AGREEMENT AND PLAN OF MERGER
AMONG
RENAISSANCE SOLUTIONS, INC.,
ARTIST ACQUISITION CORP.,
INTERNATIONAL SYSTEMS SERVICES CORPORATION
AND
O. XXXXX XXXXXX
AS THE SOLE STOCKHOLDER OF
INTERNATIONAL SYSTEMS SERVICES CORPORATION
DECEMBER 31, 1996
TABLE OF CONTENTS
Page
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ARTICLE I - THE MERGER............................................ 2
1.1 The Merger....................................... 2
1.2 The Closing...................................... 2
1.3 Actions at the Closing........................... 2
1.4 Additional Action................................ 3
1.5 Conversion of Shares............................. 3
1.6 Exchange of Shares............................... 3
1.7 Escrow........................................... 4
1.8 Post Closing Adjustments......................... 4
1.9 Certificate of Incorporation..................... 6
1.10 By-laws.......................................... 6
1.11 Directors and Officers........................... 6
1.12 No Further Rights................................ 6
1.13 Closing of Transfer Books........................ 6
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE
COMPANY STOCKHOLDER.............................. 6
2.1 Organization, Qualification, Corporate Power
and Authority.................................... 6
2.2 Capitalization................................... 7
2.3 Noncontravention................................. 8
2.4 Subsidiaries..................................... 8
2.5 Financial Statements............................. 9
2.6 Absence of Certain Changes....................... 10
2.7 Undisclosed Liabilities.......................... 10
2.8 Tax Matters...................................... 10
2.9 Assets........................................... 12
2.10 Owned Real Property.............................. 12
2.11 Intellectual Property............................ 12
2.12 Real Property Leases............................. 15
2.13 Contracts........................................ 16
2.14 Accounts Receivable; Customer Contracts in
Progress......................................... 17
2.15 Powers of Attorney............................... 18
2.16 Insurance........................................ 18
2.17 Litigation....................................... 19
2.18 Product and Service Warranties................... 19
2.19 Employees and Subcontractors..................... 19
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2.20 Employee Benefits................................ 20
2.21 Legal Compliance................................. 22
2.22 Permits.......................................... 22
2.23 Certain Business Relationships With Affiliates... 22
2.24 Books and Records................................ 22
2.25 Customers and Suppliers.......................... 23
2.26 Prepayments, Prebilled Invoices and Deposits..... 23
2.27 Banking Facilities............................... 24
2.28 Brokers' Fees.................................... 24
2.29 Company and Company Stockholder Action........... 24
2.30 Affiliates....................................... 24
2.31 Disclosure....................................... 24
ARTICLE III - FURTHER REPRESENTATIONS AND WARRANTIES OF THE
COMPANY STOCKHOLDER............................... 25
3.1 Ownership of Stock; Authority.................... 25
3.2 Investment Representations....................... 25
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE BUYER
AND THE TRANSITORY SUBSIDIARY.................... 26
4.1 Organization..................................... 26
4.2 Authorization of Transaction..................... 26
4.3 Noncontravention................................. 27
4.4 Reports and Financial Statements................. 27
4.5 Brokers' Fees.................................... 28
4.6 Disclosure....................................... 28
ARTICLE V - COVENANTS............................................. 28
5.1 Conduct of Business.............................. 28
5.3 Delivery of Interim Financial Statements......... 30
5.4 Communications with Customers and Suppliers...... 30
5.5 Compliance with Laws............................. 31
5.6 Continued Truth of Representations and Warranties 31
5.7 Continuing Obligation to Inform.................. 31
5.8 Exclusive Dealing................................ 31
5.9 Reports, Taxes................................... 31
5.10 Best Efforts to Obtain Satisfaction of Conditions 32
5.11 Full Access...................................... 32
5.12 Non-Competition.................................. 32
5.13 Solicitation and Hiring.......................... 33
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5.14 Agreements from Certain Affiliates of the Company 33
5.15 Stock Options.................................... 33
5.16 Earnings Release................................. 33
5.17 Removal of Guaranties............................ 34
5.18 Reorganization under Section 368(a).............. 34
5.19 Payment of Employee Bonuses...................... 34
5.20 Termination of LTIP.............................. 34
5.21 Retention and Non-Competition Agreements......... 34
ARTICLE VI - CONDITIONS TO CLOSING................................ 35
6.1 Conditions to Obligations of the Buyer and the
Transitory Subsidiary............................ 35
6.2 Conditions to Obligations of the Company and the
Company Stockholder.............................. 37
ARTICLE VII - INDEMNIFICATION..................................... 39
7.1 Indemnification.................................. 39
7.2 Method of Asserting Claims....................... 41
7.3 Survival and Limitations......................... 42
7.4 Allocation of Tax Liabilities.................... 43
ARTICLE VIII - TERMINATION........................................ 44
8.1 Termination of Agreement......................... 44
8.2 Effect of Termination............................ 45
ARTICLE IX - DEFINITIONS.......................................... 45
ARTICLE X - GENERAL PROVISIONS.................................... 47
10.1 Press Releases and Announcements................. 47
10.2 No Third Party Beneficiaries..................... 47
10.3 Entire Agreement................................. 47
10.4 Succession and Assignment........................ 47
10.5 Counterparts..................................... 47
10.6 Headings......................................... 48
10.7 Notices.......................................... 48
10.8 Governing Law.................................... 49
10.9 Amendments and Waivers........................... 49
10.10 Severability..................................... 49
10.11 Expenses......................................... 49
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10.12 Specific Performance............................. 49
10.13 Construction..................................... 50
10.14 Incorporation of Exhibits and Schedules.......... 50
SCHEDULES AND EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Certificate of Incorporation of the Surviving Corporation
Exhibit C Employment Agreement of O. Xxxxx Xxxxxx
Exhibit D Registration Rights Agreement
Exhibit E Opinion of Counsel to the Company
Exhibit F Affiliate's Agreement
Exhibit G Form of Retention and Non-Competition Agreement
Exhibit H Opinion of Counsel to the Buyer
Schedule 1.11 Officers of the Surviving Corporation
Schedule 5.15 Stock Options, Employee Bonuses, LTIP Payments and Retention
Payments
Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is entered into as of
December 31, 1996 (the "Agreement Date") by and among Renaissance Solutions,
Inc., a Delaware corporation (the "Buyer"), Artist Acquisition Corp., a
Connecticut corporation and a wholly-owned subsidiary of the Buyer (the
"Transitory Subsidiary"), International Systems Services Corporation, a
Connecticut corporation (the "Company"), and the undersigned stockholder of the
Company (the "Company Stockholder"). The Buyer, the Transitory Subsidiary, the
Company and the Company Stockholder are referred to collectively herein as the
"Parties."
PRELIMINARY STATEMENT
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1. The Company is a corporation duly organized and existing under the
laws of the State of Connecticut and is authorized to issue 5,000 shares of
common stock, no par value per share, of which 1,680 shares are issued and
outstanding (the "Company Shares") and owned by the Company Stockholder as of
the Agreement Date.
2. The Transitory Subsidiary is a corporation duly organized and existing
under the laws of the State of Connecticut and is authorized to issue 1,000
shares of common stock, $.01 par value per share, of which 1,000 shares are
issued and outstanding as of the Agreement Date. The Buyer owns all of the
issued and outstanding capital stock of the Transitory Subsidiary.
3. This Agreement contemplates a merger of the Transitory Subsidiary into
the Company in a transaction that will qualify under Section 368 of the Code (as
defined below). In such merger, the Company Stockholder will receive capital
stock of the Buyer in exchange for the Company Shares.
4. The Boards of Directors of the Buyer, the Company and the Transitory
Subsidiary have approved and adopted this Agreement. The Company Stockholder
and the Buyer, in its capacity as the sole shareholder of the Transitory
Subsidiary, have approved and adopted this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Parties agree as
follows:
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ARTICLE I
THE MERGER
1.1 The Merger. Upon and subject to the terms and conditions of this
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Agreement and pursuant to Section 33-366 of the Connecticut Stock Corporation
Act (the "Connecticut Law"), the Transitory Subsidiary shall merge with and into
the Company (with such merger referred to herein as the "Merger") at the
Effective Time (as defined below). From and after the Effective Time, the
separate corporate existence of the Transitory Subsidiary shall cease and the
Company shall continue as the surviving corporation in the Merger (the
"Surviving Corporation"). The "Effective Time" shall be the time at which the
Company and the Transitory Subsidiary file a certificate of merger or other
appropriate documents prepared and executed in accordance with the relevant
provisions of the Connecticut Law (the "Certificate of Merger") with the
Secretary of State of the State of Connecticut. The Merger shall have the
effects set forth in Section 33-369 of the Connecticut Law.
1.2 The Closing. The closing of the transactions contemplated by this
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Agreement (the "Closing") shall take place at the offices of Xxxx and Xxxx, 00
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, commencing at 10:00 a.m. local time
on December 31, 1996, or, if all of the conditions to the obligations of the
Parties to consummate the transactions contemplated hereby have not been
satisfied or waived by such date, on such mutually agreeable later date as soon
as practicable after the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(the "Closing Date").
1.3 Actions at the Closing. At the Closing:
----------------------
(a) the Company shall deliver to the Buyer and the Transitory
Subsidiary the various certificates, instruments and documents referred to in
Section 6.1 below;
(b) the Buyer and the Transitory Subsidiary shall deliver to the
Company the various certificates, instruments and documents referred to in
Section 6.2 below;
(c) the Company and the Transitory Subsidiary shall file with the
Secretary of State of the State of Connecticut the Certificate of Merger;
(d) the Company Stockholder shall deliver to the Buyer for
cancellation a certificate (the "Certificate") evidencing all of the Company
Shares (including any Company Shares subject to an escrow or pledge arrangement)
duly endorsed in blank or with stock powers duly executed in blank by the
Company Stockholder;
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(e) the Buyer shall cause the Transitory Subsidiary to deliver to the
Company Stockholder a certificate for the Initial Shares (as defined in Section
1.5 below) in accordance with Section 1.5 below; and
(f) the Buyer, the Company Stockholder and the Escrow Agent (as
defined therein) shall execute and deliver the Escrow Agreement attached hereto
as Exhibit A (the "Escrow Agreement") and the Buyer shall deliver to the Escrow
---------
Agent a certificate for the Escrow Shares (as defined in Section 1.5 below)
being placed in escrow on the Closing Date pursuant to Section 1.7 below.
1.4 Additional Action. The Surviving Corporation may, at any time
-----------------
after the Effective Time, take any action, including executing and delivering
any document, in the name and on behalf of either the Company or the Transitory
Subsidiary, in order to consummate the transactions contemplated by this
Agreement.
1.5 Conversion of Shares. At the Effective Time, by virtue of the
--------------------
Merger and without any action on the part of any Party or the holder of any of
the following securities:
(a) All Company Shares issued and outstanding immediately prior to the
Effective Time (other than Company Shares held in the Company's treasury) shall
be converted into and represent the right to receive in the aggregate (subject
to the provisions of Section 1.8 below) 1,310,000 shares of common stock,
$0.0001 par value per share, of the Buyer ("Buyer Common Stock"). At the
Effective Time, (a) the Company Stockholder shall be entitled to receive 90% of
the shares of Buyer Common Stock into which his Company Shares will be converted
as contemplated by this Section 1.5(a) (the "Initial Shares") and (b) the
remaining 10% of the shares of Buyer Common Stock into which the Company Shares
will be converted (the "Escrow Shares") shall be deposited in escrow pursuant to
Section 1.7 below and shall be held and disposed of in accordance with the terms
of the Escrow Agreement and Section 1.7 below. The Initial Shares and the
Escrow Shares shall together be referred to herein as the "Merger Shares."
(b) Each Company Share held in the Company's treasury immediately
prior to the Effective Time shall be cancelled and retired without payment of
any consideration therefor.
(c) Each share of common stock, $.01 par value per share, of the
Transitory Subsidiary issued and outstanding immediately prior to the Effective
Time shall be converted into and thereafter evidence one share of common stock,
$.01 par value per share, of the Surviving Corporation.
1.6 Exchange of Shares. On the Closing Date, the Company Stockholder
------------------
shall surrender to the Buyer the Certificate held by the Company Stockholder and
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shall be entitled to receive in exchange therefor (subject to any taxes required
to be withheld) the Initial Shares issuable pursuant to Section 1.5 above.
Until properly surrendered, the Certificate shall be deemed for all purposes to
evidence only the right to receive the Initial Shares issuable to the Company
Stockholder pursuant to Section 1.5 above. The Company Stockholder shall not be
entitled to receive certificates for the Initial Shares to which he would
otherwise be entitled until the Certificate is properly surrendered.
1.7 Escrow. On the Closing Date, the Buyer or the Transitory
------
Subsidiary shall deliver to the Escrow Agent a certificate (issued in the name
of the Escrow Agent or its nominee) representing the Escrow Shares, for the
purpose of (i) securing the indemnification obligations of the Company
Stockholder set forth in this Agreement and (ii) securing the post-Closing
adjustments set forth in Section 1.8 below. The Escrow Shares shall be held by
the Escrow Agent under the Escrow Agreement pursuant to the terms thereof. The
Escrow Shares shall be held as a trust fund and shall not be subject to any
lien, attachment, trustee process or any other judicial process of any creditor
of any party, and shall be held and disbursed solely for the purposes and in
accordance with the terms of the Escrow Agreement and Section 1.8 below.
1.8 Post Closing Adjustments. The aggregate number of Merger Shares
------------------------
shall be subject to adjustment after the Closing Date as follows:
(a) Not later than 60 days after the Closing Date, the Buyer shall
prepare and deliver to the Company Stockholder a balance sheet of the Company as
of the Closing Date (the "Closing Balance Sheet"). The Closing Balance Sheet
shall be prepared in accordance with United States generally accepted accounting
principles ("GAAP"), but shall not be subject to any adjustments applicable
solely as a result of the consummation of the Merger on the Closing Date,
provided that (i) any Taxes reflected on such Closing Balance Sheet shall be
computed in accordance with the principles of Section 7.4 (excluding, for this
purpose, any accruals or reserves for "deferred taxes" or similar items that
reflect timing differences in the recognition of income or deductions for tax
and financial accounting purposes), and (ii) the accrual for Accounting Change
Taxes (as defined in Section 7.4(d) hereof) reflected on such Closing Balance
Sheet shall not exceed $1,200,000 plus 50% of the amount by which the accrual
for Accounting Change Taxes would exceed $1,200,000 if computed without regard
to this clause (ii).
(b) The Closing Balance Sheet shall be accompanied by a statement
setting forth the sum, if any, by which the Net Asset Value (as defined below in
this Section 1.8(b)) as shown on the Closing Balance Sheet is less than
$1,700,000 (such value, the "Net Book Value Adjustment"). For purposes of this
Agreement, the "Net Asset Value" shall be equal to the total tangible assets of
the Company (which shall include, without limitation, for purposes of this
Section 1.8, all accounts receivable
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and unbilled hours) on the Closing Balance Sheet minus the total liabilities of
the Company on the Closing Balance Sheet. The Closing Balance Sheet shall be
accompanied by a statement setting forth the calculations showing the basis for
the determination of such sums.
(c) In the event that the Company Stockholder disputes the Closing
Balance Sheet or the calculation of the Net Book Value Adjustment, the Company
Stockholder shall notify the Buyer in writing (the "Dispute Notice") in detail
of the amount, nature and basis of such dispute within 20 calendar days after
delivery of the Closing Balance Sheet. In the event of such a dispute, the
Buyer and the Company Stockholder shall first use their diligent good faith
efforts to resolve such dispute between themselves. If the Buyer and the
Company Stockholder are unable to resolve the dispute within 10 calendar days
after delivery of the Dispute Notice, the dispute shall be submitted to Ernst &
Young LLP (the "Accountants") for resolution. The Accountants shall be required
to resolve the dispute within 30 days after submission. The determination of
the Accountants as to the resolution of any dispute shall be binding and
conclusive upon the Parties. All determinations by the Accountants pursuant to
this Section 1.8(c) shall be in writing and shall be delivered to the Parties.
Any award made pursuant to this Section 1.8 may be entered in and enforced by
any court having jurisdiction thereover.
(d) The fees and expenses of the Accountants in connection with the
resolution of disputes pursuant to Section 1.8(c) above shall be shared equally
by the Company Stockholder, on the one hand, and the Buyer, on the other hand.
(e) Immediately upon the expiration of the 20-day period for giving
the Dispute Notice, if no Dispute Notice is given, or immediately upon the
resolution of disputes, if any, pursuant to Section 1.8(c) above, the Parties
shall make post-Closing adjustments as set forth in Section 1.8(f) below.
(f) If a Net Book Value Adjustment exists, the Buyer shall give notice
to the Escrow Agent specifying the number of Escrow Shares held by the Escrow
Agent (not to exceed the number of Escrow Shares so held by the Escrow Agent)
that is equal to the result obtained by dividing the Net Book Value Adjustment
by the Buyer Stock Valuation (as defined below in this Section 1.8(f)). The
number of shares equal to the quotient computed by such division shall be
referred to herein as the "Adjustment Shares." For purposes of this Agreement,
"Buyer Stock Valuation" means the average of the closing sale prices of the
Buyer Common Stock on the Nasdaq National Market on the 10 trading days
immediately preceding the Closing Date. Upon receipt of such notice from the
Buyer, the Escrow Agent shall transfer, deliver and assign the Adjustment Shares
to the Buyer pursuant to the terms of the Escrow Agreement. Neither the Escrow
Agent nor the Company Stockholder shall have any right, title or interest in or
to the Adjustment Shares. All remaining Escrow Shares shall remain in escrow
subject to the provisions of the Escrow Agreement.
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1.9 Certificate of Incorporation. The Certificate of Incorporation
----------------------------
of the Surviving Corporation shall be amended as of the Effective Time so as to
read in its entirety in the form attached hereto as Exhibit B.
---------
1.10 By-laws. The By-laws of the Surviving Corporation shall be the
-------
same as the By-laws of the Transitory Subsidiary immediately prior to the
Effective Time, except that the name of the corporation set forth therein shall
be changed to International Systems Services Corporation.
1.11 Directors and Officers. The directors of the Transitory
----------------------
Subsidiary shall become the directors of the Surviving Corporation as of the
Effective Time. The officers of the Surviving Corporation after the Effective
Time shall be as set forth on Schedule 1.11 attached hereto.
1.12 No Further Rights. From and after the Effective Time, no Company
-----------------
Shares shall be deemed to be outstanding, and holders of certificates formerly
representing Company Shares shall cease to have any rights with respect thereto
except as provided herein or by law.
1.13 Closing of Transfer Books. At the Effective Time, the stock
-------------------------
transfer books of the Company shall be closed and no transfer of Company Shares
shall thereafter be made. If, after the Effective Time, Certificates formerly
representing Company Shares are presented to the Surviving Corporation, they
shall be cancelled and exchanged for Initial Shares in accordance with Section
1.5(a), subject to Section 1.7.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY STOCKHOLDER
The Company Stockholder represents and warrants to the Buyer that the
statements contained in this Article II are true and correct, except as set
forth in the disclosure schedule attached hereto (the "Disclosure Schedule").
The Disclosure Schedule shall be initialed by the Company Stockholder and shall
be arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article II, and the disclosures in any paragraph of the
Disclosure Schedule shall qualify only the corresponding paragraph in this
Article II.
2.1 Organization, Qualification, Corporate Power and Authority.
----------------------------------------------------------
(a) The Company is a corporation duly organized, validly existing and
in corporate and tax good standing under the laws of the State of Connecticut.
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The Company is duly qualified to conduct business and is in corporate and tax
good standing under the laws of each jurisdiction in which the nature of its
businesses or the ownership or leasing of its properties requires such
qualification, each of which jurisdiction is set forth in Section 2.1 of the
Disclosure Schedule. The Company has all requisite corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. The Company has furnished to the Buyer
true and complete copies of its Certificate of Incorporation and By-laws, each
as amended and as in effect on the Agreement Date. The Company has at all times
complied with, and is not in default under or in violation of, any provision of
its Certificate of Incorporation and By-laws.
(b) The Company has all requisite power and authority to execute and
deliver the Fundamental Agreements (as defined below in this Section 2.1(b)) and
to perform its obligations under the Fundamental Agreements. The Fundamental
Agreements have each been (or in the case of the Escrow Agreement, shall be when
delivered) duly and validly (i) executed and delivered by the Company and (ii)
authorized by all necessary corporate action on the part of the Company. Each
Fundamental Agreement constitutes (or, in the case of the Escrow Agreement,
shall constitute) a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. For purposes of this
Agreement, as to each Company Stockholder, the term "Fundamental Agreements"
means this Agreement, the Escrow Agreement, the Employment Agreement in the form
attached hereto as Exhibit C between the Company and the Company Stockholder,
---------
and the Registration Rights Agreement in the form attached hereto as Exhibit D.
---------
2.2 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of 5,000
shares of common stock, no par value per share, of which 1,680 shares are issued
and outstanding and held by the Company Stockholder. All of the issued and
outstanding Company Shares are duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. There are no outstanding or
authorized options, warrants, rights, agreements or commitments to which the
Company is a party or which are binding upon the Company providing for the
issuance, disposition or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no agreements, voting trusts, proxies or
understandings with respect to the voting, or registration under the Securities
Act of 1933 (the "Securities Act"), of any Company Shares. All of the issued
and outstanding Company Shares were issued in compliance with applicable federal
and state securities laws.
(b) The authorized capital stock of International Systems Services
(UK) Ltd. ("ISS (UK)") consists of 1,000 shares of common stock, no par value
per share, all
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of which shares are issued and outstanding (the "ISS (UK) Shares") and held by
the Company Stockholder. All of the issued and outstanding ISS (UK) Shares are
duly authorized, validly issued, fully paid, nonassessable and free of all
preemptive rights. There are no outstanding or authorized options, warrants,
rights, agreements or commitments to which ISS (UK) is a party or which are
binding upon ISS (UK) providing for the issuance, disposition or acquisition of
any of its capital stock. There are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to ISS (UK). There
are no agreements, voting trusts, proxies or understandings with respect to the
voting, or registration under the Securities Act or any securities laws of the
United Kingdom, of any ISS (UK) Shares. All of the issued and outstanding ISS
(UK) Shares were issued in compliance with applicable securities laws.
2.3 Noncontravention. Subject to compliance with (a) the applicable
----------------
requirements of the Securities Act, (b) any applicable state securities laws,
and (c) the Connecticut Law, neither the execution and delivery by the Company
or the Company Stockholder of this Agreement or the Escrow Agreement, nor the
consummation of the transactions contemplated hereby or thereby, will (i)
conflict with or violate any provision of the Certificate of Incorporation or
By-laws of the Company, (ii) require on the part of the Company any filing with,
or any permit, authorization, consent or approval of, any court, arbitrational
tribunal, administrative agency or commission or other governmental or
regulatory authority or agency (a "Governmental Entity"), (iii) conflict with,
result in a breach of, constitute (with or without due notice or lapse of time
or both) a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require any notice, consent
or waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest (as defined below) or other arrangement to which
the Company is a party or by which the Company is bound or to which its assets
is subject, (iv) result in the imposition of any Security Interest upon any
assets of the Company, or (v) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of its properties
or assets. For purposes of this Agreement, "Security Interest" means any
mortgage, pledge, security interest, encumbrance, charge or other lien (whether
arising by contract or by operation of law).
2.4 Subsidiaries. Section 2.4 of the Disclosure Schedule sets forth
------------
a list of each corporation, partnership, limited liability company or other form
of business association (a "Business Entity") with respect to which the Company,
directly or indirectly, owns or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors or others authorized
to manage or direct the affairs of such Business Entity (each such Business
Entity being hereinafter referred to as a "Subsidiary"). Section 2.4 of the
Disclosure Schedule sets forth for each Subsidiary (a) its name and jurisdiction
of incorporation, (b) the number of shares of authorized
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capital stock of each class of its capital stock, (c) the number of issued and
outstanding shares of each class of its capital stock, the names of the holders
thereof and the number of shares held by each such holder, (d) the number of
shares of its capital stock held in treasury, and (e) its directors and
officers. Each Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary is duly qualified to conduct business and is in corporate and tax
good standing under the laws of each jurisdiction in which the nature of its
businesses or the ownership or leasing of its properties requires such
qualification. Each Subsidiary has all requisite corporate power and authority
to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it. The Company has delivered to the Buyer correct
and complete copies of the charter and By-laws of each Subsidiary, as amended to
date. No Subsidiary is in default under or in violation of any provision of its
charter or By-laws. All of the issued and outstanding shares of capital stock of
each Subsidiary are duly authorized, validly issued, fully paid, nonassessable
and free of preemptive rights. All shares of each Subsidiary that are held of
record or owned beneficially by either the Company or any Subsidiary are held or
owned free and clear of any restrictions on transfer (other than restrictions
under the Securities Act and state securities laws), claims, Security Interests,
options, warrants, rights, contracts, calls, commitments, equities and demands.
There are no outstanding or authorized options, warrants, rights, agreements or
commitments to which the Company or any Subsidiary is a party or which are
binding on any of them providing for the issuance, disposition or acquisition of
any capital stock of any Subsidiary. There are no outstanding stock
appreciation, phantom stock or similar rights with respect to any Subsidiary.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of any capital stock of any Subsidiary. The Company does
not control directly or indirectly or have any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association which is not a Subsidiary.
2.5 Financial Statements. The Company has previously furnished to
--------------------
the Buyer complete and accurate copies, all of which are included in Section 2.5
of the Disclosure Schedule, of its (a) audited balance sheets and related
statements of income, retained earnings, stockholders' equity and cash flows for
the years ended December 31, 1993, 1994 and 1995, together with the reports
thereon by Price Waterhouse, LLP, independent auditors for the Company, and (b)
unaudited balance sheet (the "Most Recent Balance Sheet") and related statement
of income for the eleven months ended November 30, 1996 (the "Balance Sheet
Date"). The foregoing financial statements (the "Financial Statements") have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby (except as may be indicated therein or in the notes
thereto), fairly present the financial condition, results of operations and cash
flows of the Company as of the respective dates thereof and for the periods
referred to therein, and are consistent with the books and records of the
Company.
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2.6 Absence of Certain Changes. Since the Balance Sheet Date, (a)
--------------------------
there has not been any material adverse change in the assets, financial
condition or results of operations of the Company, nor has there occurred any
event or development that could reasonably be foreseen to result in such a
material adverse change in the future, (b) there has not been any material
adverse change in the business or future prospects of the Company, nor has there
occurred any event or development that could reasonably be foreseen to result in
such a material adverse change in the future, and (c) the Company has not taken
any of the actions set forth in subsections (a) through (u) of Section 5.2
below.
2.7 Undisclosed Liabilities. The Company has no liability (whether
-----------------------
known or unknown, whether absolute or contingent, whether liquidated or
unliquidated and whether due or to become due), except for (a) liabilities shown
on the Company's Most Recent Balance Sheet, a copy of which is included in
Section 2.7 of the Disclosure Schedule, (b) liabilities that have arisen since
the Balance Sheet Date in the ordinary course of business consistent with past
custom and practice (including with respect to frequency and amount) ("Ordinary
Course of Business") of the Company and that are similar in nature and amount to
the liabilities that arose during the comparable period of time in the
immediately preceding fiscal period, and (c) contractual liabilities incurred in
the Ordinary Course of Business of the Company that are not required to be
reflected on the Most Recent Balance Sheet and that are not in the aggregate
material.
2.8 Tax Matters.
-----------
(a) The Company has filed all Tax Returns (as defined below) that it
was required to file and all such Tax Returns were correct and complete in all
respects. The Company has paid all Taxes (as defined below) that are shown to
be due on any such Tax Returns. The accruals and reserves for Taxes set forth
on the Most Recent Balance Sheet are sufficient to pay all unpaid Taxes of the
Company (excluding, for this purpose, any accruals or reserves for "deferred
taxes" or similar items that reflect timing differences in the recognition of
income or deductions for tax and financial accounting purposes) attributable to
all periods ended on or before the date of the Most Recent Balance Sheet, and
all Taxes attributable to the period from and after the Balance Sheet Date and
continuing through the Closing Date are attributable to the operation of the
Company in the Ordinary Course of Business of the Company. Except as set forth
in Section 2.8(a) of the Disclosure Schedule, the Company has no actual or
potential liability for any Tax obligation of any taxpayer (including without
limitation any affiliated or combined group of corporations or other entities
that included the Company during a prior period) other than the Company. All
Taxes that the Company is or was required by law to withhold or collect have
been duly withheld or collected and, to the extent required, have been paid to
the proper Governmental Entity. For purposes of this Section 2.8, the Taxes
attributable to a particular period shall be determined in accordance with
Section 7.4
-10-
hereof with the Closing Balance Sheet to reflect only Taxes allocated to periods
ending on or before the Closing Date as determined pursuant to the principles of
Section 7.4. For purposes of this Agreement, "Taxes" means all taxes, charges,
fees, levies or other similar assessments or liabilities, including without
limitation income, gross receipts, ad valorem, premium, value-added, excise,
real property, personal property, sales, use, transfer, transfer gains,
withholding, employment, payroll and franchise taxes imposed by the United
States of America or any state, local or foreign government, or any agency
thereof, or other political subdivision of the United States or any such
government, and any interest, fines, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof. For purposes of this Agreement, "Tax Returns" means
all reports, returns, declarations, statements or other information required to
be supplied to a taxing authority in connection with Taxes.
(b) The Company has delivered to the Buyer correct and complete copies
of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company since January 1, 1993.
The federal income Tax Returns of the Company have been audited by the Internal
Revenue Service or are closed by the applicable statute of limitations for all
taxable years through December 31, 1990. No examination or audit of any Tax
Returns of the Company by any Governmental Entity is currently in progress or,
to the knowledge of the Company and the Company Stockholder, threatened or
contemplated.
(c) The Company is not a "consenting corporation" within the meaning
of Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code")
and none of the assets of the Company are "subsection (f) assets" as defined in
Section 341(f) of the Code. The Company has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code.
The Company is not a party to any Tax allocation or sharing agreement or any Tax
indemnity agreement. The Company has not waived any statute of limitations with
respect to Taxes or agreed to an extension of time with respect to a Tax
assessment or deficiency. The Company has not ever been a member of an
affiliated group of corporations, within the meaning of Section 1504 of the Code
and has never filed Tax Returns on a combined or consolidated basis with any
other Business Entity in any jurisdiction. The Company has not agreed to make,
nor is it required to make, any adjustments under Section 481(a) of the Code by
reason of a change in accounting method or otherwise (other than as a result of
the transactions contemplated hereby). The Company has not participated in, nor
will participate in, an international boycott within the meaning of Section 999
of the Code.
(d) The Company made a valid election under Section 1362 of the Code
to be treated as an "S corporation" as defined in Section 1361(a) of the Code
and the Company Stockholder (and any other person who owned Company Shares on
the
-11-
date of such election) validly consented to such election in accordance with
Section 1362(a)(2) of the Code. Such "S corporation" election became effective
on August 23, 1988 for the Company. This election has remained in effect since
that date, without revocation, cessation or termination, and the Company has not
been at any time a "C corporation" as defined in Section 1361(a)(2) of the Code
for federal income tax purposes and does not hold the assets of any
"predecessor corporation" within the meaning of Treasury Regulation Section
1.1374-1(e).
(e) The Company uses the cash method of accounting for all income
Tax purposes.
2.9 Assets.
------
(a) The Company owns or leases all tangible assets necessary for the
conduct of its businesses as presently conducted and as presently proposed to be
conducted. Such tangible assets, in the aggregate, are free from material
defects, have been maintained in accordance with normal industry practice, are
in good operating condition and repair (subject to normal wear and tear) and are
suitable for the purposes for which they presently are used.
(b) No asset of the Company (tangible or intangible) is subject to any
Security Interest.
(c) Section 2.9(c) of the Disclosure Schedule sets forth (i) a true,
correct and complete list of all items of tangible personal property, including
without limitation purchased and capitalized software, owned by the Company as
of the Agreement Date, or not owned by the Company but in the possession of or
used in the business of the Company (the "Personal Property"), other than
individual assets with a book value of less than $5,000; and (ii) a description
of the owner of, and any agreement relating to the use of, each item of Personal
Property not owned by the Company and the circumstances under which such
Property is used. Each item of Personal Property not owned by the Company is in
such condition that upon the return of such property to its owner in its present
condition at the end of the relevant lease term or as otherwise contemplated by
the applicable agreement between the Company and the owner or lessor thereof,
the obligations of the Company to such owner or lessor will be discharged.
2.10 Owned Real Property. The Company does not own, nor has it ever
-------------------
owned, any real property.
2.11 Intellectual Property.
---------------------
(a) The Company owns or has the right to use all Intellectual Property
(as defined below in this Section 2.11) used in the operation of its business
-12-
or necessary for the operation of its businesses as presently proposed to be
conducted. Each item of Intellectual Property owned by or used in the operation
of the business of the Company at any time during the period covered by the
Financial Statements will be owned or available for use by the Company on
identical terms and conditions immediately following the Closing. The Company
has taken reasonable measures to protect the proprietary nature of each item of
Intellectual Property and to maintain in confidence all trade secrets and
confidential information, that it owns or uses. To the knowledge of the Company
and the Company Stockholder, and except as set forth in Section 2.11(a) of the
Disclosure Schedule, no other person or Business Entity has any rights to any of
the Intellectual Property owned or used by the Company, and no other person or
Business Entity is infringing, violating or misappropriating any of the
Intellectual Property that the Company owns or uses. For purposes of this
Agreement, "Intellectual Property" means all (i) patents, patent applications,
patent disclosures and all related continuation, continuation-in-part,
divisional, reissue, reexamination, utility model, certificate of invention and
design patents, patent applications, registrations and applications for
registrations, (ii) trademarks, service marks, trade dress, logos, trade names
and corporate names and registrations and applications for registration thereof,
(iii) copy rights and registrations and applications for registration thereof,
(iv) computer software, data and documentation, (v) trade secrets and
confidential business information, whether patentable or unpatentable and
whether or not reduced to practice, know-how, manufacturing and production
processes and techniques, research and development information, copyrightable
works, financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and information,
(vi) other proprietary rights relating to any of the foregoing, and (vii) copies
and tangible embodiments thereof.
(b) None of the activities or business conducted by the Company
infringes, violates or constitutes a misappropriation of (or in the past
infringed, violated or constituted a misappropriation of) any Intellectual
Property rights of any other person or Business Entity. The Company has not
received any complaint, claim or notice alleging any such infringement,
violation or misappropriation, and to the knowledge of the Company and the
Company Stockholder, there is no basis for any such complaint, claim or notice.
(c) Section 2.11(c) of the Disclosure Schedule identifies each (i)
patent or registration that has been issued to the Company with respect to any
of its Intellectual Property, (ii) pending patent application or application for
registration that the Company has made with respect to any of its Intellectual
Property, and (iii) license or other agreement pursuant to which the Company has
granted any rights to any third party with respect to any of its Intellectual
Property. The Company has delivered to the Buyer correct and complete copies of
all such patents, registrations, applications, licenses and agreements (as
amended to date) and has specifically identified and made available to the Buyer
correct and complete copies of
-13-
all other written documentation evidencing ownership of, and any claims or
disputes relating to, each such item. Except as set forth in Section 2.11(c) of
the Disclosure Schedule, with respect to each item of Intellectual Property that
the Company owns:
(A) subject to such rights as have been granted by the Company under
license agreements entered into in the Ordinary Course of Business of the
Company, the Company possesses all right, title and interest in and to such
item;
(B) such item is not subject to any outstanding judgment, order,
decree, stipulation or injunction; and
(C) the Company has not agreed to indemnify any person or Business
Entity for or against any infringement, misappropriation or other conflict with
respect to such item.
(d) Section 2.11(d) of the Disclosure Schedule identifies each item of
Intellectual Property used in the operation of the business of the Company at
any time during the period covered by the Financial Statements that is owned by
a party other than the Company. The Company has supplied the Buyer with correct
and complete copies of all licenses, sublicenses or other agreements (as amended
to date) pursuant to which the Company uses such Intellectual Property, all of
which are listed on Section 2.11(d) of the Disclosure Schedule. Except as set
forth in Section 2.11(d) of the Disclosure Schedule, with respect to each such
item of Intellectual Property:
(i) the license, sublicense or other agreement covering such item is
legal, valid, binding, enforceable and in full force and effect;
(ii) such license, sublicense or other agreement will continue to be
legal, valid, binding, enforceable and in full force and effect immediately
following the Closing in accordance with the terms thereof as in effect prior to
the Closing;
(iii) neither the Company nor, to the knowledge of the Company and the
Company Stockholder, any other party to such license, sublicense or other
agreement 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) the underlying item of Intellectual Property is not subject to
any outstanding judgment, order, decree, stipulation or injunction;
-14-
(v) the Company has not agreed to indemnify any person or Business
Entity for or against any interference, infringement, misappropriation or other
conflict with respect to such item; and
(vi) no license or other fee is payable upon any transfer or
assignment of such license, sublicense or other agreement.
The quantities of each type of inventory are not excessive in the present
circumstances of the Company.
2.12 Real Property Leases. Section 2.12 of the Disclosure Schedule
--------------------
lists and describes briefly all real property leased or subleased to the Company
and lists the term of such lease, any extension and expansion options, and the
rent payable thereunder. The Company has delivered to the Buyer correct and
complete copies of the leases and subleases (as amended to date) listed in
Section 2.12 of the Disclosure Schedule. With respect to each lease and
sublease listed in Section 2.12 of the Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding, enforceable and in
full force and effect;
(b) the lease or sublease will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect prior to the Closing;
(c) neither the Company nor, to the knowledge of the Company and the
Company Stockholder, any other 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;
(d) there are no disputes, oral agreements or forbearance programs in
effect as to the lease or sublease;
(e) the Company has not assigned, transferred, conveyed, mortgaged,
deeded in trust or encumbered any interest in the leasehold or subleasehold;
(f) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities; and
(g) no construction, alteration or other leasehold improvement work
with respect to the lease or sublease remains to be paid for or performed by the
Company.
-15-
2.13 Contracts.
---------
(a) Section 2.13 of the Disclosure Schedule lists the following
written arrangements (including without limitation written agreements) to which
the Company is a party:
(i) any written arrangement (or group of related written arrangements)
for the lease of personal property from or to third parties providing for lease
payments in excess of $5,000 per annum;
(ii) any written arrangement (or group of related written
arrangements) for the purchase or sale of raw materials, commodities, supplies,
products or other personal property or for the furnishing or receipt of services
(i) which calls for performance over a period of more than one year, (ii) which
involves more than the sum of $10,000, or (iii) in which the Company has granted
"most favored nation" pricing provisions or marketing or distribution rights
relating to any products or territory or has agreed to purchase a minimum
quantity of goods or services or has agreed to purchase goods or services
exclusively from a certain party;
(iii) any written arrangement establishing a partnership or joint
venture;
(iv) any written arrangement (or group of related written
arrangements) under which it has created, incurred, assumed or guaranteed (or
may create, incur, assume or guarantee) indebtedness (including capitalized
lease obligations) involving more than $10,000 or under which it has imposed (or
may impose) a Security Interest on any of its assets, tangible or intangible;
(v) any written arrangement concerning confidentiality, non-
solicitation or non-competition (other than the Company's standard form of
confidentiality, non-solicitation and non-competition agreement with its
employees, a copy of which has been provided to the Buyer;
(vi) any written arrangement involving the Company Stockholder or his
Affiliates (for the purposes of this Agreement, "Affiliate" shall mean (A) in
the case of an individual, the members of the immediate family (including
parents, siblings and children) of (i) the individual and (ii) his or her spouse
and (iii) any Business Entity that directly or indirectly, through one or more
intermediaries controls, or is controlled by, or is under common control with
any of the foregoing individuals, or (B) in the case of a Business Entity,
another Business Entity or a person that directly or indirectly, through one or
more intermediaries controls, or is controlled by, or is under common control
with the Business Entity);
-16-
(vii) any written arrangement under which the consequences of a
default or termination could have a material adverse effect on the assets,
business, financial condition, results of operations or future prospects of the
Company; and
(viii) any other written arrangement (or group of related written
arrangements) either involving more than $25,000 or not entered into in the
Ordinary Course of Business of the Company.
(b) Section 2.13 of the Disclosure Schedule accurately discloses as to
each arrangement or agreement for the sale or license of products or the
performance of services disclosed therein (the "Customer Contracts") (i) the
project name; (ii) the customer name; (iii) whether or not the contract amount
is fixed (which shall include, for purposes of this Agreement, a Customer
Contract for the provision of services on a "time and materials not to exceed"
basis) or may be varied based upon services performed; (iv) if the contract
amount is fixed, the contract amount, or, if the contract amount is not fixed, a
good faith, reasonable estimate of the contract amount; (v) if the contract
amount is not fixed, the estimated contract amount most recently communicated to
the customer; (vi) the work completed and total costs incurred to date
thereunder; (vii) the total xxxxxxxx to date under such Customer Contract;
(viii) the estimated completion dates therefor; and (ix) whether or not the
Company or the Company Stockholder has any reason to believe that the Company's
profit margin with respect to such Customer Contract might be less than it has
customarily achieved in the past for similar contracts.
(c) The Company has delivered to the Buyer a correct and complete copy
of each written arrangement (as amended to date) listed in Section 2.14 of the
Disclosure Schedule. With respect to each written arrangement so listed: (i)
the written arrangement is legal, valid, binding and enforceable and in full
force and effect; (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
and (iii) neither the Company nor, to the knowledge of the Company and the
Company Stockholder, any other party, 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, modifica tion, or acceleration, under the written
arrangement. The Company is not a party to any oral contract, agreement or
other arrangement which, if reduced to written form, would be required to be
listed in Section 2.13 of the Disclosure Schedule under the terms of this
Section 2.13. The Company is not restricted by any arrangement from carrying on
its business anywhere in the world.
2.14 Accounts Receivable; Customer Contracts in Progress. All
---------------------------------------------------
accounts receivable of the Company reflected on (i) the Most Recent Balance
Sheet (net of the applicable reserve for bad debts and sales returns shown on
the Most Recent Balance Sheet) and (ii) the financial or accounting records of
the Company that have arisen
-17-
since September 30, 1996 (collectively, the "Accounts Receivable") are valid
receivables of the Company subject to no setoffs or counterclaims and are
current and collectible within 120 days after the invoice date. Section 2.14 of
the Disclosure Schedule sets forth a complete list of the Accounts Receivable,
including the aging thereof as of the Agreement Date. As to each Customer
Contract in progress as of the Agreement Date for which the Company does not
xxxx solely on the basis of hourly rates and exact expenses, Section 2.14 of the
Disclosure Schedule sets forth as of the Agreement Date the costs incurred by
the Company under such contract, the Company's reasonable estimate of the costs
to complete each such contract, the revenues received and revenues recognized by
the Company under such contract, and the Company's reasonable estimate of the
revenues to be received and to be recognized through completion of such
contract.
2.15 Powers of Attorney. There are no outstanding powers of attorney
------------------
executed on behalf of the Company.
2.16 Insurance. Section 2.16 of the Disclosure Schedule sets forth
---------
the following information with respect to each insurance policy (including fire,
theft, casualty, general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past three years:
(a) the name of the insurer, the name of the policyholder and the
name of each covered insured;
(b) the policy number and the period of coverage;
(c) 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
(d) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
Except as set forth in Section 2.16 of the Disclosure Schedule, (i) each such
insurance policy is enforceable and in full force and effect; (ii) such policy
will continue to be enforceable and in full force and effect immediately
following the Closing in accordance with the terms thereof as in effect prior to
the Closing; (iii) the Company is not in breach or default (including with
respect to the payment of premiums or the giving of notices) under such policy,
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 such policy; and (iv) the Company has not received any
notice from the insurer disclaiming coverage or reserving rights with
-18-
respect to a particular claim or such policy in general. Section 2.16 of the
Disclosure Schedule identifies all claims asserted by the Company pursuant to
any insurance policy since January 1, 1993 and describes the nature and status
of each such claim. The Company has not incurred any loss, damage, expense or
liability covered by any such insurance policy for which it has not properly
asserted a claim under such policy. The Company is covered by insurance in scope
and amount customary and reasonable for the businesses in which it is engaged.
2.17 Litigation. Except as identified and described in Section 2.17
----------
of the Disclosure Schedule, (a) there is no action, suit, proceeding or
investigation to which the Company is a party (either as a plaintiff or
defendant) pending or, to the knowledge of the Company and the Company
Stockholder, threatened before any court, Governmental Entity or arbitrator, and
to the knowledge of the Company and the Company Stockholder, there is no basis
for any such action, suit, proceeding or investigation; (b) neither the Company
nor, to the knowledge of the Company and the Company Stockholder, any officer,
director or employee of the Company has been permanently or temporarily enjoined
by any order, judgment or decree of any court or Governmental Entity from
engaging in or continuing to conduct the business of the Company; and (c) no
order, judgment or decree of any court or Governmental Entity exists that
enjoins or requires the Company to take any action of any kind with respect to
its business, assets or properties. None of the actions, suits, proceedings or
investigations set forth in Section 2.17 of the Disclosure Schedule,
individually or collectively, could have a material adverse effect on the
assets, business, financial condition, results of operations or future prospects
of the Company.
2.18 Product and Service Warranties. No product or service
------------------------------
manufactured, sold, leased or delivered by the Company is subject to any
guaranty, warranty, right of return or other indemnity other than (a) the
Company's applicable standard terms and conditions of sale or lease that are set
forth in Section 2.18 of the Disclosure Schedule and (b) manufacturers' pass-
through warranties. Section 2.18 of the Disclosure Schedule sets forth the
aggregate expenses incurred by the Company in fulfilling its obligations under
its guaranty, warranty, right of return and indemnity provisions during each of
the fiscal years and the interim period covered by the Financial Statements. To
the knowledge of the Company and the Company Stockholder, such expenses should
not significantly increase as a percentage of sales in the future.
2.19 Employees and Subcontractors.
----------------------------
(a) Section 2.19(a) of the Disclosure Schedule contains a list of (i)
all employees of the Company (the "Employees"), along with the position, date of
hire, annual rate of compensation (or, with respect to Employees compensated on
an hourly or per diem basis, the hourly or per diem rate of compensation) and
estimated or target annual incentive compensation of each such Employee, (ii)
all employment
-19-
contracts or agreements relating to employment, which are not terminable by the
Company without penalty upon less than 30 days notice, and (iii) all Employees
who have executed confidentiality, non-competition or non-solicitation
agreements. None of the Employees are a party to any collective bargaining
agreement. The Company has not experienced any strikes, grievances, claims of
unfair labor practices or other collective bargaining disputes and no
organizational effort is presently being made or threatened by or on behalf of
any labor union with respect to the Employees.
(b) Section 2.19(b) of the Disclosure Schedule sets forth (i) a list
of all subcontractors currently performing services or under contract to perform
future services for the Company and (ii) the start date, type of services to be
provided, estimated completion date and hourly or per diem pay rate of such
subcontractors.
(c) To the knowledge of the Company and the Company Stockholder, no
key employee or group of employees employed by the Company has any plans to
terminate employment with the Company.
2.20 Employee Benefits.
-----------------
(a) Section 2.20(a) of the Disclosure Schedule contains a complete and
accurate list of all Employee Benefit Plans (as defined below in this Section
2.20(a)) maintained, or contributed to, by the Company, or any ERISA Affiliate
(as defined below in this Section 2.20(a)). For purposes of this Agreement,
"Employee Benefit Plan" means any "employee pension benefit plan" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), any "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), and any other written or oral plan, agreement or arrangement involving
direct or indirect compensation, including without limitation insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation. For
purposes of this Agreement, "ERISA Affiliate" means any member of (i) a
controlled group of corporations (as defined in Section 414(b) of the Code),
(ii) a group of trades or businesses under common control (as defined in Section
414(c) of the Code), or (iii) an affiliated service group (as defined under
Section 414(m) of the Code or the regulations under Section 414(o) of the Code),
any of which at any time after December 31, 1989 included the Company. Complete
and accurate copies of (i) all Employee Benefit Plans that have been reduced to
writing, (ii) written summaries of all unwritten Employee Benefit Plans, (iii)
all related trust agreements, insurance contracts and summary plan descriptions,
and (iv) all annual reports filed on IRS Form 5500, 5500C or 5500R for the last
five plan years for each Employee Benefit Plan, and (v) all qualification
letters issued by the Internal Revenue Service with respect to every Employee
Benefit Plan that is intended to qualify under Section 401(k) of the Code, have
been delivered to the Buyer. Each Employee Benefit Plan has been administered
in accordance with its terms, and each of the Company
-20-
and the ERISA Affiliates has met its obligations with respect to such Employee
Benefit Plan and has made all required contributions thereto. The Company and
all Employee Benefit Plans are in compliance in form and operation with the
currently applicable provisions of ERISA, the Code and other applicable federal
and state laws and the regulations thereunder. Each Employee Benefit Plan that
is intended to qualify under Section 401(k) of the Code is so qualified. Nothing
has occurred that could reasonably be expected to cause a loss of such
qualification and no loss of qualification has been threatened.
(b) There are no inquiries or investigations by any Governmental
Entity, termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Employee Benefit Plans and proceedings
with respect to qualified domestic relations orders), suits or proceedings
against or involving any Employee Benefit Plan or asserting any rights or claims
to benefits under any Employee Benefit Plan other than routine claims for
benefits.
(c) Neither the Company nor any ERISA Affiliate has ever maintained an
Employee Benefit Plan subject to Section 412 of the Code, Part 3 of Subtitle B
of Title I or ERISA, or Title IV of ERISA. Except as set forth in Section
2.20(c) of the Disclosure Schedule, at no time has the Company or any ERISA
Affiliate been obligated to contribute to any "multi-employer plan" (as defined
in Section 4001(a)(3) of ERISA). No act or omission has occurred and no
condition exists with respect to any Employee Benefit Plan maintained by the
Company, any of its Affiliates or any ERISA Affiliate that would subject the
Company or any ERISA Affiliate to any fine, penalty, tax or liability of any
kind imposed under ERISA or the Code. No prohibited transaction (as defined in
Section 406 of ERISA or Section 4975 of the Code) has occurred. No Employee
Benefit Plan, plan documentation or agreement, summary plan description or other
written communication distributed generally to employees by its terms prohibits
the Company from amending or terminating any such Employee Benefit Plan and any
Employee Benefit Plan may be terminated without liability to the Company or the
Buyer, except for benefits accrued through the date of termination. No former
employees participate in any welfare benefit plans listed in Section 2.20(a) of
the Disclosure Schedule. No Employee Benefit Plan includes in its assets any
securities issued by the Company. No Employee Benefit Plan has been subject to
tax under Section 511 of the Code.
(d) Section 2.20(d) of the Disclosure Schedule discloses each: (i)
agreement with any director, executive officer or other key employee of the
Company (A) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the Company
of the nature of any of the transactions contemplated by this Agreement, (B)
providing any term of employment or compensation guarantee or (C) providing
severance benefits or other benefits after the termination of employment of such
director, executive officer or key employee; (ii) agreement, plan or arrangement
under which any person
-21-
may receive payments from the Company that may be subject to the tax imposed by
Section 4999 of the Code or included in the determination of such person's
"parachute payment" under Section 280G of the Code; and (iii) agreement or plan
binding the Company, including without limitation any stock option plan, stock
appreciation right plan, restricted stock plan, stock purchase plan, severance
benefit plan, or any Employee Benefit Plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
2.21 Legal Compliance. The Company and the conduct and operations of
----------------
its business are and have been in compliance with each law (including rules and
regulations thereunder) of any federal, state, local or foreign government, or
any Governmental Entity that (a) affects or relates to this Agreement or the
transactions contemplated hereby or (b) is applicable to the Company or its
business.
2.22 Permits. Section 2.22 of the Disclosure Schedule sets forth a
-------
list of all permits, licenses, registrations, certificates, orders or approvals
from any Governmental Entity (including without limitation those issued or
required under Environmental Laws and those relating to the occupancy or use of
owned or leased real property) ("Permits") issued to or held by the Company.
Such listed Permits are the only Permits that are required for the Company to
conduct its business as presently conducted or as proposed to be conducted.
Each such Permit is in full force and effect and, to the knowledge of the
Company and the Company Stockholder, no suspension or cancellation of such
Permit is threatened and there is no basis for believing that such Permit will
not be renewable upon expiration. Except as set forth in Section 2.22 of the
Disclosure Schedule, each such Permit will continue in full force and effect
following the Closing.
2.23 Certain Business Relationships With Affiliates. No Company
----------------------------------------------
Stockholder or any Affiliate of any Company Stockholder (a) owns any property or
right, tangible or intangible, which is used in the business of the Company, (b)
has any claim or cause of action against the Company, (c) is a party to any
contract or other arrangement, written or verbal, with the Company, or (d) owes
any money to the Company or is owed any money by the Company (the agreements,
arrangements and relationships described in this sentence are hereinafter
referred to as "Related Party Transactions"). Section 2.23 of the Disclosure
Schedule summarizes any Related Party Transactions.
2.24 Books and Records. The minute books and other similar records of
-----------------
the Company contain true and complete records of all actions taken at any
meetings of the Company's stockholders, Board of Directors or any committee
thereof and of all written consents executed in lieu of the holding of any such
meeting. The books and
-22-
records of the Company accurately reflect the assets, liabilities, business,
financial condition and results of operations of the Company and have been
maintained in accordance with good business and bookkeeping practices.
2.25 Customers and Suppliers. No unfilled customer order or
-----------------------
commitment obligating the Company to process, manufacture, license or deliver
products or perform services will, upon completion of the entire order or
commitment, result in a loss to the Company. No material customer of the
Company has indicated within the past year that it will stop, or decrease the
rate of, buying materials, products or services from the Company. Section 2.25
of the Disclosure Schedule identifies (a) all customers of the Company during
(i) the last full fiscal year and (ii) the first nine month of 1996,
respectively, the amount of revenues accounted for by such customer during each
such period, and the responsible account principal in charge of the customer
engagement and (b) each supplier that is the sole supplier of any significant
product, component or service used by the Company. Except as set forth in
Section 2.25 of the Disclosure Schedule, the Company has good customer relations
and none of the customers of the Company has notified the Company that it
intends to discontinue its relationship with the Company.
2.26 Prepayments, Prebilled Invoices and Deposits.
--------------------------------------------
(a) Section 2.26(a) of the Disclosure Schedule sets forth (i) all
prepayments, prebilled invoices and deposits that have been received by the
Company as of the Agreement Date from customers for products to be shipped, or
services to be performed, after the Closing Date, and (ii) with respect to each
such prepayment, prebilled invoice or deposit, (A) the party and contract
credited, (B) the date received or invoiced, (C) the products and/or services to
be delivered, and (D) the conditions for the return of such prepayment,
prebilled invoice or deposit. All such prepayments, prebilled invoices and
deposits are properly accrued for on the Most Recent Balance Sheet in accordance
with GAAP applied on a consistent basis with the past practice of the Company.
(b) Section 2.26(b) of the Disclosure Schedule sets forth (i) all
prepayments, prebilled invoices and deposits that have been made or paid by the
Company as of the Agreement Date for products to be purchased, services to be
performed or other benefits to be received after the Closing Date, and (ii) with
respect to each such prepayment, prebilled invoice or deposit, (A) the party to
whom such prepayment, prebilled invoice or deposit was made or paid, (B) the
date made or paid, (C) the products and/or services to be delivered, and (D) the
conditions for the return of such prepayment, prebilled invoice or deposit. All
such prepayments, prebilled invoices and deposits are properly accrued for on
the Most Recent Balance Sheet in accordance with GAAP applied on a consistent
basis with the past practices of the Company.
-23-
2.27 Banking Facilities. Section 2.27 of the Disclosure Schedule
------------------
identifies:
(a) Each bank, savings and loan or similar financial institution in
which the Company has an account or safety deposit box and the numbers of the
accounts or safety deposit boxes maintained by the Company thereat; and
(b) The names of all persons authorized to draw on each such account
or to have access to any such safety deposit box facility, together with a
description of the authority (and conditions thereof, if any) or each such
person with respect thereto.
2.28 Brokers' Fees. Neither the Company nor any of the Company
-------------
Stockholder has 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.
2.29 Company and Company Stockholder Action. The Board of Directors
--------------------------------------
of the Company has by unanimous written action (a) determined that the Merger is
fair and in the best interests of the Company and the Company Stockholder and
(b) adopted this Agreement in accordance with the provisions of the Connecticut
Law. The Company Stockholder has by unanimous written action adopted and
approved this Agreement and the Merger.
2.30 Affiliates. There are no Affiliates of the Company other than
----------
the Company Stockholder.
2.31 Disclosure. No representation or warranty by the Company or any
----------
of the Company Stockholder contained in this Agreement, and no statement
contained in the Disclosure Schedule or any other document, certificate or other
instrument delivered to or to be delivered by or on behalf of the Company or the
Company Stockholder pursuant to this Agreement, and no other statement made by
the Company, the Company Stockholder or any of their representatives in
connection with this Agreement, contains or will contain any untrue statement of
a material fact or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading. The Company and the Company
Stockholder have disclosed to the Buyer all material information relating to the
business of the Company or the transactions contemplated by this Agreement.
-24-
ARTICLE III
FURTHER REPRESENTATIONS AND WARRANTIES
OF THE COMPANY STOCKHOLDER
The Company Stockholder represents and warrants to the Buyer as
follows:
3.1 Ownership of Stock; Authority.
-----------------------------
(a) He has good and marketable title, free and clear of any and all
Security Interests, to all of the Company Shares. He has the full right, power
and authority to deliver to the Buyer or the Transitory Subsidiary at the
Closing the Company Shares and, upon consummation of the Merger, the Company
Shares shall be free and clear of all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, encumbrances, options and adverse
claims or rights whatsoever.
(b) He has all requisite power and authority to execute and deliver
the Fundamental Agreements and to perform his obligations under the Fundamental
Agreements. The Fundamental Agreements have each been (or in the case of the
Escrow Agreement, shall be when delivered) duly and validly executed and
delivered by him, and each constitutes (or, in the case of the Escrow Agreement,
shall constitute) a valid and binding obligation of him or her, enforceable
against him in accordance with its terms.
(c) Neither the execution and delivery of any or all of the
Fundamental Agreements by him, nor the consummation by him of the transactions
contemplated thereby, will (i) conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a default under, or
require any notice, consent or waiver under, any instrument, contract, agreement
or arrangement to which he is a party or by which he is bound, (ii) result in
the imposition of any Security Interest upon the Company Shares owned by him, or
(iii) violate any order, writ, injunction or decree applicable to him or to the
Company Shares.
3.2 Investment Representations.
--------------------------
(a) He is acquiring the Merger Shares to be issued to him for his own
account for investment only, and not with a view to, or for sale in connection
with, any distribution of such Merger Shares in violation of the Securities Act
or any rule or regulation under the Securities Act.
(b) He has had adequate opportunity to obtain from representatives of
the Buyer such information, in addition to the representations set forth in the
-25-
Agreement, as is necessary to evaluate the merits and risks of his investment in
the Buyer.
(c) He has sufficient experience in business, financial and investment
matters to be able to evaluate the risks involved in the acquisition of the
Merger Shares to be issued to him and to make an informed investment decision
with respect to such investment.
(d) He understands that the Merger Shares have not been registered
under the Securities Act and are "restricted securities" within the meaning of
Rule 144 under the Securities Act; and the Merger Shares cannot be sold,
transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then available.
(e) A legend substantially in the following form will be placed on the
certificate representing the Merger Shares to be issued to him:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended,
and may not be sold, transferred or otherwise disposed of
in the absence of an effective registration statement under
such Act or an opinion of counsel satisfactory to the
corporation to the effect that such registration is not
required."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
AND THE TRANSITORY SUBSIDIARY
Each of the Buyer and the Transitory Subsidiary represents and
warrants to the Company Stockholder as follows:
4.1 Organization. Each of the Buyer and the Transitory Subsidiary is
------------
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.
4.2 Authorization of Transaction. Each of the Buyer and the
----------------------------
Transitory Subsidiary (in the case of agreements to which the Transitory
Subsidiary is a party) has all requisite power and authority to execute and
deliver the Fundamental Agreements and to perform its obligations under the
Fundamental Agreements. The execution and delivery of the Fundamental
Agreements by each of the Buyer and the Transitory Subsidiary (in the case of
agreements to which the Transitory Subsidiary is
-26-
a party) and the performance of the Fundamental Agreements and the consummation
of the transactions contemplated thereby by each of the Buyer and the Transitory
Subsidiary has been (or, in the case of the Escrow Agreement, shall be when
delivered) duly and validly authorized by all necessary corporate action on the
part of the Buyer and the Transitory Subsidiary (in the case of agreements to
which the Transitory Subsidiary is a party). The Fundamental Agreements have
been (or, in the case of the Escrow Agreement, shall be when delivered) duly and
validly executed and delivered by the Buyer and the Transitory Subsidiary (in
the case of agreements to which the Transitory Subsidiary is a party) and
constitute valid and binding obligations of the Buyer and the Transitory
Subsidiary (in the case of agreements to which the Transitory Subsidiary is a
party), enforceable against each of them in accordance with their terms.
4.3 Noncontravention. Subject to compliance with (a) the applicable
----------------
requirements of the Securities Act, (b) any applicable state securities laws and
(c) Connecticut Law, the execution and delivery of the Fundamental Agreements by
the Buyer and the consummation by the Buyer of the transactions contemplated
thereby will not (i) conflict with or violate any provision of the charter or
By-laws of the Buyer, (ii) require on the part of the Buyer any filing with, or
permit, authorization, consent or approval of, any Governmental Entity, (iii)
conflict with, result in breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of, create in
any party any right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other arrangement to
which the Buyer is a party or by which the Buyer is bound or to which any of its
assets are subject, or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer or any of its properties or
assets.
4.4 Reports and Financial Statements. The Buyer has previously
--------------------------------
furnished to each of the Company Stockholder complete and accurate copies, as
amended or supplemented, of the Buyer's (a) Registration Statement on Form S-3
(File No. 333-14923) and (b) all reports filed by the Buyer with the United
States Securities and Exchange Commission (the "SEC") under Section 13 or 15 of
the Securities Exchange Act of 1934 (as amended, the "Exchange Act") since
December 31, 1995 (such materials, together with any amendments or supplements
thereto, are collectively referred to herein as the "Buyer Reports"). As of
their respective dates, the Buyer Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited financial
statements and unaudited interim financial statements of the Buyer included in
the Buyer Reports (i) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, (ii) have been prepared in accordance with GAAP
-27-
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act), (iii)
fairly present the consolidated financial condition, results of operations and
cash flows of the Buyer as of the respective dates thereof and for the periods
referred to therein, and (iv) are consistent with the books and records of the
Buyer.
4.5 Brokers' Fees. Except as to fees or commissions payable by the
-------------
Buyer to Xxxxxxxxx & Xxxxx LLC, the Buyer has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
4.6 Disclosure. No representation or warranty by the Buyer contained
----------
in this Agreement, and no statement contained in the any document, certificate
or other instrument delivered to or to be delivered by or on behalf of the Buyer
pursuant to this Agreement, contains or will contain any untrue statement of a
material fact or omit or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading.
ARTICLE V
COVENANTS
From and after the Agreement Date and until (i) the Closing Date (as
to Sections 5.1 through 5.12 inclusive) or (ii) the date specified in the
respective Section (as to Sections 5.13 and 5.14):
5.1 Conduct of Business. The Company shall carry on its business
-------------------
diligently and substantially in the same manner as before the Agreement Date and
shall not make or institute any unusual or new methods of manufacture, purchase,
sale, shipment or delivery, lease, management, accounting or operation, except
as agreed to in writing by the Buyer. All of the property of the Company shall
be used, operated, repaired and maintained in a normal business manner
consistent with past practice.
5.2 Absence of Material Changes. Without the prior written consent
---------------------------
of the Buyer, the Company shall not:
(a) take any action to amend its charter documents or bylaws;
-28-
(b) issue any stock, bonds or other corporate securities or grant
any option or issue any warrant to purchase or subscribe for any of such
securities or issue any securities convertible into such securities;
(c) incur any obligation or liability (absolute or contingent),
except (i) current liabilities incurred and obligations under contracts entered
into in the Ordinary Course of Business of the Company and (ii) borrowings for
the purpose of making, and in an amount not to exceed, the Permitted Bonus (as
defined below);
(d) declare or make any payment or distribution to its
stockholders with respect to its stock or purchase or redeem any shares of its
capital stock, except for a year-end bonus to the Company Stockholder in an
amount not to exceed $2,000,000 (the "Permitted Bonus");
(e) mortgage, pledge, or subject to any lien, charge or any other
encumbrance any of its assets or properties;
(f) sell, assign, or transfer any of its assets, except in the
Ordinary Course of Business of the Company;
(g) cancel any debts or claims, except in the Ordinary Course of
Business of the Company;
(h) merge or consolidate with or into any Business Entity other
than the Transitory Subsidiary;
(i) make, accrue or become liable for any bonus, profit sharing
or incentive payment, except for payment of the Permitted Bonus and accruals
under existing plans, if any, or increase the rate of compensation payable or to
become payable by it to any of its officers, directors or employees;
(j) make any election or give any consent under the Code or the
tax statutes of any state or other jurisdiction or make any termination,
revocation or cancellation of any such election or any consent or compromise or
settle any claim for past or present tax due;
(k) waive any rights of material value;
(l) modify, amend, alter or terminate any of its executory
contracts of a material value or which are material in amount;
(m) take or permit any act or omission constituting a breach or
default under any contract, indenture or agreement by which it or its properties
are bound;
-29-
(n) fail to (i) preserve the possession and control of its assets
and business, (ii) keep in faithful service its present officers and key
employees, and (iii) preserve the goodwill of its consumers, suppliers, agents,
brokers and others having business relations with it;
(o) fail to operate its business and maintain its books, accounts
and records in the customary manner and in the Ordinary Course of Business of
the Company and maintain in good repair its business premises, fixtures,
machinery, furniture and equipment;
(p) enter into any lease, contract, agreement or understanding,
other than in the Ordinary Course of Business of the Company;
(q) incur any capital expenditure in excess of $10,000 in an
instance or $50,000 in the aggregate;
(r) engage any new employee for a salary in excess of $200,000
per annum;
(s) materially alter the terms, status or funding condition of
any Employee Benefit Plan;
(t) take any action that would jeopardize the treatment of the
Merger as a "pooling of interests" for accounting purposes; or
(u) commit or agree to do any of the foregoing in the future.
5.3 Delivery of Interim Financial Statements. As promptly as
----------------------------------------
possible following the last day of each month after the Agreement Date until the
Closing Date, and in any event within 20 days after the end of each such month,
the Company Stockholder shall deliver to the Buyer the balance sheet of the
Company and the related statements of income, shareholders' equity, retained
earnings and cash flows for the one-month period then ended, all certified by
the chief financial officer of the Company to the effect that such interim
financial statements are prepared in accordance with GAAP on a basis consistent
with the Financial Statements and fairly present the financial condition of the
Company as of the date thereof and for the period covered thereby (collectively,
the "Interim Financial Statements").
5.4 Communications with Customers and Suppliers.
-------------------------------------------
(a) Unless instructed otherwise by the Buyer in writing, the
Company will continue to accept customer orders in the Ordinary Course of
Business
-30-
of the Company for all products and services offered by the Company, whether
expected to be shipped before or after the Closing Date.
(b) The Parties will cooperate in communications with the
Company's suppliers and customers in connection with the transfer of the Company
Shares to the Buyer on the Closing Date.
5.5 Compliance with Laws. The Company will comply with all laws and
--------------------
regulations that are applicable to it or to the conduct of its business and will
perform and comply with all contracts, commitments and obligations by which it
is bound.
5.6 Continued Truth of Representations and Warranties. Neither the
-------------------------------------------------
Company Stockholder nor the Company will take any actions that would result in
any of the representations or warranties set forth in Articles II and III above
being untrue.
5.7 Continuing Obligation to Inform. From time to time prior to the
-------------------------------
Closing, the Company Stockholder will deliver or cause to be delivered to the
Buyer supplemental information concerning events subsequent to the Agreement
Date that would render any statement, representation or warranty in this
Agreement or any information contained in any Schedule attached hereto
inaccurate or incomplete at any time after the Agreement Date until the Closing
Date; provided, that such supplemental information shall not constitute an
amendment of any statement, representation or warranty in this Agreement or any
Schedule, Exhibit or document furnished pursuant hereto.
5.8 Exclusive Dealing. Until the earlier of the Closing or the
-----------------
termination of this Agreement pursuant to Section 8.1 hereof, neither the
Company Stockholder nor the Company will, directly or indirectly, through any
officer, director, agent or otherwise, (a) solicit, initiate or encourage
submission of proposals or offers from any person or Business Entity relating to
an acquisition or purchase of all or any material portion of the assets of or an
equity interest in the Company or any merger, consolidation or business
combination with the Company, or (b) participate in any discussions or
negotiations regarding, or furnish to any other person or Business Entity, any
non-public information with respect to or otherwise cooperate in any way with,
or assist or participate in, facilitate or encourage, any effort or attempt by
any other person to do or seek any of the foregoing. The Company Stockholder
and the Company shall promptly notify the Buyer of any such proposal or offer,
or any inquiry or contact with respect thereto received by the Company or any of
the Company Stockholder.
5.9 Reports, Taxes. The Company will duly and timely file all
--------------
reports or returns required to be filed with federal, state, local and foreign
authorities and will promptly pay all federal, state, local and foreign Taxes,
assessments and
-31-
governmental charges levied or assessed upon them or any of their properties
(unless contesting such in good faith and adequate provision has been made
therefor).
5.10 Best Efforts to Obtain Satisfaction of Conditions. The
-------------------------------------------------
Parties shall use their best efforts, to the extent commercially reasonable, to
obtain the satisfaction of the conditions specified in this Agreement.
5.11 Full Access. The Company shall permit representatives of the
-----------
Buyer to have full access (at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Company) to all premises,
properties, financial and accounting records, contracts, other records and
documents, and personnel, of or pertaining to the Company. The officers and
management of the Company shall cooperate fully with the Buyer's representatives
and agents and shall make themselves available to the extent necessary to
complete the due diligence process and the Closing. The Company shall, at the
request of the Buyer, introduce the Buyer to the Company's principal suppliers,
customers and employees to facilitate discussions between such persons and the
Buyer in regard to the conduct of the business of the Company following the
Closing.
5.12 Non-Competition.
---------------
(a) For a period of four years after the Closing Date, neither
the Company Stockholder nor any Affiliate of the Company Stockholder shall,
directly or indirectly, except as an officer or employee of the Company or the
Buyer, (i) develop, design, produce, market, sell or render (or assist any other
person in developing, designing, producing, marketing, selling or rendering)
products or services competitive with those developed, designed, produced,
marketed, sold or rendered by the Company on or prior to the Closing Date, or
(ii) engage in any business competitive with the business of the Company as
conducted on the Agreement Date or on the Closing Date, in the United States or
any other country in which the Company conducted its business during the three
years prior to the Closing Date; provided, however, that nothing herein shall
prohibit the Company Stockholder from holding up to 3% of the publicly-traded
securities of any corporation.
(b) The Parties agree that the duration and geographic scope of
the non-competition provision set forth in this Section 5.12 are reasonable. In
the event that any court of competent jurisdiction determines that the duration
or the geographic scope, or both, are unreasonable and that such provision is to
that extent unenforceable, the Parties agree that the provision shall remain in
full force and effect for the greatest time period and in the greatest area that
would not render it unenforceable. The Parties intend that this non-competition
provision shall be deemed to be a series of separate covenants, one for each and
every county of each and every state of the United States of America and each
and every political subdivision of each and every country outside the United
States of America where
-32-
this provision is intended to be effective.
(c) The Company Stockholder agrees that damages are an inadequate
remedy for any breach of this Section 5.12 or Section 5.13 below and that the
Buyer shall, whether or not it is pursuing any potential remedies at law, be
entitled to equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or threatened breach
of this Section 5.12 or Section 5.13 below. The agreements of the Company
Stockholder set forth in this Section 5.12 and Section 5.13 below are in
addition to, and in no way in limitation of, his agreements set forth in
Sections 6.1 and 6.2 of the Employment Agreement entered into between him and
the Company on the Agreement Date (in the form set forth in Exhibits C to this
----------
Agreement).
5.13 Solicitation and Hiring. For a period of four years after the
-----------------------
Closing Date, the Company Stockholder shall not, and shall cause his Affiliates
not to, either directly or indirectly as a stockholder, investor, partner,
director, officer, employee or otherwise, (a) solicit or attempt to induce any
person employed by the Company on the Agreement Date or any time thereafter to
terminate his or her employment with the Company or the Buyer or any Affiliate
of the Buyer or (b) hire or attempt to hire any person employed by the Company
on the Agreement Date or any time thereafter.
5.14 Agreements from Certain Affiliates of the Company. In order to
-------------------------------------------------
help to ensure that the Merger will be accounted for as a "Pooling of
Interests," that the issuance of Merger Shares will comply with the Securities
Act and that the Merger will be treated as a tax-free reorganization, the
Company Stockholder shall execute and deliver to the Buyer, on or before the
Agreement Date, a written agreement substantially in the form attached hereto as
Exhibit F (the "Affiliate Agreement"). The Company Stockholder agrees not to
---------
take any action, or cause or permit the Company or any of his Affiliates to take
any action, that would prevent the Company and the Buyer from accounting for the
business combination to be effected by the Merger as a "pooling of interests" in
conformity with GAAP.
5.15 Stock Options. On the Closing Date, the Buyer shall grant to
-------------
certain employees of the Company options to purchase an aggregate of 250,000
shares of Buyer Common Stock (the "Stock Options") in such amounts as are set
forth opposite such employees' names on Schedule 5.15 attached hereto and
designated as the "Number of Shares Underlying Stock Options", and with such
vesting as is mutually agreed upon between the Company and the Buyer prior to
the Closing Date. Such Stock Options shall have an exercise price equal to the
closing price of the Buyer Common Stock on the Nasdaq National Market on the
Closing Date.
5.16 Earnings Release. Not later than 30 days following the
----------------
completion of the first complete calendar month following the Closing, the Buyer
shall file with the Securities and Exchange Commission a Current Report on Form
8-K which
-33-
incorporates or otherwise includes a statement of the combined earnings of the
Buyer and the Company for such calendar month (the "Earnings Release").
5.17 Removal of Guaranties. The Parties shall use their best efforts
---------------------
to obtain from the Chase Manhattan Bank N.A. ("Chase"), on or before the Closing
Date, a notice of termination of (a) the Guaranty, dated December 28, 1995,
granted by the Company Stockholder to Chase in connection with a certain Term
Promissory Note, dated December 28, 1995, executed and delivered by the Company
to Chase, and (b) any other guaranties with respect to liabilities of the
Company disclosed by the Company on the Closing Balance Sheet or in the
Disclosure Schedule (collectively, the "Guaranties"); provided, however, that in
the event such notice of termination is not obtained on or before the Closing
Date, the Buyer shall indemnify and hold the Company Stockholder harmless from
and against all amounts paid by the Company Stockholder under such Guaranties.
5.18 Reorganization under Section 368(a). The Buyer shall take no
-----------------------------------
action inconsistent with the treatment of the transaction as a reorganization
intended to qualify under Section 368(a) of the Code.
5.19 Payment of Employee Bonuses. Prior to the Closing Date, the
---------------------------
Company shall have paid to each Company employee the amount set forth opposite
his or her name on Schedule 5.15 and designated as the "Employee Bonus".
5.20 Termination of LTIP. The Company shall take all actions
-------------------
necessary to terminate its Long Term Incentive Plan ("LTIP"). As consideration
for such termination, the Buyer shall pay to each of the participants in the
LTIP, upon execution by such individuals of the Retention and Non-Competition
Agreements, as provided for in Section 5.21 below, the amount set forth opposite
his or her name on Schedule 5.15 and designated as the "LTIP Payment." Except
for such payment, the Buyer shall have no obligation under the LTIP following
the Closing Date, and the Company Stockholder shall indemnify and hold the Buyer
harmless from and against any liabilities under the LTIP (other than the
obligation to make the payments contemplated by the prior sentence).
5.21 Retention and Non-Competition Agreements. The Company and the
----------------------------------------
Company Stockholder shall use their best efforts to obtain as soon as
practicable from each of the Company's employees identified on Schedule 5.15
attached hereto, an executed Retention and Non-Competition Agreement in the form
attached hereto as Exhibit G (the "Retention and Non-Competition Agreements").
---------
As consideration for the Retention and Non-Competition Agreements, the Buyer
shall pay retention payments to such employees on the terms set forth therein
and in the amounts set forth opposite such employees' names and designated as
the "Aggregate Amount of Retention Payment" on Schedule 5.15; provided however,
that no employee shall be
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entitled to such payment unless and until he or she has executed and delivered
to the Buyer a Retention and Non-Competition Agreement.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of the Buyer and the Transitory
---------------------------------------------------------
Subsidiary. The obligation of each of the Buyer and the Transitory Subsidiary to
----------
consummate the transactions to be performed by the Buyer and the Transitory
Subsidiary in connection with the Closing and the Merger is subject to the
satisfaction, or waiver by the Buyer and the Transitory Subsidiary, of the
following conditions:
(a) the Company shall have obtained all of the waivers, permits,
consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, necessary for the consummation by the
Company and the Company Stockholder of the transactions contemplated hereby;
(b) the representations and warranties of the Company Stockholder set
forth in Articles II and III above shall have been true and correct in all
material respects when made on the Agreement Date and shall be true and correct
in all material respects as of the Closing Date as if made as of the Closing
Date, except for representations and warranties made as of a specific date,
which shall be true and correct in all material respects as of such date;
(c) each of the Company and the Company Stockholder shall have
performed or complied with their agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the Closing;
(d) no action, suit or proceeding shall be pending or threatened by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or (iii)
affect adversely the right of the Company to own, operate or control any of its
assets or operations, and no such judgment, order, decree, stipulation or
injunction shall be in effect;
(e) the Company Stockholder shall have delivered to the Buyer a
certificate (without qualification as to knowledge or materiality or otherwise)
to the effect that each of the conditions specified in clauses (a) through (d)
of this Section 6.1 is satisfied in all respects;
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(f) on the Agreement Date, the Company Stockholder shall have executed
and delivered to the Buyer an employment agreement in the form attached hereto
as Exhibit C and such employment agreement shall be in full force and effect on
---------
the Closing Date in accordance with its terms;
(g) the Buyer and the Transitory Subsidiary shall have received from
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP an opinion in the form attached hereto as
Exhibit E, addressed to the Buyer and the Transitory Subsidiary and dated as of
---------
the Closing Date;
(h) the Buyer shall have received a letter from Deloitte & Touche LLP
and Price Waterhouse LLP, auditors for the Company, in a form reasonably
satisfactory to the Buyer, to the effect that the Company and, in the case of
the letter from Deloitte & Touche LLP, the Buyer may treat the transactions
contemplated hereby as a "pooling of interests" for accounting purposes;
(i) on the Closing Date, the Affiliate Agreement delivered in
accordance with Section 5.14 shall be in full force and effect in accordance
with its terms;
(j) on the Agreement Date, the Company Stockholder shall have executed
and delivered to the Buyer a Registration Rights Agreement in the form attached
hereto as Exhibit D and such Agreement shall be in full force and effect on the
---------
Closing Date in accordance with its terms;
(k) the Buyer shall have received the resignations, effective as of
the Closing Date, of each director of the Company and the Subsidiaries;
(l) the Buyer, the Company Stockholder and the Escrow Agent shall have
executed and delivered the Escrow Agreement;
(m) the Company Stockholder shall have delivered to the Buyer a
certificate of the Secretary of State of the State of Connecticut as of the
Closing Date as to the legal existence and good standing of the Company in
Connecticut as of the Closing Date;
(n) the Company Stockholder shall have delivered to the Buyer a
certificate of the Connecticut Department of Revenue as of a date within five
business days of the Closing Date as to the tax good standing of the Company in
Connecticut as of a date within five business days of the Closing Date;
(o) the Company Stockholder shall have delivered to the Buyer
certificates of the Secretary of the Company attesting to the incumbency of the
Company's officers, the authenticity of the resolutions authorizing the
transactions
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contemplated by this Agreement, and the authenticity and continuing validity of
the charter documents of the Company;
(p) the Company Stockholder shall have delivered to the Buyer
certificates of appropriate governmental officials in each state or country in
which the Company is required to qualify to do business as a foreign corporation
as to the qualification and corporate and tax good standing of the Company in
each such jurisdiction;
(q) the Buyer shall have received an estoppel certificate from the
lessors from whom the Company leases real property in Stamford, Connecticut and
Cambridge, Massachusetts, in each case consenting to the transactions
contemplated under this Agreement and representing that there are no outstanding
claims against the Company under such lease;
(r) all actions to be taken by the Company and the Company Stockholder
in connection with the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby shall be reasonably satisfactory in form
and substance to the Buyer; and
(s) the Company Stockholder shall have transferred all of his right,
title and interest in the ISS (UK) Shares to the Buyer or its nominee.
6.2 Conditions to Obligations of the Company and the Company
--------------------------------------------------------
Stockholder. The obligations of the Company and the Company Stockholder to
-----------
consummate the transactions to be performed by them in connection with the
Closing and the Merger are subject to the satisfaction, or waiver by the Company
and the Company Stockholder, of the following conditions:
(a) the representations and warranties of the Buyer and the Transitory
Subsidiary as set forth in Article IV above shall have been true and correct in
all material respects when made on the Agreement Date and shall be true and
correct in all material respects as of the Closing Date as if made as of the
Closing Date, except for representations and warranties made as of a specific
date, which shall be true and correct in all material respects as of such date;
(b) the Buyer shall have obtained all of the waivers, permits,
consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, necessary for the consummation by the Buyer
of the transactions contemplated hereby;
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(c) each of the Buyer and the Transitory Subsidiary shall have
performed or complied with their agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the Closing;
(d) no action, suit or proceeding shall be pending or threatened by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, or (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation;
(e) the Buyer shall have delivered to the Company Stockholder a
certificate (without qualification as to knowledge or materiality or otherwise)
to the effect that each of the conditions specified in clauses (a) through (d)
of this Section 6.2 is satisfied in all respects;
(f) the Company Stockholder shall have received from Xxxx and Xxxx an
opinion in the form attached hereto as Exhibit H, addressed to the Company
---------
Stockholder and dated as of the Closing Date;
(g) on the Agreement Date, the Buyer shall have executed and delivered
to the Company Stockholder an employment agreement in the form attached hereto
as Exhibit C and such employment agreement shall be in full force and effect on
---------
the Closing Date in accordance with its terms;
(h) on the Agreement Date, the Buyer shall have executed and delivered
to the Company Stockholder a Registration Rights Agreement in the form attached
hereto as Exhibit D and such Agreement shall be in full force and effect on the
---------
Closing Date in accordance with its terms;
(i) the Buyer shall have delivered to the Company Stockholder
certificates of the Secretaries of State of the State of Delaware and the
Commonwealth of Massachusetts as of the Closing Date as to the legal existence
and good standing of the Buyer in Delaware and in Massachusetts, respectively,
as of the Closing Date;
(j) the Buyer shall have delivered to the Company Stockholder a
certificate of the Secretary of the Buyer attesting to the incumbency of the
Buyer's officers, the authenticity of the resolutions authorizing the
transactions contemplated by this Agreement, and the authenticity and continuing
validity of the charter documents of the Buyer; and
(k) all actions to be taken by the Buyer in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated
-38-
hereby shall be reasonably satisfactory in form and substance to the Company
Stockholder.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification.
---------------
(a) Indemnification by Company Stockholder. The Company Stockholder
--------------------------------------
shall indemnify the Buyer and the Surviving Corporation in respect of, and hold
such Parties harmless against, any and all claims, debts, obligations and other
liabilities (whether absolute, accrued, contingent, fixed or otherwise, known or
unknown, due or to become due or otherwise), monetary damages, fines, fees,
penalties, interest obligations, deficiencies, losses and expenses (including
without limitation amounts paid in settlement, interest, court costs, costs of
investigators, fees and expenses of attorneys, accountants, financial advisors
and other experts, and other expenses of litigation) ("Damages") incurred or
suffered by such Parties or any Affiliate thereof:
(i) resulting from, relating to or constituting any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement of the Company contained in this Agreement or in the Certificate
delivered pursuant to Section 6.1(e);
(ii) resulting from or relating to any failure of the Company
Stockholder to have good, valid and marketable title to the issued and
outstanding Company Shares, free and clear of all liens, claims, pledges,
options, adverse claims or charges of any nature whatsoever;
(iii) resulting from or relating to Taxes attributable to any and
all periods of time ending on or before the Closing Date determined in
accordance with Section 7.4 below, to the extent that such Taxes exceed the
amount of any accruals or reserves for Taxes set forth on the Closing Balance
Sheet (excluding for this purpose, any accruals or reserves for "deferred taxes"
or similar items that reflect timing differences in the recognition of income or
deductions for tax and financial accounting purposes); provided, however, that
with respect to Accounting Change Taxes, (i) solely for purposes of this Section
7.1(a)(iii), any accruals or reserves for Taxes on the Closing Balance Sheet
shall include an accrual for Accounting Tax Changes computed without regard to
the limitation on the accrual for Accounting Change Taxes set forth in clause
(ii) of the last sentence of Section 1.8(a) hereof and (ii) the Company
Stockholder shall only indemnify the Buyer and the Surviving
-39-
Corporation with respect to 50% of any Accounting Change Taxes in excess of such
accrual for Accounting Change Taxes;
(iv) resulting from or relating to any claim by a stockholder or a
former stockholder of the Company, or any other person or Business Entity,
seeking to assert, or based upon: (A) ownership or rights to ownership of any
shares of stock of the Company; (B) any rights of a stockholder (other than the
right to receive the Merger Shares pursuant to this Agreement), including any
option, preemptive rights or rights to notice or to vote; (C) any rights under
the Certificate of Incorporation or By-laws of the Company; or (D) any claim
that his, her or its shares were wrongfully repurchase by the Company;
(v) resulting from, relating to or constituting any violation by the
Company of, or any failure by the Company to comply with, any law, ruling,
order, decree, regulation or zoning, environmental or permit requirement
applicable to the Company or the business of the Company, whether or not any
such violation or failure to comply has been disclosed to the Buyer, including
any costs incurred by the Buyer in order to come into compliance with
Environmental Laws as a consequence of noncompliance with such laws on the
Closing Date. For purposes of this Section 7.1, the term "Environmental Laws"
shall mean any federal, state or local law, statute, rule or regulation or the
common law relating to the environment or occupational health and safety,
including without limitation any statute, regulation or order pertaining to (A)
treatment, storage, disposal, generation and transportation of industrial, toxic
or hazardous substances or solid or hazardous waste; (B) air, water and noise
pollution; (C) groundwater and soil contamination; (D) the release or threatened
release into the environment of industrial, toxic or hazardous substances, or
solid or hazardous waste, including without limitation emissions, discharges,
injections, spills, escapes or dumping of pollutants, contaminants or chemicals;
(E) the protection of wildlife, marine sanctuaries and wetlands, including
without limitation all endangered and threatened species; (F) above ground or
underground storage tanks, vessels and containers; (G) abandoned, disposed or
discarded barrels, tanks, vessels, containers and other closed receptacles; (H)
health and safety of employees and other persons; and (I) manufacture,
processing, use, distribution, treatment, storage, disposal, transportation or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or oil or petroleum products or solid or hazardous waste.
As used above, the terms "release" and "environment" shall have the meaning set
forth in the federal Comprehensive Environmental Compensation, Liability and
Response Act of 1980; or
(vi) arising out of the conduct of the Company's business prior to the
Closing Date or resulting from or relating to any goods sold or services
rendered by the Company through the Closing Date, including without limitation,
customer claims and customer warranty claims in respect of such pre-Closing
goods and services ("Customer Claims"), regardless of when asserted.
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(b) Indemnification by Buyer. The Buyer shall indemnify the Company
------------------------
Stockholder in respect of, and hold the Company Stockholder harmless against,
any and all Damages incurred or suffered by the Company Stockholder:
(i) resulting from, relating to or constituting any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement of the Buyer or the Transitory Subsidiary contained in this Agreement;
or
(ii) resulting from or relating to (A) Taxes attributable to any
and all periods of time commencing after the Closing Date determined in
accordance with Section 7.4 below, and (B) Accounting Change Taxes that are not
the obligation of the Company Stockholder under this Agreement.
7.2 Method of Asserting Claims.
--------------------------
(a) All claims for indemnification by an Indemnified Person
pursuant to this Article VII shall be made in accordance with the provisions of
this Section 7.2 and the Escrow Agreement.
(b) A party entitled to indemnification under this Article VII
(the "Indemnified Person") shall give prompt written notification to the Party
obligated to provide such indemnification (the "Indemnifying Person") of the
commencement of any action, suit or proceeding relating to a third party claim
for which indemnification pursuant to this Article VII may be sought; provided,
however, that no delay on the part of the Indemnified Person in notifying the
Indemnifying Person shall relieve the Indemnifying Person from any liability or
obligation under this Article VII except to the extent of any damage or
liability caused by or arising out of such delay. Within 20 days after delivery
of such notification, the Indemnifying Person may, upon written notice thereof
to the Indemnified Person, assume control of the defense of such action, suit or
proceeding with counsel reasonably satisfactory to the Indemnified Person,
provided (i) the Indemnifying Person acknowledges in writing to the Indemnified
Person that the Indemnifying Person shall indemnify the Indemnified Person with
respect to all elements of such action, suit or proceeding and any damages,
fines, costs or other liabilities that may be assessed against the Indemnified
Person in connection with such action, suit or proceeding, and (ii) the third
party seeks monetary damages only. If the Indemnifying Person does not so assume
control of such defense, the Indemnified Person shall control such defense. The
party not controlling such defense may participate therein at its own expense;
provided, that if the Indemnifying Person assumes control of such defense and
the Indemnified Person is advised by counsel in writing that the Indemnifying
Person and the Indemnified Person may have conflicting interests or different
defenses available with respect to such action, suit or proceeding, the
reasonable fees and expenses of counsel to the
-41-
Indemnified Person shall be considered "Damages" for purposes of this Agreement.
The party controlling such defense shall keep the other party advised of the
status of such action, suit or proceeding and the defense thereof and shall
consider in good faith recommendations made by the other party with respect
thereto. Except as provided in Section 7.2(c) below, an Indemnified Person shall
not agree to any settlement of such action, suit or proceeding without the prior
written consent of the Indemnifying Person, which shall not be unreasonably
withheld or delayed. The Indemnifying Person shall not agree to any settlement
or the entry of a judgment in any action, suit or proceeding without the prior
written consent of the Indemnified Person, which shall not be unreasonably
withheld (it being understood that it is reasonable to withhold such consent if,
among other things, the settlement or the entry of a judgment (A) lacks a
complete release of the Indemnified Person for all liability with respect
thereto or (B) imposes any liability or obligation on the Indemnified Person).
7.3 Survival and Limitations.
------------------------
(a) Unless otherwise specified in this Section 7.3 or elsewhere in
this Agreement, all provisions of this Agreement shall survive the Closing and
the consummation of the transactions contemplated hereby and shall continue
forever in full force and effect in accordance with their terms.
(b) The representations and warranties of the Company Stockholder set
forth in Articles II and III above and the indemnification obligations set forth
in this Article VII:
(i) shall survive the Closing and the consummation of the
transactions contemplated hereby and continue until:
(A) the issuance of the Buyer's audited financial statements
for the year ended December 31, 1996, in the case of the representation set
forth in clause (a) of Section 2.6; and
(B) the first anniversary of the Closing Date, in the case of
all other representations and warranties and the indemnification obligations set
forth in this Article VII; and
(ii) shall not be affected by any examination made for or on
behalf of the Buyer or the knowledge of any of the Buyer's officers, directors,
stockholders, employees or agents.
(c) The date on which any particular representation, warranty or
indemnification obligation of the Company Stockholder terminates shall be
referred to herein and in the Escrow Agreement as the "Termination Date." If a
notice of a
-42-
claim is given in accordance with the notice provisions of this Agreement or the
Escrow Agreement before the Termination Date, then (notwithstanding the
occurrence of the Termination Date) the representation, warranty or
indemnification obligation applicable to such claim shall survive until, but
only for purposes of, the resolution of such claim.
(d) The representations and warranties of the Buyer set forth in
Article IV above (i) shall survive the Closing and the consummation of the
transactions contemplated hereby and shall continue until the first anniversary
of the Closing Date and (ii) shall not be affected by any examination made for
or on behalf of the Company Stockholder or the knowledge of any of the Company
Stockholder.
(e) Notwithstanding anything to the contrary herein, the Company
Stockholder shall not be liable under this Article VII unless and until the
aggregate Damages to the Buyer exceed $100,000 (at which point the Company
Stockholder shall become liable for the aggregate Damages, and not just amounts
in excess of $100,000). Except with respect to claims based on willful or
intentional fraud, (A) the indemnification obligations of the Company
Stockholder in favor of the Buyer under this Article VII shall be limited solely
to the Escrow Shares, and (B) the rights of the Parties under this Article VII
shall be the exclusive remedy of the Parties with respect to matters covered by
this Article VII.
7.4 Allocation of Tax Liabilities. For purposes of Sections 2.8 and
-----------------------------
7.1 hereof, the amount of any Taxes attributable to either (X) a period ending
on or before the Closing Date or (Y) a period beginning after the Closing Date
shall be determined as follows:
(a) Any Taxes attributable to any Tax Period (as defined below) that
ends on or before the Closing Date shall be considered to be attributable to a
period ending on or before the Closing Date. "Tax Period" means any period for
which a Tax is computed or a Tax Return is filed pursuant to the law (including
administrative rule or practice) of any taxing jurisdiction. To the extent
allowable under applicable law,
(i) the parties shall elect to have any Tax Period that commences
on or before the Closing Date and that would otherwise end after the
Closing Date (a "Straddle Tax Period") end on the Closing Date; and
(ii) Taxes shall be allocated between Tax Periods using the so-
called "closing-of-the-books" method so that Taxes allocable to a Tax
Period shall be based upon the actual operations of the Company during such
period.
(b) Any Taxes attributable to a Straddle Tax Period for which an
election pursuant to subsection (a)(i) above is not available shall be
apportioned using
-43-
the so-called "closing-of-the-books" method so that Taxes allocable to the
period that ends on the Closing Date shall be based upon the actual operations
of the Company during such period as if such period constituted a Tax Period,
and Taxes allocable to the period commencing on the day following the Closing
Date shall be based upon the actual operations of the Company during such period
as if such period constituted a Tax Period; provided, however, that any
-------- -------
transaction of the Company that occurs on the Closing Date but after the Closing
and that is not in the Ordinary Course of the Business of the Company shall be
considered to have been made on the day immediately following the Closing Date.
(c) The amount of any Taxes attributable to periods (or portions
thereof, determined in accordance with subsection (a) hereof) ending on before
the Closing Date shall be determined without regard to the amount of any losses,
deductions or credits carried back to such periods from periods (or portions
thereof, determined in accordance with subsection (a) hereof) beginning after
the Closing Date.
(d) To avoid any misunderstanding, the parties specifically agree that
under this Section 7.4, any Taxes attributable to the Company changing its
method of accounting for income tax purposes from the cash basis to the accrual
basis as a result of the Merger ("Accounting Change Taxes") shall be considered
to arise in a period that ends on the Closing Date.
ARTICLE VIII
TERMINATION
8.1 Termination of Agreement. The Parties may terminate this
------------------------
Agreement prior to the Closing Date only as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) the Buyer may terminate this Agreement by giving written
notice to the Company and the Company Stockholder in the event the Company or
the Company Stockholder are in breach, and the Company or the Company
Stockholder may terminate this Agreement by giving written notice to the Buyer
in the event the Buyer is in breach, of any material representation, warranty,
or covenant contained in this Agreement, and such breach is not remedied within
10 days of delivery of written notice thereof;
(c) the Buyer may terminate this Agreement by giving written
notice to the Company if the Effective Time shall not have occurred on or before
December 31, 1996 by reason of the failure of any condition precedent under
Section 6.1 above
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(unless the failure results primarily from a breach by the Buyer of any
representation, warranty or covenant contained in this Agreement); and
(d) the Company or the Company Stockholder may terminate this
Agreement by giving written notice to the Buyer if the Effective Time shall not
have occurred on or before December 31, 1996 by reason of the failure of any
condition precedent under Section 6.2 above (unless the failure results
primarily from a breach by the Company or the Company Stockholder of any
representation, warranty or covenant contained in this Agreement).
8.2 Effect of Termination. If any Party terminates this Agreement
---------------------
pursuant to Section 8.1 above, all obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party for breaches of this Agreement).
ARTICLE IX
DEFINITIONS
For purposes of this Agreement, each of the following defined
terms is defined in the Section of this Agreement indicated below.
Defined Term Section
------------- -------
Accounting Change Taxes 7.4(d)
Accountants 1.8(c)
Accounts Receivable 2.14
Adjustment Shares 1.8(f)
Affiliate 2.13(a)(vi)
Affiliate Agreement 5.14
Agreement Date Introduction
Certificate of Merger 1.1
Balance Sheet Date 2.5
Business Entity 2.4
Buyer Introduction
Buyer Common Stock 1.5(a)
Buyer Reports 4.4
Buyer Stock Valuation 1.8(f)
Certificates 1.3(d)
Closing 1.2
Closing Balance Sheet 1.8(a)
Closing Date 1.2
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Code 2.8(c)
Company Introduction
Company Shares Preliminary Statement
Company Stockholder Introduction
Customer Claims 7.1(a)(vi)
Customer Contracts 2.13(b)
Damages 7.2(b)
Disclosure Schedule Article II
Dispute Notice 1.8(c)
Effective Time 1.1
Employees 2.19
Employee Benefit Plan 2.20(a)
Environmental Law 7.1(a)(v)
ERISA 2.20(a)
ERISA Affiliate 2.20(a)
Escrow Agreement 1.3(f)
Escrow Shares 1.5(a)
Exchange Act 4.4
Financial Statements 2.5
Fundamental Agreements 2.1(b)
GAAP 1.8(a)
Governmental Entity 2.3
Guaranties 5.17
Indemnified Persons 7.2
Indemnifying Persons 7.2
Initial Shares 1.5(a)
Intellectual Property 2.11(a)
Interim Financial Statements 5.4
ISS (UK) 2.2
ISS (UK) Shares 2.2
Merger 1.1
Merger Shares 1.5(a)
Most Recent Balance Sheet 2.5
Net Asset Value 5.2(d)
Net Book Value Adjustment 1.8(b)
Ordinary Course of Business 2.7
Parties Introduction
Permits 2.24
Permitted Bonus 5.2(d)
Personal Property 2.9(c)
Related Party Transactions 2.25
Retention and Non-Competition
Agreements 5.21
SEC 4.4
Securities Act 2.2
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Security Interest 2.3
Stock Options 5.15
Subsidiary 2.4
Surviving Corporation 1.1
Tax Returns 2.8(a)
Taxes 2.8(a)
Termination Date 7.3
Transitory Subsidiary Introduction
ARTICLE X
GENERAL PROVISIONS
10.1 Press Releases and Announcements. No Party shall issue any press
--------------------------------
release or announcement relating to the subject matter of this Agreement without
the prior written approval of the other Parties; provided, however, that any
Party may make any public disclosure it believes in good faith is required by
law or regulation (in which case the disclosing Party shall advise the other
Parties and provide them with a copy of the proposed disclosure prior to making
the disclosure).
10.2 No Third Party Beneficiaries. This Agreement shall not confer
----------------------------
any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
10.3 Entire Agreement. The Fundamental Agreements and the exhibits
----------------
and schedules attached thereto, together with that certain Confidential
Disclosure Agreement, dated June 9, 1995, by and between the Buyer and the
Company, constitute the entire agreement among the Parties and supersede any
prior understandings, agreements, or representations by or among the Parties,
written or oral, that may have related in any way to the subject matter of the
Fundamental Agreements.
10.4 Succession and Assignment. This Agreement shall be binding upon
-------------------------
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties, provided that the Transitory Subsidiary may
assign its rights, interests and/or obligations under this Agreement to an
Affiliate of the Buyer by notice to the Company and the Company Stockholder.
10.5 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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10.6 Headings. The section headings contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.7 Notices. All notices, requests, demands, claims and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered three
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
If to the Company: Copy to:
----------------- -------
International Systems Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Services Corporation 0000 Xxxxxxxx
000 Xxxxx Xxxxxxxx Xxxxx 00xx Xxxxx
Xxxxxxxx, XX 00000-0000 Xxx Xxxx, XX 00000
Attention: Mr. O. Xxxxx Xxxxxx Attention: Xxxxx X. Xxxxxxxxx, Esq.
If to the Company Stockholder: Copy to:
----------------------------- -------
Mr. O. Xxxxx Xxxxxx Xxxxxxx, Phleger & Xxxxxxxx LLP
c/o International Systems 0000 Xxxxxxxx
Services Corporation 47th Floor
000 Xxxxx Xxxxxxxx Xxxxx Xxx Xxxx, XX 00000
Xxxxxxxx, XX 00000-0000 Attention: Xxxxx X. Xxxxxxxxx, Esq.
If to the Buyer or the
----------------------
Transitory Subsidiary: Copy to:
--------------------- -------
Renaissance Solutions, Inc. Xxxx and Dorr
Lincoln North, 00 Xxx Xxxxxxx Xxxx 00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxx, XX 00000
Attn: Xx. Xxxxxx X. XxXxxxxx Attn: Xxx X. Xxxxxxxxx, Esq.
Any Party may give any notice, request, demand, claim or other communication
hereunder by personal delivery or telecopy, but no such notice, request, demand,
claim or other communication shall be deemed to have been duly given unless and
until it actually is received by the Party for whom it is intended. Any Party
may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
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10.8 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws (and not the law of conflicts) of
the Commonwealth of Massachusetts.
10.9 Amendments and Waivers. The Parties may mutually amend any
----------------------
provision of this Agreement at any time prior to the Effective Time by a written
instrument signed by all of the Parties. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
10.10 Severability. Any term or provision of this Agreement that
------------
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforce ability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof 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 the 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.
10.11 Expenses. Except as set forth in the Escrow Agreement and
--------
Section 1.8 above, each of the Buyer and the Company Stockholder shall bear
their own costs and expenses (including fees and expenses of their respective
legal, accounting and financial advisors) incurred in connection with this
Agreement and the transactions contemplated hereby. The Company Stockholder
agrees prior to Closing to pay the Company's costs and expenses (including,
without limitation, the fees and expenses of its legal, accounting and financial
advisors) incurred in connection with this Agreement and the transactions
contemplated hereby.
10.12 Specific Performance. Each of the Parties acknowledges and
--------------------
agrees that one or more of the other Parties would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each of the
Parties agrees that the other Parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which it may be entitled, at law or in equity.
-49-
10.13 Construction. The language used in this Agreement shall be
------------
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
Any reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
10.14 Incorporation of Exhibits and Schedules. The Exhibits and
---------------------------------------
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
[Signatures are on the following page]
-50-
IN WITNESS WHEREOF, the Parties have executed this Agreement and Plan
of Merger as of the date first above written.
RENAISSANCE SOLUTIONS, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Co-Chairman
ARTIST ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
President
INTERNATIONAL SYSTEMS
SERVICES CORPORATION
By: /s/ O. Xxxxx Xxxxxx
-------------------------------------
O. Xxxxx Xxxxxx, President and
Chief Executive Officer
COMPANY STOCKHOLDER:
By: /s/ O. Xxxxx Xxxxxx
-----------------------------------------
O. Xxxxx Xxxxxx
-51-
The undersigned, being the duly elected Secretary of the Transitory
Subsidiary, hereby certifies that this Agreement has been adopted by unanimous
vote of the holders of all outstanding shares of capital stock of the Transitory
Subsidiary entitled to vote on this Agreement.
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Secretary
The undersigned, being the duly elected Secretary of the Company, hereby
certifies that this Agreement has been adopted by unanimous vote of the holders
of all outstanding Company Shares entitled to vote on this Agreement.
/s/ Xxxx X. Xxxxxx
-------------------------------------------
Secretary
-52-
EXHIBIT A
ESCROW AGREEMENT
----------------
This Escrow Agreement (this "Agreement") is entered into as of December
31, 1996, by and among Renaissance Solutions, Inc., a Delaware corporation (the
"Buyer"), O. Xxxxx Xxxxxx (the "Company Stockholder"), and State Street Bank and
Trust Company (the "Escrow Agent"). The Buyer and the Company Stockholder are
sometimes referred to herein as the "Interested Parties."
WHEREAS, the Buyer, International Systems Services Corporation (the
"Company") and the Company Stockholder have entered into an Agreement and Plan
of Merger dated December 31, 1996 (the "Merger Agreement"), pursuant to which
Artist Acquisition Corp., a wholly-owned subsidiary of the Buyer, will merge
with and into the Company, with the Company as the surviving corporation of the
merger; and
WHEREAS, the Merger Agreement provides that an escrow account will be
established to secure the Company Stockholder's indemnification obligations and
post-Closing adjustment obligations to the Indemnified Persons (as that term is
defined in the Merger Agreement) under the Merger Agreement on the terms and
conditions set forth herein; and
WHEREAS, the parties hereto desire to establish the terms and conditions
pursuant to which such escrow account will be established and maintained;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used in this Agreement and not
-------------
otherwise defined shall have the meanings given them in the Merger Agreement.
2. Consent of Company Stockholder. Pursuant to the Merger Agreement, the
------------------------------
Company Stockholder has consented to the establishment of this escrow to secure
the Company Stockholder's indemnification obligations under Article VII of the
Merger Agreement and the post-Closing adjustment obligations under Section 1.8
of the Merger Agreement in the manner set forth herein.
3. Escrow and Indemnification.
--------------------------
(a) Escrow of Shares. On the Closing Date, the Buyer shall deposit
----------------
with the Escrow Agent a certificate for the number of Escrow Shares specified in
Section 1.5 of the Merger Agreement, issued in the name of the Escrow Agent or
its nominee. The Escrow Shares shall be held as a trust fund and shall not be
subject to
any lien, attachment, trustee process or any other judicial process of any
creditor of any party hereto. The Escrow Agent agrees to accept delivery of the
Escrow Shares and to hold the Escrow Shares in an escrow account (the "Escrow
Account"), subject to the terms and conditions of this Agreement. The Escrow
Account shall not be an interest bearing account and none of the cash, if any,
held in the Escrow Account shall be invested.
(b) Indemnification and Post-Closing Adjustments. The Company
--------------------------------------------
Stockholder has agreed in Article VII of the Merger Agreement to indemnify and
hold harmless the Indemnified Persons from and against specified Damages. The
Company Stockholder has further agreed in Section 1.8 of the Merger Agreement to
authorize the Escrow Agent to transfer, deliver and assign the Adjustment Shares
to the Buyer based on post-closing adjustments described in Section 1.8 of the
Merger Agreement. In no event shall there be any recovery by the Buyer against
the Escrow Shares for any Damages in respect of which a written claim is not
made by the Buyer on or prior to the first anniversary of the Closing Date. The
Escrow Shares shall be security for the foregoing obligations of the Company
Stockholder, subject to the limitations, and in the manner provided, in this
Agreement and the Merger Agreement.
(c) Distributions and Dividends. Any securities, cash dividends or
---------------------------
other property distributable to the Company Stockholder in respect of or in
exchange for any of the Escrow Shares, whether by way of stock dividends, stock
splits or otherwise, shall be delivered to the Escrow Agent, who shall hold such
securities, cash dividends or other property in the Escrow Account. Such
securities shall be issued in the name of the Escrow Agent or its nominee and
all such securities, cash dividends or other property shall be considered part
of the Escrow Account for purposes hereof.
(d) Voting of Shares. The Company Stockholder shall have the right to
----------------
direct the Escrow Agent in writing as to the exercise of any voting rights
pertaining to the Escrow Shares, and the Escrow Agent shall comply with any such
written instructions. In the absence of such instructions, the Escrow Agent
shall not vote any of the Escrow Shares.
(e) Transferability. The interest of the Company Stockholder in the
---------------
Escrow Shares and any other property comprising the Escrow Account (collectively
with the Escrow Shares, the "Escrow Property") shall not be assignable or
transferable, other than by operation of law. Notice of any such assignment or
transfer by operation of law shall be given to the Escrow Agent and the Buyer,
and no such assignment or transfer shall be valid until such notice is given.
4. Administration of Escrow Account for Post-Closing Adjustments. The
-------------------------------------------------------------
Buyer and the Company Stockholder shall comply with Section 1.8 of the Merger
-2-
Agreement before the provisions of this Section 4 shall apply. Upon receipt by
the Escrow Agent of notice (the "Adjustment Notice") from (a) the Buyer and the
Company Stockholder, (b) only the Buyer certifying that (i) the Buyer has not
received a Dispute Notice from the Company Stockholder and (ii) the period for
giving a Dispute Notice under Section 1.8(e) of the Merger Agreement has
expired, or (c) only the Buyer (i) certifying that the Accountants have resolved
the matters set forth in any Dispute Notice delivered to the Buyers under
Section 1.8(c) of the Merger Agreement and (ii) attaching a copy of the
Accountants' determination, the Escrow Agent shall promptly submit for transfer,
delivery and assignment to the Buyer the number of Escrow Shares equal to the
number of Adjustment Shares specified in the Adjustment Notice. The Escrow
Agent and the Buyer shall cooperate to ensure that after the transfer, delivery
and assignment of the Adjustment Shares to the Buyer, the Escrow Agent continues
to hold a certificate for the number of Escrow Shares remaining, if any, after
such transfer, delivery and assignment.
5. Administration of Escrow Account for Indemnification Claims. The
-----------------------------------------------------------
Escrow Agent shall administer the Escrow Account in connection with the
indemnification provisions of Article VII of the Merger Agreement as follows:
(a) If an Indemnified Person has incurred or suffered Damages for
which it is entitled to indemnification under Section 7.1(a) of the Merger
Agreement, the Indemnified Person shall, prior to the Termination Date with
respect to a particular claim, give written notice of such claim (a "Claim
Notice") to the Company Stockholder and the Escrow Agent. Each Claim Notice
shall state the amount of claimed Damages (the "Claimed Amount") and the basis
for such claim.
(b) Claims for indemnification involving a claim or legal proceeding
by a third party shall be made in accordance with the procedures set forth in
Article VII of the Merger Agreement and the provisions of this Section 5. For
indemnification claims not involving any claim or legal proceeding by a third
party, the procedures herein shall apply. Within 20 days after delivery of a
Claim Notice the Company Stockholder shall provide to the Indemnified Person,
with a copy to the Escrow Agent, a written response (the "Response Notice") in
which the Company Stockholder shall: (i) agree that Escrow Property having a
Fair Market Value (as computed pursuant to Section 7 below) equal to the full
Claimed Amount may be released from the Escrow Account to the Indemnified
Person, (ii) agree that Escrow Property having a Fair Market Value equal to
part, but not all, of the Claimed Amount (the "Agreed Amount") may be released
from the Escrow Account to the Indemnified Person, or (iii) contest that any of
the Escrow Property may be released from the Escrow Account to the Indemnified
Person. The Company Stockholder may contest the release of Escrow Property
having a Fair Market Value equal to all or a portion of the Claimed Amount only
based upon a good faith belief that all or such portion of the Claimed Amount
does not constitute Damages for which the Indemnified Person is entitled to
indemnification under Article VII of the Merger
-3-
Agreement. If no Response Notice is delivered by, and received by the Escrow
Agent from, the Company Stockholder within such 20-day period, the Company
Stockholder shall be deemed to have agreed that Escrow Property having a Fair
Market Value equal to all of the Claimed Amount may be released to the
Indemnified Person from the Escrow Account.
(c) If the Company Stockholder in the Response Notice agrees (or is
deemed to have agreed) that Escrow Property having a Fair Market Value equal to
all of the Claimed Amount may be released from the Escrow Account to the
Indemnified Person, the Escrow Agent shall, promptly following the earlier of
the required delivery date for the Response Notice or the delivery of the
Response Notice, transfer, deliver and assign to the Indemnified Person Escrow
Property having a Fair Market Value equal to the Claimed Amount (or such lesser
amount of Escrow Property as is then held in the Escrow Account).
(d) If the Company Stockholder in the Response Notice agrees that
Escrow Property having a Fair Market Value equal to part, but not all, of the
Claimed Amount may be released from the Escrow Account to the Indemnified
Person, the Escrow Agent shall promptly following the delivery of the Response
Notice transfer, deliver and assign to the Indemnified Person Escrow Property
having a Fair Market Value equal to the Agreed Amount (or such lesser amount of
Escrow Property as is then held in the Escrow Account).
(e) If the Company Stockholder in the Response Notice contests the
release of Escrow Property having a Fair Market Value equal to all or part of
the Claimed Amount (the "Contested Amount"), the Company Stockholder and the
Indemnified Person shall attempt promptly and in good faith to agree upon the
rights of the parties with respect to the Contested Amount. If the Company
Stockholder and the Indemnified Person should so agree, a memorandum setting
forth such agreement shall be prepared and signed by both parties and delivered
to the Escrow Agent and, if such agreement provides that all or a portion of the
Contested Amount is to be paid to the Indemnified Person, the Escrow Agent shall
transfer, assign and deliver to the Indemnified Person from the Escrow Account
an amount of Escrow Property having a Fair Market Value equal to the amount so
agreed. If no such agreement can be reached after good faith negotiation over a
period of 15 days (or such longer period as the Indemnified Person and the
Company Stockholder may mutually agree), the matter shall be settled by binding
arbitration in Boston, Massachusetts. All claims shall be settled by a single
arbitrator mutually agreeable to the Indemnified Person and the Company
Stockholder, or if they cannot agree on a single arbitrator in 15 days, by three
arbitrators, in accordance with the Commercial Arbitration Rules then in effect
of the American Arbitration Association (the "AAA Rules"), as follows: If a
single arbitrator has not been mutually agreed upon, the Company Stockholder
and the Indemnified Person shall each designate one arbitrator within 45 days of
the delivery of the Company Stockholder's Response
-4-
Notice contesting the Claimed Amount. The Company Stockholder and the
Indemnified Person shall cause such designated arbitrators mutually to agree
upon and designate a third arbitrator; provided, however, that (i) failing such
agreement within 75 days of delivery of the Company Stockholder's Response
Notice, the third arbitrator shall be appointed in accordance with the AAA
Rules, and (ii) if either the Company Stockholder or the Indemnified Person fail
to timely designate an arbitrator, the dispute shall be resolved by the one
arbitrator timely designated. The Company Stockholder, on the one hand, and the
Indemnified Person, on the other hand, shall pay the fees and expenses of their
respectively designated arbitrators and shall bear equally the fees and expenses
of the third arbitrator (or of the sole arbitrator, in the event a single
arbitrator decides the matter). The Company Stockholder and the Indemnified
Person shall cause the arbitrators to decide the matter to be arbitrated
pursuant hereto within 60 days after the appointment of the last arbitrator. The
arbitrators' decision shall relate solely to whether the Indemnified Person is
entitled to receive the Contested Amount (or a portion thereof) pursuant to the
applicable terms of the Merger Agreement and this Agreement. The final decision
of the arbitrator, or a majority of the arbitrators in the case of three
arbitrators, shall be furnished to the Company Stockholder, the Indemnified
Person and the Escrow Agent in writing and shall constitute a conclusive
determination of the issue in question, binding upon the Company Stockholder,
the Company Stockholder, the Indemnified Person and the Escrow Agent, and shall
not be contested by any of them. Such decision may be used in a court of law
only for the purpose of seeking enforcement of the arbitrators' award.
(f) After delivery of a Response Notice that the Claimed Amount is
contested by the Company Stockholder, the Escrow Agent shall continue to hold in
the Escrow Account an amount of Escrow Property having a Fair Market Value
sufficient to cover the Contested Amount (up to the amount of Escrow Property
then available in the Escrow Account), notwithstanding the occurrence of the
first anniversary of the Closing Date, until (i) delivery of a copy of a
settlement agreement executed by the Indemnified Person and the Company
Stockholder setting forth instructions to the Escrow Agent as to the release of
Escrow Property, if any, that shall be made with respect to the Contested Amount
or (ii) delivery of a copy of the final award of the arbitrator, or a majority
of the arbitrators in the case of three arbitrators, setting forth instructions
to the Escrow Agent as to the release of Escrow Property, if any, that shall be
made with respect to the Contested Amount. The Escrow Agent shall thereupon
release Escrow Property from the Escrow Account (up to the amount of Escrow
Property then available in the Escrow Account) in accordance with such agreement
or instructions.
(g) If, as a result of any third party claim or legal proceeding
subject to the indemnification procedures set forth in the Merger Agreement, any
settlement has been entered into, or any judgment entered in favor of any third
party (which is not subject to further appeal), the Indemnified Person may give
notice of the
-5-
resulting Damages to the Escrow Agent, together with a copy of the settlement or
judgement and the Escrow Agent shall, promptly following the receipt of such
notice, transfer, deliver and assign to the Indemnified Person an amount of
Escrow Property having a Fair Market Value equal to such Damages (up to the
amount of Escrow Property then available in the Escrow Account).
6. Release of Escrow Property.
--------------------------
(a) Promptly after the Earnings Release (as defined in the Merger
Agreement) has been issued (the "First Release Date"), the Buyer shall give
notice thereof to the Escrow Agent and promptly upon receipt of such notice
(subject to the matters provided for in Section 6(b), below) the Escrow Agent
shall deliver and/or submit for transfer, delivery and assignment to the Company
Stockholder 25% of the Fair Market Value of the Escrow Property then held in
escrow (the "First Escrow Portion") as specified by the Buyer in such notice.
Promptly after the first anniversary of the Closing Date (the "Second Release
Date"), the Escrow Agent shall deliver and/or submit for transfer, delivery and
assignment to the Company Stockholder the balance of the Escrow Property then
held in escrow (such amount, including such portion of the First Escrow Portion
as may be retained pursuant to Section 6(b) below, the "Escrow Balance").
(b) Notwithstanding the foregoing, the release of the First Escrow
Portion and the Escrow Balance shall be subject to the following limitations:
(i) if on the First Release Date the Escrow Agent has not yet
received an Adjustment Notice and has received a notice from the Buyer
indicating that adjustment matters relating to Section 1.8 of the Merger
Agreement remain unresolved (an "Adjustment Delay"), the First Escrow Portion
shall be retained by the Escrow Agent;
(ii) if on the First Release Date the Escrow Agent has received a
Dispute Notice and such dispute has not been resolved in accordance with Section
1.8(c) of the Merger Agreement, the Escrow Agent shall retain in the Escrow
Account an amount of the First Escrow Portion having a Fair Market Value equal
to the Net Book Value Adjustment asserted by the Buyer in connection with such
dispute (the "Contested Purchase Price Amount") and release the balance of the
First Escrow Portion, if any, to the Company Stockholder, subject to Section
6(b)(iii)(C);
(iii) if on the First Release Date an Indemnified Person has
previously given any Claim Notices that have not then been resolved in
accordance with Section 5 above, the Escrow Agent shall retain in the Escrow
Account an amount of the First Escrow Portion having a Fair Market Value equal
to the aggregate Claimed Amount covered by all such Claim Notices that have not
then been resolved (provided that (A) Section 6(b)(i) does not otherwise apply,
in which case Section 6(b)(i) shall govern, (B) if the Claimed Amount is greater
than or equal
-6-
to the First Escrow Portion, the Escrow Agent shall retain the entire First
Escrow Portion, and (C) if the sum of the Claimed Amount and any Contested
Purchase Price Amount is greater than or equal to the First Escrow Portion, the
Escrow Agent shall retain the entire First Escrow Portion);
(iv) if on the Second Release Date the Escrow Agent has not yet
received an Adjustment Notice and has received a notice from the Buyer of an
Adjustment Delay, the Escrow Balance shall be retained by the Escrow Agent; and
(v) if on the Second Release Date an Indemnified Person has
previously given any Claim Notices that have not then been resolved in
accordance with Section 5 above, the Escrow Agent shall retain in the Escrow
Account an amount of the Escrow Balance having a Fair Market Value equal to the
aggregate Claimed Amount covered by all such Claim Notices that have not then
been resolved (provided that Section 6(b)(iii) does not otherwise apply, in
which case Section 6(b)(iii) shall govern).
Any Escrow Property retained in escrow pursuant to this Section 6(b) shall be
disbursed in accordance with the terms of the resolution of such Adjustment
Delay or claims and, in the case of a resolution relating to any of the First
Escrow Portion retained pursuant to clauses (b)(i), (b)(ii) or (b)(iii) above,
the balance of such First Escrow Portion shall be distributed to the Company
Stockholder promptly following the resolution of all such Adjustment Delays,
Dispute Notices or claims.
7. Valuation of Escrow Property. For purposes of this Agreement, the
----------------------------
Fair Market Value of Buyer Common Stock shall be $43.5125 per share (based upon
the average of the closing prices of the Buyer Common Stock on the Nasdaq
National Market System for the 10 consecutive trading days immediately preceding
the Closing Date). The Fair Market Value of all other Escrow Property, if any,
shall be determined by the mutual agreement of the Buyer and the Company
Stockholder.
8. Fees and Expenses of the Escrow Agent. The Buyer and the Company
-------------------------------------
Stockholder hereby agree, jointly and severally, to pay to the Escrow Agent its
fees and expenses in accepting and performing its appointment as escrow agent
hereunder. The Buyer, on the one hand, and the Company Stockholder, on the
other hand, shall each pay (a) one-half of the fees of the Escrow Agent for the
services to be rendered by the Escrow Agent hereunder and (b) one-half of any
fees and expenses of counsel reasonably incurred by the Escrow Agent in the
performance of its duties hereunder.
-7-
9. General Terms and Standards Regarding the Escrow Agent.
------------------------------------------------------
Notwithstanding any terms of this Agreement to the contrary, each term of
this Agreement, including without limitation each of the stated duties and
responsibilities of the Escrow Agent set forth herein, shall be subject to the
following terms and conditions:
(a) The duties, responsibilities and obligations of the Escrow Agent
shall be limited to those expressly set forth in this Agreement (and the duty to
exercise reasonable care in the physical safekeeping of any property held in
escrow hereunder), and no implied duties, responsibilities or obligations shall
be read into this Agreement against the Escrow Agent. Without limiting the
generality of the foregoing, the Escrow Agent shall have no duty to take action
to preserve or exercise rights in any property held by it hereunder (including,
without limitation, against prior parties or otherwise).
(b) The Escrow Agent shall not be subject to, bound by, charged with
notice of or be required to comply with or interpret any agreement or document
(including without limitation the Merger Agreement) between or among the
Interested Parties (whether or not reference to any such other agreement or
documents expressed herein) other than this Agreement.
(c) The Escrow Agent shall in no instance be under any duty to give
any property held by it hereunder any greater degree of care than it gives its
own similar property. The Escrow Agent shall not be required to invest any
funds held hereunder, and shall not be obligated to pay interest on uninvested
funds. All amounts received by the Escrow Agent (and any credits to the Escrow
Account) shall be conditional upon collection (and actual receipt by the Escrow
Agent of final payment). In no event shall the Escrow Agent have any obligation
to advance funds.
(d) The Escrow Agent may rely upon, and shall be protected in acting
or refraining from acting upon, any written notice, instruction, statement,
request, waiver, order, judgment, certification, consent, receipt or other paper
or document furnished to it (not only as to genuineness, but also as to its due
execution and validity, the genuineness of signatures appearing thereon and as
to the truth and accuracy of any information therein contained), which it in
good faith believes to be genuine and signed or presented by the proper person.
(e) Neither the Escrow Agent nor any of its directors, officers or
employees shall be liable to anyone for any error of judgment, or for any act
done or step taken or omitted to be taken by it or any of its directors,
officers or employees, or for any mistake of fact or law, or for anything which
it, or any of its directors, officers or employees, may do or refrain from doing
in connection with or in the administration of this Agreement, unless and except
to the extent the same
-8-
constitutes gross negligence, bad faith or wilful misconduct on the part of the
Escrow Agent. In no event shall the Escrow Agent be liable for any indirect,
punitive, special or consequential damages, or any amount in excess of the value
of the Escrow Property (as of the date of the action or omission giving rise to
liability).
(f) The Escrow Agent may consult with, and obtain advice from, legal
counsel (including, without limitation, in-house counsel) with respect to any
question as to any of the provisions hereof or its duties hereunder, or any
matter relating hereto, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action reasonably taken,
suffered or omitted by the Escrow Agent in good faith in accordance with the
opinion and directions of such counsel.
(g) The Escrow Agent shall not be deemed to have notice of any fact,
claim or demand with respect hereto unless actually known by an officer charged
with responsibility for administering this Agreement or unless in writing
received by the Escrow Agent and making specific reference to this Agreement.
(h) No provision of this Agreement shall require the Escrow Agent to
expend or risk its own funds, or to take any legal or other action hereunder
which might in its judgment involve it in, or require it to incur in connection
with the performance of its duties hereunder, any expense or any financial
liability unless it shall be furnished with indemnification acceptable to it.
(i) Any permissive right of the Escrow Agent to take any action
hereunder shall not be construed as duty.
(j) All indemnifications contained in this Agreement shall survive the
resignation or removal of the Escrow Agent, and shall survive the termination of
this Agreement.
(k) The Escrow Agent is not responsible for the recitals appearing in
this Agreement. The recitals shall be deemed to be statements of the Interested
Parties to this Agreement.
(l) The Escrow Agent has no responsibility for the sufficiency of this
Agreement for any purpose. Without limiting the foregoing, if any security
interest is referred to herein, the Escrow Agent shall have no responsibility
for, and makes no representation or warranty as to, the creation, attachment or
perfection of any such security interest or the sufficiency of this Agreement
therefor.
(m) Nothing in this Agreement shall obligate the Escrow Agent to
qualify to do business or act in any jurisdiction in which it is not presently
qualified to do business, or be deemed to impose upon the Escrow Agent the
duties of a
-9-
trustee. The duties of the Escrow Agent under this Agreement are strictly
ministerial in nature.
(n) In no event shall the Escrow Agent have any liability for any
failure or inability of any of the Interested Parties to perform or observe his
or its duties under the Agreement, or by reason of a breach of this Agreement by
either of the Interested Parties. In no event shall the Escrow Agent be
obligated to take any action against any of the Interested Parties to compel
performance hereunder.
(o) The Escrow Agent shall in no instance be obligated to commence,
prosecute or defend any legal proceedings in connection herewith. The Escrow
Agent shall be authorized and entitled, however, in any instance to commence,
prosecute or defend any legal proceedings in connection herewith, including
without limitation any proceeding it may deem necessary to resolve any matter or
dispute, to obtain a necessary declaration of rights, or to appoint a successor
upon resignation (and after failure by the Interested Parties to appoint a
successor, as provided in Section 13).
(p) Whenever the terms hereof call for any notice, payment or other
action on a day which is not a business day, such payment or action may be
taken, or such notice given, as the case may be, on the next succeeding business
day. As used herein, "business day" shall mean any day other than a Saturday or
Sunday, or any other day on which the Escrow Agent is closed for business.
(q) In the event of any ambiguity or uncertainty under this
Agreement, or in any notice, instruction, or other communication received by the
Escrow Agent hereunder, the Escrow Agent may, in its reasonable discretion,
refrain from taking action, and may retain the Escrow Property, until and unless
it receives written instruction signed by all Interested Parties, or a decision
by a court of competent jurisdiction which eliminates such uncertainty or
ambiguity.
(r) If at any time Escrow Agent is served with any judicial or
administrative order, judgement, decree, writ or other form of judicial
administrative process which in any way relates to or affects the Escrow
Property (including but not limited to orders of attachment or garnishment or
other forms of levies or injunctions or stays relating to the Escrow Property),
Escrow Agent is authorized to comply therewith in any manner as it or its legal
counsel reasonably deems appropriate; and if the Escrow Agent complies with any
such judicial or administrative order, judgement, decree, writ or other form of
judicial or administrative process, Escrow Agent shall not be liable to any of
the parties hereto or to any other person or entity notwithstanding that though
such order, judgment, decree, writ or process may be subsequently modified,
annulled, set aside, vacated, found to have been without proper jurisdiction, or
otherwise determined to have been without legal force or effect.
-10-
(s) The Escrow Agent shall have no liability for the actions or
omissions of any transfer agent, book-entry depository, nominee, correspondent,
subagent or subcustodian, except to the extent that such action or omission of
any transfer agent, book-entry depository, nominee, correspondent, subagent or
subcustodian was caused by the Escrow Agent's own gross negligence, bad faith or
willful misconduct.
10. Indemnification.
---------------
(a) General. Each of the Buyer and the Company Stockholder, jointly
-------
and severally, hereby covenants and agrees to indemnify the Escrow Agent for,
and to defend and hold harmless the Escrow Agent from and against, any and every
loss, liability, damage, claim, cost and expense of any nature incurred or
suffered by the Escrow Agent and arising out of or in connection with this
Agreement or the administration of this Agreement or the performance or
observance by the Escrow Agent of its responsibilities or services under this
Agreement (including but not limited to attorneys fees and other costs and
expenses of defending or preparing to defend against any claim or liability),
unless and except to the extent such loss, liability, damage, cost or expense
shall be caused by the Escrow Agent's own wilful misconduct, bad faith or gross
negligence.
(b) Tax-Related. Each of the Buyer and the Company Stockholder,
-----------
jointly and severally, agree to assume any and all obligations imposed now or
hereafter by any applicable tax law with respect to the payment of Escrow
Property under this Agreement, and, without limiting the generality of Section
10(a) above, hereby agree to indemnify and hold the Escrow Agent harmless from
and against any taxes, additions for late payment, interest, penalties and other
expenses, that may be assessed against the Escrow Agent on any such payment or
other activities under this Agreement. The Buyer and the Company Stockholder
undertake to instruct the Escrow Agent in writing with respect to the Escrow
Agent's responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting in connection
with its acting as Escrow Agent under this Agreement. Each of the Buyer and the
Company Stockholder, jointly and severally, agrees to indemnify and hold the
Escrow Agent harmless from any liability on account of taxes, assessments or
other governmental charges, including without limitation the withholding or
deduction or the failure to withhold or deduct same, and any liability for
failure to obtain proper certifications or to properly report to governmental
authorities, to which the Escrow Agent may be or become subject in connection
with or which arises out of this Agreement, including costs and expenses
(including reasonable legal fees), interest and penalties. The Interested
Parties shall each promptly provide to Escrow Agent with appropriate IRS Forms
W-9 for taxpayer identification number certifications, or Forms W-8 for non-
resident alien certifications in connection with any payments to be made to
them.
-11-
11. Termination. This Agreement shall terminate upon the later of the
-----------
first anniversary of the Closing Date or the distribution by the Escrow Agent of
all of the Escrow Account in accordance with this Agreement; provided that the
provisions of Sections 9 and 10 above shall survive such termination.
12. Notices. All notices, requests, demands, claims and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered three
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
If to the Buyer: Copy to:
--------------- -------
Renaissance Solutions, Inc. Xxxx and Xxxx
Xxxxxxx Xxxxx 00 Xxxxx Xxxxxx
00 Xxx Xxxxxxx Xxxx Xxxxxx, XX 00000
Xxxxxxx, XX 00000 Attn: Xxx X. Xxxxxxxxx, Esq.
Attn: President
If to the Company Stockholder: Copy to:
----------------------------- -------
O. Xxxxx Xxxxxx Xxxxx X. Xxxxxxxxx, Esq.
c/o International Systems Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Services Corporation 0000 Xxxxxxxx
100 First Stamford Place 4th Floor
Stamford, CT 06902-6746 Xxx Xxxx, XX 00000
If to the Escrow Agent:
----------------------
State Street Bank and
Trust Company
Corporate Trust Department
0 Xxxxxxxxxxxxx Xxxxx
0xx Xxxxx
Xxxxxx, XX 00000
Any party may give any notice, request, demand, claim or other
communication hereunder by personal delivery or telecopy, but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the party for whom it is
intended. Any party may change the address to which notices, requests, demands,
claims and
-12-
other communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth. Copies of any notice, request, demand,
claim or other communication hereunder by personal delivery or telecopy given to
the Escrow Agent by either party, shall be delivered to the other party as soon
thereafter as practicable.
13. Successor Escrow Agent. In the event the Escrow Agent becomes
----------------------
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by
delivering a resignation to the parties to this Agreement, not less than 60 days
prior to the date when such resignation shall take effect. The Buyer may
appoint a successor Escrow Agent without the consent of the Company Stockholder
so long as such successor is a bank with assets of at least $100 million, and
may appoint any other successor Escrow Agent with the consent of the Company
Stockholder, which shall not be unreasonably withheld. If, within such notice
period, the Buyer provides to the Escrow Agent written instructions with respect
to the appointment of a successor Escrow Agent and directions for the transfer
of any Escrow Property then held by the Escrow Agent to such successor, the
Escrow Agent shall act in accordance with such instructions and promptly
transfer such Escrow Property to such designated successor. If no successor is
so appointed, the Escrow Agent may apply to a court of competent jurisdiction
for such appointment.
14. General.
-------
(a) Governing Law, Assigns. This Agreement shall be governed by and
----------------------
construed in accordance with the internal laws of the Commonwealth of
Massachusetts without regard to conflict-of-law principles and shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns.
(b) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) Entire Agreement. Except for the provisions of the Merger
----------------
Agreement referenced herein, this Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements or understandings, written or
oral, between the parties with respect to the subject matter hereof.
(d) Waivers. No waiver by any party hereto of any condition or of any
-------
breach of any provision of this Escrow Agreement shall be effective unless in
writing. No waiver by any party of any such condition or breach, in any one
instance, shall be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition
-13-
or breach of any other provision contained herein.
(e) Amendment. This Agreement may be amended only with the written
---------
consent of the Buyer, the Escrow Agent and the Company Stockholder.
[Signatures are on the following page]
-14-
IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement as
of the day and year first above written.
RENAISSANCE SOLUTIONS, INC.
By:________________________________
STATE STREET BANK AND TRUST COMPANY
By:________________________________
COMPANY STOCKHOLDER:
___________________________________
O. Xxxxx Xxxxxx
-15-
EXHIBIT B
Pursuant to paragraph THIRD of the Certificate of Merger, the Certificate
of Incorporation of International Systems Services Corporation, a Connecticut
corporation and the surviving corporation of the Merger, is amended and restated
in its entirety as follows:
FIRST: The name of the corporation (the "Corporation") is International
Systems Services Corporation.
SECOND: The nature of the business to be transacted or purposes to be
promoted or carried out by the Corporation are as follows:
To engage in any lawful act or activity for which corporations may be
formed under the Stock Corporation Act of the State of Connecticut.
THIRD: The designation of each class of shares, the authorized number of
shares of each such class, and the par value of each share thereof are as
follows:
NUMBER OF PER VALUE
CLASS SHARES PER SHARE VOTING RIGHTS
----- --------- --------- -------------
Common 1,000 $.01 One vote per share
FOURTH: The minimum amount of stated capital with which the Corporation
shall commence business is One Thousand Dollars ($1,000.00).
FIFTH: The Corporation shall indemnify and reimburse shareholders,
directors, officers, employees and agents as required by Section 33-320a of the
Stock Corporation Act of the State of Connecticut, including any amendment to or
substitutions for such Section 3-320a which may be made from time to time.
SIXTH: No shareholder of the Corporation shall by reason of his holding
shares of the capital stock of the Corporation have any preemptive or
preferential right to subscribe for, purchase or receive any shares of capital
stock of the Corporation, or any obligation convertible into shares of capital
stock, including, without limitation, warrants, subscription rights or options
to acquire shares of capital stock which the Corporation may issue or sell,
whether shares of the Corporation's presently authorized capital stock or shares
of its capital stock acquired by it after the issuance thereof.
Pursuant to Section 33-330 of the Stock Corporation Act of the State of
Connecticut, any action which may be taken at a meeting of shareholders may be
taken without a meeting and by less than unanimous written consent, if a consent
in writing, setting forth such actions, is signed by the holders of a majority
of the voting power of the shares of the Corporation and, if the approval of any
particular class of shares is required by the holders of a majority of the
voting power of such class of shares, entitled to vote thereon or to take such
action, or their duly authorized attorneys, except the directors of the
Corporation may not be so elected. Notice of any such proposed action without a
meeting by less than unanimous written consent shall be given to each
shareholder entitled to vote thereon in the manner provided in such Section 33-
330, or any subsequent amendments to or substitutions for such Section 33-330.
SEVENTH: The personal liability of a director of the Corporation or its
shareholders for monetary damages for breach of duty as a director is limited to
an
-2-
amount that is not greater than the compensation received by the director for
serving the Corporation during the year of the violation if such breach does not
(a) involve a knowing and culpable violation of law by the director (b) enable
the director or an associate, as defined in subdivision (3) of Section 33-374d
of the Connecticut General Statutes, to receive an improper personal economic
gain (c) show a lack of good faith and conscious disregard for the duty of the
director of the Corporation under circumstances in which the director was aware
that his conduct or omission created an unjustifiable risk of serious injury to
the Corporation, (d) constitute a sustained and unexpected pattern of
inattention that amounted to an abdication of the director's duty to the
Corporation, or (e) create liability under Section 33-321 of the Connecticut
General Statutes. The personal liability of a director to the Corporation or
its shareholders for monetary damages for breach of duty as a director shall
further be limited to the fullest extent allowed from time to time by
Connecticut law. No amendment or repeal of this Article SEVENTH, or the adoption
of any provision inconsistent herewith, shall eliminate or reduce the effect of
this Article SEVENTH in respect of any matter occurring, or any cause of action,
suit or claim accruing or arising, prior to such amendment, repeal or adoption
of a provision inconsistent with the Article SEVENTH.
-3-
EXHIBIT C
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement"), made this 31st day of December,
1996, is entered into by and between Renaissance Solutions, Inc., a Delaware
corporation with its principal place of business at Lincoln North, 00 Xxx
Xxxxxxx Xxxx, Xxxxxxx, XX 00000 (the "Company"), and O. Xxxxx Xxxxxx, residing
at 00 Xxxxxxxxxx Xxxxx, Xxxxxxx Farm, Greenwich, CT 06831 (the "Employee").
Whereas, on December 31, 1996, the Company, Artist Acquisition Corp., a
Connecticut corporation and a wholly-owned subsidiary of the Company
(the "Transitory Subsidiary"), International Systems Services Corporation, a
Connecticut corporation ("ISS"), and the Employee as the sole stockholder of
ISS, entered into an Agreement and Plan of Merger (the "Merger Agreement"),
pursuant to which the Transitory Subsidiary will merge with and into ISS, with
ISS surviving such merger; and
Whereas, in connection with the consummation of the transactions
contemplated by the Merger Agreement, the Company desires to employ the
Employee, and the Employee desires to be employed by the Company.
Now, therefore, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Employment. The Company hereby agrees to employ the Employee,
------------------
and the Employee hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on the Closing Date, as such
term is defined in the Merger Agreement (the "Commencement Date"), and ending on
the fourth anniversary of the Commencement Date, unless sooner terminated in
accordance with the provisions of Section 4 (such period, as it may be extended,
the "Employment Period").
2. Title; Capacity. The Employee shall serve initially in such position
---------------
as the Employee and the Company shall, promptly following the Closing Date,
determine, or in such other position as the Company or its Board of Directors
(the "Board") may from time to time determine. The Employee shall be subject to
the supervision of, and shall have such authority as is delegated to him by, the
Board or such officer or officers of the Company designated by the Board.
The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position and such other duties and
responsibilities as the Board or its designee shall from time to time reasonably
assign to him. The Employee agrees to devote his entire business time,
attention and energies to the business and interests of the Company during the
Employment Period; provided, however, that the Employee shall be free to
-------- -------
participate in board, civic and charitable activities so long as such activities
do not interfere with his duties and responsibilities to the Company hereunder.
The Employee agrees to abide by the rules, regulations, instructions, personnel
practices and policies of the Company and any changes therein which may be
adopted from time to time by the Company.
3. Compensation and Benefits.
-------------------------
3.1 Base Salary. The Company shall pay the Employee, at such times
-----------
as the Company pays its employees in general, an annual base salary of $375,000
for the one-year period commencing on the Commencement Date. Such base salary
shall be subject to adjustment thereafter as determined by the Board; provided,
--------
however, that the Board shall not decrease the base salary during the Employment
-------
Period without the prior written consent of the Employee.
3.2 Annual Bonus. With respect to each year during the Employment
------------
Period, the Employee shall be eligible to receive a bonus of up to $125,000 (and
for years subsequent to the first year, such greater amount (if any) as shall be
determined by the Board) based upon such performance criteria as may be
determined in good faith by the Board. Such bonus shall be payable on or before
the 45th day of the year following the year in which such bonus is earned.
3.3 Fringe Benefits. The Employee shall be entitled to participate
----------------
in all benefit programs that the Company establishes and makes available to its
employees, if any, to the extent that Employee's position, tenure, salary, age,
health and other qualifications make him eligible to participate.
3.4 Reimbursement of Expenses. The Company shall reimburse the
-------------------------
Employee for all reasonable travel, entertainment and other expenses incurred or
paid by the Employee in connection with, or related to, the performance of his
duties, responsibilities or services under this Agreement, upon presentation by
the Employee of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request; provided, however, that such
-------- -------
travel, entertainment and other expenses shall be subject to limitation in
accordance with Company policy as in effect from time to time.
-2-
4. Employment Termination. The employment of the Employee by the Company
----------------------
pursuant to this Agreement shall terminate upon the occurrence of any of the
following:
4.1 Expiration of the Employment Period in accordance with Section 1;
4.2 At the election of the Company, for cause, immediately upon
written notice by the Company to the Employee. For the purposes of this Section
4.2, cause for termination shall be deemed to exist upon (a) a good faith
finding by the Company of continual failure of the Employee to perform his
assigned duties for the Company, or dishonesty, gross negligence or willful
misconduct related to the performance of the Employee's duties for the Company;
(b) the conviction of the Employee of, or the entry of a pleading of guilty or
nolo contendere by the Employee to, any crime involving moral turpitude or any
felony; (c) Employee's habitual drunkenness, or the use, possession,
distribution or being under the influence of alcohol or illegal substances or
drugs in the workplace or in a manner otherwise affecting the Employee's
performance of his duties for the Company (the only exception is that the
Employee may consume alcohol reasonably and responsibly, if he so chooses, at
legitimate business events and functions where alcohol is legally available); or
(d) the material breach by the Employee of any terms of this Agreement, which
breach continues for 30 days subsequent to written notice from the Company to
the Employee of the breach (unless such breach is not susceptible to cure, in
which case termination shall be deemed to be immediate);
4.3 Upon the death or disability of the Employee. As used in this
Agreement, the term "disability" shall mean the inability of the Employee, due
to a physical or mental disability, for a period of 120 days, whether or not
consecutive, during any 360-day period to perform the services contemplated
under this Agreement. A determination of disability shall be made by a
physician satisfactory to both the Employee and the Company; provided that if
-------- ----
the Employee and the Company do not agree on a physician, the Employee and the
Company shall each select a physician and such physicians together shall select
a third physician, whose determination as to disability shall be binding on all
parties; or
4.4 At the election of the Company or the Employee, upon not less
than 30 days' prior written notice of termination.
5. Effect of Termination.
---------------------
5.1 Termination for Cause or Voluntary Termination. In the event the
----------------------------------------------
Employee's employment is terminated by the Company for cause pursuant to Section
4.2, or by the Employee pursuant to Section 4.4, the Company shall pay to the
-3-
Employee the compensation and benefits which would otherwise be payable to him
through the last day of his actual employment by the Company.
5.2 Termination for Death or Disability. If the Employee's
-----------------------------------
employment is terminated by death or because of disability pursuant to Section
4.3, the Company shall pay to the estate of the Employee or to the Employee, as
the case may be, the compensation and benefits which would otherwise be payable
to the Employee through the date of his termination of employment because of
death or disability.
5.3 Termination Without Cause. If the Employee's employment is
-------------------------
terminated at the election of the Company pursuant to Section 4.4, the Company
shall pay to the Employee the base salary and benefits payable to him under
Section 3, at the times provided in Section 3, including the pro rata portion of
any bonuses earned under Section 3.2 during the then current one-year period of
the Employment Period, through the day immediately prior to the one-year
anniversary of the date of his termination of employment.
5.4 Survival. The provisions of Sections 5 and 6 shall survive the
--------
termination of this Agreement.
6. Non-competition and Non-Solicitation
------------------------------------
6.1 Non-competition. During the Non-Competition Period (as defined
---------------
below) the Employee will not directly or indirectly:
(A) as an individual proprietor, partner, stockholder, officer,
employee, director, joint venturer, investor, lender, consultant, or
in any other capacity whatsoever (other than as the holder of not more
than one percent of the combined voting power of the outstanding stock
of a publicly held company), develop, design, produce, market, sell or
render (or assist any other person in developing, designing,
producing, marketing, selling or rendering) products or services
competitive with those developed, designed, produced, marketed, sold
or rendered by the Company or any subsidiary of the Company (whether
existing now or hereafter acquired or established) (a "Subsidiary")
while the Employee was employed by the Company; provided, however,
-------- -------
that nothing herein shall prohibit the Employee from holding up to 3%
of the publicly-traded securities of any corporation; or
(B) solicit, divert or take away, or attempt to divert or to take
away, the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the
Company
-4-
or any of its Subsidiaries which were contracted, solicited or
served by the Employee while employed by the Company.
The term Non-Competition Period means the period of time commencing on the
Commencement Date and ending on (a) the first anniversary of the termination or
cessation of the Employee's employment, if such termination or cessation occurs
under Sections 4.1 or 4.3 or under Section 4.4 at the election of the Company,
and (b) the later of (i) the fourth anniversary of the Commencement Date, and
(ii) the first anniversary of the termination or cessation of the Employee's
employment, if such termination or cessation occurs under Section 4.2 or under
Section 4.4 at the election of the Employee.
6.2 Non-solicitation. While the Employee is employed by the Company
----------------
and for a period of one year after the termination or cessation of such
employment for any reason, the Employee will not directly or indirectly recruit,
solicit or hire or otherwise retain the services of any employee of the Company
or of any of its Subsidiaries, or induce or attempt to induce any employee of
the Company or any of its Subsidiaries to terminate his/her employment with, or
otherwise cease his/her relationship with, the Company or such Subsidiary.
6.3 Interpretation. If any restriction set forth in Sections 6.1 or
--------------
6.2 is found by any court of competent jurisdiction to be unenforceable because
it extends for too long a period of time or over too great a range of activities
or in too broad a geographic area, it shall be interpreted to extend only over
the maximum period of time, range of activities or geographic area as to which
it may be enforceable.
6.4 Equitable Remedies. The restrictions contained in this Section 6
------------------
are necessary for the protection of the business and goodwill of the Company and
are considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of this Section 6 is likely to cause the Company
substantial and irrevocable damage and therefore, in the event of any such
breach, the Employee agrees that the Company, in addition to such other remedies
which may be available, shall be entitled to specific performance and other
injunctive relief.
7. Proprietary Information and Developments. Concurrently with the
----------------------------------------
execution of this Agreement, the Employee shall enter into an Invention and Non-
disclosure Agreement, a copy of which is attached hereto as Exhibit B (the "Non-
------- -
disclosure Agreement").
8. Notices. All notices required or permitted under this Agreement shall
-------
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or
-5-
addresses as either party shall designate to the other in accordance with this
Section 8.
9. Pronouns. Whenever the context may require, any pronouns used in this
--------
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
10. Entire Agreement. This Agreement, together with the Non-disclosure
----------------
Agreement, constitutes the entire agreement between the parties and supersedes
all prior agreements and understandings, whether written or oral, relating to
the subject matter of this Agreement.
11. Amendment. This Agreement may be amended or modified only by a
---------
written instrument executed by all of the parties hereto.
12. Governing Law. This Agreement shall be construed, interpreted and
-------------
enforced in accordance with the internal laws (and not the law of conflicts) of
the Commonwealth of Massachusetts.
13. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of all of the parties hereto and their respective
successors and assigns, including any corporation with which or into which the
Company may be merged or which may succeed to its respective assets or business;
provided, however, that the obligations of the Employee are personal and shall
not be assigned by him.
14. Severability. The invalidly or unenforceability of any provision of
------------
this Agreement shall not affect the validly or enforceability of any other
provision of this Agreement.
15. Miscellaneous.
-------------
15.1 No delay or omission by the Company in exercising any right under
this Agreement shall operate as a waiver of that or any other right. A waiver
or consent given by the Company on any one occasion shall be effective only in
that instance and shall not be construed as a bar or waiver of any right on any
other occasion.
15.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
-6-
15.3 In case any provision of this Agreement shall be invalid, illegal
or otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.
15.4 This Agreement shall become effective upon the Closing Date (as
such term is defined in the Merger Agreement) and shall be of no force and
effect if the Merger Agreement is terminated in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
RENAISSANCE SOLUTIONS, INC.
By:________________________________
Name:
Title:
___________________________________
O. Xxxxx Xxxxxx
-7-
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
Agreement dated as of December 31, 1996, by and between Renaissance
Solutions, Inc., a corporation organized under the laws of the State of Delaware
(the "Company"), and O. Xxxxx Xxxxxx (the "Stockholder").
INTRODUCTION
------------
The Company and the Stockholder have, as of the date hereof, entered into a
certain Agreement and Plan of Merger (the "Merger Agreement") pursuant to which,
upon and subject to the occurrence of the Closing thereunder, the Company will
issue to the Stockholder an aggregate of 1,310,000 shares of Common Stock,
$.0001 par value per share ("Common Stock"), of the Company. The Stockholder
wishes to have, and the Company is willing to grant to him, certain rights with
respect to the registration of such shares of Common Stock.
In consideration of the mutual covenants and promises contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Stockholders agree as
follows:
1. Certain Definitions. As used in this Section 1 and elsewhere in this
-------------------
Agreement, the following terms shall have the following respective meanings:
"Commission" means the Securities and Exchange Commission, or any
----------
other Federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Registration Statement" means a registration statement filed by the
----------------------
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Registration Expenses" means the expenses described in Section 5.
---------------------
"Registrable Shares" means (a) the shares of Common Stock issued to
------------------
the Stockholder pursuant to Merger Agreement and (b) any other shares of Common
Stock of the Company issued in respect of such shares (because of stock splits,
stock dividends, reclassifications, recapitalizations, or similar events);
provided, however, that shares of Common Stock which are Registrable Shares
-------- -------
shall cease to be Registrable Shares (i) upon any sale pursuant to a
Registration Statement, Section 4(1) of the Securities Act or Rule 144 under the
Securities Act or upon any sale in any manner to a person or entity which, by
virtue of Section 11 of this Agreement, is not entitled to the rights provided
in this Agreement, (ii) at such time as all of the Registrable Shares then held
by the Rightsholders may be sold without restriction as to volume under Rule 144
or (iii) at such time as all such shares may be sold under Rule 144(k).
"Rightsholders" means the Stockholder and any other person or entity
-------------
who becomes a Rightsholder under this Agreement pursuant to Section 11.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
Other terms used herein and not otherwise defined shall have the respective
meanings ascribed to them in the Merger Agreement.
2. Demand Registration Rights.
--------------------------
(a) Subject to the provisions of paragraph (c) below, the Company
shall use its best efforts to file with the Commission (i) on or before March
17, 1997, the Company's Annual Report on Form 10-K for the year ended December
31, 1996, and (ii) within three (3) business days following such filing, a
Registration Statement on Form S-3 with respect to 300,000 of the Registrable
Shares (the "First Demand Registration"). In addition, at any time after the
first anniversary of the occurrence of the Closing pursuant to the Merger
Agreement and prior to the second anniversary of such Closing, the Stockholder
may request, in writing, that the Company effect the registration of up to an
aggregate of an additional 200,000 of the Registrable Shares (the "Second Demand
Registration"). In either case, if the Rightsholders intend to distribute such
Registrable Shares by means of an underwriting, the Stockholder shall so advise
the Company within five business days following the Earnings Release, in the
case of the First Demand Registration, and in his request, in the case of the
Second Demand Registration. In the event either of such registrations are
-2-
underwritten, the right of Rightsholders to participate shall be conditioned on
such Rightsholders' participation in such underwriting. Upon receipt of such a
request, the Company shall, as expeditiously as possible, use its best efforts
to effect the registration of all Registrable Shares which the Company has been
requested to so register (subject to the maximums stated in this paragraph (a))
on such registration form selected by the Company as the Company is then
eligible to use.
(b) The Company shall not be required to effect more than two
registrations pursuant to paragraph (a) above.
(c) Notwithstanding anything to the contrary set forth herein, if at
the time the Company is required to file a Registration Statement pursuant to
the first sentence of Section 2(a) the Company is then in possession of material
non-public information relating to the Company, its business or financial
condition which, in the good faith determination of the Company's Board of
Directors, is of an adverse nature, and which information (i) would not, but for
the filing of the Registration Statement, then be required to be disclosed and
(ii) if disclosed, would be to the material detriment of the Company, then the
Company may at its option delay the filing of such Registration Statement for a
period not in excess of six months from the date of the Earnings Release, such
right to delay to be exercised by the Company not more than once.
(d) If at the time of any request to register Registrable Shares
pursuant to this Section 2 made after the first anniversary of the occurrence of
the Closing pursuant to the Merger Agreement and prior to the second anniversary
of such Closing, the Company is engaged or has fixed plans to engage within 30
days of the time of the request in a registered public offering as to which the
Rightsholders may include Registrable Shares pursuant to Section 3 (subject to
the limitations set forth therein) or is engaged in any other activity which, in
the good faith deter mination of the Company's Board of Directors, would be
adversely affected by the requested registration to the material detriment of
the Company, then the Company may at its option direct that such request be
delayed for a period not in excess of six months from the effective date of such
offering or the date of commencement of such other material activity, as the
case may be, such right to delay a request to be exercised by the Company not
more than once.
(e) The Company agrees that it shall not enter into any agreement
which would provide any stockholder of the Company with the opportunity to
register shares incident to the registration of any Registrable Shares pursuant
to the registration rights granted in this Section 2.
-3-
3. Incidental Registration Rights.
------------------------------
(a) At any time after the first anniversary of the Closing Date and
until the fifth anniversary of the Closing Date, whenever the Company proposes
to file a Registration Statement at any time and from time to time relating to
an offering in which the Company proposes to sell shares of Common Stock for its
own account, it will, prior to such filing, give at least 20 days' written
notice to all Rightsholders of its intention to do so (subject to the
limitations set forth in paragraph (c) below) and, upon the written request of a
Rightsholder or Rightsholders given within 20 days after the Company provides
such notice (which request shall state the intended method of disposition of
such Registrable Shares), the Company shall use its best efforts to cause all
Registrable Shares which the Company has been requested by such Rightsholder or
Rightsholders to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the request of such
Rightsholder or Rightsholders; provided, that the Company shall have the right
to postpone or withdraw any registration effected pursuant to this Section 3
without obligation to any Rightsholder.
(b) In connection with any offering under this Section 3 involving an
underwriting, the Company shall not be required to include any Registrable
Shares in such underwriting unless the holders thereof accept the terms of the
underwriting as agreed upon between the Company and the underwriter(s) of such
offering. If in the opinion of the managing underwriter(s) of such offering the
registration of all or part of the shares of Common Stock (the "Incidental
Shares") which the Rightsholders have requested to be included pursuant to this
Section 3 and/or which other holders of shares of Common Stock or other
securities of the Company entitled to include shares of Common Stock in such
registration have requested to be included would materially and adversely affect
such public offering, then the Company shall be required to include in the
underwriting only that number of such shares, if any, which the managing
underwriter(s) believe(s) may be sold without causing such adverse effect. If
the number of Registrable Shares to be included in the underwriting in
accordance with the foregoing is less than the total number of shares which the
Rightsholders have requested to be included, then (i) the Company shall be
entitled to include all shares that it desires to be registered and (ii) the
Rightsholders who have requested registration and other holders of shares of
Common Stock or other securities of the Company entitled to include shares of
Common Stock in such registration on a parity with the Rightsholders shall
participate in the underwriting pro rata based upon their total ownership of
shares of Common Stock of the Company.
-4-
(c) Notwithstanding anything in the foregoing to the contrary, the
Company shall not be required to provide any advance notice to Rightsholders in
connection with any offering under this Section 3 involving an underwriting if
the Company has been informed that in the opinion of the managing underwriter(s)
the inclusion of any Incidental Shares in such offering would materially and
adversely affect the offering. In such event, the Company will provide written
notice to all Rightsholders of such managing underwriter's(s') opinion, which
notice need not be given prior to the filing of the applicable Registration
Statement.
4. Registration Procedures. If and whenever the Company is required by
-----------------------
the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Shares under the Securities Act, the
Company shall:
(a) file with the Commission a Registration Statement with respect to
such Registrable Shares and use its best efforts to cause that Registration
Statement to become and remain effective for the period specified in paragraph
(b) below;
(b) as expeditiously as possible prepare and file with the Commission
any amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective for a period ending on the earlier of (i) 30
days after the effective date or (ii) the date on which all Registrable Shares
registered under such Registration Statement have been sold; provided, however,
that the Company may by written notice require that each Rightsholder who is
selling shares pursuant to such registration (a "Selling Holder") immediately
cease sales of shares pursuant to such Registration Statement at any time that
(A) the Company becomes engaged in a business activity or negotiation which is
not disclosed in the Registration Statement (or the prospectus included therein)
and which the Company desires to keep confidential for business purposes, (B)
the Company determines that a particular disclosure would be premature or would
adversely affect the Company or its business or prospects, or (C) the
Registration Statement can no longer be used under the existing rules and
regulations promulgated under the Securities Act. The Company shall not be
required to disclose to the Selling Holder(s) the reasons for requiring a
suspension of sales hereunder, and the Selling Holder(s) shall not disclose to
any third party the existence of any such suspension;
(c) as expeditiously as possible furnish to each Selling Holder such
reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as the Selling Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares owned
by the Selling Holder; and
-5-
(d) as expeditiously as possible use its best efforts to register or
qualify the Registrable Shares covered by the Registration Statement under the
securities or Blue Sky laws of such states as the Selling Holders shall
reasonably request, and do any and all other acts and things that may reasonably
be necessary or desirable to enable the Selling Holders to consummate the public
sale or other disposition in such states of the Registrable Shares owned by the
Selling Holders; provided, however, that the Company shall not be required in
-------- -------
connection with this paragraph (d) to qualify as a foreign corporation or
execute a general consent to service of process in any jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
Selling Holders and after having done so the prospectus is amended to comply
with the requirements of the Securities Act, the Company shall promptly notify
the Selling Holders and, if requested, the Selling Holders shall immediately
cease making offers of Registrable Shares and return all undistributed
prospectuses to the Company. The Company shall promptly provide the Selling
Holders with revised prospectuses and, following receipt of the revised
prospectuses, the Selling Holders shall be free to resume making offers of the
Registrable Shares.
5. Allocation of Expenses. The Rightsholders will pay all Registration
----------------------
Expenses of all registrations under Section 2 of this Agreement; provided,
however, that Rightsholders holding a majority of the Registrable Shares shall
determine whether any Registration Statement under Section 2 shall be printed by
a financial printer and whether legal counsel to the Selling Holders shall be
engaged. The Rightsholders requesting the registrations of Registrable Shares
under Section 3 of this Agreement shall pay the Registration Expenses of such
registration pro rata in accordance with the number of their Registrable Shares
included in such registration. For purposes of this Section 5, the term
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with this Agreement, including without limitation all registration and
filing fees, exchange listing fees, printing expenses, fees and disbursements of
counsel for the Company, state Blue Sky fees and expenses, the expense of any
special audits incident to or required by any such registration, underwriting
discounts, selling commissions and the fees and expenses of the Company's legal
counsel and one legal counsel for the Selling Holders. Notwithstanding the
provisions of this Section 5, in connection with the registration of Registrable
Shares under Section 2 of this Agreement, "Registration Expenses" shall mean
only expenses incurred by the Company solely for the purpose of complying with
the Company's obligations under Section 2 and only to the extent that such
expenses would not otherwise be required to be incurred by the Company in
complying with its reporting obligations under the Exchange Act.
-6-
6. Indemnification. In the event of any registration of any of the
---------------
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless the seller of such Registrable Shares,
each underwriter of such Registrable Shares, and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities Act or
the Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse such seller,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such seller, underwriter or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
-------- -------
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Company, in writing, by or on behalf of such seller,
underwriter or controlling person specifically for use in the preparation
thereof.
In the event of any registration of any of the Registrable Shares under the
Securities Act pursuant to this Agreement, each seller of Registrable Shares,
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors and officers and each underwriter (if any) and each person, if
any, who controls the Company or any such underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which the Company, such directors and
officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are
-7-
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
the statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such seller,
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; provided, however, that the
-------- -------
obligations of such Rightsholders hereunder shall be limited to an amount equal
to the proceeds to each Rightsholder of Registrable Shares sold as contemplated
herein.
Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
--------
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
-------- -------
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement unless and to the extent that the Indemnifying
Party is adversely affected by such failure. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
-------- -------
Indemnifying Party shall pay such expense if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between the Indemnified Party and
any other party represented by such counsel in such proceeding. No Indemnifying
Party, in the defense of any such claim or litigation shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation, and no Indemnified Party
shall consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Party.
7. Indemnification with Respect to Underwritten Offering. In the event
-----------------------------------------------------
that Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 2(a), the Company agrees to enter into
an underwriting agreement containing customary representations and warranties
with respect to the business and operations of an issuer of the securities being
registered and customary covenants and agreements to be performed by such
issuer, including without limitation customary provisions with respect to
indemnification by the Company of the underwriters of such offering.
-8-
8. Information by Holder. Each Rightsholder of Registrable Shares
---------------------
included in any registration shall furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this
Agreement.
9. "Stand-Off" Agreement. Each Rightsholder, if requested by an
--------------------
underwriter of Common Stock or other securities of the Company, shall agree not
to sell or otherwise transfer or dispose of any Registrable Shares or other
securities of the Company held by such Rightsholder for a specified period of
time following the effective date of a Registration Statement, such period not
to exceed 180 days, if the Registration Statement is declared effective on or
prior to the second anniversary of the Closing Date, or 90 days, if the
Registration Statement is declared effective after the second anniversary of the
Closing Date. Any such Stand-Off Agreement shall be in writing in a form
satisfactory to the Company and such underwriter. The Company may impose stop-
transfer instructions with respect to the Registrable Shares or other securities
subject to the foregoing restriction until the end of the stand-off period.
10. Effectiveness. This Agreement shall become effective upon the
-------------
occurrence of the Effective Time under the Merger Agreement. If the Merger
Agreement shall be terminated without the occurrence of the Effective Time, this
Agreement (and all of the rights and obligations of the parties hereunder) shall
terminate simultaneously.
11. Transfers of Certain Rights; Additional Rightsholders.
-----------------------------------------------------
(a) General. The rights granted to each Rightsholder pursuant to the
-------
terms of this Agreement may be transferred by such Rightsholder to another
Rightsholder, to any affiliate of such Rightsholder, or to any member of the
immediate family of such Rightsholder, or any trust established for the benefit
of any of the foregoing; provided, however, that in the case of any transfer
-------- -------
referred to in this paragraph (a), the Company is given written notice by the
transferor at the time of such transfer stating the name and address of the
transferee and identifying the securities with respect to which such rights are
being assigned.
(b) Transferees. Any transferee to whom rights hereunder are
-----------
transferred shall, as a condition to such transfer, deliver to the Company a
written instrument by which such transferee agrees to be bound by the
obligations imposed upon Rightsholders under this Agreement to the same extent
as if such transferee were a party hereto.
-9-
(c) Subsequent Transferees. A transferee to whom rights are
----------------------
transferred pursuant to this Section 11 may not again transfer such rights to
any other person or entity, other than as provided in (a) and (b) above.
12. No Assignment. Except as provided in Section 11 hereof, the rights
-------------
granted pursuant to this Agreement may not be transferred or assigned by any
Rightsholder.
13. Amendments. The provisions of this Agreement may be modified or
----------
amended at any time and from time to time only by an agreement or consent in
writing executed by the Company and the holders of a majority of the Registrable
Shares then outstanding; provided, however, that the registration rights granted
under this Agreement may be amended only in a manner which affects all
Registrable Shares in the same fashion.
14. Notices. All notices, requests, consents and other communications
-------
required to be given pursuant to this Agreement shall be in writing and shall be
given by personal delivery or by certified or registered mail, postage prepaid,
return receipt requested. Notices shall be deemed effective when personally
delivered or five days after being so mailed, as the case may be, to the parties
at the following respective addresses or at such other address of which either
party shall notify the other in accordance with this Section 14:
The Company: Renaissance Solutions, Inc.
Lincoln North
00 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
With a copy to: Xxx X. Xxxxxxxxx, Esq.
Xxxx and Xxxx
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Any
Rightsholder: O. Xxxxx Xxxxxx
c/o International Systems Services Corporation
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
-10-
With a copy to: Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx, Phleger & Xxxxxxxx LLP
0000 Xxxxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
15. Entire Agreement; Governing Law. This Agreement, together with the
-------------------------------
Merger Agreement, embodies the entire agreement and understanding between the
parties, and supersedes all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to conflict of laws provisions.
16. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
17. Headings. The headings of the sections, subsections, and paragraphs
--------
of this Agreement have been added for convenience only and shall not be deemed
to be a part hereof.
-11-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
RENAISSANCE SOLUTIONS, INC.
By: ___________________________
Title:_________________________
STOCKHOLDER:
_______________________________
O. Xxxxx Xxxxxx
-12-
EXHIBIT E
[XXXXXXX, XXXXXXX AND XXXXXXXX]
December 31, 1996
Renaissance Solutions, Inc.
Artist Acquisition Corp.
Lincoln North, 00 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
We have acted as special counsel to International Systems Services
Corporation, a Connecticut corporation (the "Company"), and Mr. O. Xxxxx Xxxxxx
(the "Company Stockholder"), in connection with the merger (the "Merger") of
Artist Acquisition Corp., a Connecticut corporation (the "Transitory
Subsidiary"), a wholly-owned subsidiary of Renaissance Solutions, Inc., a
Delaware corporation ("Buyer"), with and into the Company pursuant to the
Agreement and Plan of Merger among the Buyer, the Transitory Subsidiary, the
Company and the Company Stockholder, dated December 31, 1996 (the "Merger
Agreement"). This opinion is delivered to you pursuant to Section 6.1(g) of the
Merger Agreement. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Merger Agreement.
We have assisted in the preparation of the Merger Agreement, the Escrow
Agreement and the Registration Rights Agreement (collectively, the "Documents").
In connection with this opinion, we have examined and are familiar with and have
relied upon the following documents:
(a) The Certificate of Incorporation of the Company, as amended to date
(the "Company Charter");
(b) The By-laws of the Company, as amended to date (the "Company By-laws");
(c) Certificates, dated as of recent dates, of the Secretary of State of
each jurisdiction where the Company is incorporated or qualified to do
business, as set forth on Schedule A hereto, certifying as to the legal
----------
existence and the corporate and tax good standing of the Company on
such dates in such jurisdictions;
Renaissance Solutions, Inc.
Artist Acquisition Corp.
December 31, 1996
Page 2
(d) A certificate of the Secretary of the Company attesting to the
incumbency of the Company's officers and the authenticity of the
resolutions authorizing the transactions contemplated by the Merger
Agreement;
(e) Resolutions of the Board of Directors and sole stockholder of the
Company approving the Merger and authorizing, among other things, the
execution, delivery and performance by the Company of the Documents;
(f) The Merger Agreement;
(g) The Certificate of Merger;
(h) The Escrow Agreement;
(i) The Registration Rights Agreement;
(j) The closing certificate of the Company described in Section 6.1(e) of
the Merger Agreement; and
(k) Such other documents, opinions, instruments and certificates
(including, but not limited to, certificates of public officials and
officers of the Company) as we have considered necessary for purposes
of this opinion.
In our examination of the documents described above, we have assumed the
genuineness of all signatures, the legal capacity of natural persons signatory
to such documents, the authenticity of all documents submitted to us as
originals, the conformity to the original documents of documents submitted to us
as certified, facsimile or photostatic copies, and the authenticity of the
originals of such latter documents. We have assumed that the Documents
accurately describe and contain the mutual understanding of the parties as to
all matters contained therein, and that no other agreements or understandings
exist between the parties with respect to the Documents.
Insofar as this opinion relates to factual matters, information with
respect to which is in the possession of the Company or the Company Stockholder,
we have
Renaissance Solutions, Inc.
Artist Acquisition Corp.
December 31, 1996
Page 3
relied upon certificates of officers of the Company or of the Company
Stockholder, copies of which have previously been provided to your counsel.
Any reference herein to "our knowledge" or to any matter "known to us," "of
which we are aware" or "coming to our attention" or any variation of any of the
foregoing shall mean the actual knowledge of the attorneys in this firm who have
rendered substantive attention to this transaction of the existence or absence
of any facts which would contradict our opinions set forth below. We have not
undertaken any independent investigation to determine the existence or absence
of such facts, and no inference as to our knowledge of the existence or absence
of such facts should be drawn from the fact of our representation of the Company
and the Company Stockholder.
Without limiting the foregoing, with respect to our opinions in paragraphs
5 and 6 below, we have not conducted a search of any computer or electronic data
bases, or of the dockets of any court or administrative or other regulatory
agency.
For purposes of this opinion, we have assumed that the Merger Agreement has
been duly authorized, executed and delivered by the Buyer and the Transitory
Subsidiary, that the Buyer and the Transitory Subsidiary have the legal capacity
and all requisite power and authority to effect the transactions contemplated by
the Merger Agreement and that the Merger Agreement is the valid, binding and
enforceable obligation of the Buyer and the Transitory Subsidiary, enforceable
against them in accordance with its terms. We are expressing no opinion herein
as to the application of or compliance with any federal, state or local law or
regulation relating to the power, authority or competence of the Buyer or the
Transitory Subsidiary.
Our opinions expressed in paragraph 1 below, insofar as they relate to the
due organization, legal existence and corporate and tax good standing and
foreign qualifications of the Company, are based solely on the certificates
referred to in paragraph (c) above, are rendered as of the respective dates
thereof, and are limited accordingly.
The opinions hereinafter expressed are qualified to the extent that they
may be subject to or affected by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, usury, fraudulent transfer or other laws affecting
the rights and remedies of creditors generally, (ii) statutory or decisional law
concerning recourse by creditors to security in the absence of notice or
hearing, and (iii) duties and standards imposed on creditors and parties to
contracts, including without limitation
Renaissance Solutions, Inc.
Artist Acquistion Corp.
December 31, 1996
Page 4
requirements of good faith, reasonableness and fair dealing. We express no
opinion as to the availability of any equitable or specific remedy or defense
upon any breach of any of the covenants, warranties or other provisions
contained in the Documents or any of the other agreements, instruments or
documents referred to herein or therein, or of any rights granted pursuant to
any of such agreements, instruments or documents, inasmuch as the availability
of such remedies or defenses may be subject to the discretion of a court.
This opinion relates solely to the laws of the Commonwealth of
Massachusetts (with respect to the opinions expressed in the last sentence of
paragraph 3 and in paragraph 4 below), the laws of the State of New York and the
Federal laws of the United States. We note that certain matters covered by the
following opinions are governed by the laws of the State of Connecticut. We
have made no investigation of the laws of the State of Connecticut nor consulted
with counsel admitted to practice law in the State of Connecticut. Instead,
with your consent, with respect to our opinions other than those expressed in
the last sentence of paragraph 3 and in paragraph 4 below, we have assumed that
the laws of the State of Connecticut are in all respects identical to the laws
of the State of New York, and we express no opinion as to whether such
assumption is reasonable or correct.
We express no opinion herein as to whether the Merger will qualify for
"pooling treatment" in accordance with applicable accounting rules and
principles or as to the tax consequences of the Merger under applicable federal,
state and local income tax laws and regulations.
On the basis of and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized validly existing and in
good standing under the laws of the State of Connecticut. The Company is duly
qualified to transact business in each of the jurisdictions listed on Schedule A
----------
attached hereto. The Company has all requisite corporate power and authority to
carry on its business and to own and use the properties owned and used by it.
2. The authorized capital stock of the Company consists of 5,000 shares
of Common Stock, no par value per share. All of the issued and outstanding
shares of capital stock of the Company are duly authorized, validly issued,
fully paid, nonassessable, are held of record by the Company Stockholder, and
free of all preemptive rights. Except as set forth on the Disclosure Schedule,
to our knowledge, there are no outstanding or authorized (i) options, warrants,
rights, contracts, calls,
Renaissance Solutions, Inc.
Artist Acquisition Corp.
December 31, 1996
Page 5
puts, rights to subscribe, conversion rights or other agreements or commitments
to which the Company is a party or which are binding upon the Company providing
for the issuance, disposition or acquisition of any of its capital stock, (ii)
stock appreciation, phantom stock or similar rights with respect to the Company,
or (iii) agreements, voting trusts, proxies, or understandings with respect to
the voting or registration under the Securities Act of any shares of capital
stock of the Company.
3. The Company has all requisite corporate power and authority to execute
and deliver the Merger Agreement and to perform its obligations thereunder. The
execution, delivery and performance of the Merger Agreement and the consummation
of the transactions contemplated thereby have been duly and validly authorized
by all necessary corporate action on the part of the Company. The Merger
Agreement has been duly and validly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms (other than Section 6 of the
Registration Rights Agreement, as to which we express no opinion).
4. Each of the Documents has been duly and validly executed and delivered
by the Company Stockholder and constitutes a valid and binding obligation of the
Company Stockholder, enforceable against the Company Stockholder in accordance
with its terms (other than Section 6 of the Registration Rights Agreement, as to
which we express no opinion).
5. Except as set forth in the Disclosure Schedule, neither the execution
and delivery by the Company or the Company Stockholder of the Merger Agreement
or (in the case of the Company Stockholder) the Escrow Agreement and the
Registration Rights Agreement, nor the consummation by the Company or the
Company Stockholder of the transactions contemplated thereby, (i) conflicts with
or violates any provision of the Company Charter or the Company By-laws, (ii)
requires on the part of the Company, any Subsidiary or the Company Stockholder
any filing with, or permit, authorization, consent or approval of, any
Governmental Entity which has not been filed or obtained, (iii) conflicts with,
results in a breach of, constitutes (with or without due notice or lapse of time
or both) a default under, results in the acceleration of, creates in any party
the right to accelerate, terminate, modify or cancel or requires any notice,
consent or waiver (which has not been obtained) under, any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest or
other agreement or instrument listed in the Disclosure Schedule, (iv) to our
knowledge, results in the imposition of any Security Interest upon any assets of
Renaissance Solutions, Inc.
Artist Acquisition Corp.
December 31, 1996
Page 6
the Company, any Subsidiary or Company Stockholder, or (v) violates any statute,
rule or regulation, or any order, writ, injunction or decree known to us that is
specifically applicable to the Company, any Subsidiary, the Company Stockholder
or any of their respective properties or assets.
6. Except as set forth in the Disclosure Schedule, to our knowledge,
neither the Company nor any Subsidiary (i) is subject to any unsatisfied
judgment, order, decree, stipulation or injunction or (ii) is a party or is
threatened to be made a party to any complaint, action, suit, proceeding,
hearing or investigation of or in any court or administrative agency of any
Federal, state, local or foreign jurisdiction or before any arbitrator.
7. All authorizations, consents and approvals of all Federal and state
governmental agencies and authorities required in order to permit consummation
by the Company and the Company Stockholder of the transactions contemplated by
the Merger Agreement have been obtained.
8. To our knowledge, there are no affiliates (as defined under Rule 144
promulgated under the Securities Act) of the Company other than the Company
Stockholder.
This opinion is intended solely for your benefit and may not be relied upon
by any other person, firm or entity without our prior written consent. This
opinion may not be copied, used, quoted, disseminated or circulated in whole or
in part. We hereby expressly disclaim any duty to update any statement or
opinion made herein.
Very truly yours,
XXXXXXX, XXXXXXX & XXXXXXXX LLP
SCHEDULE A
International Systems Services Corporation
------------------------------------------
(a Connecticut corporation)
Date of Certificate
Certificate of Good Standing Jurisdiction of Public Official
------------------------------ ------------ -------------------
Corporate Connecticut 12/16/96
Tax Connecticut 12/19/96
Jurisdictions of Foreign Qualification
--------------------------------------
Date of Certificate
Certificate of Good Standing Jurisdiction of Public Official
------------------------------ -------------------- -------------------
Corporate California 12/13/96
Massachusetts 12/13/96
Tax California 12/17/96
Certificate of Authority District of Columbia 12/20/96
EXHIBIT F
AFFILIATE'S AGREEMENT
December 31, 1996
Renaissance Solutions, Inc.
Lincoln North
00 Xxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Dear Sirs:
An Agreement and Plan of Merger dated as of December 31, 1996 (the
"Agreement") has been entered into by and among Renaissance Solutions, Inc. (the
"Buyer"), Artist Acquisition Corp. (the "Transitory Subsidiary"), International
Systems Services Corporation (the "Company") and Mr. O. Xxxxx Xxxxxx. The
Agreement provides for the merger of the Transitory Subsidiary with and into the
Company (the "Merger"). In accordance with the Agreement, the Company Shares
(as defined in this Agreement) shall be converted into shares of common stock,
$.0001 per value per share, of the Buyer (the "Buyer Common Stock"), as
described in the Agreement.
In consideration of the mutual agreements, provisions and covenants set
forth in the Agreement and hereinafter in this agreement, the undersigned
represents and agrees as follows:
1. Pooling Requirements.
(a) The undersigned will not sell, transfer or otherwise dispose of, or
reduce his or its interest in or risk relating to, any Buyer Common Stock issued
to the undersigned pursuant to the Merger, or any Buyer Common Stock issued to
the undersigned upon exercise of any employee stock options or warrants, until
after such time as the Buyer has published (within the meaning of Accounting
Series Release No. 130, as amended, of the Securities and Exchange Commission)
financial results covering at least 30 days of combined operations of the
Company and the Buyer.
(b) For a period commencing 30 days prior to the Effective Time of the
Merger and ending on the earlier of the Effective Time of the Merger or the
termination of the Agreement, the undersigned will not sell, transfer or
otherwise dispose of, or reduce his or its interest in or risk relating to, any
shares of Company Shares presently owned or subsequently acquired by the
undersigned.
2. Rule 145. The undersigned will not offer, sell, pledge, transfer or
otherwise dispose of any of the shares of Buyer Common Stock issued to the
undersigned in the Merger unless at such time either: (i) such transaction shall
be permitted pursuant to the provision of Rule 145 under the Securities Act of
1933 (the "Securities Act"), (ii) the undersigned shall have furnished to the
Buyer an opinion of counsel, satisfactory to the Buyer, to the effect that no
registration under the Securities Act would be required in connection with the
proposed offer, sale, pledge, transfer or the disposition, or (iii) a
registration statement under the Securities Act covering the proposed offer,
sale, pledge, transfer or other disposition shall be effective under the
Securities Act.
3. Legend. The undersigned understands that all certificates
representing the Buyer Common Stock deliverable to the undersigned pursuant to
the Merger shall, until the occurrence of one of the events referred to in
Section 2 above, bear a legend substantially as follows:
"The shares represented by this certificate may not be offered, sold,
pledged, transferred or otherwise disposed of except in accordance with the
requirements of the Securities Act of 1933, as amended, and the other
conditions specified in the Affiliates Agreement dated as of December 31,
1996 between the holder of this certificate and Renaissance Solutions,
Inc., a copy of which Agreement may be inspected by the holder of the
certificate at Lincoln North, 00 Xxx Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx
or furnished by Renaissance Solutions, Inc. to the holder of this
certificate upon written request and without charge."
The Buyer, in its discretion, may cause stop transfer orders to be placed
with its transfer agent with respect to the certificates for the shares of Buyer
Common Stock which are required to bear the foregoing legend.
4. Tax Matters. The undersigned has, and as of the Effective Time of the
Merger will have, no present plan or intent to engage in a sale, exchange,
transfer, pledge, disposition or any other transaction (including a distribution
by a partnership to its partners or by a corporation to its shareholders) that
results in a reduction in the risk of ownership (collectively, as "Sale") with
respect to more than 50% of the shares by Buyer Common Stock to be acquired by
the undersigned upon consummation of the Merger. The undersigned is not aware
of, or participating in, any present plan or intention (a "Plan") on the part of
Company Stockholder to engage in Sales of shares by Buyer Common Stock to be
issued in the Merger such that the aggregate fair market value, as of the
Effective Time of the Merger, of the shares subject to such Sales would exceed
fifty percent (50%) of the aggregate fair market value of all outstanding
Company Shares immediately prior to the Merger. For purposes of the preceding
sentence, Company Shares (i) which are exchanged for cash in lieu of fractional
shares of Buyer Common Stock or (ii) with respect to which a pre-Merger Sale
occurs in a Related Transaction (as defined below), shall be considered to be
Company Shares that are exchanged for Buyer Common Stock in the Merger and then
disposed of pursuant to a Plan. A Sale of Buyer Common Stock shall be
considered to have occurred pursuant to a Plan if, among other things, such
-2-
Sale occurs in a Related Transaction. For purposes of this Section, a "Related
Transaction" shall mean a transaction that is in contemplation of, or related or
pursuant to, the Merger or the Agreement. If any of the undersigned's
representations in this section cease to be true at any time prior to the
Effective Time of the Merger, the undersigned will deliver to each of the Buyer
and the Company, prior to the Effective Time of the Merger, a written statement
to that effect, signed by the undersigned.
5. Miscellaneous.
(a) This agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
(b) This agreement shall be binding on the undersigned's successors
and assigns, including his heirs, executors and administrators.
The undersigned has carefully read this agreement and discussed its
requirements, to the extent the undersigned believed necessary, with its counsel
or counsel for the Buyer.
Very truly yours,
O. Xxxxx Xxxxxx
ACCEPTED:
RENAISSANCE SOLUTIONS, INC.
By: ____________________________________
Title: ____________________________________
Date: ____________________________________
-3-
EXHIBIT G
RETENTION AND NON-COMPETITION AGREEMENT
THIS RETENTION AND NON-COMPETITION AGREEMENT (the "Agreement"), made this
_____ day of _______, 199_ is entered into by Renaissance Solutions, Inc., a
Delaware corporation with its principal place of business at Lincoln North, 00
Xxx Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx (the "Company"), and the individual
whose signature is set forth below (the "Employee").
Whereas, pursuant to an Agreement and Plan of Merger, dated as of December
31, 1996, by and among the Company, International Systems Services Corporation
("ISS"), Artist Acquisition Corp., a wholly-owned subsidiary of the Company (the
"Sub"), and O. Xxxxx Xxxxxx (the "Merger Agreement"), Sub was merged with and
into ISS, with ISS surviving such merger as a wholly-owned subsidiary of the
Company (the "Merger"); and
Whereas, the Employee, at the time of the Merger, was an employee of ISS;
and
Whereas, in connection with the Merger, ISS terminated its Long Term
Incentive Plan (the "LTIP"), in which the Employee was a participant; and
Whereas, after the Merger the Company desires that the Employee continue to
be employed by ISS and the Employee desires such employment, subject to and in
accordance with the terms set forth in this Agreement.
Now, therefore, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Satisfaction of LTIP Obligations. The Employee hereby acknowledges
--------------------------------
receipt of a payment from the Company in the amount set forth in paragraph (a)
of Exhibit A hereto in full satisfaction of ISS's obligations to the Employee
---------
under the LTIP. The Employee hereby agrees and acknowledges that the LTIP was
terminated as of the Effective Date, as such term is defined in the Merger
Agreement, and releases the Company and ISS from any further responsibility or
obligation thereunder.
2. Annual Retention Bonus. In consideration of the agreements of the
----------------------
Employee set forth in Sections 3 and 4 below, the Company agrees to pay the
Employee the sum set forth in paragraph (b) of Exhibit A hereto on each of the
---------
first, second and third anniversaries of the Effective Date (each, a "Payment
Date"),
provided that the Employee has been continuously employed by the Company, or any
subsidiary of the Company (whether existing now or hereafter acquired or
established) (a "Subsidiary"), during the period commencing on the Effective
Date and ending on each Payment Date. In the event that the Employee's
employment by the Company or any Subsidiary of the Company is terminated or
ceases, for any reason, prior to any such Payment Date, the Employee shall not
be entitled to any bonus under this Section 2 payable on any Payment Date
subsequent to the date of the termination or cessation of the Employee's
employment.
3. Non-Solicitation of Customers.
-----------------------------
(a) While the Employee is employed by the Company and for a period
of two years after the termination or cessation of such employment for any
reason, the Employee will not directly or indirectly solicit, divert or take
away, or attempt to divert or to take away, the business or patronage of any of
the clients, customers or accounts, or prospective clients, customers or
accounts, of the Company which were contracted, solicited or served by the
Employee while employed by the Company.
(b) For the purposes of this Section 3, the term "Company" shall
include any Subsidiary of the Company.
4. Non-Solicitation of Employees.
-----------------------------
(a) While the Employee is employed by the Company and for a period of
two years after the termination or cessation of such employment for any reason,
the Employee will not directly or indirectly recruit, solicit or hire any
employee of the Company, or induce or attempt to induce any employee of the
Company to terminate his/her employment with, or otherwise cease his/her
relationship with, the Company.
(b) For the purposes of this Section 4, the term "Company" shall
include any Subsidiary of the Company.
5. Interpretation. If any restriction set forth in Sections 3 or 4 is
--------------
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which it
may be enforceable.
6. Equitable Remedies. The restrictions contained in Sections 3 and 4
------------------
are necessary for the protection of the business and goodwill of the Company and
are considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of Sections 3 and 4 is likely to cause the Company
substantial and
2
irrevocable damage and therefore, in the event of any such breach, the Employee
agrees that the Company, in addition to such other remedies which may be
available, shall be entitled to specific performance and other injunctive
relief.
7. No Employment Contract. The Employee acknowledges that this Agreement
----------------------
does not constitute a contract of employment and does not imply that the Company
will continue his or her employment for any period of time.
8. Proprietary Information and Developments. Concurrently with the
----------------------------------------
execution of this Agreement, the Employee shall enter into an Invention and Non-
disclosure Agreement, a copy of which is attached hereto as Exhibit A (the "Non-
------- -
disclosure Agreement").
9. Entire Agreement. This Agreement, together with the Non-disclosure
----------------
Agreement, constitutes the entire agreement between the parties and supersedes
all prior agreements and understandings, whether written or oral, relating to
the subject matter of this Agreement.
10. Amendment. This Agreement may be amended or modified only by a
---------
written instrument executed by all of the parties hereto.
11. Governing Law. This Agreement shall be construed, interpreted and
-------------
enforced in accordance with the internal laws (and not the law of conflicts) of
the Commonwealth of Massachusetts.
12. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of all of the parties hereto and their respective
successors and assigns, including any corporation with which or into which the
Company may be merged or which may succeed to its respective assets or business;
provided, however, that the obligations of the Employee are personal and shall
not be assigned by him.
13. Severability. The invalidly or unenforceability of any provision of
------------
this Agreement shall not affect the validly or enforceability of any other
provision of this Agreement.
14. Miscellaneous.
-------------
(a) No delay or omission by the Company in exercising any right under
this Agreement shall operate as a waiver of that or any other right. A waiver
or consent given by the Company on any one occasion shall be effective only in
that instance and shall not be construed as a bar or waiver of any right on any
other occasion.
-3-
(b) The captions of the sections of this Agreement are for convenience
of reference only and in no way define, limit or affect the scope or substance
of any section of this Agreement.
(c) In case any provision of this Agreement shall be invalid, illegal
or otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
RENAISSANCE SOLUTIONS, INC.
By:________________________________
Name:
Title:
EMPLOYEE
___________________________________
-4-
EXHIBIT A
(a) LTIP Payment: $________
(b) Retention Bonus at start of year two: $________
Retention Bonus at start of year three: $________
Retention Bonus at start of year four: $________
EXHIBIT H
[XXXX AND XXXX LETTERHEAD]
December 31, 1996
Mr. O. Xxxxx Xxxxxx
c/o International Systems Services Corporation
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Dear Xx. Xxxxxx:
This opinion is furnished to you pursuant to Section 6.2(f) of the
Agreement and Plan of Merger dated as of December 31, 1996 (the "Merger
Agreement"), among Renaissance Solutions, Inc., a Delaware corporation (the
"Buyer"), Artist Acquisition Corp., a Connecticut corporation and a wholly-owned
subsidiary of the Buyer (the "Transitory Subsidiary"), International Systems
Services Corporation, a Connecticut corporation (the "Company"), and you.
Capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to them in the Merger Agreement.
We have acted as counsel to the Buyer and the Transitory Subsidiary in
connection with the Merger and the preparation of the related Certificate of
Merger to be filed with the Secretary of State of Connecticut. As such counsel,
we have assisted in the preparation of the Merger Agreement, the Escrow
Agreement and the Registration Rights Agreement (collectively, the "Documents").
In connection with this opinion, we have also examined and are familiar
with and have relied upon the following documents:
(a) The Amended and Restated Certificate of Incorporation of the Buyer (the
"Buyer Charter");
(b) The Amended and Restated By-laws of the Buyer (the "Buyer By-laws");
(c) The Certificate of Incorporation of the Transitory Subsidiary (the
"Transitory Subsidiary Charter");
(d) The By-laws of the Transitory Subsidiary (the "Transitory Subsidiary
By-laws");
Mr. O. Xxxxx Xxxxxx
December 31, 1996
Page 2
(e) A Certificate of the Secretary of State of Delaware, dated as of a
recent date, certifying as to the legal existence and good standing of
the Buyer in Delaware (the "Buyer Good Standing Certificate");
(f) A Certificate of the Secretary of State of Connecticut, dated as of a
recent date, certifying as to the legal existence of the Transitory
Subsidiary in Connecticut (the "Transitory Subsidiary Legal Existence
Certificate");
(g) A certificate of the Secretary of the Buyer attesting to the incumbency
of the Buyer's officers and the authenticity of the resolutions
authorizing the transactions contemplated by the Merger Agreement;
(h) A certificate of the Secretary of the Transitory Subsidiary attesting
to the incumbency of the Transitory Subsidiary's officers and the
authenticity of the resolutions authorizing the transactions
contemplated by the Merger Agreement;
(i) Resolutions of the Board of Directors and stockholders of the Buyer
approving the Merger and authorizing, among other things, the
execution, delivery and performance by the Buyer of the Merger
Agreement and related documents;
(j) Resolutions of the Board of Directors and sole stockholder of the
Transitory Subsidiary approving the Merger and authorizing, among other
things, the execution, delivery and performance by the Transitory
Subsidiary of the Merger Agreement and related documents;
(k) The Merger Agreement;
(l) The Certificate of Merger;
(m) The Escrow Agreement;
(n) The Registration Rights Agreement;
(o) The closing certificate of the Buyer and the Transitory Subsidiary
described in Section 6.2(e) of the Merger Agreement; and
Mr. O. Xxxxx Xxxxxx
December 31, 1996
Page 3
(p) Such other documents, opinions, instruments and certificates
(including, but not limited to, certificates of public officials and
officers of the Buyer and the Transitory Subsidiary) as we have
considered necessary for purposes of this opinion.
In our examination of the documents described above, we have assumed the
genuineness of all signatures, the legal capacity of each signatory to such
documents, the authenticity of all documents submitted to us as originals, the
conformity to original documents of documents submitted to us as certified,
facsimile or photostatic copies, and the authenticity of the originals of such
latter documents. We have assumed that the Documents accurately describe and
contain the mutual understanding of the parties as to all matters contained
therein, and that no other agreements or understandings exist between the
parties with respect to the Documents.
Insofar as this opinion relates to factual matters, information with
respect to which is in the possession of the Buyer and the Transitory
Subsidiary, we have relied upon certificates of officers of the Buyer and the
Transitory Subsidiary, copies of which have previously been provided to your
counsel. We have not attempted to verify independently such facts, although we
know of no facts which lead us to question the accuracy of such certificates.
Any reference herein to "the best of our knowledge," "our knowledge" or to
any matter "known to us," "of which we are aware" or "coming to our attention"
or any variation of any of the foregoing shall mean the conscious awareness of
the attorneys in this firm who have rendered substantive attention to this
transaction (including the preparation of the Documents) of the existence or
absence of any facts which would contradict our opinions set forth below. We
have not undertaken any independent investigation to determine the existence or
absence of such facts, and no inference as to our knowledge of the existence or
absence of such facts should be drawn from the fact of our representation of the
Buyer or the Transitory Subsidiary.
Without limiting the foregoing, with respect to our opinion in paragraph 4
below, we have not conducted a search of any computer or electronic databases,
or of the dockets of any court or administrative or other regulatory agency.
For purposes of this opinion, we have assumed that the Documents have been
duly authorized, executed and delivered by each of the signatories thereto other
than the Buyer and the Transitory Subsidiary, as the case may be, that the
signatories thereto other than the Buyer and the Transitory Subsidiary, as the
case may be, have
Mr. O. Xxxxx Xxxxxx
December 31, 1996
Page 4
the legal capacity and all requisite power and authority to effect the
transactions contemplated by the Documents and that the Documents are the valid,
binding and enforceable obligations of each of the signatories thereto other
than the Buyer and the Transitory Subsidiary, as the case may be, enforceable
against them in accordance with their respective terms. We are expressing no
opinion herein as to the application of or compliance with any federal, state or
local law or regulation relating to the power, authority or competence of any
party to the Documents other than the Buyer and the Transitory Subsidiary.
Our opinions expressed in paragraph 1 below, insofar as they relate to the
due organization, legal existence and good standing of the Buyer and the due
organization and legal existence of the Transitory Subsidiary, are based solely
on the Buyer Good Standing Certificate and the Transitory Subsidiary Legal
Existence Certificate, are rendered as of the respective dates thereof, and are
limited accordingly. We note, however, that (i) as of the date of the
Transitory Subsidiary Legal Existence Certificate the organization and first
biennial report for the Transitory Subsidiary had not been filed with the Office
of the Secretary of State of the State of Connecticut, and (ii) we have been
advised that such report was filed with the Office of the Secretary of State on
the date hereof.
Our opinion in paragraph 2 below as to the number of shares of capital
stock of the Buyer outstanding and held in treasury as of December 30, 1996 and
the full payment therefor is based solely upon a certificate of the Buyer, a
copy of which is attached hereto as Exhibit A, and such opinion is rendered as
------- -
of December 30, 1996 and limited accordingly.
The opinions hereinafter expressed are qualified to the extent that they
may be subject to or affected by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, usury, fraudulent transfer or other laws affecting
the rights and remedies of creditors generally, (ii) statutory or decisional law
concerning recourse by creditors to security in the absence of notice or
hearing, and (iii) duties and standards imposed on creditors and parties to
contracts, including without limitation requirements of good faith,
reasonableness and fair dealing. We express no opinion as to the availability
of any equitable or specific remedy or defense upon any breach of any of the
covenants, warranties or other provisions contained in the Documents or any of
the other agreements, instruments or documents referred to herein or therein, or
of any rights granted pursuant to any of such agreements, instruments or
documents, inasmuch as the availability of such remedies or defenses may be
subject to the discretion of a court.
Mr. O. Xxxxx Xxxxxx
December 31, 1996
Page 5
We express no opinion as to the laws of any state or jurisdiction other
than the state laws of the Commonwealth of Massachusetts, the General
Corporation Law statute of the State of Delaware and the federal laws of the
United States. Accordingly, to the extent that any other laws govern any of the
matters as to which we express an opinion below, we have assumed with your
permission and without independent investigation, that the laws of such
jurisdiction are identical to the state laws of the Commonwealth of
Massachusetts, and we express no opinion as to whether such assumption is
reasonable or correct. Without limiting the foregoing, we call your attention
to the fact that the Transitory Subsidiary is a Connecticut corporation.
We are expressing no opinion as to compliance by the Buyer with any state
or so-called "Blue Sky" securities laws, or with any state or federal antifraud
laws, in connection with the issuance of the Merger Shares in the Merger.
We express no opinion herein as to whether the Merger will qualify for
"pooling treatment" in accordance with applicable accounting rules and
principles or as to the tax consequences of the Merger under applicable federal,
state and local income tax laws and regulations.
On the basis of and subject to the foregoing, we are of the opinion that:
1. The Buyer is a corporation duly organized, legally existing and in
good standing under the laws of the State of Delaware. The Transitory
Subsidiary is a corporation duly organized and legally existing under the laws
of the State of Connecticut. The Buyer has all requisite corporate power and
authority to carry on its business as, to our knowledge, it is now conducted and
to own and use its properties (as known to us) in connection therewith.
2. The authorized capital stock of the Buyer consists of 20,000,000
shares of Common Stock, of which 7,933,594 shares are issued and outstanding and
none are held in treasury, and 2,000,000 shares of Preferred Stock, none of
which are issued and outstanding. All of the issued and outstanding shares of
capital stock of the Buyer are duly authorized, validly issued, fully paid and
nonassessable. All of the Merger Shares will be, when issued in accordance with
the Merger Agreement, duly authorized, validly issued, fully paid and
nonassessable.
3. Each of the Buyer and the Transitory Subsidiary has all requisite
corporate power and authority to execute and deliver the Merger Agreement and
(in the case of the Buyer) the Escrow Agreement and the Registration Rights
Agreement
MR. O. Xxxxx Xxxxxx
December 31, 1996
Page 6
and to perform its respective obligations thereunder. The execution and delivery
of the Merger Agreement and (in the case of the Buyer) the Escrow Agreement and
the Registration Rights Agreement and the performance of the Merger Agreement
and (in the case of the Buyer) the Escrow Agreement and the Registration Rights
Agreement and the consummation of the transactions contemplated thereby have
been duly and validly authorized by all necessary corporate action on the part
of the Buyer and the Transitory Subsidiary. The Merger Agreement and (in the
case of the Buyer) the Escrow Agreement and the Registration Rights Agreement
have been duly and validly executed and delivered by the Buyer and the
Transitory Subsidiary and constitute valid and binding obligations of the Buyer
and the Transitory Subsidiary, enforceable against the Buyer and the Transitory
Subsidiary in accordance with their respective terms (other than Section 6 of
the Registration Rights Agreement, as to which we express no opinion).
4. Except as set forth in the Merger Agreement, neither the execution and
delivery by the Buyer or the Transitory Subsidiary of the Merger Agreement, nor
the consummation by the Buyer or the Transitory Subsidiary of the transactions
contemplated thereby, (i) conflicts with or violates any provision of the Buyer
Charter, the Buyer By-laws, the Transitory Subsidiary Charter or the Transitory
Subsidiary By-laws, (ii) requires on the part of the Buyer or the Transitory
Subsidiary any filing with, or permit, authorization, consent or approval of,
any Governmental Entity which has not been filed or obtained, (iii) conflicts
with, results in a breach of, constitutes (with or without due notice or lapse
of time or both) a default under, results in the acceleration of, creates in any
party the right to accelerate, terminate, modify or cancel or requires any
notice, consent or waiver (which has not been obtained) under, any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest or
other agreement or instrument filed as an Exhibit to the Buyer Reports to which
the Buyer is a party, or (iv) violates any statute, rule or regulation, or any
order, writ, injunction or decree known to us specifically naming the Buyer or
the Transitory Subsidiary or any of their respective properties or assets.
5. All authorizations, consents and approvals of all Federal and state
governmental agencies and authorities required in order to permit consummation
by the Buyer and the Transitory Subsidiary of the transactions contemplated by
the Merger Agreement have been obtained.
6. Based in part on the representations of the Company Stockholder in
Article 3 of the Merger Agreement, the offer, issuance and sale of the Merger
Shares will be exempt from registration under the Securities Act of 1933, as
amended.
Mr. O. Xxxxx Xxxxxx
December 31, 1996
Page 7
This opinion is based upon currently existing statutes, rules, regulations
and judicial decisions and upon facts known to us on the date hereof, and we
disclaim any obligation to advise you of any change in any of these sources of
law or subsequent legal or factual developments which might affect any matters
or opinions set forth herein.
Please note that we are opining only as to the matters expressly set forth
herein, and no opinion should be inferred as to any other matters.
This opinion is furnished to you pursuant to Section 6.2(f) of the Merger
Agreement and may not be relied upon by any other person or entity or for any
other purpose without our express prior written consent.
Very truly yours,
XXXX AND XXXX
EXHIBIT A
RENAISSANCE SOLUTIONS, INC.
ARTIST ACQUISITION CORP.
Officers' Certificate
---------------------
Each of Xxxxx X. Xxxxx, in his capacity as Co-Chairman of Renaissance
Solutions, Inc., a Delaware corporation (the "Company") and President of Artist
Acquisition Corp., a Connecticut corporation (the "Transitory Subsidiary") and
Xxxxxx X. XxXxxxxx, in his capacity as Vice President, Chief Financial Officer
and Chief Operating Officer of the Company and Treasurer of the Transitory
Subsidiary, hereby certifies to Xxxx and Xxxx on behalf of the Company and the
Transitory Subsidiary that:
1. The Company's issued and outstanding capital stock as of the close of
business on December 30, 1996 consisted of 7,933,594 shares of Common Stock,
$.0001 par value per share (the "Common Stock"), of which no shares were held in
the treasury of the Company.
2. All shares of Common Stock of the Company, other than shares of
capital stock issued in connection with splits of the outstanding capital stock
or recapitalizations or as dividends, issued by the Company to date were issued
originally for consideration of money paid or tangible or intangible property
received or services rendered or a combination thereof, as approved or ratified
by the Board of Directors of the Company in authorizing such issuances, and such
authorized consideration was in each case received by the Company.
3. All shares of capital stock of the Transitory Subsidiary issued by the
Transitory Subsidiary to date were issued originally for consideration of money
paid or tangible or intangible property received or services rendered or a
combination thereof, as approved or ratified by the Board of Directors of the
Transitory Subsidiary in authorizing such issuances and such authorized
consideration was in each case received by the Transitory Subsidiary.
4. The Company owns of record and beneficially all of the outstanding
shares of capital stock of the Transitory Subsidiary.
5. The outstanding shares of capital stock of the Transitory Subsidiary
are owned free and clear of all liens, encumbrances, equities and claims, and no
options, warrants or other rights to purchase, agreements or other obligations
to issue or other
rights to convert any obligations into any shares of capital stock or of
ownership interests in the Transitory Subsidiary are outstanding.
This certificate is given to Xxxx and Xxxx in connection with Xxxx and
Xxxx'x delivery of certain legal opinions dated as of the date hereof in
connection with the consummation of the transactions contemplated by the
Agreement and Plan of Merger dated as of December 31, 1996 between the Company,
the Transitory Subsidiary, International Systems Services Corporation and O.
Xxxxx Xxxxxx (the "Merger Agreement"). This certificate may be relied upon by
Xxxx and Xxxx for purposes of such opinions. All capitalized terms used and not
otherwise defined in this certificate shall have the meanings assigned to them
in the Merger Agreement.
IN WITNESS WHEREOF, the undersigned have signed their names on this 31st
day of December, 1996.
RENAISSANCE SOLUTIONS, INC. ARTIST ACQUISITION CORP.
_____________________________ ______________________________
Xxxxx X. Xxxxx Xxxxx X. Xxxxx
Co-Chairman President
_____________________________ _______________________________
Xxxxxx X. XxXxxxxx Xxxxxx X. XxXxxxxx
Vice President, Chief Financial Officer Treasurer
and Chief Operating Officer
