ASSET
PURCHASE
AGREEMENT
between
USC/CANTERBURY CORP ("Buyer")
(a wholly owned subsidiary of
CANTERBURY INFORMATION TECHNOLOGY, INC. ("Canterbury")
and
U.S. COMMUNICATIONS, INC. ("USC" or "Seller")
(A Wholly Owned Subsidiary of
CONDOR TECHNOLOGY SOLUTIONS, INC.)
and
CONDOR TECHNOLOGY SOLUTIONS, INC. ("Condor")
TABLE OF CONTENTS
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Basic Transaction . . . . . . . . . . . . . . . . . . . . 4
(a) Purchase and Sale of Assets. . . . . . . . . . . . . 4
(b) Assumption of Liabilities. . . . . . . . . . . . . . 5
(c) Purchase Price.. . . . . . . . . . . . . . . . . . . 5
(d) The Closing. . . . . . . . . . . . . . . . . . . . . 5
(e) Deliveries at the Closing. . . . . . . . . . . . . . 5
(f) Allocation.. . . . . . . . . . . . . . . . . . . . . 5
3. Representations and Warranties of the Seller. . . . . . . 5
(a) Organization of the Seller.. . . . . . . . . . . . . 6
(b) Authorization of Transaction.. . . . . . . . . . . . 6
(c) Noncontravention. . . . . . . . . . . . . . . . . . 6
(d) Title to Assets. . . . . . . . . . . . . . . . . . . 6
(e) Subsidiaries.. . . . . . . . . . . . . . . . . . . . 6
(f) Financial Statements.. . . . . . . . . . . . . . . . 6
(g) Events Subsequent to Most Recent Fiscal Year End . . 7
(h) Undisclosed Liabilities. . . . . . . . . . . . . . . 8
(i) Legal Compliance.. . . . . . . . . . . . . . . . . . 9
(j) Tax and Other Returns and Reports . . . . . . . . . 9
(k) Intellectual Property. . . . . . . . . . . . . . . . 9
(l) Tangible Assets. . . . . . . . . . . . . . . . . . . 10
(m) Contracts . . . . . . . . . . . . . . . . . . . . . 10
(n) Accounts Receivable. . . . . . . . . . . . . . . . . 12
(o) Powers of Attorney.. . . . . . . . . . . . . . . . . 12
(p) Insurance. . . . . . . . . . . . . . . . . . . . . . 12
(q) Litigation.. . . . . . . . . . . . . . . . . . . . . 12
(r) Employees. . . . . . . . . . . . . . . . . . . . . . 13
(s) Employee Benefits. . . . . . . . . . . . . . . . . . 13
(t) Guaranties.. . . . . . . . . . . . . . . . . . . . . 13
(u) Environment, Health, and Safety. . . . . . . . . . . 13
(v) Certain Business Relationships With the Seller . . . 14
(w) Disclosure.. . . . . . . . . . . . . . . . . . . . . 14
4. Representations and Warranties of the Buyer.. . . . . . . 14
(a) Organization of the Buyer. . . . . . . . . . . . . . 14
(b) Authorization of Transaction.. . . . . . . . . . . . 14
(c) Noncontravention.. . . . . . . . . . . . . . . . . . 14
(d) Securities Filings. . . . . . . . . . . . . . 14
5. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . 14
(a) General. . . . . . . . . . . . . . . . . . . . . . . 15
(b) Notices and Consents.. . . . . . . . . . . . . . . . 15
(c) Operation of Business. . . . . . . . . . . . . . . . 15
(d) Preservation of Business.. . . . . . . . . . . . . . 15
(e) Full Access. . . . . . . . . . . . . . . . . . . . . 15
(f) Notice of Developments.. . . . . . . . . . . . . . . 15
(g) Exclusivity. . . . . . . . . . . . . . . . . . . . . 15
6. Conditions to Obligation to Close.. . . . . . . . . . . . 16
(a) Conditions to Obligation of the Buyer. . . . . . . . 16
(b) Conditions to Obligation of the Seller.. . . . . . . 17
7. Termination.. . . . . . . . . . . . . . . . . . . . . . . 17
(a) Termination of Agreement.. . . . . . . . . . . . . . 18
8. Indemnification . . . . . . . . . . . . . . . . . . . . . 18
(a) Survival of Representations and Warranties . . . . . 18
(b) Indemnification Provisions for Benefit of the Buyer. 18
(c) Matters Involving Third Parties. . . . . . . . . . . 19
(d) Indemnification Provisions for Benefit of the Seller 20
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 20
(a) Registration . . . . . . . . . . . . . . . . . . . . 20
(b) Litigation Support. . . . . . . . . . . . . . . . . .20
(c) Restrictive Covenants. . . . . . . . . . . . . . . . 20
(d) Voting Agreement . . . . . . . . . . . . . . . . . . 20
(e) Right of First Refusal . . . . . . . . . . . . . . . 20
(f) No Third-Party Beneficiaries . . . . . . . . . . . . 21
(g) Entire Agreement . . . . . . . . . . . . . . . . . . 21
(h) Succession and Assignment. . . . . . . . . . . . . . 21
(i) Counterparts.. . . . . . . . . . . . . . . . . . . . 21
(j) Headings.. . . . . . . . . . . . . . . . . . . . . . 21
(k) Notices. . . . . . . . . . . . . . . . . . . . . . . 21
(l) Governing Law. . . . . . . . . . . . . . . . . . . . 22
(m) Amendments and Waivers.. . . . . . . . . . . . . . . 22
(n) Severability.. . . . . . . . . . . . . . . . . . . . 22
(o) Expenses.. . . . . . . . . . . . . . . . . . . . . . 22
(p) Brokers'/Finders' Fees.. . . . . . . . . . . . . . . 23
(q) Construction.. . . . . . . . . . . . . . . . . . . . 23
(r) Incorporation of Exhibits and Schedules. . . . . . . 23
(s) Specific Performance. . . . . . . . . . . . . . . . 23
(t) Submission to jurisdiction. . . . . . . . . . . . . 23
(u) Bulk Transfer Laws. . . . . . . . . . . . . . . . . 24
(v) Stock . . . . . . . . . . . . . . . . . . . . . . . .24
Schedule A Forms of Assignments
Schedule B Form of Assumption
Schedule C1 Schedule of Assets Being Acquired
Schedule C2 Schedule of Liabilities Assumed
Schedule D Financial Statements Including Acquisition Balance
Sheet
Schedule E Schedule of Accounts Receivable
Schedule H Disclosure Schedule - Exceptions to Representations
and Warranties (Seller)
Schedule I Disclosure Schedule - Exceptions to
Representations and Warranties (Buyer)
Schedule J Schedule of Key Customers
Schedule K Schedule of Key Employees
ASSET PURCHASE AGREEMENT
Agreement entered into effective as of October 18, 1999,
by and between USC/CANTERBURY CORP. ("Buyer"), a Maryland
corporation (a wholly owned subsidiary of CANTERBURY
INFORMATION TECHNOLOGY, INC. (herein referred to as "CIT" or
"Canterbury"), a Pennsylvania corporation; and U.S.
COMMUNICATIONS, INC. ("USC" or "Seller") (a wholly owned
subsidiary of CONDOR TECHNOLOGY SOLUTIONS, INC.) and CONDOR
TECHNOLOGY SOLUTIONS INC. (herein referred to as "Condor"), a
Delaware corporation . The Buyer and the Seller are referred
to collectively herein as the "Parties."
This Agreement contemplates a transaction in which the
Buyer will purchase all of the assets (and assume certain of
the liabilities) of the Seller in return solely for restricted
stock of Buyer.
Now, therefore, in consideration of the premises and the
mutual promises herein made, and in consideration of the
representations, warranties, and covenants herein contained,
the Parties agree as follows.
1. Definitions
"Accredited Investor" has the meaning set forth in
Regulation D promulgated under the Securities Act.
"Acquired Assets" means all right, title, and interest in
and to all of the assets of the Seller, including the name
"U.S. Communications, Inc." and all of USC's (a) real
property, leaseholds and subleaseholds therein, improvements,
fixtures, and fittings thereon, (b) tangible personal property
(such as machinery, equipment, inventories of supplies,
manufactured and purchased parts, work in process and finished
work, furniture, automobiles and trucks,), (c) Intellectual
Property, goodwill associated therewith, licenses and
sublicenses granted and obtained with respect thereto, and
rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of
all jurisdictions, (d) leases, subleases, and rights
thereunder, (e) agreements, contracts, indentures, mortgages,
instruments, Security Interests, guaranties, other similar
arrangements, and rights thereunder, (f) claims, deposits,
prepayments, refunds, causes of action, choses in action,
rights of recovery, rights of set off, and rights of
recoupment (including any such item relating to the payment of
Taxes), (g) franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, and similar rights
obtained from governments and governmental agencies, (h)
books, records, ledgers, files, documents, correspondence,
lists, plats, architectural plans, drawings, and
specifications, creative materials, advertising and
promotional materials, studies, reports, and other printed or
written materials, curricula, either finished, in process, or
planned, and (i) rights in and with respect to the assets
associated with its Employee Health and Disability Plans;
provided, however, that the Acquired Assets shall not include
(i) the corporate charter, qualifications to conduct business
as a foreign corporation, arrangements with registered agents
relating to foreign qualifications, taxpayer and other
identification numbers, seals, minute books, stock transfer
books, blank stock certificates, and other documents relating
to the organization, maintenance, and existence of the Seller
as a corporation; (ii) any of the rights of the Seller under
this Agreement; or (iii) accounts, notes and other
receivables; or (iv) any other assets specifically identified
as being excluded from the Acquired Assets. The enumeration
of asset categories set forth herein shall not imply that
Seller necessarily owns each such type of asset.
"Affiliate" has the meaning set forth in Rule 12b-2 of
the regulations promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the
meaning of Code Sec. 1504(a) [or any similar group defined
under a similar provision of state, local, or foreign law].
"Assumed Liabilities" As set forth on Schedule C2 in
detail.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or
transaction that forms or could, with reasonable probability,
form the basis for any specified consequence.
"Buyer" means USC/Canterbury Corp.
"Cash" means cash and cash equivalents (including
marketable securities and short term investments) calculated
in accordance with GAAP applied on a basis consistent with the
preparation of the Financial Statements.
"Canterbury" means Canterbury Information Technology,
Inc., of which USC/Canterbury Corp. is a wholly owned
subsidiary.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date " has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Condor" means Condor Technology Solutions, Inc., of which USC is
a wholly owned subsidiary.
"Controlled Group of Corporations" has the meaning set forth in
Code Sec. 1563.
"Disclosure Schedule" has the meaning set forth in Section 3
below.
"Employee Benefit Plan "means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee
Pension Benefit Plan, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c)
qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan), or
(d) Employee Welfare Benefit Plan or material fringe benefit plan or
program.
"Employee Pension Benefit Plan "has the meaning set forth in
ERISA Sec. 3(2).
"Employee Welfare Benefit Plan "has the meaning set forth
in ERISA Sec. 3(l).
"Environmental, Health, and Safety Laws" means the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976, and the Occupational Safety and Health Act of
1970, each as amended, together with all other laws (including
rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal,
state, local, and foreign governments (and all agencies
thereof) concerning pollution or protection of the
environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants,
or chemical, industrial, hazardous, or toxic materials or
wastes into ambient air, surface water, ground water, or lands
or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"Extremely Hazardous Substance" has the meaning set forth
in Sec. 302 of the Emergency Planning and Community Right-to-Know Act
of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statement" has the meaning set forth in
Section 3(f) and (g) below.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations,
derivations, and combinations thereof and including all
goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all
trade secrets and confidential business information (including
ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and tech-
niques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (e) all computer
software (including data and related documentation), (f) all
other proprietary rights, and (g) all copies and tangible
embodiments thereof (in whatever form or medium), (h) teaching
or instructor notes, teaching plans, or other syllabus.
"Knowledge" means actual knowledge after reasonable inquiry.
"Liability" means any liability (whether known or
unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet of
October 15, 1999.
"Most Recent Financial Statements" has the meaning set
forth in Section 3(f) and (g) below.
"Most Recent Fiscal Month End" has the meaning set forth
in Section3(f) and (g) below.
"Most Recent Fiscal Year End" has the meaning set forth
in Section 3(f) and (g) below.
"Multiemployer Plan" has the meaning set forth in ERISA
Sec. 3(37).
"Ordinary Course of Business" means the ordinary course
of business consistent with past custom and practice
(including with respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a
corporation, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political
subdivision thereof.
"Purchase Price" has the meaning set forth in Section 2(c) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange
Act of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than
(a) mechanic's, materialmen's, and similar liens, (b) liens
for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing
rental payments under capital lease arrangements, and (d)
other liens arising in the Ordinary Course of Business and not
incurred in connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which
a specified Person (or a Subsidiary thereof) owns a majority
of the common stock or has the power to vote or direct the
voting of sufficient securities to elect a majority of the
directors.
"Seller" means U.S. Communications, Inc. ("USC")
"Stock of Canterbury" means restricted common stock of
Canterbury Information Technology, Inc.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or
not.
"Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
2. Basic Transaction
(a) Purchase and Sale of Assets. On and subject to the
terms and conditions of this Agreement, the Buyer agrees to
purchase from the Seller, and the Seller agrees to sell,
transfer, convey, and deliver to the Buyer, all of the
Acquired Assets at the Closing for the consideration specified
below in this Section 2.
(b) Assumption of Liabilities. On and subject to the
terms and conditions of this Agreement, the Buyer agrees to
assume and become responsible for the Assumed Liabilities at
the Closing. The Buyer will not assume or have any
responsibility, however, with respect to any other obligation
or liabilities of the Seller not included within the Schedule
of Assumed Liabilities as set forth in Schedule C2.
(c) Purchase Price.
(i) The "Purchase Price" shall be the sum of (a)
$100.00 cash consideration (b) $899,900 and (c) the Assumed
Liabilities.
(ii) The Purchase Price shall be paid as follows:
(A) $100 shall be paid at the Closing in cash or other
immediately available funds; (B) $899,900 of the Purchase
Price shall be paid by Canterbury's issuance to USC at the
Closing of $899,900 worth of the Stock of Canterbury, reduced
by the dollar value of deferred revenue assumed and unpaid
vacation pay earned by those USC employees who become
employees of Buyer as of the time of Closing; and (C) the
balance of the Purchase Price not including the Guaranteed
Receivables Adjustment, shall be paid by Buyer's assumption of
the Assumed Liabilities in accordance with the Form of
Assumption attached hereto as Exhibit B. The number of shares
of Stock of Canterbury to be delivered to USC shall be
determined the day before Closing by dividing $899,900 by the
closing price of Stock of Canterbury on the NASDAQ National
Market, rounded off to the nearest whole share. Concurrently,
Canterbury will give instructions to Canterbury's transfer
agent to issue the agreed upon number of shares to USC.
(iii) In connection with obtaining certain
accommodations from USC's and Condor's lenders, First Union
and Deutsche Finanical Services, the parties have agreed that
USC shall not assume USC's accounts payable (as set forth in
the Assumption Agreement) and USC shall not sell its accounts
receivables (the "Receivables") to Buyer. However, in order
to provide Buyer with the benefit the parties had intended
Buyer to obtain had it acquired the Receivables, the parties
agree as follows:
(A) Beginning thirty (30) days after the
Closing, and every Monday thereafter until the Monday which
follows the sixtieth (60th) day after the Closing, USC shall
provide Canterbury and Buyer with a report of collections of
the Receivables, which Canterbury and Buyer shall have the
right to audit, at their sole expense.
(B) At such time as the collections of
Receivables exceed One Million, One Hundred Fifty-Nine
Thousand, Nine Hundred Eleven Dollars ($1,159,911), USC shall
remit the excess, not to exceed an aggregate of Three Hundred
Eight Thousand Dollars ($308,000), to Buyer on a weekly basis,
as and when collected. If, at the end of the sixty (60) day
period following the Closing, Buyer has not received from USC
Three Hundred Eight Thousand ($308,000) from collections of
Receivables, then USC shall pay the amount of such shortfall
to Buyer within ten (10) days after the expiration of such
sixty (60) day period. USC shall, from its collections of
Receivables, pay its creditors (including vendors and banks)
in a timely manner consistent with USC's arrangements with
such creditors.
(d) The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take
place at the offices of Levy & Levy, P.A., Plaza 1000, Suite
000, Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx, 00000, commencing at
9:00 a.m, local time on the business day or at any other
mutually agreed upon location or by Federal Express, following
the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to
actions the respective Parties will take, at the closing
itself) or such other date as the Parties may mutually
determine (the "Closing Date"); provided, however, that the
Closing Date shall be no later than October 18, 1999.
(e) Deliveries at the Closing. At the Closing, (i) the
Seller will deliver to the Buyer the various certificates,
instruments, and documents referred to (including UCC filings)
in Section 6(a) below; (ii) the Buyer will deliver to the
Seller the instructions for Canterbury's transfer agent to
issue the agreed upon shares in Section 6(b) below; (iii) the
Seller will execute, acknowledge (if appropriate), and deliver
to the Buyer (A) assignments (including leases of real
property and Intellectual Property transfer documents) in the
forms attached hereto under Schedule (A) and (B) such other
instruments of sale, transfer, conveyance, and assignment as
the Buyer and its counsel may reasonably request; (iv) the
Buyer will execute, acknowledge (if appropriate), and deliver
to the Seller (A) an Assumption Agreement in the form attached
hereto as Schedule B; and (B) such other instruments of
assumption as the Seller and its counsel may reasonably
request; (v) the Buyer will deliver to the Seller the
consideration specified in Section 2(c) above; (vi) Articles
of Transfer required to be filed in the State of Maryland
prepared by Seller and originally executed by Buyer and
Seller; and (vii) an Employment Contract between Buyer and
Xxxxxxxx Xxxxxxxx in form and content mutually acceptable to
them.
(f) Allocation. This transaction is structured as a
taxable exchange of assets for stock. The transaction does
not qualify as a tax-free reorganization under Internal
Revenue Code 368. The Buyer and Seller agree to report the
transaction as a taxable exchange to the Internal Revenue
Service. Therefore, the parties agree to allocate the
purchase price (and all other capitalizable costs) among the
acquired assets as follows:
(i) The fixed assets shall be valued at
approximately $60,000; and
(ii) All other assets set forth in the October 15,
1999 Balance Sheet of the Seller (with the exception of
organizational costs, which are not being transferred) shall
be valued at their book value, provided that accounts
receivable shall be valued at 100% of the invoiced amount and
shall be guaranteed by Seller; and
(iii) The balance of the Purchase Price shall be
allocated to "good will."
3. Representations and Warranties Regarding the Seller.
Condor and USC, jointly and severally, represent and warrant
to the Buyer that the statements contained in this Section 3
are correct and complete as of the date of this Agreement
except as set forth in the disclosure schedule accompanying
this Agreement and initialed by the Parties (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 3.
(a) Organization of the Sellers. Each of USC and Condor
are corporations duly organized, validly existing, and in good
standing under the laws of the jurisdiction of their
incorporation.
(b) Authorization of Transaction. Each of USC and
Condor has full corporate power and authority, to execute and
deliver this Agreement and to perform its obligations
hereunder. Without limiting the generality of the foregoing,
the board of directors of each of USC and Condor has duly
authorized the execution, delivery, and performance of this
Agreement by USC and Condor. This Agreement constitutes the
valid and legally binding obligation of each of USC and
Condor, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above), will (i)
violate in any material respect any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental
agency, or court to which the Seller is subject, (ii) violate
any provision of the charter or bylaws of USC and Condor or
(iii) conflict with, result in a material breach of,
constitute a material default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
material agreement, contract, lease, license, instrument, or
other arrangement to which USC and Condor is a party or by
which it is bound or to which any of the Acquired Assets are
subject (or result in the imposition of any Security Interest
upon any of the Acquired Assets). USC does not need to give
any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Section 2 above).
(d) Title to Assets. USC has good and marketable title
to, or a valid leasehold interest in, the assets used by it,
located on its premises, or shown on the Most Recent Balance
Sheet or acquired after the date thereof, free and clear of
all Security Interests, except for assets disposed of in the
Ordinary Course of Business since the date of the Most Recent
Balance Sheet and except for liens disclosed in the Notes to
the Financial Statements. Without limiting the generality of
the foregoing, USC has good and marketable title to all of the
Acquired Assets, free and clear of any Security Interest or
restriction on transfer, except for liens disclosed in the
Notes to the Financial Statements and in the Disclosure
Schedule.
(e) Subsidiaries. USC does not have any Subsidiaries,
but USC is a wholly owned subsidiary of Condor.
(f) Financial Statements. Attached hereto as Schedule
D are the following financial statements (collectively the
"Financial Statements"): (i) balance sheets, statements of
income, retained earnings, and cash flows as of and for the
last two fiscal years ended December 31, 1998 and December 31,
1997 (the "Most Recent Fiscal Year End") for USC; and (ii)
unaudited balance sheet, statements of income, retained
earnings, and cash flows (the "Most Recent Financial
Statements" ) as of and for the eight months ended August 31,
1999 (the "Most Recent Fiscal Month End " ) for USC. The
Financial Statements (including the Notes thereto where
applicable) have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of USC as of such dates
and the results of operations of USC for such periods, and are
consistent with the books and records of USC. The financial
statements referenced in clause (ii) will be internally
prepared by USC along with Condor and such financial statement
information as of August 31, 1999 is to the best of USC's and
Condor's knowledge, true and correct. USC and Condor hereby
represent that USC's financial statements are able to be
audited for the time periods required under SEC and GAAP rules
and guidelines within 2 months from closing.
(g) Events Subsequent to Most Recent Fiscal Year End.
Since the Most Recent Fiscal Year End, there has not been
any material adverse change in the business, financial
condition, operations, or results of operations of USC or on
behalf of USC. Without limiting the generality of the
foregoing, since that date.
(i) USC has not sold, leased, transferred, or
assigned any of USC's assets, tangible or intangible, of a
value in excess of $1,000, other than for a fair consideration
and in the Ordinary Course of Business;
(ii) USC has not entered into any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases and licenses) outside the Ordinary Course of
Business;
(iii) No party (including USC) has accelerated,
terminated, modified, or canceled any material agreement,
contract, lease or license (or series of related agreements,
contracts, leases and licenses) to which the USC is a party or
by which it is bound;
(iv) USC or Condor has not permitted any Security
Interest upon any of USC's material assets, tangible or
intangible;
(v) USC has not made any capital expenditure (or
series of related capital expenditures) outside the Ordinary
Course of Business;
(vi) USC has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of,
any other Person (or series of related capital investments,
loans, and acquisitions) ;
(vii) USC has not issued any note, bond, or
other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized
lease obligation;
(viii) USC or Condor has not delayed or postponed
the payment of accounts payable and other Liabilities or USC,
other than as consistent with its Ordinary Course of Business.
(ix) The Seller has not canceled, compromised,
waived, or released any right or claim (or series of related
rights and claims in excess of $1,000), outside the Ordinary
Course of Business.
(x) The Seller has not granted any license or
sublicense of any rights under or with respect to any
Intellectual Property;
(xi) USC represents that there has been no change
made or authorized in the charter or bylaws of USC;
(xii) USC has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of USC's capital
stock;
(xiii) USC has not declared, set aside, or paid
any dividend or made any distribution with respect to USC's
capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock;
(xiv) USC has not experienced any material
damage, destruction, or loss (whether or not covered by
insurance) to its property;
(xv) USC has not made any loan to, or entered into
any other transaction with, any of its directors, officers,
and employees outside the Ordinary Course of Business;
(xvi) USC has not entered into any employment
contract or collective bargaining agreement, written or oral,
or modified the terms of any existing such contract or
agreement outside the Ordinary Course of Business;
(xvii) USC has not granted any increase in the
base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xviii) USC has not adopted, amended, modified or
terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of
its directors, officers, and employees (or taken any such
action with respect to any other Employee Benefit Plan) on
behalf of USC;
(xix) USC has not made any other change in
employment terms for any of USC's directors, officers, and
employees outside the Ordinary Course of Business;
(xx) USC has not made or pledged to make any
charitable or other capital contribution.
(xxi) USC has not paid any amount to any third
party with respect to any Liability or obligation (including
any costs and expenses USC has incurred or may incur in
connection with this Agreement and the transactions
contemplated hereby) which would not constitute an Assumed
Liability if in existence as of the Closing, other than
accounting fees equal in amount to the usual accounting costs
which would have been incurred by USC in the Ordinary Course
of Business.
(xxii) to the knowledge of USC and Condor, there
has not been any other material occurrence, event, incident,
action, failure to act, or transaction involving USC which
will have a material adverse effect upon the business of the
Seller; and
(xxiii) Condor has not committed to any of the
foregoing on behalf of USC.
(h) Undisclosed Liabilities. USC does not have any
undisclosed liabilities affecting their assets being sold
herewith. There is no basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of the assets to be acquired
giving rise to any liability.
(i) Legal Compliance. USC has complied in all material
respects with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or
commenced against it alleging any failure so to comply.
(j) Tax and Other Returns and Reports. All federal,
state, local and foreign Tax Returns and other similar filings
required to be filed by USC with respect to any federal,
state, local or foreign tax have been filed with the
appropriate governmental agencies in all jurisdictions in
which such Tax Returns are required to be filed, and all such
Tax Returns properly reflect the liabilities of USC or Taxes
for the periods, property or events covered thereby. All
Taxes which are called for in the Tax Returns, or claimed to
be due by any taxing authority from Seller, have been properly
accrued or paid. Seller has not received any notice of
assessment or proposed assessment in connection with any Tax
Returns and there are no pending tax examinations of or tax
claims asserted against the Acquired Assets. There are no tax
liens (other than any lien for current taxes not yet due and
payable) in any of the Acquired Assets.
(k) Intellectual Property.
(i) USC owns or has the right to use pursuant to
ownership license, sublicense, agreement or permission all
Intellectual Property used in the operation of the businesses
of the Seller as presently conducted. Each item of
Intellectual Property owned or used by USC immediately prior
to the Closing hereunder will be owned or available for use by
the Buyer on identical terms and conditions immediately
subsequent to the Closing hereunder.
(ii) To the knowledge of Condor and USC, USC has not
interfered with, infringed upon, misappropriated, otherwise
come into conflict with any material Intellectual Property
rights of third parties, and none of USC, Condor and the
directors and officers of Condor or USC has ever received any
charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation.
To the knowledge of USC, Condor and the directors and
officers of USC, no significant competitor of US C has
interfered with infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of
USC for commercial purposes.
(iii) Section 3(k)(iii) of the Disclosure
Schedule identifies each item of Intellectual Property that
any third party owns and that the Seller uses pursuant to
license, sublicense, agreement, or permission (other than
commercially available software which is subject to a
"shrinkwrap" license (the "Shrinkwrap Software").The Seller
has delivered to the Buyer correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as
amended to date) that are being purchased herewith. With
respect to each item of Intellectual Property required to be
identified in Section 3(k)(iii) of the disclosure Schedule, to
the knowledge of USC:
(A) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(B) the license, sublicense, agreement, or
permission will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby (subject, however, to the assignments and assumptions
referred to in Section 2 above and the receipt of any
necessary consents);
(C) to the knowledge of the Seller, no party
to the license, sublicense, agreement, or permission is in
material breach or default, and no event has occurred which
with notice or lapse of time would constitute a material
breach or default or permit termination, modification, or
acceleration thereunder;
(D) no party to the license, sublicense,
agreement, or permission has repudiated any provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A)
through (D) above are true and correct with respect to the
underlying license;
(F) the Seller has not granted any sublicense
or similar right with respect to the license, sublicense,
agreement, or permission.
(iv) To the knowledge of any of the directors and
officers of USC, USC will not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of
the continued operation of its business as presently
conducted.
(l) Tangible Assets. Substantially all of the tangible
assets that are being purchased herewith used by USC in the
conduct of its business are in good operating condition and
repair (subject to normal wear and tear), and is suitable for
the purposes for which they presently are used, subject to
technological obsolescence.
(m) Contracts. Section 3(m) of the Disclosure Schedule
lists the following contracts and other agreements to which
USC is a party:
(i) any agreement (or group of related agreements)
for the lease of personal property to or from any Person
providing for aggregate remaining lease payments in excess of
$3,000;
(ii) any agreement (or group of related agreements)
for the purchase or sale of supplies, products, or other
personal property, or for the furnishing or receipt of
services, the performance of which will extend over a period
of more than one year, result in a material loss to the
Seller, or involve consideration in excess of $3,000;
(iii) any agreement concerning a partnership or
joint venture;
(iv) any agreement (or group of related agreements)
under which it has created, incurred, assumed, or, guaranteed
any indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $3,000 or under which it has imposed
a Security Interest on any of its assets, tangible or
intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement between USC and its Affiliates
(including Condor);
(vii) any profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation,
severance, or other plan or arrangement for the benefit of its
current or former directors, officers, and employees which
would result in liability to the Buyer;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any
individual on a full-time, part-time, consulting, or other
basis providing annual compensation or providing severance
benefits;
(x) any agreement under which it has advanced or
loaned any amount to any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xi) any agreement under which the consequences of
a default or termination could have a material adverse effect
on the business, financial condition, operations, results of
operations of USC; or
(xii) any other agreement (or group of related
agreements) the performance of which involves consideration in
excess of $5,000.
The Seller has furnished or made available to the Buyer
a correct and complete copy of each written agreement listed
in Section 3(m) of the Disclosure Schedule (as amended to
date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in Section 3(m)
of the Disclosure Schedule. With respect to each agreement
required to be disclosed hereunder: (A) the agreement is
legal, valid, binding, enforceable, and in full force and
effect subject to laws limiting or affecting creditors' rights
generally; (B) the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby (including and subject to the assignments
and assumptions referred to in Section 2 above and the receipt
of any necessary consents) subject to laws limiting or
affecting creditors' rights generally; (C) no party is in
breach or default, in any material respect, and no event has
occurred which with notice or lapse of time would constitute
a material breach or default, or permit termination,
modification, or acceleration, under the agreement; and (D) to
USC's and Condor knowledge no party has repudiated any
material provision of the agreement. With respect to verbal
employment arrangements, the Disclosure Schedule shall only be
required to list the name, title, base compensation, and full
or part-time status of employees and those consultants
currently performing active services for the Seller.
(n) Intentionally Omitted.
(o) Powers of Attorney. There are no outstanding powers
of attorney executed on behalf of the Seller.
(p) Insurance. USC's business has been insured through
insurance policies maintained by Condor which at the time of
closing will be current and in force.
(q) Litigation. Section 3(r) of the Disclosure Schedule
sets forth each instance in which USC (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge or (ii) is a party or to USC's or Condor's knowledge,
is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any
arbitrator. None of the actions, suits, proceedings,
hearings' and investigations set forth in Section 3(q) of the
Disclosure Schedule could result in any material adverse
change in the assets being sold and liabilities being assumed,
business, financial condition, operations or results of
operations of USC. Neither USC, Condor nor the directors and
officers of USC and Condor has any reason to believe that any
such action, suit, proceeding, hearing, or investigation may
be brought or threatened against USC.
(r) Employees. Neither Condor nor USC has been informed
that any executive, key employee, employee engaged in
training, or group of employees comprising the majority of the
employees of any department that he, she or they intend to
terminate employment with USC, or that if offered employment
by USC/Canterbury Corp. that they would not accept same. USC
is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances,
claims of unfair labor practices, or other collective
bargaining disputes. USC has not committed any unfair labor
practice. Neither Condor, USC nor the directors and officers
of Condor or USC has any knowledge of any organizational
effort presently being made or threatened by or on behalf of
any labor union with respect to employees of USC.
(s) Employee Benefits. The employees of USC are
covered by employee benefit plans sponsored by Condor.
(t) Guaranties. USC is not a guarantor or otherwise
liable for any Liability or obligation (including
indebtedness) of any other Person or Condor except as set
forth in Schedule C2.
(u) Environment, Health, and Safety.
(i) To the knowledge of the Seller, the Seller and
their respective Affiliates have complied with all
Environmental, Health, and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of
them alleging any failure so to comply. Without limiting the
generality of the preceding sentence, the Seller has obtained
and been in compliance with all of the material terms and
conditions of all permits, licenses, and other authorizations
which are required under, and has complied in all material
respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules,
and timetables which are contained in, all Environmental,
Health, and Safety Laws.
(ii) The Seller does not have any Liability (and the
Seller has not handled or disposed of any substance, arranged
for the disposal of any substance, exposed any employee or
other individual to any substance or condition, or owned or
operated any property or facility in any manner that could
form the basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
or demand against the Seller giving rise to any Liability) for
damage to any site, location, or body of water (surface or
subsurface), for any illness of or personal injury to any
employee or other individual, under any Environmental,
Health, and Safety Law except with respect to possible such
liabilities associated with the use and operation of equipment
used in the ordinary course of the Seller's business,
including electromagnetic radiation.
(iii) To the knowledge of the Seller, all
properties and equipment used in the business of USC have been
free of asbestos, PCB'S, methylene chloride,
trichloroethylene, 1,2-transdichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances other than
in de minimus quantities.
(v) Certain Business Relationships With USC. Neither
Condor nor its Affiliates has been involved in any business
arrangement or relationship with USC other than as
stockholders, directors, officers and employees, within the
past 12 months, and none of Condor and its Affiliates own any
asset, tangible or intangible, which is used in the business
of USC or the assets being sold herewith.
(w) Disclosure. The representations and warranties
contained in this Section 3 do not contain any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements and information
contained in this Section 3 not misleading.
4. Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Seller that the statements
contained in this Section 4 are correct and complete as of the
date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement
throughout this Section 4), except as set forth in the
Disclosure Schedule. The Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 4.
(a) Organization of the Buyer. Each of Buyer and
Canterbury is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of
their incorporation.
(b) Authorization of Transaction. Each of Buyer and
Canterbury has full power and authority (including full
corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation
of the Buyer and Canterbury, enforceable in accordance with
its terms and conditions. Each share of Stock of Canterbury
to be issued to USC at the closing will be duly and validly
authorized and issued, free and clear of all liens and fully
paid and non-assessable.
(c) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above), will (i)
violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court
to which the Buyer is subject or any provision of its charter
or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to
which the Buyer is a party or by which it is bound or to which
any of its assets is subject. Each of the Buyer or Canterbury
does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in
Section 2 above).
(d) Securities Filings. Canterbury has made all filings
required by the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended, and such filings did not
contain any material misstatement or omit to state a material
fact required to make the statements therein not misleading.
(e) Disclosure. The representations and warranties
contained in this paragraph 4 do not contain any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements and
information contained in this paragraph 4 not misleading.
5. Pre-Closing Covenants. The Parties agree as follows with
respect to the period between the execution of this Agreement
and the Closing.
(a) General. Each of the Parties will use its best
efforts to take all action, and to do all things necessary, in
order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but
not waiver, of the closing conditions set forth in Section 6
below).
(b) Notices and Consents. Condor and USC will give
any notices to third parties, and Condor and USC will use
their best efforts to obtain any third party consents, that
the Buyer reasonably may request in connection with the
matters referred to in Section 3(c) above. Each of the
Parties will give any notices to, make any filings with, and
use its best efforts to obtain any authorizations, consents,
and approvals of governments and governmental agencies in
connection with the matters referred to in Section 3(c) and
Section 4(c) above.
(c) Operation of Business. USC will not engage in,
and Condor will not cause USC to engage in any practice, take
any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the
foregoing, USC will not (i) declare, set aside, or pay any
dividend or make any distribution with respect to USC's
capital stock, (ii) pay any amount to any third party with
respect to any Liability or obligation (including any costs
and expenses the Seller has incurred or may incur in
connection with this Agreement and the transactions
contemplated hereby other than Seller's usual accounting-related
costs) which would not constitute an Assumed Liability
if in existence as of the Closing, or (iii) otherwise engage
in any practice, take any action, or enter into any
transaction of the sort described in Section 3(g) above.
(d) Preservation of Business. USC and Condor will keep
USC's business and properties substantially intact, including
its present operations, physical facilities, working
conditions, and relationships with lessors, licenser,
suppliers, customers, and employees.
(e) Full Access. USC and Condor will permit
representatives of the Buyer to have access at all reasonable
times, and in a manner so as not to interfere with the normal
business operations of USC to all premises, properties,
personnel, books, records (including Tax records), contracts,
and documents of or pertaining to USC provided, however, that
no activities will be carried out within USC's premises except
by prior arrangement with a representative of USC who shall
be designated for that purpose. Buyer shall use its best
efforts to minimize the need to conduct on-site activities
and, when they are necessary, to avoid unnecessary disruption
of USC's business. Seller will make available to Buyer those
of USC's employees who are reasonably necessary in order for
Buyer to complete its due diligence investigations.
(f) Notice of Developments. Each Party and Condor will
give prompt written notice to the other Party of any material
adverse development causing a breach of any of its own
representations and warranties in Section 3 and Section 4
above. No disclosure by any Party pursuant to this Section
5(f), however, shall be deemed to amend or supplement the
Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant
provided that if the party to whom a disclosure was made
proceeds to closing, that party shall be deemed to have waived
such breach and any remedies which may have been available
with respect thereto.
(g) Exclusivity. USC and Condor will not (i) solicit,
initiate, or encourage the submission of any proposal or offer
from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion
of the assets of USC (including any acquisition structured as
a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate
in, or facilitate in any other manner any effort or attempt by
any Person to do or seek any of the foregoing.
6. Conditions to Obligation to Close
(a) Conditions to Obligation of the Buyer. The
obligation of the Buyer to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties set forth in
Section 3 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Seller shall have performed and complied
with all of its covenants hereunder in all material respects
through the Closing;
(iii) the Seller shall have procured all of the
third party consents specified in Section 5(b) above;
(iv) no action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator, wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded
following consummation, or (C) affect adversely and materially
the right of the Buyer to own the Acquired Assets and to
operate the former businesses of the Seller;
(v) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions
specified above in Section 6(a)(i)-(iv) is satisfied in all
respects;
(vi) The Seller and the Buyer shall have received
all authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(c) and Section
4(c) above;
(vii) all actions to be taken by the Seller in
connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated
hereby will be reasonably satisfactory in form and substance
to the Buyer.
(viii) compliance with miscellaneous covenants in
Paragraph 9 and elsewhere in this Agreement.
The Buyer may waive any condition specified in this
Section 6(a) if it executes a writing so stating at or prior
to the Closing.
(b) Conditions to Obligation of the Seller. The
obligation of the Seller to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties set forth in
Section 4 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Buyer and Canterbury shall have performed
and complied with all of its covenants hereunder in all
material respects through the Closing;
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment,
order, decree, or charge shall be in effect);
(iv) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions
specified above in Section 6(b)(i)-(iii) is satisfied in all
respects;
(v) The Seller and the Buyer shall have received
all other authorizations, consents, and approvals of
governments and governmental agencies referred to in Section
3(c) and Section 4(c) above;
(vi) all actions to be taken by the Buyer in
connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated
hereby will be reasonably satisfactory in form and substance
to the Seller.
The Buyer may waive any condition specified in this
Section 6(b) if it executes a writing so stating at or prior
to the Closing.
7. Termination.
(a) Termination of Agreement. Certain of the Parties
may terminate this Agreement as provided below:
(i) the Buyer and the Seller may terminate this
Agreement by mutual written consent at any time prior to the
Closing;
(ii) the Buyer may terminate this Agreement by
giving written notice to the Seller at any time prior to the
Closing (A) in the event the Seller has breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, the Buyer has notified the
Seller of the breach, and the breach has continued without
cure for a period of 30 days after the notice of breach or (B)
if the Closing shall not have occurred on or before October
18, 1999 by reason of the failure of any condition precedent
under Section 6(a) hereof (unless the failure results
primarily from the Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement; and
(iii) the Seller may terminate this Agreement by
giving written notice to the Buyer at any time prior to the
Closing (A) in the event the Buyer has breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, the Seller has notified the
Buyer of the breach, and the breach has continued without cure
for a period of 30 days after the notice of breach or (B) if
the Closing shall not have occurred on or before October 18,
1999, by reason of the failure of any condition precedent
under Section 6(b) hereof or 6(a)(ix)(financing contingency)
(unless the failure results primarily from the Seller itself
breaching any representation, warranty, or covenant contained
in this Agreement).
8. Indemnification
(a) Survival of Representations and Warranties. All of
the representations of the Buyer and the Seller contained in
this Agreement shall survive the Closing and continue in full
force and effect thereafter for a period of two (2) years
following the date of Closing (subject to any applicable
statutes of limitations, the last day of which shall be the
"Expiration Date").
(b) Indemnification Provisions for Benefit of the
Buyer.
Subject to the limitations set forth in Section 8(e) below:
(i) In the event the Seller breaches (or in the
event any third party alleges facts that, if true, would mean
USC or Condor has breached) any of its material
representations, warranties, and covenants contained in the
Asset Purchase Agreement, and, provided that the Buyer makes
a written claim for indemnification against the Seller or
Condor within the survival period set forth in Section8(a)
above, then USC and Condor, jointly and severally, agree to
indemnify the Buyer from and against the entirety of any
losses the Buyer may suffer through and after the date of the
claim for indemnification including any Losses the Buyer may
suffer after the end of any applicable survival period
resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach).
(ii) USC and Condor agree to indemnify the Buyer
from and against the entirety of any Losses the Buyer may
suffer resulting from, arising out of, relating to, in the
nature of, or caused by any Liability of USC which is not an
Assumed Liability (including any Liability of USC that becomes
a Liability of the Buyer under any bulk transfer law of any
jurisdiction, under any common law doctrine of de facto merger
or successor liability, or otherwise by operation of law).
This indemnity obligation with respect to Losses arising from
any Third Party Claim (as defined below) shall not be limited
to the survival period set forth in Paragraph 8(a) above.
(iii) USC and Condor agree to indemnify the
Buyer against the failure of USC to deliver to Buyer, within
sixty (60) days after the Closing Three Hundred Thousand
Dollars ($300,000) from the collection of Receivables; to the
extent of such deficiency; provided, however, that the remedy
provided herein shall not duplicate any relief provided to
Buyer under Section 2(c) hereof.
(iv) For purposes of this Section8, the term
"Losses" shall mean all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and
expenses.
(v) At the option of Buyer, Buyer may set off any
damages or liabilities due Buyer by reducing Buyer's common
stock issued to USC by the pro rata closing price per share of
Buyer's stock on NASDAQ National market on the day the damages
are claimed by Buyer, or the price of the original issuance,
whichever is higher.
(c) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third
Party Claim") which may give rise to a claim for
indemnification against any other Party (the "Indemnifying
Party") under this Paragraph 8, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim
with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (A) the Indemnifying Party
notified the Indemnified Party in writing with 15 days after
the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will, to the full extent
required by this Agreement, indemnify the Indemnified Party
from and against the entirety of any Losses the Indemnified
Party may suffer resulting from, arising out of, relating to,
in the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that
the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (C) the Third Party
Claim involves only money damage and does not seek an
injunction or other equitable relief, (D) settlement of, or an
adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party,
likely to establish a prejudicial custom or practice
materially adverse to the continuing business interests of the
Indemnified Party, and (E) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance
with Section8(c)(ii) above, (A) the Indemnified Party may
retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C)
the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in
Section8(c)(ii) above is or becomes unsatisfied, however, (A)
the Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it reasonably
may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying
Party in connection therewith), (B ) the Indemnifying Parties
will reimburse the Indemnified party promptly and periodically
for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (C)
the Indemnifying Parties will remain responsible for any
Losses the Indemnified Party may suffer, result from, arising
out of, relating to, in the nature of, or caused by the Third
Party Claim to the fullest extent provided in this paragraph
8.
(d) Indemnification Provisions for Benefit of the
Seller.
(i) The Buyer agrees to indemnify the Seller from
and against the entirety of Losses the Seller may suffer
resulting from, arising out of, relating to, in the nature of,
or caused by (A) any Liability of the Seller which is an
Assumed Liability, and (B) Buyer's breach of any material
representation, warranty or covenant.
(ii) For purposes hereof, the term "Losses" shall
have the same meaning as set forth in Section 8(a)(iv) above,
and all other capitalized terms shall have the meaning
elsewhere provided in this Agreement.
(e) Limitations and Conditions on Indemnification.
Except as otherwise specifically provided in this Agreement:
(i) Indemnity obligations of USC and Condor
hereunder may at USC and Condor's election, be satisfied
through the payment of cash or the delivery of Stock of
Canterbury, or a combination thereof. For purposes of
calculating the value of the Stock of Buyer received or
delivered by USC or Condor (for purposes of determining the
amount of any indemnity paid), the value of Stock of
Canterbury shall be determined as of the date of notice of the
indemnity claim, or at the original purchase price, whichever
is higher.
(ii) Except as specifically set forth in this
Agreement, no party shall be entitled to indemnity for claims
or conditions which have been waived, or deemed to be waived,
by such party.
(iii) Notwithstanding any provision herein to the
contrary, no Indemnified Party shall be entitled to make any
claim for indemnification hereunder after the appropriate
Expiration Date, provided, however, that if prior to the close
of business on the Expiration Date an Indemnifying Party shall
have been notified of a claim for indemnity hereunder and such
claim shall not have been finally resolved or disposed of at
such date, the basis for such claim shall continue to survive
with respect to such claim and shall remain a basis for
indemnity hereunder with respect to such claim until such
claim is finally resolved or disposed of in accordance with
the terms hereof.
(iv) Upon making a claim for indemnification, the
Indemnifying Party shall be subrogated, to the extent of such
payment, to any rights that the Indemnified Party may have
against any other parties with respect to the subject matter
underlying such indemnified claim.
(v) Except for claims under Section 8(b)(iii)
regarding payments on account of Receivables, for which there
shall be no minimum claim, Buyer and the other Persons or
entities indemnified pursuant to Section 8(b) shall not assert
any claim for indemnification hereunder against Condor or USC
until such time as, and with respect to any individual claim,
unless and until such claim or claims, individually or in the
aggregate, exceed Twenty Five Thousand Dollars ($25,000).
Except for claims for payment of Purchase Price, for which
there shall be no minimum claim, Condor and USC shall not
assert any claim for indemnification hereunder against Buyer
until such time as, and solely to the extent that, the
aggregate of all claims which Condor and USC may have against
Buyer exceeds Twenty Five Thousand Dollars ($25,000).
(vi) Notwithstanding any other term of this
Agreement, USC and Condor shall not be liable under this
Section 8 for an amount which exceeds, in the aggregate, the
proceeds received by USC in connection with this Agreement
(the "Cap"), provided that, in the event USC or Condor fails
to provide defense for a Third Party Claim against Buyer or
Canterbury, then any Losses attributable to Buyer's or
Canterbury's reasonable attorney's fees incurred in connection
with defense of such Third Party Claim which would otherwise
have exceeded the Cap shall not be subject to the Cap.
(vii) Each party's rights under Section 8 hereof
(as specifically limited thereby) shall be the exclusive means
by which such party shall seek money damages against another
party in connection with the transactions contemplated hereby.
9. Miscellaneous
(a) Registration of Stock of Canterbury.
(i) As soon as practicable, but in no event later
than thirty (30) days from the closing, Canterbury shall: (A)
prepare and file with the SEC a registration statement on Form
S-3 under the Securities Act covering the Stock of Canterbury
to be issued to USC hereunder (the "Registration Statement"),
(B) use its best efforts to have the registration Statement
declared effective by the SEC under the Securities Act as soon
as possible thereafter, and (C) keep the Registration
Statement continuously in effect, if necessary, until the
earlier to occur of the first anniversary of the closing or
the date on which all of the shares of Stock of Canterbury
registered under the Registration Statement have been sold to
Canterbury in accordance with Section 9(e) below or to the
public. In the event that Canterbury fails, within ninety
(90) days after the Closing, to have filed a Registration
Statement, then Canterbury shall pay to USC a "penalty," in
shares of Stock of Canterbury, equal to Five Percent (5%) of
the Stock of Canterbury issued to USC as part of the Purchase
Price; in the event that Canterbury fails within six (6)
months after the Closing to have filed a Registration
Statement, then Canterbury shall pay to USC a "penalty," in
shares of Stock of Canterbury, equal to an additional Five
Percent (5%) of the Stock of Canterbury issued to USC as part
of the Purchase Price (in addition to the Five Percent (5%)
issued in accordance with the preceding clause.
(ii) The Registration Statement, when filed, (A)
will comply as to form with the requirements of the Securities
Act in all material respects, and (B) will not contain any
untrue statement of material fact or omit to state a material
fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not
misleading, provided, however, that Canterbury and the Buyer
make no representation or warranty in respect of any
information that Condor or USC supply for use in the
Registration Statement.
(iii) As to the Stock of Canterbury registered
pursuant to this Section 9(a), Canterbury and Buyer covenant
and agree that:
(A) It shall immediately advise Condor and USC
in writing of the occurrence and time of occurrence of each of
the following events: (1) the issuance by the SEC of an order
declaring the Registration Statement effective; (2) any
request by the SEC for an amendment of the Registration
Statement as originally filed or as amended or as effective or
for any amendment or supplement to the final prospectus or
preliminary prospectus contained therein, or for any
additional information with respect to the registration
Statement or such prospectus or any preliminary prospectus;
(3) the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or any order
suspending or preventing the use of such final prospectus or
any such preliminary prospectus, or the initiation of any
proceedings for such purpose.
(B) At Seller's expense, Canterbury will Blue
Sky any sale of the Stock of Canterbury in any jurisdiction
that if qualifies for.
(C) It shall timely file all reports required
by the Securities Exchange Act and promptly amend or
supplement the Registration Statement at any time during the
period of its effectiveness in order to make the statements
therein not misleading, or as otherwise may be required by the
Securities Act and the rules and regulations promulgated
thereunder;
(D) It shall make every reasonable effort to
prevent the issuance of any stop order and, if issued, to
obtain the withdrawal thereof at the earliest practicable
time; and
(E) All expenses of the Registration
Statement, and all amendments and supplements thereto, will be
borne by Canterbury. Canterbury shall furnish such number of
copies of the prospectus as USC reasonably requests in order
to facilitate the disposition of the Stock of Canterbury, but
in no event more than five (5) copies.
(F) Buyer and Canterbury will indemnify USC
and Condor with respect to each registration which has been
effected pursuant to this Section 9(a) against all claims,
losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any
related registration statement, notification or the like)
incident to any such registration and related qualification or
compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or
necessary to make statements therein not misleading, or any
violation by Buyer or Canterbury of the Securities Act or the
Securities Exchange Act or any rule or regulation thereunder
applicable to Buyer or Canterbury and relating to action or
inaction required of Buyer or Canterbury in connection with
any such registration and related qualification or compliance,
and will reimburse USC and Condor for any reasonable legal and
any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage,
liability or action, provided that Buyer and Canterbury will
not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission based upon written
information furnished to Buyer by USC in writing and stated to
be specifically for use therein.
(G) USC and Condor will indemnify Buyer and
Canterbury, and each of its directors and officers, and each
Person who controls Buyer, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of
or based on (1) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus,
offering circular or other document made by USC, or (2) any
omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the
statements by USC therein not misleading, and will reimburse
Buyer and such directors, officers, or control persons for any
legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to
the extent that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written
information furnished to Buyer by USC and stated to be
specifically for use therein; provided, however, that the
obligations of USC hereunder shall be limited as set forth in
Section 8(e) hereof.
(H) The procedure for indemnity hereunder
shall be as set forth in Section 8 hereof.
(b) Litigation Support. In the event and for so long as
any Party actively is contesting or defending against any
action, suit, proceedings, hearing, investigation, charge,
complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any
fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure
to act, or transaction on or prior to the Closing Date
involving the Seller, each of the other parties will cooperate
reasonably with the contesting or defending Party and his or
its counsel in the contest or defense, make available his or
its personnel, and provide such testimony and access to his or
its books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of
the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under
Section 8).
(c) Restrictive Covenants.
(i) Condor and USC agree not to compete against
Buyer and its subsidiaries in the business in which USC is
engaged as of the Closing for a period of three (3) years in
any cities which USC is currently engaged.
(ii) For a period of two (2) years, Seller agrees
not to solicit, directly or indirectly, alone or as principal,
partner, joint venture, officer, director, employee,
consultant, agent, independent contractor or stockholder, or
in any other capacity whatsoever, employ, retain, or enter
into any employment, agency, consulting or other similar
arrangement with, any person who became an employee of Buyer
to purchase the Acquired Assets and who was at the time of
closing an employee of USC, or induce or attempt to induce
such person to terminate his employment with Buyer, including
but not limited to employees listed on Schedule K.
(iii) Condor or USC shall not for a period of two
(2) years, directly or indirectly, alone or as principal,
partner, joint venturer, officer, director, employee,
consultant, agent, independent contractor or stockholder, or
in any other capacity whatsoever, directly or indirectly, for
his, her or its own account, or for the account of others,
solicit orders for services of a kind or nature like or
similar to services performed by USC as of the Closing, from
any party that was a customer or client of USC during the
preceding twenty four (24) month period preceding the Closing,
including but not limited to the "Key Customer List" on
Schedule J.
(d) Voting Agreement. Condor and USC agree that the
Shares of Canterbury that they receive in this transaction are
subject to a voting agreement. Condor and USC hereby grant
voting rights on all of the Stock of Canterbury to
Canterbury's President, Xxxxxxx X. Xxxxx. Any and all voting
rights shall terminate whenever Condor or USC actually sell
the actual shares subject to such Voting Agreement on the
public market on a pro rata basis so as not to place a
restriction on the stock.
(e) Restriction of Stock of Canterbury
(i) Notwithstanding any provision herein to the
contrary, so long as USC or Condor holds Stock of Canterbury,
it shall be subject to the voting restrictions as set forth in
paragraph 9(d) (the "Voting Agreement"), provided that any
restrictions on the Stock of Canterbury imposed by the Voting
Agreement shall be released upon the sale of the Stock of
Canterbury by USC or Condor in accordance with the
Registration Statement or this Section 9(e).
(ii) Subject to the restrictions set forth in
Section 9(e)(iii) below, at any time during which USC is
legally permitted to sell Stock of Canterbury, USC shall
provide Canterbury with written notice of its intention to so
sell the Stock of Canterbury (the "Option Notice"). Upon
receipt of the Option Notice, Canterbury or its designees
shall have the right, but not the obligation, to purchase the
shares of Stock of Canterbury which are the subject of such
Option Notice, at a price equal to the closing bid price on
the NASDAQ National Market on the day prior to the date of the
Option Notice, less five percent (5%). Canterbury or its
designees shall exercise its option by giving USC written
notice of acceptance within fifteen business (15) days of the
date of the Option Notice, and shall cause a closing of such
purchase and sale to occur within fifteen business (15) days
of the date of the Option Notice. If Canterbury fails to
timely close such purchase and sale, then the shares of
Canterbury which were the subject of the Option Notice shall
no longer be subject to the provisions of this Section
9(e)(ii). However, Canterbury has a continuous option to buy
any or all Stock that is not sold within fifteen business (15)
days after Canterbury's failure or decline such sale.
(iii) USC's right to sell Stock of Canterbury shall
be limited to the following proportion of Stock of Canterbury:
(A) Not more than one third (1/3) of the Stock
of Canterbury may be sold during the period between (1) the
date on which the Registration Statement is declared effective
and (2) the date which is six (6) months after the Closing;
and
(B) Not more than an additional one-third
(1/3) of the Stock of Canterbury (in addition to the one-third
(1/3) which may be sold in accordance with Section
9(e)(iii)(a) above), may be sold within the first nine (9)
months after Closing.
(iv) Subject to any limitations imposed by
applicable Laws, USC shall have the right to sell all of the
Stock of Canterbury after the nine-month anniversary of the
closing. Subject to the foregoing limitations, not more than
Fifty Thousand (50,000) shares per week of the Stock of
Canterbury may be sold in the public market.
(v) In order to effectuate the limitations set
forth in Section 9(e)(iii), the Stock of Canterbury shall be
issued to USC in three (3) separate certificates, each of
which shall bear a legend indicating the date on which the
Stock of Canterbury represented thereby may be sold.
(vi) Nothing contained herein or in the Voting
Agreement shall be deemed to prohibit (A) the transfer of
Stock of Canterbury from USC to Condor, provided that any
Stock of Canterbury so transferred to Condor shall remain
subject to the Voting Agreement, (B) the transfer of Stock of
Canterbury to Canterbury or Buyer in satisfaction of USC's and
Condor's indemnity obligations. In the event of a transfer of
Stock of Canterbury from USC to Condor, Condor shall succeed
to all of USC's rights to Stock of Canterbury, including,
without limitation, the registration rights set forth in
Section 9(a) above.
(f) 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.
(g) Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement
between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the
subject matter hereof.
(h) 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 Party; provided, however, that
the Buyer may (i) assign any or all of its rights and
interests hereunder to one or more of its Affiliates and (ii)
designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer
nonetheless shall remain responsible for the performance of
all of its obligations hereunder).
(i) Counterparts. This Agreement may be executed in
any number of counterparts, including counterparts transmitted
by telecopier or FAX, any one of which shall constitute an
original of this Agreement. When counterparts of facsimile
copies have been executed by all parties, they shall have the
same effect as if the signature to each counterpart or copy
were upon the same document and copies of such documents shall
be deemed valid as originals. The parties agree that all such
signatures may be transferred to a single document upon the
request of any party.
(j) 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.
(k) Notices. All notices, requests, demands, claims,
and other communications hereunder will be in writing. Any
notice, request, demand, claim, or other communication
hereunder shall be deemed duly given if (and then two business
days after) it is personally delivered, sent by reputable
overnight delivery service or by registered or certified mail,
return receipt requested, postage prepaid, and addressed to
the intended recipient as set forth below:
If to the USC or Condor:
Condor Technology Solutions, Inc.
Xxxxxxxxx Xxxxxx Xxxxx
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. XxXxxx, General Counsel
If to the Buyer: Copy to:
Canterbury Information Technology, Inc. Levy & Levy, P.A.
1600 Medford Xxxxx Xxxxx 0000, Xxxxx 000
Xxxxx 00 & Hartford Road Main Street
Medford, NJ 08055 Xxxxxxxx, XX 00000
(000) 000-0000 (000) 000-0000
(000) 000-0000 (fax) (000) 000-0000 (fax)
Any Party may send any notice, request, demand, claim, or
other communication hereunder to the recipient at the address
set forth above using any other means (including personal
delivery, expedite messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice,
request, demand other communication shall be deemed to have
been duly given unless and until it actually is received by
its intended recipient. Any Party may change the address to
which notices, requests, demands, claims, and other'
communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.
(l) Governing Law. This Agreement shall be governed by
and construed in accordance with the domestic laws of the
State of New Jersey without giving effect to any choice or
conflict of law provision or rule (whether of the State of New
Jersey, or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the
State of New Jersey.
(m) Amendments and Waivers. No amendment of any
provision of this Agreement shall be valid unless the same
shall be in writing and signed by the Buyer and the Seller.
The Seller may consent to any such amendment at any time prior
to the Closing with the prior authorization of its board of
directors; provided, however, that any amendment effected
Condor has approved this Agreement will be subject to the
restrictions contained in the Delaware General Corporation
Law. 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.
(n) 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 enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
(o) Expenses. The Buyer and the Seller will bear their
own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the
transactions contemplated hereby. Buyer and Seller agree that
each will be solely responsible for all its own legal,
accounting and consulting fees, if any, for the review and
completion of this transaction, except that Buyer will pay the
cost of the audit fee required for it's auditor Ernst & Young,
LLP or any other auditor firm as designated by Buyer.
(p) Brokers'/Finders' Fees. Buyer has not incurred or
will become liable for any broker's commission or finder's fee
relating to or in connection with the transactions
contemplated by this Agreement. Both Condor/USC and CITI
represent to each other that the only broker and/or finder who
has been involved in or associated with this transaction has
been Ambassador Capital Corporation and Xxxxxx Xxxx, its
President. Condor and USC shall have sole responsibility for
any and all fees to Ambassador Capital Corporation and Xxxxxx
Xxxx.
(q) Construction. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.] 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.
The word "including" shall mean including without limitation.
Nothing in the Disclosure Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made
herein unless the Disclosure Schedule identifies the exception
with particularity and describes the relevant facts in
reasonable detail.
(r) Incorporation of Exhibits and Schedules. The
Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
(s) Specific Performance. Each of the Parties
acknowledges and agrees that the other Party 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 Party, 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
(subject to the provisions set forth in Section 9(t) below),
in addition to any other remedy to which it may be entitled,
at law or in equity (except as limited by this Agreement).
(t) Submission to jurisdiction. Each of the Parties
submits to the jurisdiction of any state or federal court
sitting in New Jersey, in any action or proceeding arising out
of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to
bring any action or proceeding arising out of or relating to
this Agreement in any other court. Each of the Parties waives
any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other Party
with respect thereto. Any Party may make service on the other
Party by sending or delivering a copy of the process (i) to
the Party to be served at the address and in the manner
provided for the giving of notices in Section 9(i) above or
(ii) to the Party to be served at the address and in the
manner provided for the giving of notices in Section 9(i)
above. Nothing in this Section 9(r), however, shall affect
the right of any Party to bring any action or proceeding
arising out of or relating to this Agreement in any other
court or to serve legal process in any other manner permitted
by law or in equity. Each Party agrees that a final judgment
in any action or proceeding so brought shall be conclusive and
may be enforced by suit on the judgment or in any other manner
provided by law or in equity.
(u) Bulk Transfer Laws.
(i) The Seller represents that it is not necessary
to comply with the provisions of any bulk transfer laws of
Maryland in connection with the transactions contemplated by
this Agreement.
(ii) Seller agrees to file Articles of Transfer with
the State of Maryland in a timely manner after the Closing.
USC and Condor shall bear the expense of any transfer taxes or
asset transfer taxes imposed by Maryland law.
(v) Canterbury's shares shall be restricted stock.
Seller confirms that the Canterbury shares are being acquired
by it for investment, and not with a view to sale or
distribution thereof except to the extent permitted by the
Securities Act of 1933 and the rules and regulations of the
Securities Exchange Commission promulgated thereunder as
amended from time to time.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the date first above written.
CANTERBURY INFORMATION TECHNOLOGY, INC.
By:/s/Xxxxx X. XxXxxxxx By:/s/Xxxxxxx X. Xxxxx
Xxxxx X. XxXxxxxx, Executive Vice President Xxxxxxx X. Xxxxx,
President
USC/CANTERBURY CORP. (Buyer)
By: /s/Xxxxx X. XxXxxxxx By:/s/Xxxxxxx X. Xxxxx
Xxxxx X. XxXxxxxx Xxxxxxx X. Xxxxx
Executive Vice President Vice President
CONDOR TECHNOLOGY SOLUTIONS, INC.
By: /s/Xxxxxxx Xxxx
Xxxxxxx Xxxx, President, CEO
U.S. COMMUNICATIONS, INC. (Seller)
By: /s/Xxxx XxXxxx
Xxxx XxXxxx, Vice President
SCHEDULE "A"
FORMS OF ASSIGNMENTS
Schedule A
ASSIGNMENT OF ASSETS
THIS ASSIGNMENT OF ASSETS (this "Assignment") is made this ___
day of October, 1999, by U.S. COMMUNICATIONS, INC., a Maryland
corporation ("USC") to USC/CANTERBURY CORP., a Maryland corporation
("Buyer").
WHEREAS, Buyer, Canterbury Information Technology, Inc. (the sole
stockholder of Buyer), USC, and Condor Technology Solutions, Inc. (the
sole stockholder of USC), have entered into an Asset Purchase
Agreement dated October __, 1999 (the "Purchase Agreement") (all
capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Purchase Agreement) whereby USC has agreed to
sell certain assets (the "Acquired Assets") to Buyer;
NOW, THEREFORE, in consideration of the foregoing and of other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
1. Transfer of Assets from USC.
1.1. USC does hereby bargain, transfer, assign, convey and
deliver unto Buyer all of USC's right, title and interest in and to
the assets described on Schedule A hereto, free and clear of any and
all liens, claims or encumbrances of any kind, to have and to hold the
Acquired Assets unto Buyer, its successors and assigns, forever. The
Acquired Assets shall not include those assets described on Schedule B
hereto (the "Excluded Assets").
1.2. USC covenants that it will do or cause to be done all such
further acts, and it shall execute and deliver, or cause to be
executed and delivered, all transfers, assignments and conveyances,
evidences of title, notices, powers of attorney, and assurances
necessary or desirable to put Buyer, and its successors and assigns,
in actual possession and operating control of the Acquired Assets or
as Buyer shall reasonably require to better assure and confirm title
of Buyer to the Acquired Assets.
1.3. The transfer evidenced by this Assignment is made
subject to and upon all of the terms, covenants, conditions,
representations and warranties set forth in the Purchase Agreement,
and all of which terms, covenants, conditions, representations and
warranties are incorporated herein by reference, and shall survive the
delivery of this Assignment.
2. Successors and Assigns. This Agreement shall inure to the
benefit of parties hereto, and their respective successors, legal
representatives and assigns.
IN WITNESS WHEREOF, USC has duly executed this Assignment as of
the day and year first above written.
U.S. COMMUNICATIONS, INC.
By:___________________________
1226191.v3
SCHEDULE A
to
ASSIGNMENT OF ASSETS
by
U.S. COMMUNICATIONS, INC. ("USC")
to
USC/CANTERBURY CORP. ("Buyer")
ACQUIRED ASSETS
1. The name "U.S. Communications;"
2. All of USC's leasehold rights in the premises located at 000
Xxxxxxx Xxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx (provided that the
assignment and assumption of such real property lease shall be
addressed in a separate lease assignment), and all improvements,
fixtures and fittings thereon;
3. All of USC's tangible personal property (such as machinery,
equipment, inventories of supplies, manufactured and purchased parts,
work in process and finished work, furniture, automobiles and trucks),
including, without limitation, the tangible personal property
identified on Schedule C-1 to the Purchase Agreement;
4. All of USC's Intellectual Property, and the goodwill associated
therewith, licenses and sublicenses granted and obtained with respect
thereto, and rights thereunder, remedies against infringements
thereof, and rights to protection of interests therein under the laws
of all jurisdictions (such Intellectual Property being listed in
Section 3(k)(iii) of Schedule H Disclosure Schedule of USC and
Condor);
5. All of USC's leases, subleases and rights thereunder (provided
that the assignment and assumption of such contract rights shall be
addressed in a separate assumption agreement);
6. All of USC's agreements, contracts, indentures, mortgages,
instruments, Security Interests, guaranties, other similar
arrangements, and rights thereunder (provided that the assignment and
assumption of such contract rights shall be addressed in a separate
assumption agreement);
7. All of USC's claims, deposits, prepayments, refunds, causes of
action, choses in action, rights of recovery, rights of set-off, and
rights of recoupment (including any such item relating to the payment
of Taxes);
8. All of USC's franchises, approvals, permits, licenses, orders,
registrations, certificates, variances and similar rights obtained
from governments and governmental agencies;
9. All of USC's books, records, ledgers, files, documents,
correspondence, lists, plats, architectural plans, drawings and
specifications, creative materials, advertising and promotional
materials, studies, reports, and other printed or written materials,
curricula, either finished or in process, or planned;
10. All of USC's rights in and with respect to the assets associated
with its Employee Health and Disability Plans; and
SCHEDULE B
TO
ASSIGNMENT OF ASSETS
by
U.S. COMMUNICATIONS, INC. ("USC")
to
USC/CANTERBURY CORP. ("Buyer")
EXCLUDED ASSETS
1. USC's corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer books, blank stock certificates,
and other documents relating to the organization, maintenance, and
existence of USC as a corporation;
2. Any and all rights of Seller under the Purchase Agreement,
including the right to receive the Purchase Price and any proceeds
thereof;
3. Cash on hand or in the bank and marketable securities;
4. Bank accounts; and
5. Accounts, notes and other receivables (provided that Buyer shall
have the right to receive payments in respect thereof as set forth in
Section 3(c)(iii) of the Purchaser Agreement).
SCHEDULE "B"
FORM OF ASSUMPTION
Schedule B
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (this "Agreement") is made this ___ day
of October, 1999, by and between U.S. COMMUNICATIONS, INC., a Maryland
corporation ("USC"), and USC/CANTERBURY CORP., a Maryland corporation
("Buyer").
WHEREAS, pursuant to that certain Asset Purchase Agreement dated
October ___, 1999, by and among Buyer, Canterbury Information
Technology, Inc. (the sole stockholder of Buyer), USC and Condor
Technology Solutions, Inc. (the sole stockholder of USC) (the
"Purchase Agreement;" all capitalized terms not otherwise defined
herein shall have the meanings assigned to them in the Purchase
Agreement), USC has agreed to transfer to Buyer certain assets of USC
used by USC in its business in exchange for, among other things, the
assumption of certain of the USC's liabilities and obligations;
NOW, THEREFORE, in consideration of the transfer to Buyer of the
aforesaid assets, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. Assignment of Certain Contractual Rights.
1.1. USC does hereby bargain, transfer, assign, convey and
deliver unto Buyer all of USC's right, title and interest in and to
the contractual rights listed on Schedule A hereto (the "Contract
Rights"), which Contract Rights are included among the "Acquired
Assets" under the Purchase Agreement, to have and to hold the Contract
Rights unto Buyer, its successors and assigns, forever.
1.2. USC covenants that it will do or cause to be done all such
further acts, and it shall execute and deliver, or cause to be
executed and delivered, all transfers, assignments and conveyances,
evidences of title, notices, powers of attorney, and assurances
necessary or desirable to put Buyer, and its successors and assigns,
in actual possession and operating control of the Contract Rights or
as Buyer shall reasonably require to better assure and confirm title
of Buyer to the Contract Rights.
2. Assumption of Obligations. Subject to the further terms of
this Agreement, effective on the date hereof, Buyer, for itself and
its successors and assigns, hereby covenants and agrees to assume,
pay, perform and discharge the liabilities and obligations of USC as
are listed or described on Schedule B hereto (the "Assumed
Liabilities"). USC acknowledges that it shall remain liable for all
liabilities and obligations of USC other than the Assumed Liabilities.
3. Conditions Relating to Consents. To the extent that any of
the Contract Rights may not be assigned without consent of another
person which has not been obtained, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment
would constitute a breach thereof or be unlawful, and USC, at its sole
expense, shall use commercially reasonable efforts to obtain any
required consents. If any such consent shall not be obtained or if
any assignment would be ineffective or would impair Buyer's rights
under the Contract Rights in question so that Buyer would not in
effect acquire the benefit of all such rights, USC, to the maximum
extent permitted by law and the Contract Rights, shall act as Buyer's
agent in order to obtain for Buyer the benefits thereunder and shall
cooperate, to the maximum extent permitted by law and the Contract
Rights, with Buyer in any other reasonable arrangement designed to
provide such benefits to the Buyer.
4. Further Assurances. The parties agree that they will take
whatever action or actions are found to be reasonably necessary from
time to time to effectuate the provisions and intent of this
Agreement, and, to that end, the parties agree that they will execute
any further documents or instruments which may be necessary to give
full force and effect to this Agreement or to any of its provisions.
5. Binding Effect. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused the due
execution of this Assumption Agreement, under seal, as of the day and
year first above written.
U.S. COMMUNICATIONS, INC.
By: ___________________________
USC/CANTERBURY CORP.
By: ___________________________
1226205.v4
SCHEDULE A
to
ASSUMPTION AGREEMENT
by and between
USC/CANTERBURY CORP. ("Buyer")
and
U.S. COMMUNICATIONS, INC. ("USC")
Contract Rights
1. All of USC's contracts or relationships with its customers,
suppliers and subcontractors, including those listed in Section 3(m) of
Seller's Disclosure Schedule to the Purchase Agreement;
2. All of USC's rights under any personal property leases listed in
Section 3(m)(i) of Seller's Disclosure Schedule to the Purchase Agreement;
and
3. All of USC's rights under real property leases, provided that the
assignment and assumption of such real property leases shall be
addressed in a separate Lease Assignment.
1226205.v4
SCHEDULE B
to
ASSUMPTION AGREEMENT
by and between
USC/CANTERBURY CORP. ("Buyer")
and
U.S. COMMUNICATIONS, INC. ("USC")
Assumed Liabilities
1. All of USC's obligations under contracts or relationships with
it's customers, suppliers and subcontractors, including those listed
in Section 3(m) of Seller's Disclosure Schedule to the Purchase Agreement;
2. All of USC's obligations after the Closing under the personal
property leases listed in Section 3(m)(i) of Seller's Disclosure Schedule to
the Purchase Agreement;
3. All of USC's obligations after the Closing Date under real
property leases, provided that the assignment and assumption of such
real property leases shall be addressed in a separate Lease
Assignment; and
4. All ordinary course liabilities other than accounts payable and
intercompany payables, including without limitation, accrued vacation
pay, accrued commissions and deferred service revenue.
SCHEDULE "C1"
SCHEDULE OF ASSETS BEING ACQUIRED
SCHEDULE "C2"
SCHEDULE OF LIABILITIES ASSUMED
SCHEDULE "D"
FINANCIAL STATEMENTS
INCLUDING ACQUISITION BALANCE SHEET
SCHEDULE "E"
SCHEDULE OF ACCOUNTS RECEIVABLE AS OF _______________
SCHEDULE "F"
FORM OF OPINION OF COUNSEL OF SELLER
SCHEDULE "G"
FORM OF OPINION OF COUNSEL TO BUYER
SCHEDULE "H"
DISCLOSURE SCHEDULE
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES (SELLER)
SCHEDULE H
DISCLOSURE SCHEDULE OF USC AND CONDOR
The following constitutes the Disclosure Schedule of Condor Technology
Solutions, Inc. ("Condor") and U.S. Communications, Inc. ("USC") to
the Asset Purchase Agreement by and among Condor, USC, Canterbury
Information Technology, Inc., and USC/Canterbury Corp. (the
"Agreement").
Section references herein are to sections of the Agreement. Summaries
or references to actual documents hereto are qualified in their
entirety by reference to such documents. The inclusion of any items
in this Disclosure Schedule shall not constitute an admission that a
violation, right of termination, default, liability or other
obligation of any kind exists with respect to such item, but rather is
intended only to qualify certain representations and warranties in the
Agreement and to set forth other information required by the
Agreement. The inclusion of any matter on this Disclosure Schedule
does not constitute an admission as to its materiality as it relates
to any provision of the Agreement. If a document or matter is listed
in one section hereof, such listing shall suffice, without specific
repetition and with or without cross-reference, as a response to any
other section if such response is apparent from such disclosure.
Except as expressly set forth in this Disclosure Schedule, the
definitions used in the Agreement are incorporated by reference
herein.
SCHEDULE "I"
DISCLOSURE SCHEDULE
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES (BUYER)
NONE.
SCHEDULE "J"
SCHEDULE OF KEY CUSTOMERS OF USC
EXHIBIT "K"
SCHEDULE OF KEY EMPLOYEES OF USC
