19 sets forth the form and placement of the proprietary
legends and copyright notices displayed in or on the Non-Software Intellectual
Property and NTPC Software Programs. In no instance has the eligibility of the
Non-Software Intellectual Property and NTPC Software Programs for protection
under applicable copyright law been forfeited to the public domain by omission
of any required notice or any other action.
(f) Seller has enforced the trade secret protection program set forth
in Schedule 3.19 as it relates to the Non-Software Intellectual Property and the
NTPC Software Programs, and there has been no violation of such program by any
person or entity. The Documentation relating to the NTPC Software Programs
(except for end user manuals and other items generally delivered to end users),
(i) has at all times been maintained in strict confidence, (ii) has been
disclosed by Seller only to employees having a "need to know" the contents
thereof in connection with the performance of their duties to Seller and (iii)
has not been disclosed to any third party.
(g) All personnel, including employees, agents, consultants, and
contractors, who have contributed to or participated in the conception and
development of NTPC Software Programs have executed nondisclosure agreements,
the form of which is set forth in Schedule 3.19, and either (l) have been party
to a written agreement with Seller that has accorded Seller full, effective,
exclusive and original ownership of all NTPC Software Programs, or (2) have
executed appropriate instruments of assignment in favor of Seller as assignee
that have conveyed to Seller full, effective, and exclusive ownership of all
NTPC Software Programs.
(h) Schedule 3.19 contains a complete list of all software libraries,
compilers and other third-party software used in the development of the NTPC
Software Programs.
(i) The NTPC Software Programs and the Client Software Programs will
perform in accordance with the warranties set forth in Seller's licenses to, or
agreements with, the end users.
(j) The use of the NTPC Software Programs and the Client Software
Programs and the license, sale or lease of the NTPC Software Programs and the
Client Software Programs, or of any part thereof, or of any copy, or of any part
thereof, do not and will not infringe on, or contribute to the infringement of,
any copyright, trade secret, patents or any other exclusionary right, of any
third party in either the United States or any foreign country. No person or
entity has asserted against Seller a claim that the use, license, sale or lease
of any NTPC Software Program or the Client Software Programs, or any part
thereof, infringes or contributes to the infringement of any patent claim,
copyright or trade secret right of any third party in either the United States
or any foreign country, and Seller is not aware of any Basis for any such claim.
(k) Except with respect to demonstration or trial copies, no portion of
the NTPC Software Programs or the Client Software Programs contains or will
contain any "back door," "time bomb," "Trojan horse," "worm," "drop dead
device," "virus" or other software routines or hardware
-13-
18
components designed to permit unauthorized access; to disable or erase software,
hardware, or data; or to perform any other such similar actions.
(l) Except as set forth in Schedule 3.19, Seller has made available to
Buyer correct and complete copies of all third party licenses, sublicenses,
agreements, and permissions (as amended to the date hereof) as to Non-Software
Intellectual Property and Third Party Software Programs licensed or sublicensed
to Seller (collectively, the "LICENSES"). Except as set forth in Schedule 3.19,
with respect to each such License:
(i) the License is legal, valid, binding, enforceable
and in full force and effect;
(ii) the License will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the Closing;
(iii) no party to the License is in breach or default
and no event has occurred which with notice or lapse or time would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(iv) no underlying item of the property covered by
the License is subject to any outstanding judgment, order, decree,
stipulation, injunction, or charge;
(v) no charge, complaint, action, suit, proceedings,
hearing, investigation, claim, or demand is pending or is threatened
which challenges the legality, validity, or enforceability of any
underlying item of the property covered by the License; and
(vi) except as may have been necessary in preparing
and delivering a Client Software Program, in accordance with the terms
of the applicable client engagement, Seller has not granted any
sublicense or similar right with respect to any License.
(m) The NTPC Software Programs (i) are year 2000 compatible, which
shall include, but is not limited to, date data century recognition, and
calculations that accommodate same century and multi-century formulas and date
values; (ii) operate or will operate in accordance with their specifications
prior to, during and after the calendar year 2000; and (iii) shall not end
abnormally or provide invalid or incorrect results as a result of date data,
specifically including date data which represents or references different
centuries or more than one century.
3.20 NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
relating to the Business are reflected properly on the Financial Statements, are
valid receivables subject to no setoffs or counterclaims, are presently current
and collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Financial Statements (rather than in any notes thereto) as adjusted
for the passage of time through the Closing Date in accordance with the past
custom and practice of Seller.
3.21 INSURANCE. Schedule 3.21 sets forth the following information with
respect to each insurance policy (including policies providing property,
casualty, liability, and workers'
-14-
19
compensation coverage and bond and surety arrangements) to which Seller has been
a party, a named insured, or otherwise the beneficiary of coverage in each case
relating to the Business at any time within the past three (3) years:
(a) The name, address, and telephone number of the agent;
(b) The name of the insurer, the name of the policyholder, and the name
of each covered insured;
(c) The policy number and the period of coverage;
(d) The scope (including an indication of whether the coverage was on a
claims made, occurrence, or other basis) and amount (including a description of
how deductibles and ceilings are calculated and operate) of coverage; and
(e) A description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal,
valid, binding, and enforceable and in full force and effect; (B) the policy
will continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms through the Closing Date; (C) Seller is not in breach
or default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default or permit termination, modification,
or acceleration, under the policy; and (D) no party to the policy has repudiated
any provision thereof. Seller has been covered during the past three (3) years
by insurance in scope and amount customary and reasonable for the Businesses
during the aforementioned period. Schedule 3.21 describes any self-insurance
arrangements affecting the Business.
3.22 BROKERS' FEES. Except for Xxxxx and Associates, Inc., of Granby,
Connecticut, Seller does not have any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
3.23 DISCLOSURE. The representations and warranties contained in this
Section 3 along with the Schedules and any other information, statement or
certificate provided by Seller do not contain any untrue statement of fact or
omit to state any fact necessary in order to make the statements and information
contained in this Section 3 not misleading.
-15-
20
ARTICLE 3A
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
3.1A ORGANIZATION; AUTHORIZATION; QUALIFICATION. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Illinois and has full corporate power and authority to own and operate
its business as it is now being conducted and to own and use its properties and
assets. Buyer has the power and authority to enter into this Agreement and the
Transfer Documents and to carry out the transactions contemplated hereby and
thereby. The execution, delivery and performance by Buyer of this Agreement and
the Transfer Documents and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all requisite corporate action.
This Agreement and the Transfer Documents have been duly executed and delivered
by Buyer and are the valid and binding obligations of Buyer enforceable against
it in accordance with their respective terms.
3.2A ABSENCE OF CONFLICTS. Neither the execution and delivery of this
Agreement or the Transfer Documents by Buyer, nor the consummation of the
transactions contemplated hereby and thereby will violate or breach the terms
of, cause a default by Buyer under, conflict with or result in acceleration or
right to accelerate under (a) any Legal Requirement or (b) the charter documents
of Buyer.
ARTICLE 4
CLOSING CONDITIONS; CLOSING
4.1 CLOSING. Subject to the terms and conditions of this Agreement, the
transactions described and provided for in this Agreement shall be consummated
at a closing (the "CLOSING") that shall take place at the offices of Buyer in
Houston, Texas commencing at 9:00 a.m. local time on the second business day
following the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby or such other date as
Buyer and Seller may mutually determine (the "CLOSING DATE"); provided, however,
that the Closing Date shall be no later than November 13, 1998, which date may
be extended with the mutual consent of Buyer and Seller.
4.2 CONDITIONS TO CLOSING.
(a) The obligation of Buyer to consummate the transactions contemplated
by this Agreement is subject to the fulfillment at or prior to the Closing Date
of the following conditions; provided, Buyer, in its sole discretion, may
(without waiving any of its other rights hereunder) waive any of the following
conditions and elect to proceed with the Closing:
(i) The representations and warranties of Seller and the
Shareholders set forth in Article 3 shall be true and correct in all
Material respects at and as of the Closing Date;
(ii) The Seller and the Shareholders shall have performed and
complied with all of their respective covenants hereunder in all
Material respects through the Closing;
-16-
21
(iii) Seller shall have procured all of the governmental or
third party consents and approvals disclosed or required to be
disclosed in the Schedules including any landlord consents related to
any rental property;
(iv) The Seller and the Shareholders shall have delivered to
Buyer a certificate (without qualification as to knowledge or
materiality or otherwise) to the effect that each of the conditions
specified above in Section 4.2(a)(i)-(iii) is satisfied in all
respects;
(v) No order shall have been entered and remain in effect in
any action or proceeding before any federal, state, foreign, or local
court or governmental agency or other federal, state, foreign, or local
regulatory or administrative agency or commission that would prevent or
make illegal the consummation of the transactions contemplated to occur
at the Closing;
(vi) Seller shall have paid or made arrangements satisfactory
to Buyer for the payment of all wages, salaries, and associated taxes,
accrued to all of the NTPC Employees and the Key Employees. Seller
shall be responsible for wage information reports (Form W-2 and 1099
reports) for wages paid by Seller to its employees and independent
contractors;
(vii) Seller shall have released each of the NTPC Employees
from its employment agreement with Seller;
(viii) Substantially all NTPC Employees shall have agreed to
become employees of Metamor Technologies, Ltd. or such other subsidiary
of Buyer as designated by Buyer after the Closing;
(ix) Buyer shall have completed, and be satisfied in its sole
discretion with the results of, its interviews with those employees of
Seller to be mutually agreed upon by Buyer and Seller;
(x) Buyer shall have completed, and be satisfied in its sole
discretion with the results of, its interview with Caterpillar Inc.;
(xi) Xxxx X. Xxxxxx, P.C. of Simonds, Winslow, Xxxxxx &
Xxxxxx, counsel to Seller, shall have delivered a legal opinion
substantially in the form attached hereto as Exhibit D;
(xii) No Material adverse change shall have occurred in
connection with the Business or the future prospects of the Business;
and
(xiii) Buyer shall be satisfied that all authorizations,
notices and consents necessary for the consummation of the transactions
contemplated hereby under any and all contracts, instruments or
arrangements of Seller related to the Business have been obtained
and/or delivered pursuant to the terms of such contracts, instruments
or arrangements.
-17-
22
(b) The obligation of Seller and the Shareholders to consummate the
transactions contemplated by this Agreement is subject to the fulfillment at or
prior to the Closing Date of the following conditions; provided, Seller and the
Shareholders, in their discretion, may (without waiving any of its other rights
hereunder) waive any of the following conditions and elect to proceed with the
Closing:
(i) The representations and warranties set forth in Article 3A
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) No order shall have been entered and remain in effect in
any action or proceeding before any federal, state, foreign, or local
court or governmental agency or other federal, state, foreign, or local
regulatory or administrative agency or commission that would prevent or
make illegal the consummation of the transactions contemplated to occur
at the Closing; and
(iv) Buyer shall have delivered to the Seller and the
Shareholders a certificate (without qualification as to knowledge or
materiality or otherwise) to the effect that each of the conditions
specified above in Section 4.2(b)(i)-(ii) is satisfied in all respects.
4.3 DOCUMENTS TO BECOME EFFECTIVE AT CLOSING. The following document
and agreements, which are to be executed concurrently herewith, shall become
effective as of the Closing Date in accordance with their terms:
(a) the Employment Agreement between Xxxx X. Xxxxxxxxx and
Buyer attached hereto in Exhibit E.
(b) the Non-Competition/No Solicitation Agreement between Xxxx
X. Xxxxxxxxx and Buyer attached hereto in Exhibit F.
(c) the Transition Agreement by and among Metamor, Buyer and
Seller attached hereto in Exhibit G.
(d) the Sublease Agreement between Technical Staffing
Solutions and Buyer attached hereto in Exhibit H.
(e) the General Conveyance, Assignment, Xxxx of Sale and
Assumption Agreement between Buyer and Seller attached hereto in
Exhibit I (the "ASSIGNMENT").
4.4 ACTION TO BE TAKEN BY SELLER AT THE CLOSING. Subject to the terms
and conditions of this Agreement, the following events shall occur at the
Closing:
(a) Seller will execute and deliver to Buyer the following documents
and instruments:
-18-
23
(i) evidence reasonably satisfactory to Buyer that the person
or persons executing this Assignment and the Transfer Documents on
behalf of Seller have the full right, power and authority to do so; and
(ii) the certificate required to be delivered pursuant to
Section 4.2(a)(iv).
(b) The Shareholders shall execute and deliver to Buyer the certificate
required to be delivered pursuant to Section 4.2(a)(iv).
(c) Possession of the Purchased Assets shall be made available by
Seller to Buyer, and Seller shall deliver to Buyer at the Closing the Books and
Records.
(d) Seller shall accept the resignations of each of the NTPC Employees
and the Key Employees.
4.5 ACTIONS TO BE TAKEN BY BUYER AT THE CLOSING. Subject to the terms
and conditions of this Agreement, Buyer shall cause the following events to
occur at the Closing:
(a) Buyer shall deliver the Cash Portion of the Purchase Price, as
adjusted, by wire transfer to the account specified in writing by Seller at
least one day before the Closing Date.
(b) Buyer shall accept delivery of the Purchased Assets.
(c) Buyer shall execute and deliver the certificate required to be
delivered pursuant to Section 4.2(b)(iv).
(d) Buyer will furnish Seller with evidence reasonably satisfactory to
Seller that the person executing this Agreement and the Transfer Documents on
behalf of Buyer has the full right, power and authority to do so.
-19-
24
ARTICLE 5
INDEMNIFICATION
5.1 BUYER'S INDEMNITIES. From and after the Closing, Buyer shall
absolutely and irrevocably indemnify, defend and hold harmless Seller, its
Affiliates and their respective directors, stockholders, officers, employees,
agents, consultants, representatives, successors, transferees and assignees
(collectively, the "SELLER PARTIES") from, against and in respect of any and all
of the following matters (herein collectively referred to as the "SELLER
INDEMNIFIED LIABILITIES", and individually as a "SELLER INDEMNIFIED LIABILITY"):
(a) any and all Claims arising from, relating to, or associated with any
representation or warranty made by Buyer in this Agreement or the Transfer
Documents not having been true and correct as of the Closing Date; (b) any and
all Claims arising from, relating to or associated with the ownership, use,
possession, enjoyment, transfer or operation of each of the Purchased Assets and
the Business after the Effective Time; (c) any and all Claims arising from,
relating to or associated with any of the Assumed Obligations; and (d) any and
all Claims arising from, relating to or associated with any failure by Buyer to
perform its covenants under this Agreement; IN THE CASE OF (a), (b) AND (c)
ABOVE, REGARDLESS OF BY WHOM ASSERTED, AND REGARDLESS OF WHETHER ANY CLAIM
RESULTS SOLELY OR IN PART FROM THE ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE OF
ANY OF THE SELLER PARTIES. The parties acknowledge and agree that any of the
subsections in this Section 5.1 may be relied upon independently of and without
regard to any other of such subsections more specifically or generally covering
the same subject matter.
5.2 SELLER'S AND SHAREHOLDERS' INDEMNITIES. From and after the Closing,
Seller and the Shareholders shall, jointly and severally, indemnify, defend and
hold harmless Buyer, Buyer's Affiliates and their respective directors,
stockholders, officers, employees, agents, consultants, representatives,
successors, transferees and assignees (collectively, the "BUYER PARTIES") from,
against and in respect of any and all of the following described matters (herein
collectively referred to as the "BUYER INDEMNIFIED LIABILITIES," and
individually as a "BUYER INDEMNIFIED LIABILITY"): (a) any and all Claims arising
from, relating to, or associated with any representation or warranty made by
Seller or the Shareholders in this Agreement or the Transfer Documents not
having been true and correct as of the Closing Date; (b) any and all Claims
arising from, relating to or associated with any actions taken by Buyer to
defend against, assume or discharge any debt, liability or obligation of Seller
other than the Assumed Obligations; provided that Buyer shall deliver, or cause
to be delivered, to Seller copies of all correspondence, pleadings, motions,
briefs, appeals or other written statements relating to or submitted in
connection with the defense of such Claim and timely notices of any hearing or
other court proceeding relating to such Claim, in which Seller shall have the
right to participate as an observer only; (c) any and all Claims arising before
or after the Closing Date from, relating to or associated with the ownership,
use, possession, enjoyment, transfer, or operation of each of the Purchased
Assets and the Business on or before the Effective Time for such asset
including, without limitation, Claims relating to Taxes and Claims relating to
non-compliance with any agreement or contract or applicable laws and obligations
under agreements or contracts that are not an Assumed Obligation; and (d) any
and all Claims arising from, relating to or associated with any failure by
Seller or the Shareholders to perform their covenants under this Agreement; IN
THE CASE OF (a), (b) AND (c) ABOVE, REGARDLESS OF BY WHOM ASSERTED, AND
-20-
25
REGARDLESS OF WHETHER ANY CLAIM RESULTS SOLELY OR IN PART FROM THE ACTIVE,
PASSIVE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF ANY OF THE BUYER
PARTIES. The parties acknowledge and agree that any of the subsections in this
Section 5.2 may be relied upon independently of and without regard to any other
of such subsections more specifically or generally covering the same subject
matter.
5.3 EXCEPTIONS TO BUYER AND SELLER INDEMNITIES.
(a) Notwithstanding anything to the contrary set forth in Section 5.1,
Seller Indemnified Liabilities shall not include any and all Claims to the
extent same are attributable to a breach of any representation or warranty of
either Seller or the Shareholders under this Agreement. Notwithstanding anything
to the contrary set forth in Section 5.2, Buyer Indemnified Liabilities shall
not include any and all Claims to the extent same are attributable to a breach
of any representation or warranty of Buyer under the Agreement.
(b) Notwithstanding anything to the contrary in Section 5.2, in no
event shall Seller or the Shareholders be required to make indemnity payments
pursuant to Section 5.2(a) that exceed the aggregate amount of the
Consideration; provided, however, that the limitations contained in this Section
5.3 shall not apply to any Claim relating to the breach of a representation or
warranty under any of Sections 3.1, 3.2, 3.4, 3.5 or 3.9 (as it relates to the
payment in full of Taxes in a timely manner) or to a Claim for intentional
fraud. The parties hereto acknowledge that each party shall have the benefit of
all remedies available at law, in equity or otherwise, relating to a breach by
any other party of this Agreement. Without limiting the generality of the
foregoing, the parties hereby acknowledge and agree that monetary damages may
not be sufficient to compensate Buyer for a breach by Seller or the Shareholders
of their obligation to convey and transfer the Purchased Assets at the Closing.
Thus, in the event of such a breach, the parties agree that Buyer shall be
entitled to bring a suit for specific performance of Seller's and the
Shareholders' obligations hereunder.
5.4 PAYMENT; GENERAL RIGHT OF OFFSET. In the event Buyer is entitled to
indemnification pursuant to Section 5.2, Buyer may, at its option, in lieu of
obtaining a cash payment directly from the Shareholders or the Seller, offset
against any Earn-Out Payment payable to the Seller the amount of any Buyer
Indemnified Liability or any other payments to which Buyer or such other Buyer
Party as may be entitled to indemnity hereunder may become entitled to by reason
of the provisions of this Agreement. In the event that Buyer offsets more than
the amount of any Buyer Indemnified Liability (as finally determined), Buyer
shall be responsible to the Seller for such sums which should not have been
subject to an offset. To the extent that the Earn-Out Payment is not sufficient
to cover the amount of any such Buyer Indemnified Liability, the Shareholders
and the Seller shall promptly pay to Buyer or such other Buyer Party as may be
entitled to indemnity hereunder in cash the amount of any Buyer Indemnified
Liability to which Buyer or such Buyer Party may become entitled to by reason of
the provisions of this Agreement.
-21-
26
ARTICLE 6
MISCELLANEOUS AGREEMENTS
6.1 PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing:
(a) General. Each of the Parties will use his or its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
to consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth herein).
(b) Notices and Consents. Seller will give any notices to third parties
required by this Agreement or the transactions contemplated hereby, and will
obtain all third-party consents required by this Agreement or the transactions
contemplated hereby or in connection with the matters pertaining to the Business
disclosed or required to be disclosed in the Schedules. Seller will take
additional actions that may be deemed necessary, proper, or advisable by Buyer
in connection with any other notices to, filings with, and authorizations,
consents, and approvals of governments, governmental agencies, and third parties
that Seller may be required to give, make, or obtain as reasonably required by
this Agreement or the transactions contemplated hereby in order that Buyer is
able to conduct the Business in the same manner as it is currently being
conducted.
(c) Operation of Business. Seller will not engage in any practice, take
any action, embark on any course of inaction, or enter into any transaction
relating to the Business outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, Seller will not engage in any
practice, take any action, embark on any course of inaction, or enter into any
transaction of the sort described in Section 3.14(b) above.
(d) Preservation of Business. Seller will keep the Business
substantially intact, including its present operations, physical facilities,
working conditions, and relationships with lessors, licensors, suppliers,
customers, and employees.
(e) Full Access.
(i) Seller will permit representatives of Buyer to have access
at reasonable times, and in a manner so as not to interfere with the
normal business operations of Seller, to the headquarters office of
Seller and all books, records, contracts, Tax records, and documents of
or pertaining to the Business. Buyer's on-site investigation of the
Business shall be limited to fifteen (15) business days, unless
otherwise agreed to by Buyer and Seller in writing; provided, however,
that such limitation of time shall not otherwise limit Buyer's
investigation of the Business off-site. During Buyer's on-site
investigation, Buyer shall not discuss any aspects of the operation of
the Business with any employee of Seller, and Buyer shall direct all
requests for information and material only through Xxxxx Xxxxx, Xxxx
Xxxxxxxxx or Xxxx XxXxxxxx or such other persons as any of them shall
designate in writing, unless otherwise agreed to by Buyer and Seller in
writing. Buyer shall not contact or speak or correspond with any
lender, customer, employee or other person associated in business with
the Business without the written consent of Seller.
-22-
27
(ii) Upon completion of the accounting review and business,
legal and accounting due diligence by Buyer and so long as this
agreement has not been terminated, Buyer shall arrange with Seller a
mutually agreeable time and place at which Buyer may conduct interviews
with employees and/or customers of the Business mutually agreed to by
Buyer and Seller. Such interviews shall be in strict conformity with a
format mutually agreed to by Buyer and Seller and shall take place and
be completed wholly within the last five (5) days prior to Closing.
(f) Notice of Developments. Seller will give prompt written notice to
Buyer of any material development affecting the Purchased Assets, liabilities,
business, financial condition, operations, results of operations, or future
prospects of the Business. Each Party will give prompt written notice to the
others of any material development affecting the ability of the Parties to
consummate the transactions contemplated by this Agreement. No disclosure by any
Party pursuant to this Section 6.1(f) however, shall be deemed to amend or
supplement the Exhibits or the Schedules or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) Designation of Purchased Assets. On or before the Closing Date,
Seller will designate those Purchased Assets that are located in or on the
facilities of Seller as assets to be transferred to Buyer pursuant to this
Agreement by affixing labels, stickers or such other notice to such assets as
will readily identify such assets as the Purchased Assets. Seller agrees that
those Purchased Assets may remain on Seller's premises following the Closing
until such time as Buyer has made arrangements to move such Purchased Assets.
(h) Exclusivity. Neither any of the Shareholders nor Seller will (i)
solicit, initiate, or encourage the submission of any proposal or offer from any
person relating to any (A) liquidation, dissolution, or recapitalization of the
Seller in any manner likely to adversely affect the Business or the consummation
of the transactions contemplated hereby, (B) merger or consolidation of the
Seller in any manner likely to adversely affect the Business or the consummation
of the transactions contemplated hereby, (C) acquisition or purchase of
securities or assets of the Seller in any manner likely to adversely affect the
Business, or (D) similar transaction or business combination involving the
Business or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any person to do or seek any of the
foregoing. Seller will notify Buyer immediately if any person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
6.2 EMPLOYMENT OF NTPC EMPLOYEES. As of the Closing Date, Buyer shall
offer employment to all of the NTPC Employees effective as of the Closing Date.
Notwithstanding the foregoing, Buyer expressly reserves the right to evaluate
its work force needs and to terminate the employment of any full time or part
time employee for any reason whatsoever after the Closing Date with Buyer to
assume all responsibility and liability for such action.
6.3 EMPLOYEE BENEFIT MATTERS. The term "Employee" as used in this
Section 6.3 shall mean all full time active employees of Seller who are offered
and accept employment with Buyer effective as of the Closing Date.
-23-
28
(a) Except as provided in Section 6.3(g) hereof, effective as of the
Closing Date: (x) Seller shall cause each Employee to cease to participate in
each Benefit Plan listed on Schedule 3.11, and (y) Buyer shall cause each
Employee to be provided with benefits on a basis consistent with Buyer's normal
practice. Notwithstanding the foregoing, except as otherwise provided in this
Section 6.3, Buyer expressly reserves the right to modify or terminate any of
its benefit plans or programs.
(b) Except as provided in Section 6.3(g) hereof, effective as of the
Closing Date: (i) Seller shall cause each Employee to cease to participate in
Seller's welfare plans (as such term is defined in section 3(1) of ERISA ("PRIOR
WELFARE PLANS"), and (ii) Buyer shall cause each Employee to be covered by each
of the welfare plans in accordance with Buyer's policies (as such term is
defined in section 3(1) of ERISA) that provides medical, mental health, dental,
vision, life, or disability benefits maintained by Buyer ("BUYER'S WELFARE
PLANS"). Except as provided in Section 6.3(g) hereof, effective as of the
Closing Date: (i) Prior Welfare Plans shall be liable for any and all claims for
benefits by Employees for expenses that are accepted by the insurance company
that are incurred, or attributable to events that occurred, prior to the Closing
Date, and (ii) Buyer's Welfare Plans shall be liable for any and all claims for
benefits by Employees for expenses that are accepted by the insurance company
that are incurred on or after the Closing Date but only to the extent such
expenses are attributable to events that occurred after the Closing Date.
(c) Effective as of the Closing Date: (i) Seller shall cause each
Employee to cease to participate in Seller's vacation, paid time off and sick
leave programs (collectively "SELLER'S PTO PLAN"), and (ii) Buyer shall cause
each Employee to be covered by the program of vacation, sick leave, and paid
time off benefits maintained by Buyer (or caused by Buyer to be newly
established by Buyer).
(d) Seller shall (i) effective as of the Closing Date, cause to be made
any contributions that are required to be made under all retirement plans
maintained by Seller that are qualified under Section 401(a) of the Code whose
trust is intended to be exempt from tax under Section 501(a) of the Code ("PRIOR
QUALIFIED PLANS") for the period prior to the Closing Date, (ii) effective as of
the Closing Date, cause each Employee to cease to participate in and accrue
benefits under Prior Qualified Plans, and (iii) as soon as practicable after the
Closing Date, pay each nonvested Employee 100% of his accrued benefits under
Prior Qualified Plans. As soon as practicable after the Closing Date, Buyer
shall take all action necessary and appropriate to extend coverage to each
eligible Employee under the retirement plans intended to be qualified under
Section 401(a) of the Code whose trust is intended to be tax exempt under
Section 501(a) of the Code maintained by Buyer ("BUYER'S QUALIFIED PLANS") under
the terms of Buyer's Qualified Plans.
(e) Effective as of the Closing Date: (i) Seller shall cause each
Employee to cease to participate in any program of workers' compensation
subscribed to or maintained by Seller ("SELLER'S WORKERS' COMPENSATION"), and
(ii) Buyer shall cause each Employee to be covered by a program of workers'
compensation, if any, maintained by Buyer ("BUYER'S WORKERS' COMPENSATION").
Effective as of the Closing Date: (i) Seller's Workers' Compensation shall be
liable for any and all covered claims for workers' compensation benefits by
Employees to the extent such claims are for injuries or diseases which commenced
or occurred prior to the Closing Date, and (ii) Buyer's
-24-
29
Workers' Compensation shall be liable for any and all covered claims for
workers' compensation benefits by Employees to the extent such claims are for
injuries or diseases which commenced or occurred on or after the Closing Date.
(f) Seller shall provide to all employees or former employees of Seller
sufficient medical, mental health, vision, dental, and other group health plan
benefits to satisfy the obligations, if any, of Seller and any corporation,
trade, business or entity under common control with Seller within the meaning of
Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA, under the
continuation of coverage provisions described in Section 4980B of the Code and
Sections 601 through 608 of ERISA and any similar continuation of health
coverage provisions under applicable state law ("COBRA COVERAGE").
(g) Effective as of 12:00 a.m. Eastern time on November 15, 1998: (i)
Seller shall cause each Employee to cease to participate in the medical and
dental programs maintained by Seller as of the date hereof and a life insurance
program providing for $15,000 of life insurance coverage maintained by Seller as
of the date hereof ("CERTAIN PRIOR WELFARE PLANS"), and (ii) Buyer shall cause
each Employee to be covered by each of Buyer's benefit plans relating to
medical, dental and equivalent life insurance coverage ("CERTAIN BUYER'S WELFARE
PLANS"). With respect solely to the insurance programs covered by this Section
6.3(g), effective as of 12:00 a.m. Eastern time on November 15, 1998: (i)
Certain Prior Welfare Plans shall be liable for any and all claims for benefits
by Employees for expenses that are accepted by the insurance company that are
incurred, or attributable to events that occurred, prior to the Closing Date,
and (ii) Certain Buyer's Welfare Plans shall be liable for any and all claims
for benefits by Employees for expenses that are accepted by the insurance
company that are incurred on or after the Closing Date but only to the extent
such expenses are attributable to events that occurred after the Closing Date.
6.4 WARN ACT. Buyer agrees and acknowledges that the purchase of the
Purchased Assets constitutes the sale of one or more businesses within the
meaning of the Worker Adjustment and Retraining Notification Act (the "WARN
ACT") and the rules and regulations promulgated thereunder. Anything in this
Agreement notwithstanding, Buyer agrees and acknowledges that for purposes of
the Warn Act, any person who is an employee of Seller (other than part time
employees, as defined under the Warn Act) engaged in the Business as of the
Closing Date (which shall constitute the effective date of the sale within the
meaning of the Warn Act) shall be considered an employee of Buyer for purposes
of the Warn Act immediately after the Closing Date. With respect to such
"deemed" employees, Buyer further agrees and acknowledges that Buyer will be
responsible for all applicable notices and liabilities under the Warn Act
resulting from the termination of any such employees on or after the Closing
Date.
6.5 CHANGE OF NAME. Promptly following the Closing, Seller shall use
its best efforts on a continuing basis to change its corporate name to a name
that is different from, and not confusingly similar to, "New Technology Partners
Consulting" or "NTP Consulting." Following the Closing, Seller shall not use the
name "New Technology Partners Consulting" or "NTP Consulting" or any other name
used in connection with the Business or any logos, trademarks or servicemarks
associated with the Business. Seller shall make reasonable efforts to minimize
any confusion which may result prior to its name change, including without
limitation, providing notice
-25-
30
of the sale of the Business to corporate and industry publications. Seller shall
execute and deliver such instruments and take all such other actions necessary
for Buyer to realize the full use and potential of the names "New Technology
Partners Consulting" and "NTP Consulting." Following the Closing, Buyer shall
not use the name "NTP Consulting" and will use reasonable efforts to change any
logos, trademarks or servicemarks in which such name is incorporated to reflect
the name "New Technology Partners Consulting."
6.6 WEBSITE. Following the Closing and not later than December 31,
1998, Seller shall remove from the Website all references to businesses of the
Seller not related to the Business. Buyer shall provide Seller with system
administration privileges to the Website until December 31, 1998 to allow Seller
to remove such references from the Website.
6.7 DOMAIN. Notwithstanding the transfer of title to the Domain
contemplated by this Agreement, Seller shall retain physical control of and
access to the Domain during the period from the Closing Date until December 31,
1998. Following the Closing, Seller shall forward all e-mails related to the
Business received on the Domain to Buyer at the forwarding e-mail address
provided by Buyer to Seller in accordance with the notice provisions of this
Agreement. During the period from the Closing Date until December 31, 1998,
Seller shall effect a domain transition in connection with the transfer of the
Domain from Seller to Buyer (the "DOMAIN TRANSITION"). The Domain Transition,
which shall be completed prior to December 31, 1998, shall accomplish the
removal of the e-mail addresses of all employees of Seller not associated with
the Business and the removal of all other aspects and characteristics of the
Domain not related to the Business. On December 31, 1998, Seller shall deliver
to Buyer the Domain, and Seller's access to and control of the Domain shall
terminate.
6.8 EXCLUSIVE DESIGNATION. Following the Closing, Buyer shall have
exclusive rights to the use of the designation "1997 Microsoft's Solution
Provider Partner of the Year - Worldwide" (the "DESIGNATION"). Following the
Closing, Seller shall not use the Designation for any purpose or in any matter
whatsoever, including without limitation in advertising, marketing or
promotional materials.
6.9 RECEIPT OF PAYMENT. From and after the Closing Date, Seller shall
endorse and forward to Buyer at the following address all checks, payments,
funds and other receipts, including, without limitation, payments for all
accounts receivable, related to the Business (the "Post-Closing Receipts") that
it receives:
Metamor Technologies, Ltd.
Xxx Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
In no instance shall such Post-Closing Receipts be deposited into any
bank account of NTP or any of its affiliates (the "NTP Bank Accounts"). In the
event that any Post-Closing Receipts are deposited into any NTP Bank Account,
NTP shall promptly deliver a check to Buyer in the amount of such deposit in
accordance with the provisions of this Section 6.9.
-26-
31
6.10 FORWARDING SERVICES. From and after the Closing Date, Seller shall
forward all telephone calls, facsimiles, e-mail, mail and other requests,
inquiries or information relating to the Business to the forwarding telephone
number, facsimile number or mailing address, as appropriate, delivered by Buyer
to Seller or in accordance with the notice provisions of this Agreement if no
alternative instructions have been provided.
6.11 FURTHER ASSURANCES. Following the Closing, to the extent that any
of the Purchased Assets are not fully transferable according to their terms,
Seller shall execute and deliver such instruments, undertake all actions
necessary and notify Buyer of all actions required to be undertaken by Buyer in
order to fully transfer such Purchased Assets to Buyer. Further, Seller shall
provide any and all assistance to Buyer in order to cause all of the Purchased
Assets to be fully transferred to Buyer.
6.12 PAYMENT OF OBLIGATIONS. Following the Closing, Seller shall pay,
discharge and otherwise satisfy all of Seller's obligations of any nature
whatsoever, other than the Assumed Obligations, which directly or indirectly
affect, impact or are related to the Purchased Assets or which otherwise hinder
the transferability of the Purchased Assets.
6.13 TRANSITION ASSISTANCE.
(a) Seller shall provide routine assistance to Buyer in order to cause
a smooth transition of the ownership and operation of the Purchased Assets and
the Business from Seller to Buyer.
(b) Seller shall discontinue its relationship with the NTPC Employees
from and after the Closing Date, and Seller shall use commercially reasonable
efforts to encourage the Consultants who are independent contractors to provide
services for Buyer on substantially similar terms to the services provided by
such Consultants prior to the Closing Date.
6.14 COVENANT NOT TO COMPETE.
(a) For a period of two (2) years from and after the Closing Date,
neither Seller nor any of the Shareholders will engage directly or indirectly in
any business that is substantially similar to that conducted by the Business
within a one hundred (100) mile radius of any office of the Business now in
existence; provided, however, that the foregoing restriction shall not apply to
Xxxxxxx X. Xxxxxxxx working as an independent consultant providing technical
services. Notwithstanding the foregoing, this Section 6.14(a) shall not prohibit
Seller or any of the Shareholders from conducting those operations of Seller
that are not part of the Business and do not compete with the services offered
by the Business as of the Closing Date.
(b) For a period of four (4) years from and after the Closing Date,
neither Seller nor any of the Shareholders will (i) service or solicit any
current or future customer of the Business and/or Buyer relating to any business
that is substantially similar to that conducted by the Business or (ii) offer
employment to or attempt to induce any director, officer, employee, agent, or
customer of the Business and/or Buyer to terminate such relationship with the
Business or Buyer.
-27-
32
(c) If either Seller or any of the Shareholders commit a breach, or
overtly threaten to commit a breach, of any of the provisions of Section 6.14(a)
or (b) above, Buyer shall have the right and remedy to seek to have the
provisions of Section 6.14(a) or (b) specifically enforced by any court having
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury and continuing damage to Buyer
and its Affiliates, and that the exact amount of which would be difficult to
ascertain and that in any event money damages will not provide adequate remedy
and Buyer shall be entitled to seek to obtain injunctive relief restraining any
violation of Section 6.14(a) or (b).
(d) It is expressly understood and agreed that Buyer, the Shareholders
and Seller consider the restrictions contained in Section 6.14(a) and (b) above
to be reasonable and necessary for the purposes of preserving and protecting the
business and goodwill purchased by Buyer.
(e) If the final judgment of a court of competent jurisdiction declares
that any term or provision of Section 6.14 is invalid or unenforceable, the
parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of
term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
6.15 CONFIDENTIALITY. Seller and the Shareholders will hold
confidential all of the Intellectual Property, and will deliver promptly to
Buyer or destroy, at the request and option of Buyer, all tangible embodiments
(and all copies) of the Intellectual Property which are in their possession.
Seller and the Shareholders agree that they will not use or disclose the
Intellectual Property for any purpose. In the event that Seller or any of the
Shareholders is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Intellectual Property,
such party will notify Buyer promptly of the request or requirement prior to
disclosure so that Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 6.15. If, in the absence of a
protective order or the receipt of a waiver hereunder, Seller or any of the
Shareholders is, on the advice of counsel, compelled to disclose any
Intellectual Property to any tribunal or else stand liable for contempt, such
party may disclose the Intellectual Property to the tribunal; provided, however,
that such party shall use their commercially reasonable efforts to obtain, at
the request of Buyer, an order or other assurance that confidential treatment
will be accorded to such portion of the Intellectual Property required to be
disclosed as Buyer shall designate.
6.16 CONDUCT OF BUSINESS DURING EARN-OUT PERIOD. During the Earn-Out
Period, Buyer (together with the Key Employees, as long as they remain employed
by Buyer or its designee) shall be entitled to operate and manage the Business,
consistent with prudent business practices.
6.17 ACCESS. To the extent that any Books and Records are intermingled
with the books and records of Seller's other operations, Seller shall make
available that portion of the Books and
-28-
33
Records related to the Business as and when requested by Buyer, until such time
as duplicate sets are provided to Buyer as set forth in Section 2.1(g) hereof.
6.18 BROKERAGE FEES. Seller shall indemnify, hold harmless and defend
the Buyer Parties from the payment of any and all brokers' and finders'
expenses, commissions, fees or other forms of compensation which may be due or
payable from or by Seller or its Affiliates, or may have been earned by any
third party acting on behalf of Seller, and Buyer agrees to indemnify, hold
harmless and defend Seller Parties from the payment of any and all brokers' or
finders' expenses, commissions or fees or other forms of compensation which may
be due or payable from or by Buyer or its Affiliates, or may have been earned by
any third party acting on behalf of Buyer; in each case, in connection with the
identification of the opportunity for the sale of the Purchased Assets or any
portion thereof, the negotiation and execution of this Agreement or the
consummation of the transactions contemplated hereby.
6.19 ASSIGNMENT. This Agreement and any of the rights or obligations
hereunder may not be assigned by Seller without the prior written consent of
Buyer. This Agreement and any of the rights or obligations hereunder may not be
assigned by Buyer without the prior written consent of Seller, except that Buyer
may designate a wholly-owned subsidiary to effect the transactions contemplated
under this Agreement.
6.20 NOTICES. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party hereto to
another party hereto shall be in writing, and delivered personally or mailed by
certified mail, postage prepaid, return receipt requested (such mailed notice to
be effective on the date such receipt is acknowledged), or by facsimile
transmission or by overnight courier, as follows:
If to Seller or the Shareholders, addressed to:
New Technology Partners
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxx
Telephone: 603/000-0000
Facsimile: 603/641-6934
With a copy to:
Xxxx X. Xxxxxx, Esq.
00 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Telephone: 617/000-0000
Facsimile: 617/227-1961
-29-
34
If to Buyer, addressed to:
Metamor Worldwide, Inc.
0000 Xxxx Xxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxxx X. Xxxx, Esq.
Metamor Worldwide, Inc.
0000 Xxxx Xxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others in accordance with this Section
6.20.
6.21 CHOICE OF LAW. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the internal laws (and
not the law of conflicts) of the State of Texas.
6.22 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together
with all Annexes, Exhibits and Schedules hereto, constitutes the entire
Agreement between the parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein. No amendment, supplement, modification or waiver of this Agreement shall
be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless expressly agreed to in
writing by the affected party.
6.23 FACSIMILE/COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. A facsimile, telecopy or
other reproduction of this Agreement may be executed by one or more parties
hereto, and an executed copy of this Agreement may be delivered by one or more
parties hereto by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all parties
hereto agree to execute an original of this Agreement and provide such
requesting party with a full set of original signature pages for each of the
parties hereto other than the requesting party within two (2) days of the
original execution date hereof.
-30-
35
6.24 EXPENSES OF THIS AGREEMENT. Each party hereto shall pay its own
expenses incident to this Agreement including the fees and disbursements of
counsel and other professionals and all action taken in preparation for carrying
this Agreement into effect. Seller will pay all state and local transfer sales,
use or other similar taxes involved in the transfer of the Purchased Assets.
6.25 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
6.26 HEADINGS; REFERENCES. The headings of the several Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. Any reference herein to an Article or Section shall be deemed to
refer to the applicable Article or Section of this Agreement unless otherwise
expressly stated herein. Any reference to a Schedule, Exhibit or Annex shall be
deemed to refer to the applicable Schedule, Exhibit or Annex attached hereto,
all such Schedules, Exhibits and Annexes being incorporated herein and made a
part hereof by this reference.
6.27 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties hereto, their respective Affiliates and their successors
and assigns permitted under this Agreement, and no provisions of this Agreement
(other than the indemnified parties described in Sections 5.1 and 5.2) shall be
deemed to confer upon any other Persons any remedy, claim, liability,
reimbursement, cause of action or other right.
6.28 NO MERGER. The terms and provisions of this Agreement (including,
without limitation, the representations, warranties and covenants) shall not
merge, be extinguished or otherwise affected by the delivery and execution of
the Transfer Documents unless such document shall specifically so state and
shall be signed by both Buyer and Seller.
6.29 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and indemnities set forth in this Agreement shall survive
for a period of three (3) years following the Closing and the delivery of the
Transfer Documents.
6.30 FURTHER ASSURANCES. After the Closing Date, Seller and Buyer will
take (and will cause their respective Affiliates to take) all appropriate action
and execute any documents, instruments or conveyances of any kind which may be
reasonably necessary to carry out any of the provisions of this Agreement.
[INTENTIONALLY LEFT BLANK]
-31-
36
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
SELLER:
NEW TECHNOLOGY PARTNERS, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
SHAREHOLDERS:
/s/ Xxxxx Xxxxx
---------------------------------------
Xxxxx Xxxxx
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxx X. Xxxxxxxxx
---------------------------------------
Xxxx X. Xxxxxxxxx
/s/ Xxxx XxXxxxxx
---------------------------------------
Xxxx XxXxxxxx
/s/ Xxxxxx X. Xxxx
---------------------------------------
Xxxxxx X. Xxxx
/s/ Xxxxxxx Xxxx
---------------------------------------
Xxxxxxx Xxxx
METAMOR WORLDWIDE, INC.:
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
METAMOR TECHNOLOGIES, LTD.:
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
-32-
37
EXHIBIT A
DEFINITIONS
In addition to terms defined in the body of this Agreement, the
following terms shall have the following designated meanings:
"ACCOUNTS RECEIVABLE" shall mean all accounts receivable, notes
receivable, loans receivable and advances, including those which are not
evidenced by instruments or chattel paper, whether or not they have been earned
by performance or have been written off or reserved against as a bad debt or
doubtful account in any financial statements, together with (1) all instruments
and all documents of title representing any of the foregoing and (2) all rights,
title, security and guaranties in favor of the Seller with respect to any of the
foregoing, in each case as related to the Business.
"ADJUSTED EBIT" shall mean earnings before interest and taxes (prepared
on an accrual basis of accounting and in accordance with generally accepted
accounting principles, consistently applied), as further provided in Annex I
hereto.
"AFFILIATE" shall mean with respect to any Person, any Person which,
directly or indirectly, controls, is controlled by, or is under a common control
with, such Person. The term "control" (including the terms "controlled by" and
"under common control with") as used in the preceding sentence means the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of a Person, whether through the ownership
of voting securities, by contract, or otherwise.
"ASSIGNMENT" shall have the meaning set forth in Section 4.3.
"ASSUMED OBLIGATIONS" shall have the meaning set forth in Section 2.3.
"BASIS" shall mean any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"BENEFIT PLANS" shall have the meaning set forth in Section 3.11.
"BOOKS AND RECORDS" shall mean all financial, accounting and operating
data and records relating to or used or held for use in the Business, including
all schedules, work papers, books, records, notes, sales and sales promotional
data, advertising materials, credit information, cost and pricing information,
equipment maintenance data, purchasing records and information, supplier lists,
business plans, reference catalogs, payroll and personnel records, stationery,
purchase orders, sales forms, labels, catalogs, brochures, artwork, photographs,
product display and other similar property, rights and information, in each case
as related to the Business.
"BUSINESS" shall have the meaning set forth in the recitals.
"BUYER INDEMNIFIED LIABILITIES" shall have the meaning set forth in
Section 5.2.
EXHIBIT A
Page 1
38
"BUYER PARTIES" shall have the meaning set forth in Section 5.2.
"BUYER WELFARE PLANS" shall have the meaning set forth in Section
6.3(b).
"BUYER'S QUALIFIED PLANS" shall have the meaning set forth in Section
6.3(d).
"BUYER'S WORKERS COMPENSATION" shall have the meaning set forth in
Section 6.3(e).
"CASH PORTION OF THE PURCHASE PRICE" shall have the meaning set forth
in Section 2.2.
"CLAIM" shall mean any and all judgments, claims, causes of action,
demands, lawsuits, suits, proceedings, governmental investigations or audits,
losses, assessments, fines, penalties, administrative orders, obligations,
costs, expenses, liabilities and damages (whether actual, consequential or
punitive), including interest, penalties, reasonable attorney's fees,
disbursements and costs of investigations, deficiencies, levies, duties and
imposts.
"CLIENT SOFTWARE PROGRAM" shall mean any software program relating to
the Business developed by Seller for a client on a work for hire basis pursuant
to which the client has acquired and retains all intellectual property rights in
such developed software.
"CLOSING" shall have the meaning set forth in Section 4.1.
"COBRA COVERAGE" shall have the meaning set forth in Section 6.3(f).
"CODE" shall have the meaning set forth in Section 3.11.
"CONFIDENTIAL INFORMATION" shall mean all confidential information and
trade secrets, including, without limitation, the identity, lists or
descriptions of any customers, referral sources or organizations; financial
statements, cost reports or other financial information; contract proposals, or
bidding information; business plans and training operations methods and manuals;
personnel records; fee structure; and management systems, policies or
procedures, including related forms and manuals, in each case as related to the
Business.
"CONSULTANT CONTRACTS" shall mean all employment, consulting,
non-competition, confidentiality, non-solicitation or similar restrictive
agreements between Seller and a Consultant or NTPC Employee.
"CONTRACT" shall mean any contract or agreement (whether written or
oral) related to the Business.
"CORPORATE NAMES" shall mean "New Technology Partners Consulting" and
"NTP Consulting."
"CUSTOMER CONTRACT" shall mean any contract or agreement related to the
Business related to (a) information technology or computer support services, (b)
maintenance contracts for application software; (c) maintenance support
arrangements, (d) reengineering and refurbishment arrangements;
EXHIBIT A
Page 2
39
(e) consulting arrangements; (f) any other contract for computer support
services; and (g) agreements related to any other services provided by Seller
relating to the Business.
"CUSTOMER-RELATED DATA" shall mean all marketing materials, brochures
and programs, including all materials which bear the Corporate Names or the
logos of NTPC, and all customer lists, sales records, credit data and other
information relating to present and past customers of the Business.
"DOCUMENTATION" shall mean, with respect to a software program, the
source code (with comments), as well as any pertinent commentary or explanation
prepared to render such materials understandable and usable by a trained
computer programmer, any programs (including compilers), "workbenches," tools
and higher level (or "proprietary") language necessary for the development,
maintenance and implementation of the software program, and any and all prepared
and deliverable materials relating to the software program, including without
limitation all notes, flow charts, programmer's or user' manuals.
"DOMAIN" shall mean the domain "xxx.xxx" maintained by Seller.
"EARN-OUT PAYMENT" has the meaning set forth in Section 2.5.
"EARN-OUT PERIOD" has the meaning set forth in Section 2.5.
"E&Y EARN-OUT PAYMENT DETERMINATION" has the meaning set forth in
Section 2.6.
"EFFECTIVE TIME" shall mean 11:59 p.m., Houston time, on the Closing
Date.
"EMPLOYEE" shall have the meaning set forth in Section 6.3.
"ERISA" shall meant the Employee Retirement Income Security Act of
1974, as amended.
"EXCLUDED LIABILITIES" shall have the meaning set forth in Section 2.4.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
3.14.
"GROSS PROFIT MARGIN" shall mean the gross profit relating to the
Business as customarily set forth on the Financial Statements.
"INTELLECTUAL PROPERTY" shall mean all (a) trademarks, service marks,
trade dress, logos, trade names, and corporate names and registrations and
applications for registration thereof, (b) patents, patent applications, and
provisional applications, including all continuations, divisionals and related
applications, (c) copyrights and registrations and applications for registration
thereof, (d) computer software, data, and documentation, (e) to the extent
legally protectable, trade secrets and confidential business information
(including ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing, and business data, pricing
EXHIBIT A
Page 3
40
and cost information, business and marketing plans, and customer and supplier
lists and information), (f) to the extent legally protectable, other proprietary
rights, and (g) copies and tangible embodiments thereof (in whatever form or
medium), specifically relating to or primarily used in the Business.
"KEY EMPLOYEES" shall mean Xxxx X. Xxxxxxxxx, Xxxx XxXxxxxx and such
other employees as mutually agreed upon by Buyer and Seller.
"KNOWLEDGE" shall mean that which is known or understood or should have
been known or understood after reasonable investigation and inquiry, which
inquiry shall include an inquiry of the employees of Seller with responsibility
for the matters in question.
"LEGAL REQUIREMENT" shall mean any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, franchise, permit,
certificate, license, authorization, or other directive or requirement
(including, without limitation, any of the foregoing that relates to
environmental standards or controls, energy regulations and occupational, safety
and health standards or controls).
"LICENSE" shall have the meaning set forth in Section 3.19.
"LIEN" shall mean any lien, pledge, condemnation award, claim,
restriction, charge, security interest, financing statement, mortgage or
encumbrance of any nature whatsoever.
"NET WORKING CAPITAL" shall mean the total current assets included in
the Purchased Assets less the total current liabilities of Seller relating to
the Business included in the Assumed Liabilities, further reduced by any
long-term debt of Seller relating to the Business included in the Assumed
Obligations, in each case as determined in accordance with generally accepted
accounting principles, consistently applied.
"NON-SOFTWARE INTELLECTUAL PROPERTY" shall mean Intellectual Property
exclusive of software programs and their related Documentation.
"NTPC EMPLOYEES" shall have the meaning set forth in the Recitals
above.
"NTPC SOFTWARE PROGRAM" shall mean any software program owned by Seller
relating to the Business or, excluding Client Software Programs, developed by
Seller relating to the Business for sale or licensing to the end-user.
"ORDINARY COURSE OF BUSINESS" shall mean the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"PARTIES" shall mean Metamor Worldwide, Inc., a Delaware corporation,
Metamor Technologies, Ltd., an Illinois corporation, New Technology Partners,
Inc., a Delaware corporation, and the shareholders of New Technology Partners,
Inc. as set forth on the signature page hereto.
"PERSON" shall mean any natural person, firm, partnership, association,
corporation, limited liability company, company, trust, entity, public body or
government.
EXHIBIT A
Page 4
41
"PERSONAL PROPERTY" shall mean all machinery, equipment, furniture and
other tangible personal property (including computer software programs which are
licensed under normal retail license terms or pursuant to a negotiated
agreement).
"PHONE NUMBER" shall mean the toll-free telephone numbers (800)
000-0000 and (000) 000-0000, which are maintained and operated in conjunction
with the Business.
"PRIOR QUALIFIED PLANS" shall have the meaning set forth in Section
6.3(d).
"PRIOR WELFARE PLANS" shall have the meaning set forth in Section
6.3(b).
"PURCHASED ASSETS" shall have the meaning set forth in Section 2.1.
"RETAINED BUSINESS" shall have the meaning set forth in the Recitals
above.
"SELLER INDEMNIFIED LIABILITIES" shall have the meaning set forth in
Section 5.1.
"SELLER PARTIES" shall have the meaning set forth in Section 5.1.
"SELLER'S PTO PLANS" shall have the meaning set forth in Section
6.3(c).
"SELLER'S WORKERS' COMPENSATION" shall have the meaning set forth in
Section 6.3(e).
"TAXES" shall have the meaning set forth in Section 3.9.
"TAX RETURNS" shall have the meaning set forth in Section 3.9.
"THIRD PARTY SOFTWARE PROGRAM" means any software program developed by
a third party and used by Seller in developing either a NTPC Software Program or
a Client Software Program, or used by Seller in relation to the Business.
"TRANSFER DOCUMENTS" shall mean the Assignment and any other document,
instrument, affidavit or certificate executed by Seller and Buyer or their
respective affiliates in connection with the transactions contemplated by this
Agreement, to become effective in conjunction with the Closing.
"WARN ACT" shall have the meaning set forth in Section 6.4.
"WEBSITE" shall mean the website maintained by Seller located on the
internet at the address xxxx://xxx.xxx.xxx.
"WORK IN PROGRESS" shall mean all services performed by Seller which
relate to the Business and which have not been billed to the customers for such
which services were performed.
EXHIBIT A
Page 5
