AMENDED AND RESTATED TRANSACTION AGREEMENT
Dated as of June 11, 1997
By and Among
COMPUTER DATA SYSTEMS, INC.,
ANALYTICAL SYSTEMS ENGINEERING CORPORATION
and
THE SHAREHOLDERS
of
ANALYTICAL SYSTEMS ENGINEERING CORPORATION
TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions.................................. 1
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Closing Transactions......................... 1
Section 2.02 Form and Payment of Purchase Price........... 2
Section 2.03 Closing...................................... 3
Section 2.04 Escrow....................................... 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SELLING SHAREHOLDERS
Section 3.01 Representations and Warranties of the
Selling Shareholders........................ 3
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CDSI
Section 4.01 Representations and Warranties of CDSI...... 4
ARTICLE V
COVENANTS OF THE SELLING SHAREHOLDERS
Section 5.01 Conduct of Business of ASEC................. 4
Section 5.02 Access to Information....................... 6
Section 5.03 Resolution of Affiliated Transactions....... 6
Section 5.04 Transfer or Encumbrance of ASEC Common
Stock....................................... 6
Section 5.05 Non-Solicitation of Employees............... 7
Section 5.06 Key Management Employees.................... 7
Section 5.07 Appointment of Selling Shareholders'
Representative.............................. 9
Section 5.08 Exercise of Outstanding Options and
Warrants.................................... 9
Section 5.10 Contribution of Minority Interest in
Subsidiaries................................ 9
ARTICLE VI
COVENANTS OF CDSI
Section 6.01 Eligibility for CDSI Stock Option Plan...... 9
Section 6.02 CDSI Board Representative................... 9
ARTICLE VII
OTHER COVENANTS OF THE PARTIES
Section 7.01 Further Assurances.......................... 10
Section 7.02 Certain Filings; Consents................... 10
Section 7.03 Public Announcements........................ 10
Section 7.04 H-S-R Act................................... 11
Section 7.05 Exclusivity................................. 11
Section 7.06 CDSI Common Stock........................... 11
Section 7.07 Selling Shareholders Approval Pursuant
to Section 280G(b)(5)....................... 12
Section 7.08 Consistent Treatment for Tax Purposes....... 13
ARTICLE XIII
CONDITIONS TO CLOSING
Section 8.01 Conditioins to the Obligations of Each
Party....................................... 13
Section 8.02 Conditions to Obligations of the Selling
Shareholders................................ 13
Section 8.03 Conditions to Obligation of CDSI............ 14
ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.01 Survival................................... 16
Section 9.02 Indemnification............................ 16
Section 9.03 Procedures................................. 17
Section 9.04 Claims Against Escrow Amount............... 19
Section 9.05 Limitations................................ 19
Section 9.06 Deductible Amount.......................... 20
ARTICLE X
TERMINATION
Section 10.01 Termination................................ 20
Section 10.02 Effect of Termination...................... 21
ARTICLE XI
MISCELLANEOUS
Section 11.01 Notices.................................... 21
Section 11.02 Amendments; Waivers........................ 22
Section 11.03 Expenses................................... 23
Section 11.04 Successors and Assigns..................... 23
Section 11.05 Construction............................... 23
Section 11.06 Entire Agreement........................... 23
Section 11.07 Governing Law.............................. 24
Section 11.08 Counterparts; Effectiveness................ 24
Section 11.09 Jurisdiction............................... 24
Section 11.10 Captions................................... 24
EXHIBITS
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EXHIBIT A Selling Shareholders
EXHIBIT B Definitions
EXHIBIT C Representations and Warranties of Selling Shareholders
EXHIBIT D Representations and Warranties of CDSI
DISCLOSURE SCHEDULES
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Section Schedule Description
------- -------- -----------
Section C.1 Schedule C.1 Organization and Good Standing
Section C.2 Schedule C.2(a) Capital Stock/Subsidiaries and Affiliates
Section C.3 Schedule C.3 Execution and Effect of Agreement
Section C.4 Schedule ▇.▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇.▇ ▇▇▇▇▇▇▇▇ ▇.▇ Financial Statements
Section C.6 Schedule C.6 Lawsuits and Proceedings
Section C.7 Schedule C.7 Compliance with Laws
Section C.8 Schedule C.8 Licenses and Permits
Section C.10 Schedule C.10 Insurance
Section C.11 Schedule C.11(a) Material Commercial Contracts
Section C.11 Schedule C.11(b) Government Contracts
Section C.11 Schedule C.11(c) Outstanding Bids
Section C.11 Schedule C.11(d) Satisfactory and Non-delinquent Status
Section C.12 Schedule C.12(e) Taxes
Section C.13 Schedule C.13 Banks and Deposits
Section C.14 Schedule C.14 Claims of Directors, Officers, Etc.
Section C.15 Schedule C.15 Affiliate Transactions
Section C.16 Schedule C.16 Intellectual Property
Section C.17 Schedule C.17 Extraordinary Transactions
Section C.20 Schedule C.20 Employees
Section C.21 Schedule C.21 Employment Matters
Section C.22 Schedule C.22(j) Employee Benefit Matters
Section C.24 Schedule C.24 Real Property
Section C.25 Schedule C.25 Title to Assets
Section C.28 Schedule C.28 Arrangements with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Section D.9 Schedule D.9 Financial Statements
REGISTRATION RIGHTS AGREEMENT
-----------------------------
Section 2 Schedule 2(d) Piggy-back Registration Rights
ATTACHMENTS
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Attachment I Form of Registration Rights Agreement
Attachment II Form of Standstill Agreement
Attachment III Consents and Approvals Required Prior to Closing
Attachment IV December Balance Sheet
Attachment V Form of Escrow Agreement
Attachment VI ▇▇▇▇▇▇▇▇▇ Employment Agreement
Attachment VII ▇▇▇▇▇ Employment Agreement
AMENDED AND RESTATED
TRANSACTION AGREEMENT
---------------------
This Amended and Restated Transaction Agreement (together with the
Exhibits, Schedules and Attachments hereto, this "Agreement") is made as of
the 11th day of June 1997 (and effective, unless otherwise indicated, as of
and from May 29, 1997), by and between COMPUTER DATA SYSTEMS, INC., a Maryland
corporation ("CDSI"), ANALYTICAL SYSTEMS ENGINEERING CORPORATION, a
Massachusetts corporation ("ASEC"), and the shareholders of ASEC, all of whom
are listed on Exhibit A (collectively, the "Selling Shareholders" and
individually, a "Selling Shareholder").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Selling Shareholders will own as of the Closing 100% of the
issued and outstanding capital stock of ASEC free and clear of any and all
Encumbrances; and
WHEREAS, each of the Selling Shareholders desires to transfer, sell and
convey to CDSI all of the Selling Shareholder's capital stock of ASEC and CDSI
desires to purchase, buy and acquire all of the issued and outstanding capital
stock of ASEC, upon the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Defined terms used in this Agreement
shall have the meanings specified elsewhere in this Agreement or in Exhibit B.
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Closing Transactions. Upon the terms and subject to
the conditions set forth in this Agreement, the parties agree that on the
Closing Date:
(a) the Selling Shareholders will transfer or cause to be
transferred to CDSI the ASEC Common Stock;
(b) CDSI will pay, in accordance with the provisions of
Section 2.02, the Purchase Price;
(c) CDSI and ▇▇▇▇▇▇▇▇▇ will enter into the Registration Rights
Agreement and CDSI, ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ will enter into the Standstill
Agreement, substantially in the forms attached as Attachments I and II,
respectively;
(d) CDSI and the Selling Shareholders will enter into the Escrow
Agreement in substantially the form attached as Attachment V;
(e) CDSI and ▇▇▇▇▇▇▇▇▇ will enter into an Employment Agreement
in substantially the form attached hereto as Attachment VI;
(f) CDSI and ▇▇▇▇▇ will enter into an Employment Agreement in
substantially the form attached hereto as Attachment VII; and
(g) the Selling Shareholders will cause all the Encumbrances on
the assets of ASEC (other than the Encumbrances relating to its capital lease
obligations which are excluded from the definition of Bank Debt) and its
Subsidiaries to be released, assuming payoff of all Bank Debt out of the Gross
Purchase Price.
Section 2.02 Form and Payment of Purchase Price. The Purchase
Price shall be paid as follows:
(a) The Purchase Price may be paid fully in cash or, at the
option of CDSI, in a combination of cash and CDSI Common Stock (at an agreed
upon price of $27.50 per share) provided that the aggregate amount of the CDSI
Common Stock does not exceed 10% of the Purchase Price. CDSI shall notify the
Selling Shareholders' Representative at least three Business Days prior to the
Closing Date of the manner in which CDSI elects to pay the Purchase Price.
(b) In the event CDSI elects to pay the Purchase Price in cash
and CDSI Common Stock, CDSI will issue and deliver to those Selling
Shareholders who are to receive CDSI Common Stock (as identified on Exhibit A)
their Proportionate Share of that number of fully paid and non-assessable
shares of CDSI Common Stock having a value, at a per share price of $27.50,
equal to the Stock Portion of the Purchase Price; and
(c) CDSI will pay, by wire transfer of immediately available
funds, to the account or accounts which are designated in writing at least
three Business Days prior to Closing by the Selling Shareholders'
Representative, the Cash Portion of the Purchase Price less the Escrow Amount
which is to be paid into escrow pursuant to Section 2.04.
Section 2.03 Closing. The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at the offices of
Miles & Stockbridge, a Professional Corporation, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on June 18, 1997, provided, however, that if all of the
conditions to Closing set forth in Article VIII have not been satisfied (or
waived in writing) as of that date and if closing on that date therefore would
be impractical, the Closing shall take place on such other day as the parties
to this Agreement may agree but, subject to the provisions of
Section 10.01(c), in no event later than June 30, 1997. The Closing will
occur at 10:00 a.m. on the Closing Date.
Section 2.04 Escrow. On the Closing Date, CDSI shall pay out of
the Cash Portion of the Purchase Price to the Escrow Agent (as defined in the
Escrow Agreement) Three Million Two Hundred Thousand Dollars ($3,200,000) (the
"Escrow Amount"). The Proportionate Share of the Escrow Amount that will be
attributable to each Selling Shareholder shall equal that Selling
Shareholder's aggregate Proportionate Share interest in ASEC (rather than his
or its Proportionate Share of the Cash Portion of the Purchase Price).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SELLING SHAREHOLDER
Section 3.01 Representations and Warranties of the Selling
Shareholders. Except for the Fidelity Investments Charitable Gift Fund
Foundation, Inc. (the "Fund"), each of the other Selling Shareholders, jointly
and severally, represent and warrant to CDSI as set forth in Exhibit C. The
Fund represents and warrants only as provided in Section C.2(c) of Exhibit C
with respect to its ownership of and due authorization to transfer its ASEC
Common Stock to CDSI, and as provided in Section C.3(a) of Exhibit C with
respect to the due execution and delivery of this Agreement by the Fund.
Except as provided above, the Fund neither makes nor joins in the
representations and warranties made by the other Selling Shareholders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CDSI
Section 4.01 Representations and Warranties of CDSI. CDSI
represents and warrants to the Selling Shareholders as set forth in Exhibit D.
ARTICLE V
COVENANTS OF THE SELLING SHAREHOLDERS
Section 5.01 Conduct of Business of ASEC. From May 29, 1997
through the date of this Agreement and until the Closing Date,
(a) the Selling Shareholders other than the Fund have and shall
continue to cause ASEC to:
(i) maintain itself as a corporation duly incorporated
under the laws of the Commonwealth of Massachusetts and conduct its Business
in substantially the same manner as it historically has been conducted in the
usual and ordinary course;
(ii) use reasonable commercial efforts to maintain ASEC's
Business and employees, customers, suppliers and operations as an ongoing
business in accordance with past practices and customs,
(b) without the prior written consent of CDSI, the Selling
Shareholders other than the Fund have not permitted and shall not permit ASEC
to:
(i) enter into any transaction other than in the ordinary
course of business;
(ii) enter into any transaction with any Affiliate or any
transaction which is not at arms-length with any unaffiliated Person;
(iii) materially change the extent or character of its
Business;
(iv) dissolve, liquidate (completely or partially), acquire
any capital assets, merge or consolidate into or with any other person, or
sell, lease, exchange, transfer, or otherwise dispose of, or grant to any
person a right or option to lease, acquire, or purchase any material amount of
the assets of ASEC (including any part of it or any interest in it), except as
expressly contemplated by this Agreement;
(v) except in connection with Bids set forth on Schedule
C.11(c) to Exhibit C, amend, renew, extend, enter into, or execute any
material contract, agreement or other binding arrangement, unless the
contract, agreement or other binding arrangement is terminable following the
Closing Date on not more than 30 days' advanced notice without any liability
to ASEC or CDSI following the Closing Date;
(vi) remove any material assets from any of ASEC's
facilities or premises, unless such assets are replaced before the Closing
Date with similar items of equal quality and utility and without the
incurrence of any indebtedness or Encumbrance;
(vii) issue any shares of capital stock of ASEC or any of
its Subsidiaries (other than upon exercise of options and warrants outstanding
as of April 30, 1997) or any securities convertible into or exercisable or
exchangeable for capital stock or options to purchase capital stock or other
rights in respect of any of the foregoing;
(viii) pay to any current or former Employee any compensation
or other benefit that is not (A) required by a plan, trust, agreement or other
arrangement in effect on or before April 30, 1997 and disclosed in a schedule
to this Agreement, or (B) salaries in the ordinary course of business that are
reflected on Schedule C.20 to Exhibit C, or adopt, amend, or increase any
benefits payable under, any employee benefit, welfare, compensation, or other
"fringe benefit" plan, trust, agreement, or other arrangement covering any
existing or former employee, including any thrift, pension, savings,
retirement, stock bonus, stock option, stock purchase, profit sharing, group
insurance, medical reimbursement, deferred compensation, or other similar
plan, including any Plan as defined in Section C.22, except that ASEC may
increase annual compensation payable to Employees (other than Key Management
Employees) in the aggregate for all Employees by $100,000 without consultation
and the prior written approval of CDSI and in the ordinary course of business
on a basis consistent with past practices provided it gives CDSI at least 10
days advanced notice of its intent to do so and provides CDSI with the
opportunity to review and discuss such increases with ▇▇▇▇▇▇▇▇▇;
(ix) redeem, purchase, or otherwise acquire, split,
combine, or reclassify, any shares of its capital stock;
(x) pay, declare, or set aside for payment a dividend or
other distribution in respect of any shares of its capital stock or make any
other payment or distribution of any kind to its shareholders;
(xi) discontinue or materially diminish any insurance
coverage applicable to its assets, properties and business operations;
(xii) cancel or compromise any legal right or claim of or
debts owed to ASEC or any of its Subsidiaries;
(xiii) pay any fees pertaining to contractually required
consents to the transactions contemplated by this Agreement;
(xiv) incur or suffer to exist any indebtedness for money
borrowed other than indebtedness to the extent available under credit
facilities in existence on December 31, 1996; or
(xv) agree to do, or acquiesce in, any of the foregoing
acts.
Section 5.02 Access to Information. Subject to the terms of the
Nondisclosure Agreement, except as may be deemed appropriate to ensure
compliance with any Applicable Laws (including, without limitation, any
requirements with respect to security clearances), from the date of this
Agreement until the Closing Date, the Selling Shareholders will cause ASEC to
give CDSI and its representatives reasonable access to all information
(financial or otherwise) reasonably requested by or on behalf of CDSI, its
financing sources, and their respective Representatives in connection with
their due diligence investigation of ASEC, including, without limitation, at
all reasonable times and upon reasonable notice, access to ASEC's and its
Subsidiaries' books, records, facilities, properties, officers, accountants
and representatives. CDSI will use reasonable efforts to minimize any
disruption to ASEC's business in connection with its due diligence
investigation.
Section 5.03 Resolution of Affiliated Transactions. On or prior to
the Closing, each of the Selling Shareholders other than the Fund shall, and
each of the Selling Shareholders other than the Fund shall cause his or its
Affiliates to, pay, satisfy, discharge and release any and all claims of such
Selling Shareholder or Affiliate against ASEC or any of its Subsidiaries which
are reflected on Schedule C.14 to Exhibit C of this Agreement, unless
otherwise specifically noted thereon.
Section 5.04 Transfer or Encumbrance of ASEC Common Stock. Except
for the transfers on June 9, 1997 of a portion of their ASEC Common Stock by
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ to the Fund (the results of which transfers constitute all
of the ASEC Common Stock held by the Fund), from May 29, 1997 to the date
hereof and through the Closing, none of the Selling Shareholders have or shall
(a) sell, transfer or otherwise convey any interest in or to any of the ASEC
Common Stock or any options, warrants or other rights to acquire shares of
ASEC Common Stock or (b) incur or allow to exist any Encumbrances on any
shares of ASEC Common Stock or any options, warrants or other rights to
acquire shares of ASEC Common Stock.
Section 5.05 Non-Solicitation of Employees. From and after the
Closing Date until the second anniversary of the Closing Date, each of the
Selling Shareholders other than the Fund shall not, on behalf of the Selling
Shareholder or any other Person, without prior written approval of CDSI,
directly or indirectly solicit any person who is an employee of ASEC or any of
its Subsidiaries at any time on or after the date of this Agreement to
terminate his or her relationship with ASEC or any of its Subsidiaries.
Section 5.06 Key Management Employees. From May 29, 1997 through
the date hereof and through the Closing, each of ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ have used
and shall use their respective best efforts to ensure the continued employment
of Key Management Employees (other than ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇) after the Closing
on terms substantially similar to those on which CDSI employees of similar
rank and with similar responsibility are currently employed, subject to the
increases contemplated by Section 5.01(b)(viii).
Section 5.07 Appointment of Selling Shareholders' Representative.
(a) By their execution hereof, the Selling Shareholders appoint
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ as the Selling Shareholders' Representative. The Selling
Shareholders' Representative shall act as attorney-in-fact for each of the
Selling Shareholders (and their successors, beneficiaries and assignees) with
power and authority to do each of the following acts in the name and on behalf
of each of the Selling Shareholders:
(i) Sign and deliver any and all documents or certificates
to be delivered on behalf of the Selling Shareholders under the terms of this
Agreement;
(ii) Enter into the Escrow Agreement in substantially the
form attached hereto as Attachment V, with such changes and additions as the
Selling Shareholders' Representative deems necessary or appropriate;
(iii) Act on behalf of the Selling Shareholders in respect
of any claims for indemnification and the defense and settlement of claims for
indemnification and related matters;
(iv) Negotiate the terms of any ancillary agreements to
this Agreement with such usual and customary provisions as the Shareholders
Representative may deem necessary or appropriate and to sign on behalf of each
of the Selling Shareholders any such agreements;
(v) Approve and pay from the proceeds of the Purchase
Price the reasonable and proper expenses, including the fees and expenses of
legal counsel, incurred by ASEC or the Selling Shareholders in negotiating and
closing the transactions contemplated by this Agreement; and
(vi) Do all things deemed by the Shareholders'
Representative to be necessary or appropriate to accomplish the transactions
contemplated by this Agreement, including delivery of any stock certificates
and stock powers to CDSI.
The authority granted pursuant to this Section 5.07(a) shall not be revoked,
impaired or otherwise effected by any disability of a Selling Shareholder that
may hereafter occur. In regard to any action of the Shareholders'
Representative under this Agreement, the decision of the Shareholders'
Representative shall be binding upon all of the Shareholders.
(b) The Selling Shareholders' Representative shall not be liable
to any of the Selling Shareholders for any action taken by him in good faith
and believed by him to be authorized or within the rights or powers conferred
on him by this Section 5.07, and may consult with counsel of his own choice
and shall have full and complete authorization and protection for any action
taken or suffered by him hereunder in good faith and in accordance with the
opinion of such counsel.
(c) The Selling Shareholders agree, jointly and severally, to
indemnify and hold the Selling Shareholders' Representative harmless from and
against any Damages incurred without gross negligence or bad faith on his
part, arising out of or in connection with acting pursuant to this Agreement,
including the cost and expenses of defending himself against any claim for
liability by a Selling Shareholder. Notwithstanding anything to the contrary
contained in this Section 5.07, the Fund's obligations to indemnify the
Selling Shareholders' Representative and to contribute to the settlement of
claims that may be made against the Selling Shareholders shall be limited to
the extent provided for in Section 9.05 hereof.
Section 5.08 Exercise of Outstanding Options and Warrants. At
least one Business Day prior to Closing, the Board of Directors of ASEC shall
accelerate the vesting of all options to purchase shares of ASEC Common Stock
which are not at that time vested and each of the Selling Shareholders shall
exercise all outstanding rights to acquire shares of ASEC Common Stock such
that as of the Closing there shall be no outstanding options, warrants or
other rights to acquire shares of capital stock or other equity interests in
ASEC or any of its Subsidiaries.
Section 5.09 Payoff of Indebtedness. The Selling Shareholders
shall use reasonable efforts to cause each of MCRC and BayBanks, at Closing,
to execute and deliver "payoff letters" in respect of all Bank Debt of ASEC
outstanding as of the Closing to each of MCRC and BayBanks and to deliver such
other documents (including UCC-3 Termination Statements) as CDSI may request
in connection with the discharge and removal of all Encumbrances on the assets
of ASEC and its Subsidiaries other than Encumbrances relating to capital lease
obligations to the extent excluded from the definition of Bank Debt.
Section 5.10 Contribution of Minority Interest in Subsidiaries.
Prior to Closing, the minority owner of each of ASEC International, ASEC
Systems and ASEC Security International shall transfer (for no additional
consideration from CDSI) his interest in those Subsidiaries of ASEC to ASEC.
ARTICLE VI
COVENANTS OF CDSI
Section 6.01 Eligibility for CDSI Stock Option Plan. CDSI agrees
to consider each of the Key Management Employees for awards of stock options
to be made in July, 1997 consistent with CDSI's current practices for
employees at equivalent levels.
Section 6.02 CDSI Board Representative. Subject to the
requirements with Applicable Law, CDSI agrees to use reasonable efforts to
cause ▇▇▇▇▇▇▇▇▇ to be elected to the Board of Directors of CDSI as soon as
practicable following Closing. Subject to the requirements of Applicable Law,
at any regular or special meeting of stockholders of CDSI called for the
purpose of filling positions on the Board of Directors of CDSI during the term
of the ▇▇▇▇▇▇▇▇▇ Employment Agreement, CDSI agrees to recommend ▇▇▇▇▇▇▇▇▇ for
election to the Board of Directors in the same manner as all of the nominees
of CDSI for election as a director.
ARTICLE VII
OTHER COVENANTS OF THE PARTIES
Section 7.01 Further Assurances. Subject to the terms and
conditions of this Agreement, each party shall use all reasonable commercial
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or desirable under this Agreement and Applicable
Laws to consummate the transactions contemplated by this Agreement. CDSI and
each of the Selling Shareholders shall execute and deliver such other
documents, certificates, agreements and other writings and take such other
actions as may be necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement. Except as
otherwise expressly set forth in the Transaction Documents, nothing in this
Section 7.01 shall require CDSI or any of the Selling Shareholders to make any
payments in order to obtain any consents or approvals necessary or desirable
in connection with the consummation of the transactions contemplated by this
Agreement.
Section 7.02 Certain Filings; Consents. CDSI and the Selling
Shareholders shall cooperate with one another (i) in determining whether any
action by or in respect of, or filing with, any Governmental Authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (ii)
subject to the terms and conditions of this Agreement, in taking such actions
or making any such filings, furnishing information required in connection
therewith and seeking timely to obtain any such actions, consents, approvals
or waivers.
Section 7.03 Public Announcements. Neither CDSI, ASEC nor the
Selling Shareholders shall make any public announcement relating to the
transactions contemplated by this Agreement without the prior consent of the
other parties (or the Shareholders' Representative in the case of the Selling
Shareholders), except as may be required by Applicable Law based on an opinion
of counsel. Upon execution of this Agreement, the parties agree to issue a
press release in form and content reasonably satisfactory to all parties, and
CDSI may file a Current Report on Form 8-K, announcing the signing of this
Agreement. The parties agree that prior to Closing and except as may be
required by Applicable Law based on an opinion of counsel, the timing and
content of all other press releases and other public announcements, and all
communications with ASEC's customers, suppliers and employees relating to the
transactions contemplated by this Agreement shall be mutually agreed upon and
the content of which will be determined jointly by CDSI and the Shareholders'
Representative. CDSI acknowledges that ASEC will communicate with its
customers and suppliers contemporaneously with the initial public announcement
of the transactions contemplated by this Agreement and CDSI hereby consents to
such communications provided that the content of such communications is
reasonably satisfactory to CDSI.
Section 7.04 H-S-R Act. The parties shall take all actions
necessary or appropriate to cause the prompt expiration or termination of any
applicable waiting period under the H-S-R Act in respect of the transactions
contemplated by this Agreement, including, without limitation, complying as
promptly as practicable with any requests for additional information.
Section 7.05 Exclusivity. CDSI has and will devote substantial
time and incur significant out-of-pocket expenses (including attorneys',
accountants' and consultants' fees and expenses) in connection with conducting
due diligence, drafting and negotiating this Agreement and related documents,
arranging financing, and other related expenses (the "Transaction Expenses").
To induce CDSI to incur Transaction Expenses, the Selling Shareholders agree
that from April 30, 1997 until the earlier of (a) July 31, 1997 or (b) the
date on which CDSI notifies the Selling Shareholders that it no longer wishes
to pursue the transactions contemplated hereby (the "Exclusivity Period"),
ASEC shall not, and the Selling Shareholders have not and will not allow ASEC
to (i) enter into any written or oral agreement or understanding with any
Person or entity regarding Another Transaction (as defined below), (ii) enter
into or continue any negotiations or discussions with any person or entity
regarding the possibility of Another Transaction, or (iii) except as required
by Applicable Law, provide any nonpublic or confidential or proprietary
information regarding ASEC to any person or entity whom any of the Selling
Shareholders knows or has reason to believe (based on actual indications
received from such third party) would have an interest in participating in
Another Transaction. For purposes of this Agreement, the term "Another
Transaction" means the sale or other disposition (whether by sale of stock or
assets, issuance of capital stock, merger, consolidation, share exchange or
other disposition) of all or any substantial portion of ASEC or any of its
Subsidiaries or the assets or capital stock of ASEC or any of its
Subsidiaries. In addition to any other remedies available to CDSI in the
event of a breach by ASEC or any of the Selling Shareholders of this Section
7.05, in the event that ASEC or any Selling Shareholder enters into an
agreement in respect of Another Transaction within two years of the date of
this Agreement that is a direct or indirect result of any actions taken by
ASEC or any Selling Shareholder in contravention of their agreements contained
in this Section 7.05, ASEC shall, and the Selling Shareholders shall cause
ASEC to (or the successor or survivor of ASEC following Another Transaction
which successor or survivor shall include any purchaser of a substantial
percentage of the assets of ASEC), immediately pay to CDSI, by wire transfer
of immediately available funds, $2,500,000.
Section 7.06 CDSI Common Stock.
(a) The shares of CDSI Common Stock received by the Selling
Shareholders, if any, hereunder shall be held by the Selling Shareholders in
compliance with the registration requirements of the 1933 Act and the
qualification and registration requirements of applicable states' securities
laws. In addition, the shares of CDSI Common Stock received by ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ or MCRC, if any, shall be held in compliance with the terms of the
Standstill Agreement. The CDSI Common Stock shall not be sold, transferred,
pledged, hypothecated or disposed of in any manner by the Selling Shareholders
except in accordance with such laws and the Standstill Agreement, as the case
may be. The certificates representing the shares of CDSI Common Stock
delivered under this Agreement, if any, shall bear the following legend: THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE NOT REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NOR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED OR AN EXEMPTION THEREFROM IS
AVAILABLE. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND
ARE TRANSFERABLE ONLY UPON COMPLIANCE WITH, THE PROVISIONS OF A STANDSTILL
AGREEMENT DATED AS OF _________ ___, 1997. A COPY OF THE ABOVE-REFERENCED
AGREEMENT IS ON FILE AT THE OFFICES OF COMPUTER DATA SYSTEMS, INC. AND WILL BE
FURNISHED TO THE STOCKHOLDER UPON REQUEST AND WITHOUT CHARGE.
(b) Upon delivery by a Selling Shareholder to CDSI of an opinion
of counsel reasonably satisfactory to CDSI to the effect that the legend
referred to in Section 5.03(a) is no longer necessary to ensure compliance
with (i) the registration requirements of the 1933 Act or applicable state
securities laws or (ii) the Standstill Agreement, as the case may be, CDSI
shall issue new share certificates for the shares of CDSI Common Stock not
including the relevant portions of the legend referred to above.
Section 7.07 Selling Shareholders Approval Pursuant to
Section 280G(b)(5)(B). In accordance with Section 280G(b)(5)(B) of the Code,
by execution of this Agreement, each of the Selling Shareholders hereby
consents to, and acknowledges his or its vote in favor of any payment in
connection with the exercise of options to purchase ASEC Common Stock or any
of the other transactions contemplated by this Agreement which payments may
otherwise have constituted "parachute" payments.
Section 7.08 Consistent Treatment for Tax Purposes. Each of CDSI
and the Selling Shareholders agree, and agree to cause ASEC, to attribute the
compensation deduction resulting from the exercise of stock options and
warrants to the period prior to Closing and not to take, or allow ASEC to
take, any position on their respective tax returns that is inconsistent with
such position.
ARTICLE XIII
Section 8.01 Conditions to the Obligations of Each Party. The
obligations of CDSI and the Selling Shareholders to consummate the Closing are
subject to the satisfaction (or waiver) of the following conditions:
(a) Any applicable waiting period under the H-S-R Act relating
to the transactions contemplated by this Agreement shall have expired or been
terminated;
(b) No provision of any Applicable Law or regulation (including
any applicable securities or blue sky law) and no judgment, injunction, order
or decree shall prohibit the Closing, and no action or proceeding shall be
pending before any court, arbitrator or governmental body, agency or official
with respect to which counsel reasonably satisfactory to CDSI and the Selling
Shareholders shall have rendered a written opinion that there is a substantial
likelihood of a determination that would prohibit the Closing; and
(c) All actions by or in respect of or filings with any
Governmental Authority required to permit the consummation of the Closing
shall have been taken or obtained.
Section 8.02 Conditions to Obligations of the Selling Shareholders.
The obligations of the Selling Shareholders to consummate the Closing are
subject to the satisfaction (or waiver by a majority of the Selling
Shareholders) of the following further conditions:
(a) CDSI shall have performed in all material respects all of
its obligations under the Transaction Documents required to be performed by it
on or prior to the Closing Date;
(b) The representations and warranties of CDSI contained in the
Transaction Documents (except for representations and warranties that by their
terms speak only as of the date of this Agreement) shall be accurate at and as
of the Closing Date, as if made at and as of such date and the Selling
Shareholders shall have received a certificate signed by an executive officer
of CDSI to the foregoing effect; and
(c) In the event that CDSI elects to pay a portion of the
Purchase Price in the form of CDSI Common Stock, the Selling Shareholders
shall have received an opinion of Miles & Stockbridge, a Professional
corporation, in form and content reasonably satisfactory to the Selling
Shareholders, to the effect that the CDSI Common Stock has been duly issued,
fully paid and non-assessable.
Section 8.03 Conditions to Obligation of CDSI. The obligation of
CDSI to consummate the Closing is subject to the satisfaction (or waiver by
CDSI) of the following further conditions:
(a) The Selling Shareholders shall have performed in all
material respects all of their respective obligations under the Transaction
Documents required to be performed by any of them at or prior to the Closing
Date;
(b) The representations and warranties of the Selling
Shareholders contained in the Transaction Documents (except for
representations and warranties that by their terms speak only as of the date
of this Agreement) shall be accurate at and as of the Closing Date, as if made
at and as of such date and CDSI shall have received certificates signed by
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ to the foregoing effect;
(c) Each of the holders of options or warrants to purchase ASEC
Common Stock shall have fully exercised those options or warrants, as the case
may be, and made payment for the full amount of the exercise price for each of
such options or warrants, such that as of the Closing there shall be no
outstanding rights to acquire any shares of ASEC Common Stock of any other
shares of capital stock of ASEC or of any shares of capital stock of any of
the Subsidiaries of ASEC and the cash account of ASEC at Closing shall have
been increased by an aggregate of $2,300,000 as a result thereof;
(d) CDSI shall have completed its financial, business and legal
due diligence investigation of ASEC and its Affiliates and the results of such
investigation shall be satisfactory to CDSI in its sole and absolute
discretion;
(e) ASEC and ▇▇▇▇▇▇▇▇▇ shall have terminated the existing
employment agreement between ASEC and ▇▇▇▇▇▇▇▇▇ without the payment of any
consideration by ASEC and CDSI and ▇▇▇▇▇▇▇▇▇ shall have executed the
Employment Agreement in substantially the form attached hereto as
Attachment VI;
(f) ASEC and ▇▇▇▇▇ shall have terminated the existing
employment agreement between ASEC and ▇▇▇▇▇ without the payment of any
consideration by ASEC and CDSI and ▇▇▇▇▇ shall have executed an Employment
Agreement in substantially the form attached hereto as Attachment VII;
(g) Each of ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ shall have used their best
efforts to ensure the continued employment of Key Management Employees (other
than ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇) after the Closing on terms substantially similar to
those on which CDSI employees of similar rank and with similar responsibility
are currently employed, subject to the increases contemplated by
Section 5.01(b)(viii);
(h) There shall have been no material adverse change since
December 31, 1996 in the business, assets, financial condition, operating
results, customers, supplier and employer relations, or business prospects of
ASEC and its Subsidiaries taken as a whole;
(i) There shall be no material undisclosed liabilities of ASEC
and its Subsidiaries;
(j) ASEC or its applicable Affiliate, as the case may be, shall
have obtained all consents or approvals of third parties or Governmental
Authorities required for the consummation of the transactions contemplated by
this Agreement, including those set forth in Attachment III;
(k) The Board of Directors of CDSI shall have received a
fairness opinion to the effect that the transactions contemplated by this
Agreement are fair, from a financial perspective, to the Shareholders of CDSI,
in form and content reasonably satisfactory to the Board of Directors;
(l) The Bank Debt shall have been paid off out of the Gross
Purchase Price and ASEC's assets shall be free and clear of any Encumbrances
(other than Encumbrances in respect of capital lease obligations to the extent
permitted by Section 2.01(g)); and
(m) CDSI shall have received an opinion of ▇▇▇▇▇▇ & Hannah LLP,
in form and content reasonably satisfactory to CDSI, to the effect that the
ASEC common stock delivered to CDSI at Closing has been duly issued, is fully
paid and non-assessable and constitutes 100% of all of the issued and
outstanding capital stock of ASEC.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.01 Survival. Except as otherwise specifically provided
in this Agreement, each of the covenants, agreements, representations and
warranties of the parties contained herein or in any certificate or other
writing delivered pursuant to this Agreement shall survive the Closing for a
period of three (3) years, except that:
(a) the representations and warranties in Sections C.2, C.14,
C.15 and C.28 of Exhibit C shall survive indefinitely;
(b) the representations and warranties included in Section C.12
of Exhibit C shall survive until 30 days after the expiration of the
applicable statute of limitations (or extensions or waivers thereof).
Section 9.02 Indemnification.
(a) Indemnification of CDSI by the Selling Shareholders. Each
of the Selling Shareholders, jointly and severally (subject to the limitations
set forth in Section 9.05), hereby indemnifies CDSI and its Affiliates, and to
the extent actually indemnified by CDSI or any such Affiliate from time to
time, its directors, officers, employees and agents, against and agrees to
hold them harmless from any and all Damages incurred or suffered by any of
them arising out of or related in any way to (i) any breach of any
representation, warranty, covenant or agreement made or to be performed by any
of the Selling Shareholders pursuant to any of the Transaction Documents,
including without limitation or duplication, (A) as a result of the violation
of any Environmental Laws or provisions in any agreement to which ASEC or any
of its Subsidiaries is party relating to environmental matters, (B) as a
result of any violation or alleged violation of Government Contract Laws or
(C) the failure (or alleged failure) to comply with any Applicable Laws,
including any affirmative action program requirements of any Governmental
Authority at any time prior to Closing, (ii) the inability of CDSI to receive
the full benefit of the compensation deduction attributable to the exercise of
the ASEC Stock Options prior to Closing, (iii) the payment of any Bank Debt in
excess of $5,200,000 or (iv) any action, claim or suit brought by or on behalf
of or the exercise of any right under any Contracts or arrangements on the
part of ▇▇▇▇▇ or any of his Affiliates of any nature whatsoever, provided that
the indemnification set forth in this clause (iv) shall not include gross
payments of up to $350,007 for consulting fees and up to $75,000 for insurance
benefits due to ▇▇▇▇▇ after Closing.
(b) Indemnification of the Selling Shareholders by CDSI. CDSI
hereby indemnifies each of the Selling Shareholders and their respective
Affiliates, against and agrees to hold them harmless from any and all Damages
incurred or suffered by any of them arising out of or related in any way to
any breach of any representation, warranty, covenant or agreement made or to
be performed by CDSI pursuant to any of the Transaction Documents.
Section 9.03 Procedures.
(a) Notice. If CDSI or any of its Affiliates or any of their
directors, officers, employees and agents, shall seek indemnification pursuant
to Section 9.02(a) or if any of the Selling Shareholders or their respective
Affiliates shall seek indemnificationpursuant to Section 9.02(b), such Person
seeking indemnification (the "Indemnified Party") shall give written notice to
the party from whom such indemnification is sought (the "Indemnifying Party")
promptly after the Indemnified Party (or, if the Indemnified Party is a
corporation, any officer of the Indemnified Party) becomes aware of the facts
giving rise to such claim for indemnification (an "Indemnified Claim") stating
the amount of the Damages, if known, and the method of computation thereof.
The failure of an Indemnified Party to provide notice pursuant to this
Section 9.03 shall not constitute a waiver of that party's claims to
indemnification pursuant to Section 9.02 in the absence of material prejudice
to the Indemnifying Party. If the Indemnified Claim arises from the assertion
of any claim, or the commencement of any suit, action or proceeding brought by
a Person that is not a party hereto (a "Third Party Claim") any such notice to
the Indemnifying Party shall be accompanied by a copy of any papers
theretofore served on the Indemnified Party in connection with such Third
Party Claim. With respect to any Third Party Claim asserted or brought prior
to the Closing Date, notice of such Third Party Claim shall be deemed to have
been delivered on the Closing Date.
(b) Defense and Settlement of Third Party Claims.
(i) Assumption of Defense by Indemnifying Party. Upon
receipt of notice of a Third Party Claim from an Indemnified Party
pursuant to Section 9.03(a), the Indemnifying Party will, subject to the
provisions of Section 9.03(b)(ii), (iii) and (iv), assume the defense
and control of such Third Party Claim but shall allow the Indemnified
Party a reasonable opportunity to participate in the defense thereof
with its own counsel and at its own expense. The Indemnifying Party
shall select counsel, contractors and consultants of recognized standing
and competence after consultation with the Indemnified Party; shall take
all steps necessary in the defense or settlement thereof; and shall at
all times diligently and promptly pursue the resolution thereof. In
conducting the defense thereof, the Indemnifying Party shall at all
times act as if all Damages relating to such Third Party Claim were for
its own account and shall act in good faith and with reasonable prudence
to minimize Damages therefrom. The Indemnified Party shall, and shall
cause each of its Affiliates, directors, officers, employees, and agents
to, cooperate fully with the Indemnifying Party in the defense of any
Third Party Claim defended by the Indemnifying Party.
(ii) Continuing Notice of Certain Claims. The Indemnifying
Party shall give prompt and continuing notice to the other Indemnified
Party of any Third Party Claims that the Indemnifying Party reasonably
believes may: (1) result in the assertion of criminal liability on the
part of the Indemnified Party or any of its Affiliates, directors,
officers, employees or agents; (2) adversely affect the ability of the
Indemnified Party to do business in any jurisdiction or in any manner or
with any customer; or (3) materially affect the reputation of the
Indemnified Party or any of its Affiliates, directors, officers,
employees or agents.
(iii) Settlement of Claims. Subject to the provisions of
Section 9.03(b)(iv), the Indemnifying Party shall be authorized to
consent to a settlement of, or the entry of any judgment arising from,
any Third Party Claims, without the consent of any Indemnified Party;
provided, that the Indemnifying Party shall (1) pay or cause to be paid
all amounts arising out of such settlement or judgment concurrently with
the effectiveness thereof; (2) shall not encumber any of the assets of
any Indemnified Party or agree to any restriction or condition that
would apply to such Indemnified Party or to the conduct of that party's
business; and (3) shall obtain, as a condition of any settlement or
other resolution, a complete release of each Indemnified Party.
(iv) Shared Defense. Each party may elect to share the
defense of a Third Party Claim the defense of which has been assumed by
the other party pursuant to Section 9.03(b)(ii). In that event, the
Indemnified Party will so notify the Indemnifying Party in writing.
Thereafter, the Indemnifying Party and the Indemnified Party shall
participate on an equal basis in the defense, management and control of
any such claim. The Indemnifying Party and the Indemnified Party shall
select mutually satisfactory counsel, contractors and consultants to
conduct the defense or settlement thereof (the costs and expenses of
which shall be shared equally by the Indemnifying Party and the
Indemnified Party), and shall at times diligently and promptly pursue
the resolution thereof.
(c) Dispute Resolution. If the Indemnifying Party and the
Indemnified Party are unable to agree with respect to a procedural matter
arising under Section 9.03(b)(iv), the Indemnifying Party and the Indemnified
Party shall, within 10 days after notice of disagreement given by either
party, agree upon a third-party referee ("Referee"), who shall be an attorney
and who shall have the authority to review and resolve the disputedarty
simultaneously providing to the other a copy of all documents submitted) to
the Referee and shall cause the Referee promptly to review any facts, law or
arguments either the Indemnifying Party or the Indemnified Party may present.
The Referee shall be retained to resolve specific differences between the
parties within the range of such differences. Either party may request that
all oral arguments presented to the Referee by either party be in each other's
presence. The decision of the Referee shall be final and binding unless both
the Indemnifying Party and the Indemnified Party agree otherwise. The parties
shall share equally all costs and fees of the Referee.
Section 9.04 Claims Against Escrow Amount. In the event that CDSI
or any of its Affiliates is entitled to indemnification of any Damages under
Section 9.02(a), such Person shall seek payment for such Damages first out of
the Escrow Amount in accordance with the terms of the Escrow Agreement. In
the event that the Escrow Amount is not sufficient to satisfy all claims for
indemnification pursuant to Section 9.02(a), the Persons seeking such
indemnification shall be entitled to seek payment directly from a Selling
Shareholder, subject to the limitations set forth in Section 9.05.
Section 9.05 Limitations. Notwithstanding anything to the contrary
in this Agreement or in any of the Transaction Documents, the Selling
Shareholders (other than ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ and MCRC) shall only have liability
to CDSI or any other Person under this Article IX to the extent of their
Proportionate Share of the Escrow Amount. Although the Fund has not made the
representations and warranties made by the other Selling Shareholders, the
Fund shall be liable for any breach by the other Selling Shareholders of their
representations and warranties to the extent of the Fund's Proportionate Share
of the Escrow Amount. The Fund shall have no right of contribution from the
other Selling Shareholders for any reduction in the Fund's Proportionate Share
of the Escrow Amount due to a claim. Following release to the Fund of all or
any part of its Proportionate Share of the Escrow Amount, the Fund shall have
no liability for the return of the amounts so released. In addition, MCRC
shall only be liable to the extent of its Proportionate Share of the Purchase
Price. Notwithstanding the foregoing, ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ agree that they
shall be, jointly and severally, responsible for any Damages in excess of the
Escrow Amount, provided that in no event shall ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ be liable
in an amount in excess of the Purchase Price.
Section 9.06 Deductible Amount.
(a) Except as provided on Schedule C.11(d) in respect of any
Damages resulting from the Compliance Review, the Persons who are provided
indemnification pursuant to Section 9.02(a) (the "CDSI Indemnified Parties")
shall not be entitled to seek indemnification until the aggregate amount of
the Damages incurred by the CDSI Indemnified Parties exceeds $200,000.00 (the
"Deductible Amount"). Except as provided on Schedule C.11(d) in respect of
any Damages resulting from the Compliance Review, in the event that the
Deductible Amount is exceeded, the CDSI Indemnified Parties shall be entitled
to seek indemnification only to the extent of Damages incurred in excess of
the Deductible Amount.
(b) The Persons who are provided indemnification pursuant to
Section 9.02(b) (the "Selling Indemnified Parties") shall not be entitled to
seek indemnification until the aggregate amount of the Damages incurred by the
Selling Indemnified Parties exceeds the Deductible Amount. In the event that
the Deductible Amount is exceeded, the Selling Indemnified Parties shall be
entitled to seek indemnification only to the extent of Damages incurred in
excess of the Deductible Amount.
ARTICLE X
TERMINATION
Section 10.01 Termination. The Transaction Documents may be
terminated at any time prior to the Closing:
(a) by mutual written agreement of CDSI and the Selling
Shareholders Representative;
(b) by either CDSI or any of the Selling Shareholders if there
shall be any law or regulation that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited or if
consummation of the transactions contemplated by this Agreement would violate
any nonappealable final order, decree or judgment of any court or Governmental
Authority having competent jurisdiction;
(c) notwithstanding anything contained herein to the contrary,
in the event of a second request under the H-S-R Act, the term of this
Agreement shall extend through final clearance under the H-S-R Act and no
party shall be entitled to terminate this Agreement as a result of not having
received clearance under the H-S-R Act prior to the final determination under
the H-S-R Act; and
(d) by CDSI or any of the Selling Shareholders if the Closing
shall not have been consummated by June 30, 1997; provided, however, that
neither CDSI nor a Selling Shareholder may terminate the Transaction Documents
pursuant to this clause (b) if the Closing shall not have been consummated by
June 30, 1997, by reason of the failure of such party or any of its Affiliates
to perform in all material respects any of its or their respective covenants
or agreements contained in the Transaction Documents.
Any party desiring to terminate this Agreement pursuant to this Section 10.01
shall give written notice of such termination to the other parties to this
Agreement.
Section 10.02 Effect of Termination. If this Agreement is
terminated as permitted by Section 10.01, such termination shall be without
liability of any party (or any Affiliate, shareholder, director, officer,
employee, agent, consultant or representative of such party) to any other
party to this Agreement; provided, however, that if the transactions
contemplated by this Agreement fail to close as a result of a breach of any
Transaction Document by CDSI or any of the Selling Shareholders, such party
shall be fully liable for any and all Damages incurred or suffered by any
other party as a result of all such breaches.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy
or similar writing) and shall be given, by telecopy, registered or certified
mail or overnight delivery service:
if to CDSI:
Computer Data Systems, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Miles & Stockbridge,
a Professional Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Selling Shareholders
c/o ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Analytical Systems Engineering Corporation
Five ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & Hannah LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or telecopy number and with such other copies, as
such party may hereafter specify for the purpose by notice to the other
parties. Each such notice, request or other communication shall be effective
(i) if given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this Section 11.01 and evidence of receipt is received or
(ii) if given by any other means, upon delivery or refusal of delivery at the
address specified in this Section 11.01.
Section 11.02 Amendments; Waivers.
(a) Any provision of the Transaction Documents may be amended or
waived prior to the Closing Date if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by CDSI and the Selling
Shareholders, or in the case of a waiver, by the party against whom the waiver
is to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege under any Transaction Document shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
Section 11.03 Expenses. Except as otherwise provided in the
Transaction Documents, all costs and expenses incurred in connection with the
Transaction Documents shall be paid by the party incurring such cost or
expense.
Section 11.04 Successors and Assigns. The provisions of the
Transaction Documents shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns; provided that no party
may assign, delegate or otherwise transfer any of its right or obligations
under this Agreement without the consent of CDSI, in the case of any of the
Selling Shareholders, and the Selling Shareholders' Representative in the case
of CDSI.
Section 11.05 Construction. As used in the Transaction Documents,
any reference to the masculine, feminine or neuter gender shall include all
genders, the plural shall include the singular, and the singular shall include
the plural. With regard to each and every term and condition of the
Transaction Documents, the parties understand and agree that the same have or
has been mutually negotiated, prepared and drafted, and that if at any time
the parties desire or are required to interpret or construe any such term or
condition or any agreement or instrument subject hereto, no consideration
shall be given to the issue of which party actually prepared, drafted or
requested any term or condition of the Transaction Documents.
Section 11.06 Entire Agreement.
(a) The Transaction Documents and any other agreements
contemplated thereby (including, the Nondisclosure Agreement and the binding
provisions of the Memorandum as modified hereby) constitute the entire
agreement among the parties with respect to the subject matter of such
documents and supersede all prior agreements, understandings and negotiations,
both written and oral, between the parties with respect to the subject matter
thereof.
(b) Except as expressly provided herein or in any other
Transaction Document, no Transaction Document or any provision thereof is
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
Section 11.07 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Maryland (without
regard to the choice of law provisions thereof).
Section 11.08 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts (by facsimile or otherwise), each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received a counterpart hereof
signed by the other parties hereto.
Section 11.09 Jurisdiction. Any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, any of the Transaction Documents or the transactions
contemplated by this Agreement may be brought (i) to the extent it is brought
by CDSI against any of the other parties in the United States District Court
for the District of Massachusetts, or (ii) to the extent that it is brought by
any of the Selling Shareholders against CDSI in the United States District
Court for the District of Maryland, and each of the parties hereby consents to
the exclusive jurisdiction of such court (and of the appropriate appellate
court) in any such suit, action or proceeding and waives any objection to
venue laid therein. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the State
of Maryland or the Commonwealth of Massachusetts. Without limiting the
foregoing, each of the parties agree that service of process upon such party
at the address referred to in Section 11.01, together with written notice of
such service to such party, shall be deemed effective service of process upon
such party.
Section 11.10 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed, individually or by their respective authorized officers, on the day
and year first above written.
WITNESS: COMPUTER DATA SYSTEMS, INC.
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------ ------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO and President
ANALYTICAL SYSTEMS ENGINEERING
CORPORATION
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------ ------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
THE SHAREHOLDERS OF ANALYTICAL
SYSTEMS ENGINEERING
CORPORATION
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------ ------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------ ------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
FIDELITY INVESTMENTS
CHARITABLE GIFT FUND
FOUNDATION, INC.
/s/[unidentified] By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------ ----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
MASSACHUSETTS CAPITAL RESOURCE
COMPANY
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------- -------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------- ----------------------------
D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------- ----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------- ----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/▇▇▇▇▇ ▇▇▇▇▇
------------------------- ----------------------------
▇▇▇▇▇ ▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/▇▇▇▇ ▇▇▇▇▇▇
------------------------- ----------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------- ----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇ /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------- ----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------- ----------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------- ----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
EXHIBIT A
---------
Selling Shareholders
CDSI
Proprotionate Common
Name and Address Shares* Shares Cash Stock
---------------- ------- ------------- ---- -----
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 839,020 59.859024300% 59.859024300% 59.859024300%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 127,100 9.067819585% 9.067819585% 9.067819585%
D. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ 8,000 0.570751823% 0.570751823% 0.570751823%
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 60,000 4.280638671% 4.280638671% 4.280638671%
▇▇▇▇▇▇ ▇▇▇▇▇▇ 35,000 2.497039225% 2.497039225% 2.497039225%
▇▇▇▇▇ ▇▇▇▇▇ 30,000 2.140319336% 2.140319336% 2.140319336%
▇▇▇▇ ▇▇▇▇▇▇ 3,000 0.214031934% 0.214031934% 0.214031934%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 10,000 0.713439779% 0.713439779% 0.713439779%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 10,000 0.713439779% 0.713439779% 0.713439779%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 5,000 0.356719889% 0.356719889% 0.356719889%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 5,000 0.356719889% 0.356719889% 0.356719889%
Fidelity
Investments
Charitable Gift
Fund Foundation,
Inc. 17,400 1.241385215% 1.241385215% 1.241385215%
Massachusetts
Capital
Resource Company 252,140 17.988670576% 17.988670576% 17.988670576%
------- ------------ ------------ ------------
1,401,660 100.0000000% 100.0000000% 100.0000000%
_______________
* Includes all shares of ASEC Common Stock that will be transferred to
CDSI at Closing, including all shares which the Selling Shareholder has the
right to acquire upon exercise of stock options and warrants prior to Closing.
EXHIBIT B
----------
Definitions
-----------
(a) The following terms have the following meanings:
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person. For purposes of determining whether a Person is an Affiliate, the term
"control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of securities, contract or otherwise.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment,
decree or other requirement of any Governmental Authority (including any
Environmental Law) applicable to such Person or any of their respective
properties, assets, officers, directors, employees, consultants or agents (in
connection with such officer's, director's, employee's, consultant's or agent's
activities on behalf of such Person).
"ASEC" means Analytical Systems Engineering Corporation, a
Massachusetts corporation.
"ASEC Common Stock" shall mean all of the issued and outstanding
Common Stock, par value $.01 per share, of ASEC as of the Closing, which Common
Stock shall constitute 100% of the issued and outstanding capital stock of
ASEC.
"ASEC International" means ASEC International Incorporated, a
Delaware corporation, which is 80% owned by ASEC and 20% owned by ▇▇▇▇▇▇▇▇▇ as
of the date of this Agreement.
"ASEC Limited" means ASEC Limited, Inc., a Delaware corporation and
wholly-owned subsidiary of ASEC.
"ASEC Security" means ASEC Security International, Inc., a Delaware
corporation, which is 80% owned by ASEC and 20% owned by ▇▇▇▇▇▇▇▇▇ as of the
date of this Agreement.
"ASEC Systems" means ASEC Systems, Inc., a Delaware corporation,
which is 80% owned by ASEC and 20% owned by ▇▇▇▇▇▇▇▇▇ as of the date of this
Agreement.
"Bank Debt" shall mean all outstanding bank and other interest
bearing indebtedness of ASEC at Closing, including, without limitation, all
outstanding indebtedness to BayBank and MCRC plus any prepayment penalties
associated with the payoff of such indebtedness. Bank Debt shall not include
capital lease obligations to the extent that those obligations do not exceed
$100,000 in the aggregate.
"Bid" means any proposal or bid submitted by ASEC or any of its
Subsidiaries in respect of a Government Contract.
"Business" means the businesses conducted by ASEC as of the date of
this Agreement and at any time prior thereto.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or required
by law to close.
"CDSI" shall mean Computer Data Systems, Inc., a Maryland
corporation.
"CDSI Common Stock" shall mean shares of Common Stock, par value
$.10 per share, of CDSI.
"Cash Portion of the Purchase Price" means that portion of the
purchase price that CDSI does not elect to pay in the form of CDSI Common Stock
pursuant to Section 2.02(a) of this Agreement.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Contracts" means all contracts, agreements, leases, licenses,
commitments, sales and purchase orders, and other instruments of any kind,
whether written or oral.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties, charges and amounts paid in settlement, including,
without limitation, reasonable costs, fees and expenses of attorneys, experts,
accountants, appraisers, consultants, witnesses, investigators and any other
agents or representatives of such Person (with such amounts to be determined
net of any resulting tax benefit and net of any refund or reimbursement of any
portion of such amounts, including, without limitation, reimbursement by way of
insurance, third party indemnification or the inclusion of any portion of such
amounts as a cost under Government Contracts).
"December Balance Sheet" means the audited consolidated balance
sheet of ASEC at December 31, 1996, as attached in Attachment IV to the
Agreement.
"Encumbrances" means all liabilities, obligations, liens (including,
but not limited to, tax liens), security interests, charges, pledges,
encumbrances, mortgages, claims or rights of any kind, nature or description
whatsoever.
"Environmental Laws" means any and all past, present or future
federal, state, local and foreign statutes, laws, regulations, ordinances,
judgments, orders, codes, or injunctions, which imposes liability for or
standards of conduct concerning the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or handling
of Hazardous Substances including, the Resource Conservation and Recovery Act
of 1976, as amended, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, the Superfund Amendment and Reauthorization
Act of 1984, as amended, the Toxic Substances Control Act, as amended, and any
other so-called "Superfund" or "Superlien" law.
"Escrow Agreement" means the Escrow Agreement, dated the Closing
Date, by and among CDSI and the Selling Shareholders (in substantially the form
of Attachment V to the Agreement, as the same may be amended from time to time).
"▇▇▇▇▇" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, a resident of the Commonwealth
of Massachusetts.
"▇▇▇▇▇ Employment Agreement" means the Employment Agreement, dated
as of the Closing Date, between CDSI and ▇▇▇▇▇ (in substantially the form
attached ereto as Attachment VII), as such agreement may be amended from time
to time.
"GAAP" means Generally Accepted Accounting Principles as in effect
on the date of the Agreement.
"Government Contract" means any prime contract, subcontract, teaming
agreement or arrangement, joint venture, basic ordering agreement, letter
contract, purchase order, delivery order, change order or other arrangement of
any kind between ASEC or any of its Affiliates and (i) the U.S. Government
(acting on its own behalf or on behalf of another country or international
organization), (ii) any state, local or foreign government (acting on its own
behalf or on behalf of any of its respective Affiliates), (iii) any prime
contractor of the U.S. Government (or any state, local or foreign government)
or (iv) any subcontractor with respect to any contract of a type described in
clauses (i), (ii) or (iii) above.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory
organization, commission, tribunal or organization or any regulatory,
administrative or other agency, or any political or other subdivision,
department or branch of any of the foregoing.
"Gross Purchase Price" shall mean the Purchase Price plus Bank Debt
at Closing of up to $5,200,000.
"Hazardous Substances" means substances defined as "hazardous
substances," "hazardous materials" or "hazardous waste" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, and
the Resource Conservation and Recovery Act of 1976, as amended, those
substances defined as "hazardous wastes" in the regulations adopted and
publications promulgated pursuant to said laws, those substances defined as
"toxic substances" in the Toxic Substances Control Act, as amended, and
petroleum, its derivatives and petroleum products.
"▇▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, a resident of the
Commonwealth of Massachusetts.
"▇▇▇▇▇▇▇▇▇ Employment Agreement" means the Employment Agreement,
dated as of the Closing Date, between ▇▇▇▇▇▇▇▇▇ and CDSI (in substantially the
form attached hereto as Attachment VI), as such agreement may be amended from
time to time.
"H-S-R Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Intellectual Property" means patents, copyrights, trademarks, trade
names, servicemarks, service names, technology, know-how, processes, trade
secrets, inventions, proprietary data, formulae, research and development data,
computer software programs and other intellectual property and applications for
the same.
"Key Management Employees" means Henderson, Fagan, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ Saterale and ▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Memorandum" means the letter dated April 30, 1997, by and among
CDSI and ASEC, as the same may be amended from time to time.
"MCRC" shall mean Massachusetts Capital Resource Company, a special
purpose Massachusetts limited partnership.
"Nondisclosure Agreement" shall mean the letter dated March 27, 1997
by and between CDSI and ASEC, as amended from time to time.
"1933 Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Person" means an individual, a corporation, a general partnership,
a limited partnership, a limited liability company, an association, a trust or
any other entity or organization, including a government or political sub-
division or an agency or instrumentality thereof.
"Prime Government Contract" means any Government Contract in
connection with which ASEC or any of its Subsidiaries is the prime contractor.
"Proportionate Share" means the percentage interest of a Selling
Shareholder in ASEC as reflected on Exhibit A to the Agreement. When used in
connection with the Cash Portion of the Purchase Price or Stock Portion of the
Purchase Price, Proportionate Share means that percentage reflected on Exhibit
A under the column captioned "Cash" or "CDSI Common Stock," respectively, for
that Selling Shareholder.
"Public Systems Corporation" means Public Systems Corporation, a
Delaware corporation, and a wholly-owned subsidiary of ASEC.
"Purchase Price" means Fifty-One Million Dollars ($51,000,000) minus
Bank Debt in excess of $5,200,000. The Purchase Price reflects the increase of
$2,300,000 in cash of ASEC relating to the exercise of stock options and
warrants prior to Closing as well as the expected tax benefit generated thereby
of $3,700,000 and ASEC's continuing obligations to provide insurance benefits
(at a gross cost not to exceed $75,000) and consulting payments (at a gross
cost not to exceed $350,007) to ▇▇▇▇▇. The cash generated by the exercise of
options and warrants and the tax benefit of such exercise will not be
distributed prior to Closing.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated the Closing Date, by and among CDSI and ▇▇▇▇▇▇▇▇▇ (in
substantially the form of Attachment I to the Agreement), as the same may be
amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Selling Shareholders" shall mean those persons listed on Exhibit A
to this Agreement. The Selling Shareholders comprise all of the owners of
capital stock of ASEC as of the Closing. Individually, the Selling Share-
holders shall be referred to as a "Selling Shareholder."
"Selling Shareholders' Representative" shall mean ▇▇▇▇▇▇▇▇▇.
"Standstill Agreement" means the Standstill Agreement dated the
Closing Date by and between CDSI and certain of the Selling Shareholders (in
substantially the form of Attachment II to the Agreement), as the same may be
amended from time to time.
"Stock Portion of the Purchase Price" shall mean that portion of the
Purchase Price, if any, that CDSI elects to pay in the form of CDSI Common
Stock in accordance with the provisions of Section 2.02(a) of this Agreement.
"Subsidiary" as it relates to any Person, shall mean a corporation
more than 50% of whose outstanding securities the Person has the right, other
than as affected by events of default, directly or indirectly, to vote for the
election of directors.
"Transaction Documents" means the Agreement, the Registration Rights
Agreement, the Standstill Agreement, the Escrow Agreement, the ▇▇▇▇▇▇▇▇▇
Employment Agreement, the ▇▇▇▇▇ Employment Agreement and any exhibits,
schedules or attachments to any of the foregoing, as the same may be amended
from time to time.
"U.S. Government" means the United States Government and any
agencies,instrumentalities and departments thereof.
(b) "To the knowledge," "known by" or "known" (and any similar phrase)
means (i) with respect to CDSI to the actual knowledge of the Chairman, the
President and Chief Executive Officer and the Chief Financial Officer, and
shall be deemed to include a representation that a reasonable investigation
or inquiry of the subject matter thereof has been conducted by one of the
specified Persons and (ii) with respect to the Selling Shareholders, to the
actual knowledge of any of the Selling Shareholders, and shall be deemed to
include a representation that a reasonable investigation or inquiry of the
subject matter thereof and of employees of ASEC responsible therefore has been
conducted by one of the specified Persons.
(c) Each of the following terms is defined in the Section set forth
opposite such term:
Term Location
---- --------
"accredited investor" Exhibit C,
Section C.26(a)
"accumulated funding deficiency" Exhibit C,
Section C.22(f)
"Affiliated Group" Exhibit C,
Section C.12(f)
"Another Transaction" Section 7.05
"CDSI Indemnified Parties" Section 9.06(a)
"Closing" Section 2.03
"Commonly Controlled Entity" Exhibit C,
Section C.22(a)
"Deductible Amount" Section 9.06(a)
"Employees" Exhibit C,
Section C.20
"Escrow Amount" Section 2.04
"Exclusivity Period" Section 7.05
"Financial Statements" Exhibit C,
Section C.5(a)
"fringe benefit" Section 5.01(b)(viii)
"Government Contract Laws" Exhibit C,
Section C.11(d)
"Indemnified Claim" Section 9.03(a)
"Indemnified Party" Section 9.03(a)
"Indemnifying Party" Section 9.03(a)
"multi-employer plan" Exhibit C,
Section C.22(d)
"multiple employer welfare Exhibit C,
arrangement" Section C.22(d)
"parachute" payments Section 7.07
"payoff letters" Section 5.09
"Permits" Exhibit C,
Section C.8
"Plans" Exhibit C,
Section C.22
"prohibited transaction" Exhibit C,
Section C.22(f)
"Property" Exhibit C,
Section C.23(a)
"Referee" Section 9.03(c)
"reportable event" Exhibit C,
Section C.22(f)
"Returns" Exhibit C,
Section C.12(a)
"▇▇▇▇▇" Exhibit C,
Section C.28
"Selling Indemnified Parties" Section 9.06(b)
"Taxes" Exhibit C,
Section C.12(a)
"Third Party Claim" Section 9.03(a)
"Transaction Expenses" Section 7.05
"welfare plans" Exhibit C,
Section C.22(e)
Exhibit C
---------
Representations and Warranties of Selling Shareholders
------------------------------------------------------
In order to induce CDSI to enter into this Agreement and to consummate
the transactions contemplated hereunder, each of the Selling Shareholders,
jointly and severally, make the following representations and warranties which
are subject to the disclosure items set forth on the Schedules to the extent
that such Schedule refers to the Section in which such representation or
warranty is made:
Section C.1. Organization and Good Standing. Schedule C.1 sets
forth a list of the state of incorporation of ASEC and each of its Subsidiaries
and each foreign jurisdiction in which each of ASEC and its Subsidiaries is
qualified to do business. ASEC and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation, and has full power and authority to own, operate
and lease its properties, to carry on its business as it is now being
conducted, and to enter into this Agreement and perform its obligations
hereunder. ASEC and each of its Subsidiaries is qualified as a foreign
corporation and is in good standing under the laws of each jurisdiction in
which the conduct of its business or the ownership of its properties requires
such qualification, except where such qualification would not have a material
adverse effect on the Business. The organizational documents and minutes of
proceedings of ASEC and each of its Subsidiaries are complete and correct, have
not been amended or repealed since delivery to CDSI, and are in full force and
effect.
Section C.2. Capital Stock/Subsidiaries and Affiliates.
(a) Schedule C.2(a) sets forth a true and complete list and
description of the manner in which all of the outstanding capital stock of ASEC
is legally and beneficially held. ASEC owns (or will own as of Closing) 100%
of the issued and outstanding capital stock of each of the Subsidiaries. ASEC
International owns 49% of the equity interests in Saudi American Systems
Engineering Company and ASEC Limited owns approximately 5% of the equity
interests in Harbor Point Apartments Company Limited Partnership. Other than
the shares of capital stock reflected on Schedule C.2(a), at the Closing there
will be no other issued or outstanding equity securities or instruments
convertible into equity securities of ASEC or any of its Subsidiaries.
Neither ASEC nor any Subsidiary is subject to any commitment or obligation
which would require the issuance or sale of additional shares of its capital
stock or debt securities at any time under options, subscriptions, warrants,
rights, calls, preemptive rights, convertible obligations or any other fixed or
contingent obligations, except for those options or warrants to be exercised or
cancelled prior to Closing which are reflected on Schedule C.2(a).
(b) Except for the 49% ownership interest of ASEC Inter-
national in the Saudi Arabian Limited Liability Partnership and the 5% interest
of ASEC Limited in Harbor Point Apartments Company Limited Partnership, neither
ASEC nor any of its Subsidiaries owns shares of capital stock or other equity
interests in any corporation or other entity.
(c) Each of the Selling Shareholders will be at Closing the
lawful, record and beneficial owner of the number of shares of ASEC Common
Stock set forth opposite his name on Exhibit A all of which are, or will be as
of the Closing, free and clear of all Encumbrances of any kind, and the ASEC
Common Stock owned by the Selling Shareholders constitutes 100% of the issued
and outstanding shares of capital stock of ASEC. The delivery at the Closing
of the certificates representing ASEC Common Stock owned by each of the
Selling Shareholders will transfer to CDSI good and valid title to such
shares, which title shall be free and clear of all Encumbrances of every
kind, and each SellingShareholder hereby forever warrants and defends such
title against claimants thereto.
Section C.3. Execution and Effect of Agreement.
(a) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, including,
without limitation, the sale, conveyance, transfer and assignment of the ASEC
Shares to CDSI, have been duly and effectively authorized by all necessary
action on the part of ASEC and each of the Selling Shareholders. This
Agreement has been duly executed and delivered by each Selling Shareholder and
constitutes a legal, valid and binding obligation of each Selling Share-
holder, enforceable in accordance with its terms.
(b) Except as set forth on Schedule C.3, neither the execu-
tion, delivery and performance of this Agreement nor the consummation of the
transactions contemplated hereby will, with or without the passage of time, or
the giving of notice, or both, (i) violate any of the provisions of the
certificate of incorporation or by-laws of ASEC or any of its Subsidiaries,
(ii) violate the provisions of any law, statute or rule, regulation, order,
award, judgment or decree of any court or authority applicable to a Selling
Shareholder or ASEC or any of its Subsidiaries, (iii) result in the creation of
any Encumbrance upon any of ASEC Common Stock or any of the assets of ASEC or
any of its Subsidiaries, (iv) conflict with or result in a breach of or give
rise to the right of termination of, or constitute a default of, or accelerate
the performance required by, the terms of any judgment, court order, consent
decree, statute, ordinance, regulation or any other restriction of any kind or
character, or any agreement, indenture, mortgage, deed of trust, lease,
contract, note, bond, license, permit, authorization or other instrument to
or by which ASEC, any of its Subsidiaries or any Selling Shareholder is
party or bound or (v) cause ASEC or any of its Subsidiaries to lose the benefit
of any legal right that it presently enjoys.
Section C.4. Consents. Except as set forth on Schedule C.4, no
consent or approval of any court, governmental agency or other public
authority, or of any other person, corporation or entity (including a person or
entity that is a party to any contract) is required as a condition to the
validity or enforceability of this Agreement or any other instruments to be
executed by a Selling Shareholder, to effectuate this Agreement, or the
completion or validity of any of the transactions contemplated by this
Agreement including the sale, transfer and assignment by the Selling Share-
holders of the ASEC Common Stock.
Section C.5. Financial Statements.
(a) Attached as Schedule C.5 are true and complete copies of
the audited consolidated balance sheets of ASEC at December 31, 1996 and 1995
and audited statements of cash flows and earnings and retained earnings for
each of the three years ended December 31, 1996 (collectively, the "Financial
Statements"). Except as disclosed in Schedule C.5, the Financial Statements
have been prepared in accordance with GAAP, consistently applied, and fairly
present the financial condition and results of operations of ASEC and its
Subsidiaries on a consolidated basis at and for the dates and periods
indicated.
(b) There has been no material adverse change in, material
loss or destruction of, or material amount of damage to, the Business of ASEC
since December 31, 1996, whether or not arising from transactions in the
ordinary course of business. For purposes of this Section C.5(b), the term
"material" shall mean an amount as to which there is a reasonable likelihood
that a purchaser of ASEC would attach importance in determining the value of
ASEC.
(c) The regular books of account of ASEC and each of its
Subsidiaries fairly and accurately reflect all transactions since December 31,
1996 and are true, correct and complete.
(d) As of the date of this Agreement, ASEC and its
Subsidiaries have no liabilities or obligations, whether accrued, absolute,
contingent or otherwise, except and to the extent (i) reflected or reserved
against in the Financial Statements, or (ii) as incurred in connection with
the usual and ordinary course of ASEC's business since December 31, 1996 and
that are reflected in the books of account of ASEC. At Closing, ASEC will
have no liabilities or obligations, whether known or unknown, accrued,
absolute, contingent or otherwise except and to the extent (i) reflected or
reserved against in the Financial Statements or (ii) of current liabilities
incurred in connection with the usual and ordinary course of the Business of
ASEC since December 31, 1996, and that are reflected in the books of account of
ASEC. No dividends or other distributions to shareholders are due or unpaid by
ASEC.
Section C.6. Lawsuits and Proceedings. Except as set forth on
Schedule C.6, there is no suit, claim, action, audit, investigation or
proceeding before or involving any court (at law or in equity,) arbitration or
mediation panel, governmental, regulatory or administrative agency or body, nor
do facts or circumstances exist, the consequence of which reasonably could be
expected to lead to any suit, claim, action, audit (other than in the ordinary
course of business of ASEC) or investigation pending or threatened against
ASEC or any of its Subsidiaries or any Selling Shareholder in respect of the
ASEC Common Stock, including but not limited to, OSHA claims, workers'
compensation claims, employment discrimination claims, wage and hour claims,
claims arising from or relating to the violation of Environmental Laws or the
handling of or disposal of Hazardous Waste, claims arising out of laws, rules
or regulations relating to government contractors generally or under any
Government Contract Laws or claims involving disputes between employees and
ASEC or any of its Subsidiaries. Neither ASEC, any of its Subsidiaries nor
any Selling Shareholder is in default with respect to any decree, injunction
or other order of any court or governmental authority.
Section C.7. Compliance With Laws. Except as set forth on Schedule
C.7, ASEC and each of its Subsidiaries has conducted its business and main-
tained its assets in compliance with all (and has not received notice of a
claimed violation of any) Applicable Laws (including, without limitation, all
such statutes, rules, laws and regulations applicable to government contractors
generally or ASEC or a Subsidiary specifically in respect of a Government
Contract) and all orders, judgments and decrees of any court or governmental
authority applicable to, binding upon or affecting ASEC or a Subsidiary or
any of the assets of ASEC or a Subsidiary.
Section C.8. Licenses and Permits. ASEC and each of its
Subsidiaries possesses all licenses, permits, and other governmental consents,
certificates, approvals, or other authorizations (the "Permits") necessary for
operation of ASEC's Business at the locations and in the manner presently
operated. Except as set forth on Schedule C.8, (a) ASEC and each of the
Subsidiaries have complied with the terms and conditions of all Permits and
all such Permits are in full force and effect, and (b) there has occurred no
event nor is any event, action, investigation or proceeding pending or
threatened which could cause or permit revocation or suspension of or other-
wise adversely affect the maintenance of any Permits. The transactions
contemplated by this Agreement will not lead to the revocation, cancellation,
termination or suspension of any Permits.
Section C.9. Cost Reports and Third Party Receivables. All cost
reports for reimbursement of expenses in connection with a government contract
(whether domestic or foreign) required to have been submitted by ASEC or any of
its Subsidiaries have been prepared and filed in accordance with all applicable
rules and regulations. No amounts are due and owing to any governmental or
third party payor or any recipient of services provided by ASEC or any
Subsidiary and no amounts will become due and payable to any third party
(including, without limitation, governmental or third party payors or any
recipients of services provided by ASEC or any Subsidiary) following Closing as
a result of or following any audit or inquiry made in respect of any contract
or arrangement as to which ASEC or any Subsidiary is or was a party.
Section C.10. Insurance. Schedule C.10 sets forth a list and
description of all policies of fire, casualty, liability, worker's compensa-
tion, life and other forms of insurance carried by ASEC currently, including
with respect to each policy a description of the types and limits of the
coverage, the amount of premiums, the name of the carrier, the policy number,
the expiration date of the current premium period and the nature and amount
of any claims pending thereunder or asserted within the preceding three
years. Each of ASEC and the Subsidiaries has regularly maintained all
insurance policies in amounts and types required by law and as set forth on
Schedule C.10. Each of ASEC and the Subsidiaries is not in default with
respect to any material provision contained in any insurance policy, nor has
ASEC or any Subsidiary failed to give any notice or present any claim there-
under in due and timely fashion and no cancellation or non-renewal has been
threatened or occurred with respect to any policy.
Section C.11. Agreements.
(a) Schedule C.11(a) sets forth a correct and complete
list of all material written or oral contracts, agreements and other
instruments to which ASEC or any of the Subsidiaries is a party (other than
Government Contracts). Except as set forth on Schedule C.11(a) ASEC or its
Subsidiary that is a party to each of the contracts set forth on Schedule
C.11(a) is not in default under, and there exists no event, condition or
occurrence which with notice, lapse of time or both, would constitute such a
default. For purposes of this Section C.11(a), the term "material" shall mean
any contract, agreement or other instrument which could reasonably be expected
to result in expenditures or revenue of $50,000 or more in the aggregate on
an annual basis.
(b) Schedule C.11(b) sets forth a true, complete and
accurate list of all Government Contracts awarded to ASEC or any Subsidiary,
and that are currently in effect. The Government Contracts are in full force
and are free and clear of any Encumbrances.
(c) Except as set forth on Schedule C.11(c), there are no
outstanding Bids submitted by ASEC or any Subsidiary to any Governmental
Authority or any proposed prime contractor to a Governmental Authority.
(d) Except as set forth on Schedule C.11(d), delivery and
performance under the Government Contracts are currently in satisfactory and
non-delinquent status. Except as set forth on Schedule C.11(d), the Government
Contracts are not behind schedule, and the Selling Shareholders know of no
reason why delivery and performance under the Government Contracts will become
unsatisfactory, behind schedule or delinquent in the future. Each of ASEC and
the Subsidiaries has complied with all statutory and regulatory requirements in
respect of the Government Contracts (including, without limitation, under the
Assignment of Contracts Act, the Federal Assignment of Claims Act, the
Federal Acquisition Regulation, and the Foreign Corrupt Practices Act)
("GovernmentContract Laws"). Each of ASEC and its Subsidiaries has complied
with each and everycertification executed, acknowledged or set forth by ASEC
or any Subsidiary in respect of the Government Contracts. Each of ASEC and the
Subsidiaries has fully complied with each and every representation executed,
acknowledged or set forth by ASEC or any Subsidiary in the Government
Contracts. Each of ASEC and the Subsidiaries has fully complied with all
contract clauses, provisions and requirements incorporated expressly, by
reference or by operation of law in the Government Contracts to the extent
their performance thereunder is required as of the date hereof. Any and all
facts set forth in or acknowledged by ASEC or any Subsidiary in any certifica-
tions, representations or disclosure statements submitted by ASEC or any
Subsidiary to any governmental entity in respect of the Government Contracts
are current, accurate and complete as of the date of submission and have been
updated to the extent required by any applicable law, rule, regulation or
provision of any of the Government Contracts. Except as set forth on
Schedule C.11(d), the Governmental Authority that is a party to a Government
Contract has not notified ASEC or any Subsidiary, either orally or in writing,
that ASEC or any Subsidiary has breached or violated any regulation, statute,
certification, representation or contract clause, provision or requirement in
respect of any Government Contract. Neither ASEC nor any Subsidiary is
currently debarred or suspended from doing business with any governmental
entity and no Selling Shareholder knows of circumstances that would warrant
the institution of debarment or suspension proceedings in the future with
respect to ASEC or any Subsidiary. No show cause notices or cure notices have
been issued against ASEC or any Subsidiary in respect of the Government
Contracts. No default terminations have been issued against ASEC or any
Subsidiary in respect of the Government Contracts. No negative determinations
of responsibility have been issued against ASEC or any Subsidiary in respect
of any bid, quotation or proposal submitted by ASEC or any Subsidiary.
Except as set forth in Schedule C.11(d), no costs incurred by ASEC or any
Subsidiary in respect of a Government Contract have been formerly questioned
or disallowed as a result of a finding or determination of any kind by the
governmental entity that is a party to such Government Contract. No govern-
mental entity that is a party to a Government Contract has withheld or set off,
or attempted to withhold or set off, monies due to ASEC or any Subsidiary under
a Government Contract, including, without limitation, with respect to any
foreign offset requirements. Except as set forth on Schedule C.11(d), the
Selling Shareholders do not know, and have no reason to know, of any
irregularities, misstatements or omissions relating to the Government
Contracts or the bids, quotations or proposals made in connection with any
Government Contract or the work performed or to be performed thereunder, that
have led to or could reasonably be expected to lead to, either before or after
the date hereof, (i) any administrative, civil or criminal investigations or
indictment of ASEC or any Subsidiary or any employee of ASEC or any Subsidiary,
(ii) the formal questioning or disallowance of any costs submitted for payment
by ASEC or any Subsidiary, (iii) the recoupment of any payments previously made
to ASEC or any Subsidiary or (iv) the assessment of any penalties or damages
of any kind against ASEC or any Subsidiary arising out of such irregular-
ities, misstatements or omissions. Except as set forth Schedule C.11(d),
neither ASEC nor any of the Subsidiaries is currently under administrative,
civil or criminal investigation or indictment with respect to any alleged
irregularity, misstatement or omission arising under or in any way relating to
any of the Government Contracts. Except as set forth on Schedule C.11(d),
there exists (i) no outstanding claims or disputes against ASEC or any
Subsidiary by any governmental entity or any subcontractor, vendor or third
party arising under or relating to any Government Contract, and (ii) no facts
which are known or should be known by ASEC or any Subsidiary or a Selling
Shareholder upon which such a claim or dispute may be based in the future.
Except as set forth in Schedule C.11(d), neither ASEC nor any of the
Subsidiaries is presently undergoing any audit, and neither ASEC nor any of the
Subsidiaries has knowledge or reason to know of any basis for impending audits
in the future, arising under or relating to any Government Contract. The
Selling Shareholders do not know, and have no reason to know, of any reason why
any Government Contract will be terminated, including, without limitation, any
terminations for default or convenience of the government.
Section C.12. Taxes.
(a) ASEC and each of the Subsidiaries has exercised due
diligence in the preparation of and has duly and timely filed all applicable
tax returns, extensions, declarations or statements ("Returns") with respect to
all income, property, sales, use, gross receipts, value-added, profits,
occupancy, employment, excise, withholding, customs duties or other taxes of
any nature whatsoever, whether of the United States, a state or otherwise,
including, without limitation, penalties and interest thereon, ("Taxes")
required to be filed to the date hereof and, as of the Closing Date, to the
Closing Date. All Taxes shown on the Returns or pursuant to any declarations or
assessments received by ASEC or any Subsidiary (including estimated taxes,
penalties and interest) have been duly and timely paid, or, if not yet due,
properly accrued and reserved for and reflected in the books of account of ASEC
or any Subsidiary. All such Returns are true, correct and complete, no audit
or investigation of any such Returns is in progress, pending or threatened.
There exists no tax deficiency or unpaid tax assessed by any authority against
ASEC or any Subsidiary.
(b) There are no waivers of statutes of limitations in
effect for any Taxes with respect to ASEC or any Subsidiary. No extension of
time is in effect for the assessment of deficiencies by any taxing authority
against ASEC or any Subsidiary with respect to any Taxes or Returns for any
year.
(c) All tax accruals and deferrals are properly and
accurately reflected on the Financial Statements.
(d) ASEC and each of the Subsidiaries has duly and properly
deducted and accounted for all amounts which it has been obligated to deduct or
withhold in respect of Taxes.
(e) Schedule C.12(e) contains a list of all states and other
jurisdictions where each Transferor has filed Returns during the past three
years or expects to file Returns during the current calendar year and each
state where ASEC or any Subsidiary joins in the filing of combined or unitary
state tax returns.
(f) Neither ASEC nor any of its Subsidiaries has been a
member of an "Affiliated Group," as that term is defined in Section 1504(q) of
the Code or for applicable state, local or foreign tax purposes.
Section C.13. Banks and Deposits. Schedule C.13 sets forth the name
of each bank or other depository in which ASEC or any Subsidiary has an
account, the number assigned to each account, and the names of all persons
authorized to draw thereon. Neither ASEC nor any of its Subsidiaries has any
custody arrangements.
Section C.14. Claims of Directors, Officers, Etc. Except as set
forth on Schedule C.14, no employee, director or officer of ASEC or any
Subsidiary, either individually or in any other capacity, has a claim of any
kind whatsoever (including, without limitation, in respect of loans extended to
ASEC or any Subsidiary and any bonus or incentive payments) against ASEC or any
Subsidiary, except the right to his current salary or wages, any accrued
vacation pay, and reasonable reimbursable expenses arising in the ordinary
course of business. Except as set forth on Schedule C.14, there are no
outstanding loans, obligations or open account advances payable to ASEC or any
of its Subsidiaries by any Selling Shareholder or any current or former
officer, director or employee of ASEC or any of its Subsidiaries and there are
no guarantees, endorsements or other obligations of ASEC or any of its
Subsidiaries with respect to any indebtedness, obligation or liability of any
of the foregoing persons.
Section C.15. Affiliate Transactions. Schedule C.15 sets forth a
true and complete list of all amounts that are due and payable (including
amounts that have arisen in respect of intercompany transactions) by any
Affiliate of ASEC to ASEC or any of its Subsidiaries.
Section C.16. Intellectual Property. Schedule C.16 contains a true,
correct and complete list and description of all Intellectual Property,
including all license agreements pursuant to which any Intellectual Property is
licensed to or by ASEC or any of its Subsidiaries. The conduct of the Business
of ASEC and its Subsidiaries does not infringe upon, conflict with, or violate
the rights of others in respect of any Intellectual Property and none of the
Selling Shareholders or ASEC or any of its Subsidiaries have received notice
that any claim or proceeding is pending or threatened in respect of any such
Intellectual Property or that ASEC or any of its Subsidiaries has infringed
upon, conflicted with, or violated any patent, patent right, trademark,
service ▇▇▇▇, tradename, copyright or trade secret of any third party.
Section C.17. Extraordinary Transactions. Except as set forth on
Schedule C.17, since December 31, 1996, neither ASEC nor any of its
Subsidiaries has, nor as of the Closing will have (i) mortgaged, pledged or
subjected to any Encumbrance any of its assets; (ii) canceled or compromised
any claim of or debts owed to it; (iii) except in the ordinary course of
business, sold, leased or transferred any of its assets; (iv) sold, assigned
or transferred any of the Intellectual Property; (v) waived any rights;
(vi) entered into any material transaction other than in the ordinary course
of business; (vii) suffered any material change in the relationship or course
of dealing with any material supplier, customer or creditor; (viii) suffered
any material destruction, loss or damage to any of its assets; (ix) made any
management decisions involving any material change in its policies with regard
to pricing, per diem rates, sales, purchasing or other business, financial,
accounting (including reserves and the amounts thereof) or tax policies or
practices; (x) declared or paid any dividends on or made any distributions in
respect of any outstanding shares of capital stock or made any other
distributions or payments (except for salary or wages paid in the ordinary
course of business and not in excess of the amounts reflected on Schedule C.20)
of any kind to any of the Selling Shareholders or their Affiliates; or (xi)
submitted any Bid to any Governmental Authority or third party in response to a
request for proposal or otherwise.
Section C.18. Accounts Receivable. All information set forth in the
balance sheet of ASEC and its Subsidiaries as of the Closing with respect to
accounts receivable of ASEC and each of the Subsidiaries will be true, accurate
and complete as the date thereof, and there will be no material adverse change
with respect to the amount, validity, or collectibility of any accounts
receivable of ASEC or any Subsidiary other than decreases in the amount of
accounts receivable due to collection in the ordinary course of business since
the Closing Date. Such accounts receivable will be good and collectible in
amounts equal to the aggregate face amounts thereof after giving effect to
any reserves for bad debts and contractual allowances which are set forth in
the balance sheet of ASEC and its Subsidiaries as of the Closing.
Section C.19. Broker and Finder Fees. ASEC and the Selling
Shareholders have not engaged any broker or finder in connection with this
transaction, and no action by any of the foregoing will cause or support any
claim to be asserted against ASEC, its Subsidiaries or CDSI by any broker,
finder or intermediary in connection with this transaction.
Section C.20. Employees. Schedule C.20 sets forth a true, correct
and complete list of all current employees of ASEC and each of its Subsidiaries
(the "Employees") together with the salary and any bonus, if applicable, paid
to the Employee during the preceding 12 month period as well as any accrued and
unpaid benefits due to the Employee, if any.
Section C.21. Employment Matters. No Employees are members of any
collective bargaining unit or a party to any union agreement. No union
organizing activities are taking place or have taken place within the past two
years. Except as set forth on Schedule C.21, ASEC and its Subsidiaries do not
have any employment agreements with any Employees. All accrued or vested
vacation pay is reflected on Schedule C.21. Except as set forth on Schedule
C.21, neither ASEC nor any Subsidiary is liable for any arrearage of wages or
any tax or penalty for failure to comply with any Applicable Laws relating to
employment or labor, and there is not a controversy pending, threatened or
in progress between ASEC and its Employees nor is there any basis for such a
controversy. Each of ASEC and the Subsidiaries is in compliance with all laws
respecting occupational health and safety, employment, employment practices,
and terms and conditions of employment, wages and hours, and is not engaged in
any unfair labor practice and there is not now pending or threatened any charge
or complaint against ASEC or any Subsidiary by any governmental labor or
employment agency or any representative thereof and the consummation of the
transactions contemplated by this Agreement will not result in any such
charge or complaint.
Section C.22. Employee Benefit Matters. The plans, programs,
contracts, understandings and arrangements described in this Section C.22 and
listed on Schedule C.22 are hereinafter referred to as the "Plans".
(a) Except as set forth on Schedule C.22, there are no plans,
programs, contracts, understandings or arrangements of any type (whether oral
or written) of ASEC or a "Commonly Controlled Entity" (within the meaning of
Sections 414(b), (c), (m), (n) or (o) of the Code or regulations thereunder)
which provide for pension, profit sharing, savings, executive compensation,
incentive compensation, company cars or car allowances, deferred compensation,
severance pay, bonuses, stock options, stock purchases, welfare, group
insurance, medical disability, life, health, hospitalization, dental, vacation,
sick pay, holiday, educational assistance, or any other form of employee or
former employee benefits, whether established by contract, policy, custom or
course of dealing, (including, but not limited to plans described in Section
3(3) of ERISA); and neither ASEC nor a Commonly Controlled Entity has
previously sponsored or contributed to any such plan, program, contract,
understanding or arrangement other than as listed or described on Schedule
C.22.
(b) Neither ASEC nor any Commonly Controlled Entity has ever
maintained a plan which is subject to Title IV of ERISA.
(c) Neither ASEC nor any Commonly Controlled Entity has ever
been a party to any collective bargaining agreement.
(d) Neither ASEC nor any Commonly Controlled Entity has ever
maintained or contributed to a "multi-employer plan" within the meaning of
Sections 3(37) and 4001(a)(3) of ERISA, a "multiple employer plan" within the
meaning of Section 413 of the Code, or a "multiple employer welfare
arrangement" within the meaning of Section 3(40) of ERISA.
(e) With respect to the Plans which are "welfare plans"
within the meaning of Section 3(1) of ERISA: (i) none of those plans provide
medical or death benefits (whether or not insured) with respect to current or
former employees beyond their termination of employment; and (ii) each of those
plans has been operated in material compliance with the provisions of Section
4980B of the Code and Part 6 of Title I of ERISA and all other applicable laws
concerning continuation or conversion of coverage; and (iii) none of those
plans has any reserves, assets, surplus or prepaid premiums.
(f) With respect to each of the Plans: (i) if intended to
qualify under Section 401(a) or 403(a) of the Code, the plan has been
maintained and administered at all times in compliance with its terms and
applicable laws and regulations and has been so qualified during the period
from its adoption to date and the trust forming a part thereof is exempt from
taxation pursuant to Section 501(a) of the Code, a favorable determination
letter as to qualification under Section 401 of the Code has been issued and
any amendments required for continued qualification under Section 401 of the
Code have been timely adopted and nothing has occurred subsequent to the date
of such determination letter that could adversely affect the qualified status
of such Plan; (ii) no event has occurred and there exists no circumstance under
which ASEC could directly, or indirectly through a Commonly Controlled Entity,
incur any liability with respect to any current or former employee (or any
beneficiary of any current or former employee) of ASEC or any Commonly
Controlled Entity under ERISA, the Code or otherwise; (iii) there are no
actions, suits or claims pending or threatened with respect to any Plan or
against any fiduciary or the assets of any Plan and there are no facts which
could give rise to any such actions, suits or claims, and no Plan is under
audit or investigation by any governmental authority; (iv) no event has
occurred with respect to any Plan or any employee benefit plan sponsored,
maintained or contributed to by ASEC or a Commonly Controlled Entity which
could subject any Plan, ASEC or CDSI, directly or indirectly (through
indemnification agreement or otherwise) to any liability for or as a result of
a breach of fiduciary duty, a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code, or a civil penalty under
Section 502 of ERISA or a tax under Section 4971 of the Code; (v) no
"reportable event" (as defined in Section 4043 of ERISA) has occurred; (vi) no
"accumulated funding deficiency" (as defined in Section 302 of ERISA or Section
412 of the Code) has occurred; (vii) all contributions required to be made to,
or benefit liabilities arising under, any Plan for all periods prior to the
date hereof and the Closing Date have been, or will as of the Closing Date
be, paid or accrued; (viii) all contributions have met the requirements for
deductibility under the Code; (ix) each Plan has been operated in accordance
with its terms and with all applicable laws, including, but not limited to
ERISA, the Code, and state insurance and health care continuation and
conversion laws.
(g) Except as set forth on Schedule C.22, consummation of the
transactions contemplated by this Agreement will not (i) entitle any individual
to any bonus, incentive or severance pay or payments, or (ii) accelerate the
time of payment or vesting of any benefit under any Plan, increase the amount
of compensation due to any individual from ASEC following Closing, or increase
any benefits otherwise payable under any Plan, (iii) result in the payment of
an amount subject to the provisions of Section 280G of the Code, or (iv) give
rise to any liability or obligation of a Transferor pursuant to any Plan.
(h) With respect to each Plan, ASEC has delivered to CDSI
true and complete copies of: (i) the plan document;, if any; (ii) any trust
agreements, (iii) all material employee communications (including, but not
limited to, any summary plan description); (iv) the last three annual reports
(Treasury Forms 5500), including schedules thereto; (v) the most recent annual
and periodic accounting of plan assets; (vi) the most recent actuarial
valuation; (vii) the most recent favorable determination letter received from
the Internal Revenue Service; (viii) any insurance contract currently in
effect; (ix) any investment management agreement currently in effect; (x) any
service provider agreement currently in effect; (xi) any other agreement
relating to a Plan or to which a Plan is a party.
(i) As of the date of this Agreement, neither ASEC nor a
Commonly Controlled Entity has adopted or communicated to Employees any change
to, or termination of, any Plan or the adoption of a new employee benefit plan
or arrangement affecting the employees of the Transferor or their dependents.
(j) Except as set forth on Schedule C.22(j), ASEC is not
bound to make, nor has ASEC proposed the making of, any bonus or incentive or
other similar payment to any Employee or consultant at any future date or an
increase to the compensation of any Employee or consultant. Neither ASEC nor
any Subsidiary will be liable by reason of this Agreement or any of the
transactions contemplated hereby, to make any payment to any employee by way
of damages or compensation for loss of office or for redundancy or unfair
dismissal or any like payment.
Section C.23. Environmental Matters.
(a) The facilities occupied or used by ASEC and any of its
Subsidiaries and any other real property presently or formerly owned by, used
by or leased to ASEC and any of its Subsidiaries or by ASEC and any of its
Subsidiaries (collectively, the "Property"), the existing and prior uses of the
Property and all operations of the Business of ASEC and its Subsidiaries or any
predecessor of a ASEC and its Subsidiaries comply and have at all times
complied in all material respects with all Environmental Laws and each of ASEC
and its Subsidiaries is not in violation of nor has it violated, in connection
with the ownership, use, maintenance or operation of such Property or the
conduct of its business, any Environmental Law.
(b) Each of ASEC and its Subsidiaries has all material
permits, registrations, approvals and licenses required by any governmental
agency or Environmental Law.
(c) There are no claims, notices of violations, notice
letters, investigations, inquiries or other proceedings now pending or
threatened by any governmental entity or any foreign governmental entity or
third party with respect to the Business or any Property (or any predecessor in
interest) in connection with any actual or alleged failure to comply with any
requirement of any Environmental Law.
Section C.24. Real Property. Neither ASEC nor any of the
Subsidiaries owns any real property. Set forth on Schedule C.24 is a true,
correct and complete list of all real property leased by ASEC and its
Subsidiaries. Except as noted on Schedule C.24, none of the agreements under
which any of the real property set forth thereon is leased to ASEC or any of
its Subsidiaries requires the consent or approvalof any third party as a result
of the transactions contemplated by this Agreement. Onor prior to Closing, the
Selling Shareholders shall cause to be delivered to CDSI the written consent
(in form and content satisfactory to CDSI) of each of the parties whose consent
is required to the transactions contemplated by this Agreement under the terms
of the lease agreements set forth on Schedule C.24.
Section C.25. Title to Assets. ASEC or a Subsidiary, as the case may
be, has good and marketable title to all of the assets reflected in the
Financial Statements, free and clear of all Encumbrances, except for the
Encumbrances reflected on Schedule C.25. At the Closing, each of the
Encumbrances will be removed and all of the assets of ASEC and its Subsidiaries
will be free and clear of all Encumbrances of any kind or nature whatsoever.
Section C.26. Investment Representations.
(a) Each of the Selling Shareholders who is to receive shares
of CDSI Common Stock as part of the Purchase Price is aware that the CDSI
Common Stock being delivered pursuant to Section 2.02 of this Agreement is not
being registered under the Securities Act of 1933, as amended. Each Selling
Shareholder who is to receive shares of CDSI Common Stock as part of the
Purchase Price possesses such knowledge and experience in business and
financial matters (individually or through their respective representatives)
that such Selling Shareholder is capable of evaluating the merits and risks
of an investment in CDSI.
(b) Each Selling Shareholder who is acquiring CDSI Common
Stock as part of the Purchase Price is acquiring the CDSI Common Stock being
delivered pursuant to Section C.02 of this Agreement for his own account, for
investment purposes only and not with a view to distribution thereof. Each of
the Selling Shareholders understands and agrees that the CDSI Common Stock may
not be sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of by such entity or person except pursuant to a valid exemption from
registration under the 1933 Act.
Section C.27. Adverse Business Conditions. The Selling Shareholders
have no knowledge or information of any conditions, facts, developments or
circumstances which would have a material adverse effect upon the business,
assets, financial condition, operating results, customer, supplier and Employee
relations, or business prospects of ASEC and its Subsidiaries taken as a whole.
Without limiting the foregoing, the Selling Shareholders have no knowledge,
after due inquiry, of any written or oral communication, fact, event or action
that exists or has occurred that would tend to indicate that any customer will
terminate its business relationship with ASEC following Closing.
Section C.28. Arrangements With ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇. Schedule C.28 sets
forth a true, complete and accurate list of each and every claim or right of
any kind whatsoever (including without limitation, in respect of loans extended
to ASEC or any Subsidiary or any bonus or incentive payments) against ASEC or
any of its Subsidiaries which ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") currently has. ▇▇▇▇▇
has no claims against any Selling Shareholder in respect of any of the ASEC
Shares.
EXHIBIT D
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Representations and Warranties of CDSI
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In order to induce each of the Selling Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereunder, CDSI makes
the following representations and warranties:
Section D.1. Organization and Good Standing. CDSI is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland and has full corporate power and authority to carry on its
business as it is now being conducted.
Section D.2. Execution and Effect of Agreement. CDSI has the
corporate power and authority to enter into this Agreement and to perform the
obligations to be performed by CDSI hereunder, and the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action. This Agreement
has been duly executed and delivered by CDSI and constitutes a legal, valid
and binding obligation of CDSI, enforceable against CDSI in accordance with
its terms.
Section D.3. Restrictions. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will violate any of the provisions of the charter or by-laws of CDSI.
Section D.4. Consents. No consent or approval of any court,
governmental agency or other public authority, or of any other person,
corporation or entity is required as a condition to (a) the validity or
enforceability of this Agreement or any other instruments to be executed by
CDSI to effectuate this Agreement, or (b) the completion or validity of any of
the transactions contemplated by this Agreement, except for compliance with and
approval under the H-S-R Act, compliance with federal and state securities
laws in connection with the issuance of CDSI Common Stock and other consents
or approvals contemplated by this Agreement.
Section D.5. No Lawsuits. There is no lawsuit, proceeding or
investigation pending or, to the knowledge of CDSI, threatened against CDSI the
effect of which could reasonably be expected to prevent the consummation of any
of the transactions contemplated hereby.
Section D.6. Broker and Finder Fees. Other than Quarterdeck
Investment Partners, Inc., CDSI has not engaged any broker or finder in
connection with this transaction, and no action by CDSI will cause or support
any claim to be asserted against the Selling Shareholders by any broker, finder
or intermediary in connection with this transaction.
Section D.7. CDSI Common Stock. In the event that CDSI elects to
pay a portion of the Purchase Price by the issuance of shares of CDSI Common
Stock in accordance with Section 2.02 of this Agreement, the shares of CDSI
Common Stock issued to the Selling Shareholders will be fully paid and non-
assessable shares.
Section D.8. Financing. CDSI has, or will have on or prior to the
Closing Date, financing sufficient to pay the Cash Portion of the Purchase
Price.
Section D.9. Financial Statements. Attached hereto as Schedule D.9
are (i) the Annual Report to Stockholders on Form 10-K for the fiscal year
ended June 30, 1996 and Quarterly Report on Form 10-Q for the period ended
March 31, 1997 which includes (1) the unaudited consolidated balance sheet of
CDSI as of March 31, 1996; (2) the unaudited consolidated statements of changes
in stockholders equity for the nine months ended March 31, 1996 and 1995; (3)
the unaudited consolidated statement of income for the nine months ended March
31, 1996 and 1995; and (4) the unaudited consolidated statements of cash
flow for the nine months ended March 31, 1996 and 1995 together with the notes
to those consolidated statements (the "CDSI Financial Statements"). Subject to
the absence of certain footnote information in the unaudited statements, the
CDSI Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated or as more particularly set forth therein. The unaudited
consolidated balance sheets included as part of the CDSI Financial Statements
present fairly as of their respective dates the consolidated financial position
and assets and liabilities of CDSI. The unaudited consolidated statements of
income included as part of the CDSI Financial Statements present fairly the
consolidated results of operations of CDSI for the periods indicated.
