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EXHIBIT 10.5
AGREEMENT AND PLAN OF EXCHANGE
by and among
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
and
SOFTWARE CONSULTING SERVICES AMERICA, LLC AND
THE UNDERSIGNED HOLDERS OF ALL
OF THE OUTSTANDING OWNERSHIP INTERESTS
OF SOFTWARE CONSULTING SERVICES AMERICA, LLC
December 19, 1997
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TABLE OF CONTENTS
PAGE
1. THE EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale. . . . . . . . . . . . . . . . . . . . . 1
1.1.1 Tangible Personal Property . . . . . . . . . . . . 2
1.1.2 Personal Property Leases . . . . . . . . . . . . . 2
1.1.3 Real Property . . . . . . . . . . . . . . . . . . . 2
1.1.4 Real Property Leases . . . . . . . . . . . . . . . 2
1.1.5 Cash and Accounts Receivable . . . . . . . . . . . 2
1.1.6 Acquired Contracts . . . . . . . . . . . . . . . . 2
1.1.7 Business Records . . . . . . . . . . . . . . . . . 2
1.1.8 Licenses . . . . . . . . . . . . . . . . . . . . . 3
1.1.9 Intellectual Property . . . . . . . . . . . . . . . 3
1.1.10 Ownership Interests in Other Entities . . . . . . . 3
1.1.11 General Intangibles and Rights of the Company . . . 3
1.1.12 Prepaid Items . . . . . . . . . . . . . . . . . . . 3
1.1.13 Telephone Numbers . . . . . . . . . . . . . . . . . 4
1.1.14 Company Name and Goodwill . . . . . . . . . . . . . 4
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Assumption of Obligations and Liabilities . . . . . . . . . 4
1.4 Certain Definitions . . . . . . . . . . . . . . . . . . . . 4
1.5 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 5
1.6 Successor Operating Company . . . . . . . . . . . . . . . . 5
1.7 Payment of Purchase Price . . . . . . . . . . . . . . . . . 5
1.8 No Fractional Shares . . . . . . . . . . . . . . . . . . . . 6
2. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 No Other Assignments of Company Assets or Common Stock . . . 6
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MEMBERS . . . . . . 6
3.1 Organization of the Company . . . . . . . . . . . . . . . . 6
3.2 Capitalization of the Company . . . . . . . . . . . . . . . 7
3.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Title of Acquired Assets . . . . . . . . . . . . . . . . . . 7
3.5 Condition of the Acquired Assets . . . . . . . . . . . . . . 7
3.5.1 Tangible Personal Property . . . . . . . . . . . . 7
3.5.2 Leases . . . . . . . . . . . . . . . . . . . . . . 7
3.5.3 Accounts Receivable . . . . . . . . . . . . . . . . 8
3.5.4 Acquired Contracts . . . . . . . . . . . . . . . . 8
3.5.5 Licenses . . . . . . . . . . . . . . . . . . . . . 9
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3.5.6 Intellectual Property . . . . . . . . . . . . . . . . 9
3.5.7 Prepaid Items . . . . . . . . . . . . . . . . . . . . 9
3.5.8 Completeness of Acquired Assets . . . . . . . . . . . 9
3.6 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . 10
3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.11 Compliance; Legal Actions . . . . . . . . . . . . . . . . . . 11
3.16 Entities Owned . . . . . . . . . . . . . . . . . . . . . . . . 12
3.17 Affiliate Relationships . . . . . . . . . . . . . . . . . . . 12
3.18 Investment Company . . . . . . . . . . . . . . . . . . . . . 13
3.19 No Material Adverse Change . . . . . . . . . . . . . . . . . . 13
3.20 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.21 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.22 Company Material Adverse Effect . . . . . . . . . . . . . . . 14
3.23 Restricted Securities . . . . . . . . . . . . . . . . . . . . 14
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . 15
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Capitalization of Purchaser. . . . . . . . . . . . . . . . . . 15
4.3 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . 16
4.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.8 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.9 Investment Company . . . . . . . . . . . . . . . . . . . . . . 17
4.11 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.12 Purchaser Material Adverse Effect. . . . . . . . . . . . . . . 17
5. CERTAIN OTHER ACTIONS, COVENANTS AND DOCUMENTS . . . . . . . . . . . . . . . 17
5.1 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . 17
5.2 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3 Filings, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 20
5.4 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5 Satisfaction of Conditions . . . . . . . . . . . . . . . . . . 20
5.6 Capital Budget . . . . . . . . . . . . . . . . . . . . . . . . 21
5.7 Exclusivity. . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.8 Covenant Not to Compete. . . . . . . . . . . . . . . . . . . . 21
5.9 Limitation on Assignments to Purchaser . . . . . . . . . . . . 22
5.10 Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6. CERTAIN AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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6.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 23
6.3 Company Plans . . . . . . . . . . . . . . . . . . . . . . . 23
6.4 Tax-Free Exchange . . . . . . . . . . . . . . . . . . . . . 23
6.5 Sale of Motor Vehicles . . . . . . . . . . . . . . . . . . . 23
7. CONDITIONS PRECEDENT; CLOSING DELIVERIES . . . . . . . . . . . . . . . . 23
7.1 Conditions Precedent to the Obligations of the Purchaser . . 23
7.1.1 Accuracy of Representations and Warranties . . . . 23
7.1.2 Performance of Covenants . . . . . . . . . . . . . 24
7.1.3 Legal Actions or Proceedings . . . . . . . . . . . 24
7.1.4 Approvals . . . . . . . . . . . . . . . . . . . . . 24
7.1.5 Closing Deliveries . . . . . . . . . . . . . . . . 24
7.1.6 No Loss or Damage . . . . . . . . . . . . . . . . . 24
7.1.7 Licenses, etc. . . . . . . . . . . . . . . . . . . 24
7.1.8 No Material Adverse Change . . . . . . . . . . . . 24
7.1.9 IPO . . . . . . . . . . . . . . . . . . . . . . . . 24
7.1.10 Certain Corporate Actions . . . . . . . . . . . . . 24
7.2 Conditions Precedent to the Obligations of the Members and
the Company . . . . . . . . . . . . . . . . . . . . 25
7.2.1 Accuracy of Representations and Warranties . . . . 25
7.2.2 Performance of Covenants . . . . . . . . . . . . . 25
7.2.3 Approvals . . . . . . . . . . . . . . . . . . . . . 25
7.2.4 Closing Deliveries . . . . . . . . . . . . . . . . 25
7.3 Deliveries by the Company or the Members at the Closing . . 25
7.3.1 Closing Certificates . . . . . . . . . . . . . . . 25
7.3.2 Instruments of Transfer . . . . . . . . . . . . . . 25
7.3.3 Stock Transfer Restriction Agreement . . . . . . . 26
7.3.4 Employment Agreements . . . . . . . . . . . . . . . 26
7.3.5 Opinion of Counsel for the Members and the Company 26
7.3.6 Documents. . . . . . . . . . . . . . . . . . . . . 26
7.5 Deliveries by the Purchaser at the Closing . . . . . . . . . 26
7.5.1 Closing Certificates . . . . . . . . . . . . . . . 27
7.5.2 Instruments of Transfer . . . . . . . . . . . . . . 27
7.5.3 Opinion of Counsel for the Purchaser . . . . . . . 27
7.5.4 Closing Consideration . . . . . . . . . . . . . . . 27
7.7 Conditions Precedent to Completion of the Closing . . . . . 27
7.7.1 Legal Actions or Proceedings . . . . . . . . . . . 27
7.7.2 IPO . . . . . . . . . . . . . . . . . . . . . . . . 28
7.8 Delivery of the Closing Consideration . . . . . . . . . . . 28
8. SURVIVAL; INDEMNIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . 28
8.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . 28
8.2.1 Purchaser Indemnified Parties . . . . . . . . . . . 28
8.2.2 Minimum Losses . . . . . . . . . . . . . . . . . . 29
8.2.3 Purchaser Indemnity . . . . . . . . . . . . . . . . 29
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8.3 Limitations . . . . . . . . . . . . . . . . . . . . 30
8.4 Procedures for Indemnification . . . . . . . . . . . 30
8.4.1 Notice . . . . . . . . . . . . . . . . . . 30
8.4.2 Legal Defense. . . . . . . . . . . . . . . 30
8.4.3 Settlement . . . . . . . . . . . . . . . . 30
8.4.4 Cooperation . . . . . . . . . . . . . . . . 31
8.5 Subrogation . . . . . . . . . . . . . . . . . . . . 31
9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.1 Grounds for Termination . . . . . . . . . . . . . . 31
9.1.1 Prior to Closing . . . . . . . . . . . . . 31
9.1.2 After the Closing Date . . . . . . . . . . 32
9.2 Effect of Termination . . . . . . . . . . . . . . . 32
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.1 Notice . . . . . . . . . . . . . . . . . . . . . . . 32
10.2 Further Documents . . . . . . . . . . . . . . . . . 33
10.3 Assignability . . . . . . . . . . . . . . . . . . . 34
10.4 Exhibits and Schedules. . . . . . . . . . . . . . . 34
10.5 Entire Agreement . . . . . . . . . . . . . . . . . . 34
10.6 Headings . . . . . . . . . . . . . . . . . . . . . . 34
10.7 CONTROLLING LAW . . . . . . . . . . . . . . . . . . 34
10.8 Public Announcements . . . . . . . . . . . . . . . . 34
10.9 No Third Party Beneficiaries. . . . . . . . . . . . 34
10.10 Amendments and Waivers . . . . . . . . . . . . . . . 34
10.11 No Employee Rights . . . . . . . . . . . . . . . . . 35
10.12 Non-Recourse . . . . . . . . . . . . . . . . . . . . 35
10.13 When Effective . . . . . . . . . . . . . . . . . . . 35
10.14 Takeover Statutes . . . . . . . . . . . . . . . . . 35
10.15 Number and Gender of Words . . . . . . . . . . . . . 35
10.16 Invalid Provisions . . . . . . . . . . . . . . . . . 35
10.17 Multiple Counterparts . . . . . . . . . . . . . . . 36
10.18 No Rule of Construction . . . . . . . . . . . . . . 36
10.19 Expenses . . . . . . . . . . . . . . . . . . . . . . 36
10.20 Broker's Fees . . . . . . . . . . . . . . . . . . . 36
10.21 Section 351 Plan of Exchange . . . . . . . . . . . . 36
EXHIBITS:
Exhibit 1.2 Excluded Assets
Exhibit 1.3 Assumed Obligations
Exhibit 2.1 Escrow Agreement
Exhibit 5.6 Capital Budget of the Company
Exhibit 7.3.2(i) Conveyance, Transfer, Assignment and Assumption Agreement
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Exhibit 7.3.2(ii) Assignment and Assumption of Real Property Leases
Exhibit 7.3.3 Stock Transfer Restriction Agreement
Exhibit 7.3.4 Certain Employees
Exhibit 7.3.4A Form of Employment Agreements
Exhibit 7.3.5 Opinion of Counsel for Company
Exhibit 7.5.3 Opinion of Counsel for the Purchaser
Exhibit 10.21 Section 351 Plan of Exchange
SCHEDULES:
Schedule 1.1.1 Tangible Personal Property
Schedule 1.1.2 Personal Property Leases
Schedule 1.1.3 Real Property
Schedule 1.1.4 Leased Property
Schedule 1.1.5 Accounts Receivable
Schedule 1.1.6 Acquired Contracts
Schedule 1.1.7 Business Records
Schedule 1.1.8 Licenses
Schedule 1.1.9 Intellectual Property
Schedule 1.1.10 Ownership Interests
Schedule 1.1.11 General Intangibles and Rights of the Company
Schedule 1.1.12 Prepaid Items
Schedule 1.1.13 Telephone Numbers
Schedule 3.2 Member Interests
Schedule 3.3 Company Consents
Schedule 3.4 Encumbrances on Acquired Assets
Schedule 3.8 Financial Statements
Schedule 3.9 Taxes
Schedule 3.11 Compliance; Legal Actions
Schedule 3.12 Legal Descriptions of Real Property Owned by the Company
Schedule 3.13 Employees
Schedule 3.14 Employee Obligations
Schedule 3.15 Safety Matters
Schedule 3.17 Affiliate Relationships
Schedule 3.19 Material Adverse Changes
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AGREEMENT AND PLAN OF EXCHANGE
This AGREEMENT AND PLAN OF EXCHANGE (this "Agreement") made effective
as of December 19, 1997 (the "Effective Date"), by and among BRIGHTSTAR
INFORMATION TECHNOLOGY GROUP, INC., a Delaware corporation (the "Purchaser"),
SOFTWARE CONSULTING SERVICES AMERICA, LLC, a California limited liability
company (the "Company"), and THE UNDERSIGNED HOLDERS OF ALL OF THE OUTSTANDING
OWNERSHIP AND MEMBER INTERESTS ("MEMBER INTERESTS") IN THE COMPANY (the
"Members").
WHEREAS, the Board of Directors of the Purchaser and the Managers of
the Company have each approved the assignment and transfer to Purchaser of
substantially all of the assets of the Company in exchange for cash and shares
of common stock, $.001 par value per share of Purchaser ("Purchaser Common
Stock") and the assumption of certain liabilities of the Company by Purchaser
all as provided herein (the "Exchange");
WHEREAS, the above Exchange is one of several related transactions
involving the assignment of property to Purchaser in exchange for common stock
and cash of Purchaser as part of an overall plan that includes an initial
public offering of Purchaser Common Stock; and for federal income tax purposes,
it is intended that this Exchange and the other related exchange transactions
with Purchaser shall qualify as exchanges under the provisions of Section 351
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Exchange has been approved as required by applicable law
and by appropriate action of the Company and Purchaser, and the Exchange has
been approved by the Members as the holders of all of the outstanding Member
Interests of the Company as evidenced by their signatures hereto;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
1. THE EXCHANGE
1.1 Purchase and Sale. Subject to the terms and conditions of
this Agreement, and in consideration of delivery of the Purchase Price (as
defined below) by Purchaser and the assumption of the Assumed Obligations (as
defined below) by Purchaser, the Company agrees to sell, convey, assign,
transfer, exchange and deliver to Purchaser, and Purchaser agrees to purchase,
exchange and acquire from the Company, all of the assets owned by the Company
as of the date hereof and the Closing Date, of every kind, character and
description, other than the "Excluded Assets" specified under Section 1.2
hereof (the "Acquired Assets"), whether such assets are tangible, intangible,
real, personal or mixed, and wheresoever located, and whether carried on the
books of the Company, including, but not limited to, the assets listed and/or
described as follows and in the Schedules 1.1.1-1.1.13 referenced under this
Section 1.1, free and clear of any and all liens, claims, charges, pledges,
security interests, exceptions or other encumbrances of any kind other than
those described on
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Exhibit 3.4; and the Company and the Members represent and warrant to the
Purchaser that the following referenced Schedules 1.1.1-1.1.13 hereto are
accurate and complete:
1.1.1 Tangible Personal Property. All tangible personal
property (including computers and computer equipment and hardware, other
equipment, machinery, tools, appliances, products, implements, spare parts,
instruments, furniture, inventories and supplies) owned by the Company
("Tangible Personal Property"), a correct and complete list of which is set
forth on Schedule 1.1.1 hereto;
1.1.2 Personal Property Leases. All of the Company's
rights in, to and under all leases of equipment, machinery, tools, appliances,
implements, spare parts, instruments, furniture, supplies, and other items of
tangible personal property ("Personal Property Leases"), a correct and complete
list of which leased personal property is set forth on Schedule 1.1.2 hereto;
1.1.3 Real Property. All right, title and interests to the
land, buildings, improvements and other real property owned by the Company
("Real Property"), a correct and complete list of which is set forth on
Schedule 1.1.3 hereto;
1.1.4 Real Property Leases. The leasehold estates created
by, and all rights conferred on the Company under or by virtue of, all real
property lease agreements (such real property lease agreements are hereinafter
referred to as "Real Property Leases" and the parcels of real property in which
the Company has a leasehold interest and that are subject to the Real Property
Leases are hereinafter referred to as "Leased Property"), a correct and
complete list of which is set forth on Schedule 1.1.4 hereto, including all
rights, titles and interests, to use all warehouses, storage facilities,
buildings, works, structures, fixtures, landings, constructions in progress,
improvements, betterments, installations and additions constructed or located
on or attached or affixed to the Leased Property;
1.1.5 Cash and Accounts Receivable. All of the Company's
cash and accounts receivable ("Accounts Receivable"), a correct and complete
list of which Accounts Receivable as of the date hereof is set forth on
Schedule 1.1.5 hereto.
1.1.6 Acquired Contracts. All of the Company's rights in,
to and under all contracts, agreements, insurance policies, purchase orders and
commitments, notes, mortgages, security agreements, pledges, guaranties,
warranties, and any other contracts or agreements together with all instruments
and all documents of title representing any of the foregoing, all rights in any
merchandise or goods which any of the same represent, and all rights, title,
security and guaranties in favor of the Company with respect to any of the
foregoing (the "Acquired Contracts"), a correct and complete list of which
contracts is set forth on Schedule 1.1.6 hereto (exclusive of any contracts
that are Excluded Assets);
1.1.7 Business Records. All books and records of the
Company wherever located, including without limitation, all credit records,
payroll records, computer records, computer programs, contracts, agreements,
operating manuals, schedules of assets, accounting and financial records, sales
and property tax records and returns, sales records, customer and supplier
data,
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blueprints, specifications, plats, maps, surveys, building and machinery
diagrams, maintenance records, personnel and labor relation records, real
estate records, construction records, environmental records and returns, files,
papers, books and all other public and confidential business records (together
the "Business Records"), whether such Business Records are in hard copy form or
are electronically or magnetically stored, excluding only the Company's income
tax records and returns, its corporate Minute Book and stock records;
1.1.8 Licenses. To the extent assignable, all franchises,
licenses, sublicenses, permits, certificates, approvals and other
authorizations from governments and any other entities or persons necessary to
own and/or operate any of the other Acquired Assets (the "Licenses"), a
complete and correct list of which is set forth on the Schedule 1.1.8 hereto;
1.1.9 Intellectual Property. All of the intellectual
property owned by the Company including, but not limited to: (i) United States
and foreign patents, patent applications, trademarks, trademark applications
and registrations, trade dress, brand names, logos, service marks, service ▇▇▇▇
applications and registrations, copyrights, copyright applications and
registrations and trade names, fictitious names and assumed names of the
Company including, without limitation, all such rights described on Schedule
1.1.9 hereto; (ii) proprietary data and technical, manufacturing know-how and
information (and all materials embodying such information); (iii) developments,
discoveries, inventions, ideas and trade secrets of the Company; (iv) client
lists and information, marketing plans, business plans, customer and supplier
lists, pricing policies and purchasing information; (v) computer programs and
other software, computer technology, data bases operating systems, source and
object codes, flow charts, algorithms, coding sheets, routines, compilers,
assemblers, design concepts and manuals; and (vi) covenants by others not to
compete, rights and privileges of the Company used in the conduct of its
business, rights to exclusive use and rights to ▇▇▇ for past infringement with
respect to any item described in this Section 1.1.9 (all of the foregoing,
collectively, "Intellectual Property"), a correct and complete list of which is
set forth on Schedule 1.1.9 of hereto;
1.1.10 Ownership Interests in Other Entities. All equity
securities, partnership interests, indebtedness or other interests owned in any
other corporation, partnership, limited partnership, joint venture, limited
liability company, trust, or other entity or person, a correct and complete
list of which is set forth on Schedule 1.1.10 hereto.
1.1.11 General Intangibles and Rights of the Company. All
general intangible property of the Company and all rights in, to and under all
representations, warranties, covenants, guaranties made or provided by third
parties to or for the benefit of the Company, and all rights, privileges,
claims and causes of action of the Company; a correct and complete list of any
claims or causes of action owned by the Company is set forth on Schedule 1.1.11
hereto;
1.1.12 Prepaid Items. All of the Company's prepaid
expenses, prepaid insurance, deposits and other similar items ("Prepaid
Items"), a correct and complete list of which items is set forth on Schedule
1.1.12 hereto;
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1.1.13 Telephone Numbers. All of the Company' right, title
and interest in, to and under all telephone numbers used by the Company and
Company business telephone numbers used by its employees, a correct and
complete list of which is set forth on Schedule 1.1.13 hereto; and
1.1.14 Company Name and Goodwill. The exclusive right to
own and use the name "Software Consulting Services America" and all goodwill
with respect to the business and operations of the Company.
1.2 Excluded Assets. The Company shall not sell, convey, assign,
transfer or deliver to Purchaser, and Purchaser shall not acquire (or make any
payments or otherwise discharge any liability or obligation of the Company with
respect to), the assets of the Company described on Exhibit 1.2 attached hereto
(the "Excluded Assets").
1.3 Assumption of Obligations and Liabilities. At the Closing,
Purchaser shall assume and agree to pay or perform, promptly as they become
due, only those obligations and liabilities of the Company expressly set forth
on Exhibit 1.3 hereof (the "Assumed Obligations"). Except for the assumption
of Assumed Obligations, Purchaser shall not assume or be deemed to have assumed
and shall not be responsible for any other obligation or liability of the
Company, direct or indirect, known or unknown, ▇▇▇▇▇▇ or inchoate, absolute or
consignment, including without limitation (i) any and all obligations regarding
any foreign, Federal, state or local income, sales, use, franchise or other tax
liabilities, and (ii) any and all obligations or liabilities regarding any of
the Company Plans (as defined herein).
1.4 Certain Definitions. The following terms shall have the
meaning ascribed below for purposes of this Agreement:
(i) "Closing Balance Sheet Date" means the end of the
most recent monthly accounting period of the Company preceding the
Closing Date.
(ii) "Current Assets" means the current assets of the
Company determined as of the Closing Balance Sheet Date in accordance
with GAAP.
(iii) "Current Liabilities" means the current liabilities
of the Company determined as of the Closing Balance Sheet Date in
accordance with GAAP excluding those current liabilities included in
Long-Term Debt and federal, state and local income taxes payable by
the Company with respect to all periods prior to Closing not included
in Long-Term Debt, and expressed as a positive number; provided,
however, that all expenses of the Company or the Shareholders incurred
in connection with the transactions contemplated hereby which are
payable by the Company shall be included in Current Liabilities.
(iv) "GAAP" means U.S. generally accepted accounting
principles consistently applied.
(v) "IPO" means the Purchaser's first underwritten public
offering of Purchaser Common Stock resulting in net cash proceeds
sufficient to fund the use of proceeds of such
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offering as described in the PPM (and any supplements thereto)
referenced in Section 3.23 herein (other than any offering pursuant to
any registration statement (i) relating to any capital stock of
Purchaser or options, warrants or other rights to acquire any such
capital stock issued or to be issued primarily to directors, officers
or employees of the Purchaser or any of its subsidiaries, (ii)
relating to any employee benefit plan or interest therein, (iii)
relating principally to any preferred stock or debt securities of the
Purchaser, or (iv) filed pursuant to Rule 145 under the Securities Act
of 1933, as amended ("Securities Act"), or any successor or similar
provision).
(vi) "IPO Closing Date" means the date that the Purchaser
receives funds in consideration for the sale of its securities in the
IPO.
(vii) "IPO Price" means the initial price per share to the
public for shares of Purchaser Common Stock in the IPO.
(viii) "Long-Term Debt" means all long-term liabilities of
the Company as of Closing Date, including capitalized lease
obligations, as applicable to a corporation taxable under Subchapter C
of the Code, as determined under GAAP, plus current portions of such
long-term liabilities and pre-payment penalties as of the Closing
Date.
(ix) "Net Working Capital" means the Current Assets of the
Company minus the Current Liabilities of the Company as of the
applicable date of determination, all as determined under GAAP.
1.5 Purchase Price. The purchase price for the Acquired Assets
("Purchase Price") shall be the aggregate amount of $16,000,000 with the
Purchase Price payable $11,000,000 in cash and $5,000,000 in Purchaser Common
Stock at a value per share equal to the IPO Price reduced by: (i) the amount
of Long-Term Debt assumed by the Purchaser hereunder; and (ii) the amount of
any reduction in the Company's Net Working Capital from September 30, 1997 to
the Closing Balance Sheet Date.
1.6 Successor Operating Company. The parties hereto acknowledge
and agree that Purchaser shall immediately after the IPO Closing Date (as
defined below) assign all Acquired Assets and all Assumed Obligations and all
of its right, title and interest in and to this Agreement, the related
agreements and documents, and its rights and obligations thereunder and the
products thereof, to a new wholly-owned subsidiary corporation of the Purchaser
to be named Software Consulting Services America, Inc. (or a similar name), a
Delaware corporation ("SCS Delaware"), which shall have no material assets or
liabilities prior to acquiring the Acquired Assets. The Purchaser shall cause
SCS Delaware to receive and assume ownership of such assets, rights and
performance of such obligations and seek to employ the employees previously
employed by the Company so that SCS Delaware may after the IPO Closing Date
conduct the business previously conducted by the Company and seek to further
develop such business.
1.7 Payment of Purchase Price. Purchaser shall deliver payment of
the Purchase Price (other than the Earnout Consideration) on the IPO Closing
Date by delivery to the Company of
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$11,000,000 in cash less the reduction amounts under Section 1.5, plus
$5,000,000 of Purchaser Common Stock as provided under Section 1.5 (the
"Closing Consideration").
1.8 No Fractional Shares. Notwithstanding the foregoing, no
fractional shares of Purchaser Common Stock will be issued pursuant to this
Section 1, and if the Company would be entitled hereunder to receive a
fractional share of Purchaser Common Stock but for this paragraph, the Company
shall receive a cash payment for and in lieu thereof in the amount (rounded
upward to the nearest whole cent) equal to the fractional interest in a share
of Purchaser Common Stock multiplied by the IPO Price.
2. THE CLOSING
2.1 Closing. A closing into Escrow ("Closing") will take place at
the offices of Chamberlain, Hrdlicka, White, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ in Houston,
Texas at the time and on the day that the Purchaser and its underwriters agree
on the IPO Price for shares of Purchaser's Common Stock offered in the IPO as
set forth in an executed underwriting agreement, but in no event later than
April 23, 1998 ("Closing Date"); provided that each of the conditions precedent
to the obligations of the parties to effect the Closing are then satisfied or
waived by the applicable party. The parties may agree in writing on another
date, time or place for the Closing. At the Closing, the parties will deliver
or cause to be delivered into escrow with the escrow agent ("Escrow Agent")
under the Escrow Agreement set forth in Exhibit 2.1 hereto, the documents
described in Sections 7.3 and 7.5 below. On the IPO Closing Date, such
documents shall be delivered out of escrow to the parties designated to receive
such documents under this Agreement in accordance with the Escrow Agreement,
and the payment and delivery by the Purchaser of the portion of the Purchase
Price payable to the Company at Closing shall be made in compliance with
Sections 1.5 and 1.7 of this Agreement.
2.2 No Other Assignments of Company Assets or Common Stock. It is
agreed that no assignment, transfer or other disposition of (i) any assets of
the Company (except in the ordinary course of business consistent with past
practices) or (ii) of record or beneficial ownership of any Member Interests in
the Company, may be made on or after the date hereof other than as provided
herein, except for the issuance of Class B Membership Interests upon exercise
of options as described in Schedule 3.2.
3. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE MEMBERS
The Company and the Members hereby represent and warrant to Purchaser
as follows:
3.1 Organization of the Company. The Company is a California
limited liability company, duly organized, validly existing and in good
standing under the laws of the State of California and is duly qualified and
authorized to do business in all other states where required to be qualified
and authorized, except where the failure to obtain such qualification will not
have a Company Material Adverse Effect (as defined below).
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3.2 Capitalization of the Company. All outstanding Member
Interests in the Company are set forth on Schedule 3.2 hereto and are held of
record and beneficially by the Members in such amounts as are respectively set
forth for each owner by their names on Schedule 3.2 hereto. All such Member
Interests are duly and validly authorized and issued, and were not issued in
violation of the preemptive rights of any past or present owner or Member.
Except for the interests described on Schedule 3.2, there are no outstanding
convertible or exchangeable securities, subscriptions, calls, options,
warrants, rights or other agreements or commitments of any character relating
to the issuance or sale of any ownership, member or management interest in the
Company. Further, the Company has no liability, contingent or otherwise, to
any person or entity in connection with preemptive or contractual subscription
rights or the offer, sale, purchase, surrender or cancellation of any interests
in the Company.
3.3 Consents. Except as provided on Schedule 3.3, no approval,
consent, order or action of or filing with any court, administrative agency,
governmental authority or other third party is required for the execution,
delivery or performance by the Company and the Members, as applicable, of this
Agreement, any Company Related Document or any Member Related Document. If the
required consents listed on Schedule 3.3 hereto are acquired, the execution,
delivery and performance by the Company and each Member of this Agreement, the
Company Related Documents and the Member Related Documents do not violate any
mortgage, indenture, contract, agreement, lease or commitment or other
instrument of any kind to which the Company or any Member is a party or by
which the Company or any Member or any of their respective assets or properties
may be bound or affected or any law, rule or regulation applicable to the
Company or any Shareholder or any court injunction, order or decree or any
valid and enforceable order of any governmental agency in effect as of the date
hereof having jurisdiction over the Company or any Member.
3.4 Title of Acquired Assets. Except as set forth on Schedule 3.4
hereto, the Company owns outright, and has full legal and beneficial title to,
or a valid leasehold interest in, all of the Acquired Assets free and clear of
all liens, pledges, mortgages, security interests, conditional sales contracts,
claims, encumbrances, rights of others and restrictions on transfer, including
good and marketable title to all of the real property interests, free and clear
of any mortgages, security agreements, liens, claims, encumbrances, rights of
others or restrictions on transfer.
3.5 Condition of the Acquired Assets.
3.5.1 Tangible Personal Property. Except as set forth on
Schedule 1.1.1, the Tangible Personal Property is in good operating condition,
working order and repair (normal wear and tear excepted) and is fully-suitable
for the uses for which it is employed in the conduct of the Company's business.
All inventory is fit for the use intended and free from any known defect and is
of a quality and quantity for good use in the ordinary course of business.
3.5.2 Leases. With respect to the Personal Property Leases
and the Real Property Leases, except as set forth on Schedules 1.1.2 and 1.1.4,
respectively;
(1) each lease is legal, valid, binding,
enforceable and in full force and effect;
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(2) each lease will continue to be legal, valid,
binding, enforceable and in full force and effect on the same
terms following the Closing as before;
(3) no party to any such lease is in material
breach or default thereof, and no event has occurred that,
with notice or lapse of time or both, would constitute a
material breach or default or permit termination, modification
or acceleration thereunder;
(4) no party to any such lease has repudiated in
writing any provision thereof;
(5) there are no disputes, oral agreements or
forbearance programs in effect as to such lease;
(6) to the best of the knowledge of the Company
and the Members, the owner of the property leased pursuant to
such lease has good and marketable title to such property free
of any encumbrance that would adversely affect the leasehold
interests of the Company; and
(7) The Company has performed and satisfied in
full each material obligation to be performed by the Company
under such lease as of the date hereof.
3.5.3 Accounts Receivable. The Accounts Receivable
reflected on Schedule 1.1.5, and all Accounts Receivable arising between the
date hereof and the Closing are and will be valid accounts receivable that
arose or will have arisen from bona fide transactions in the ordinary course of
business of the Company; the services involved were or will have been validly
and properly provided to the account obligor, and after the accounts receivable
have been booked, no further services will be required to be provided in order
to complete the sales and to entitle the Company or its assignees to collect
the accounts receivable in full. Except for the allowance for doubtful
accounts in the Company Financial Statements, the Company has no reason to
believe that the Accounts Receivable will not be timely paid. No such account
has been or will be assigned or pledged to any other person, firm or
corporation.
3.5.4 Acquired Contracts. Sellers have attached to
Schedule 1.1.6 a correct and complete copy of the Acquired Contracts all of
which are listed on Schedule 1.1.6. Such Acquired Contracts, along with the
other Acquired Assets, provide sufficient rights for the Purchaser to conduct
business after the Closing in substance the same as business was conducted by
the Company prior to Closing. Except as set forth on Schedule 1.1.6, each of
the Acquired Contracts is legal, valid and enforceable and is in full force and
effect, and there is no material default or existing condition that, with the
giving of notice or the passage of time or both, would constitute such a
default by the Company or by any parties thereto, and by the Closing, the
Company shall have acquired any required consents necessary for the assignment
of the Acquired Contracts hereunder. The Company has performed and satisfied
in full each material obligation required to be performed by the Company under
each Assumed Contract as of the date hereof. If services are to be provided to
the Company
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under any such Assumed Contract, such services have been and are being
performed satisfactorily and timely, substantially in accordance with terms of
such Assumed Contract.
3.5.5 Licenses. The Company holds adequate Licenses or
other rights to conduct its business as now conducted, and the Company's
conduct of business prior to Closing does not conflict with, infringe on, or
otherwise violate any rights of others. The Company has attached to Schedule
1.1.8 correct and complete copies of all such Licenses (as amended to date)
disclosed on Schedule 1.1.8. Each License is legal, valid and enforceable, and
in full force and effect and will continue to be so after the Closing on the
same terms as before the Closing, and by the Closing, the Company shall have
acquired any required consent necessary for the assignment to the Purchase
hereunder of each License, such that the Purchaser may use the Licenses to
conduct business after the Closing the same as business is conducted by the
Company prior to Closing. No party to any License is in breach or default
thereof and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination or modification of any
License.
3.5.6 Intellectual Property. The Company has full and
sufficient rights to use all Intellectual Property necessary for the present
operation of its businesses and the marketing, distribution, sale and use of
the materials used, services provided and products sold by the Company. None
of the ownership, access to, use or practice of the Intellectual Property by
the Company infringes on the rights of any other party and all Intellectual
Property rights are valid, enforceable and transferable or assignable to the
Purchaser as contemplated by this Agreement. Schedule 1.1.9 includes a list of
all of the Company's Intellectual Property and a description of any fees and
royalties (or the basis of calculation thereof) required to be paid now or in
the future by the Company for the use and practice of its Intellectual
Property.
3.5.7 Prepaid Items. Each of the Prepaid Items is valid
and represents a credit on the Company's behalf with the payee and may be
transferred to Purchaser without the necessity of obtaining any consent or
approval except as may be set forth on Schedule 3.3.
3.5.8 Completeness of Acquired Assets. The Acquired Assets
including, without limitation, the Licenses described in Schedule 1.1.8,
include all the assets and properties necessary to conduct the business of the
Company by Purchaser following the Closing the same as presently conducted.
3.6 Defaults. Neither the Company, any Member nor any Company
Plan (as defined below) is in default under or in violation of, and the
execution and delivery of this Agreement, the Company Related Documents and the
Member Related Documents and the consummation of the transactions contemplated
hereby and thereby will not result in a default by the Company, any Member or
any Company Plan under or a violation of (i) any Acquired Contract or (ii) any
law, rule or regulation applicable to the Company or any Company Plan or any
court injunction, order or decree, or any valid and enforceable order of any
governmental agency in effect having jurisdiction over the Company or any
Company Plan, which default or violation could adversely affect the ability of
the Company to consummate the transactions contemplated hereby or will have a
Company Material Adverse Effect.
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3.7 Authority. The Company has full right, power, legal capacity
and authority to (i) execute, deliver and perform this Agreement, and all other
documents and instruments referred to herein or contemplated hereby to be
executed, delivered and performed by the Company (each a "Company Related
Document") and (ii) consummate the transactions contemplated herein and
thereby. Each Member has full right, power, legal capacity and authority to
(i) execute, deliver and perform this Agreement, and all other documents and
instruments referred to herein or contemplated hereby to be executed, delivered
and performed by such Member (each a "Member Related Document") and (ii)
consummate the transactions contemplated herein and thereby. This Agreement
has been duly executed and delivered by the Company and by each Member and
constitutes, and each Company Related Document and each Member Related
Document, when duly executed and delivered by each party thereto will
constitute, legal, valid and binding obligations of the Company and each Member
who or which is a party thereto, enforceable against the Company and each
Member, as applicable, in accordance with their respective terms and
conditions, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).
3.8 Financial Statements. The Company has listed in Schedule 3.8
hereto and delivered to the Purchaser copies of the following audited financial
statements of the Company: Balance Sheets as of December 31, 1995 and 1996,
and as of June 30, 1997, and Statements of Income, Members' Equity and Cash
Flows for the period from February 7, 1995 (date of inception) to December 31,
1995, the year ended December 31, 1996 and the six month period ended June 30,
1997; plus the unaudited Balance Sheet as of September 30, 1997 ("Balance Sheet
Date") and Statements of Income and Cash Flows for the nine months ended
September 30, 1996 and 1997. Such financial statements, together with the
Closing Balance Sheet, are collectively referred to herein as ("Company
Financial Statements"). Such financial statements, except as described in the
notes thereto, have been prepared from the Company's records in accordance with
GAAP. Such balance sheets present accurately and fairly in all material
respects the financial condition of the Company as of the date indicated
thereon, and such statements of earnings and retained earnings present
accurately and fairly in all respects the results of the Company's operations
for the periods indicated thereon. Except as set forth in the Company
Financial Statements or in a supplemental description in Schedule 3.8 hereto,
and other than the performance of its obligations under its Contracts, the
Company has no liabilities or obligations of any nature whether absolute,
contingent or otherwise.
3.9 Taxes. The Company has filed all requisite federal and other
tax returns, information returns, declarations and reports for all fiscal
periods ended on or before the Balance Sheet Date; and except as set forth on
Schedule 3.9 hereto, there are no claims (nor is there any matter pending which
may result in a claim) against the Company for federal, state or local income,
sales, use, franchise or other taxes for any period or periods prior to and
including the Balance Sheet Date and no notice of any claim, whether pending or
threatened, for taxes has been received which would create a lien on the
Company's assets or adversely affect the Company. The amounts shown as
accruals for taxes on the Company Financial Statements as of the Balance Sheet
Date delivered to Purchaser as a part of Schedule 3.8 are sufficient for the
payment of all taxes of any kind or nature whatsoever for all fiscal periods
ended on or before that date. Copies of the federal, state and local income
tax returns and franchise tax returns of the Company (collectively, "Tax
Returns") for the last three fiscal years are
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attached to Schedule 3.9 hereto. The Company has not obtained any extensions
of time in which to file any Tax Returns which have not yet been filed. The
Company has not waived any statute of limitations with respect to federal,
state, or local income, sales, use, franchise or other taxes or agreed to any
extensions of time with respect to a tax assessment or deficiency, except for
such waivers or extensions which, by their terms, have lapsed as of the date
hereof.
3.10 No Conflict. The Company has full power, authority and legal
right and has all licenses, permits, qualifications, and other documentation
(including permits required under applicable Environmental Law, as defined
below) necessary to own and/or operate its businesses, properties and assets
and to carry on its businesses as being conducted on the date hereof, and such
businesses are now being conducted and such assets and properties are being
owned and/or operated, and the Company Plans have been implemented and
maintained, in compliance with all applicable laws (including Environmental
Law), ordinances, rules and regulations of any governmental agency of the
United States, any state or political subdivision thereof, or any foreign
jurisdiction, all applicable court or administrative agency decrees, awards and
orders and all such licenses, permits, qualifications and other documentation,
except where the failure to comply will not have a Company Material Adverse
Effect, and there is no existing condition or state of facts which would give
rise to a violation thereof or a liability or default thereunder, except where
a violation, liability or default will not have a Company Material Adverse
Effect. The term "Environmental Law" means any law, rule, regulation,
approval, decision, decree, ordinance, by-law having the force of law or order
of any federal, state or local executive, legislative, judicial, regulatory or
administrative agency, board or authority, which relate to (i) noise; (ii)
pollution or protection of the air, surface water, ground water or land; (iii)
solid, gaseous or liquid waste generation, treatment, storage, use, processing,
disposal or transportation; (iv) exposure to hazardous or toxic substances; (v)
the safety or health of employees or (vi) regulation of the manufacture,
processing, distribution in commerce, use, or storage of chemical substances.
3.11 Compliance; Legal Actions. The Company and the Members have
complied with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof) with
respect to the Company and its business, and except as may be described in
Schedule 3.11 hereto, no legal action, suit, audit, investigation, unfair labor
practice charge, complaint, claim, grievance, or proceeding by or before any
court, arbitration panel, governmental authority or third party is pending or,
to the best knowledge of the Company or the Members threatened, which involves
or may involve the Company or its now or previously owned or operated assets,
operations, properties or businesses.
3.12 Real Property. Schedule 3.12 includes correct and complete
legal descriptions of all real property owned in fee by the Company and a copy
of the deed and any other material documents reflecting or affecting the real
property interests owned by the Company.
3.13 Employees. Schedule 3.13 is a complete and accurate list of
the names, start dates and current annual salary or hourly wage rates of all
salaried and hourly regular full-time and part-time employees of the Company
together with a summary of the bonuses, additional compensation and other like
benefits, if any, payable to each employee and the last date, if any, on which
each
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employee received (a) a raise in annual salary or hourly wage or (b) a bonus;
and Schedule 3.13 lists any agreement involving the Shareholders and their
affiliates (other than the Company and its subsidiaries).
3.14 Employee Benefit Plans. Schedule 3.14 of the Disclosure
Schedule is a complete and accurate list of all obligations, contingent or
otherwise, covering any of the Company's employees under any employment or
consulting agreement or under any executive or employee's compensation plan,
agreement or arrangement including, without limitation, any "employee welfare
benefit plan" as defined in Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), "employee pension benefit plan" as
defined in Section 3(2) of ERISA or any other pension, retirement, profit
sharing, stock option, stock purchase, bonus, fringe benefit, incentive,
vacation, savings plan, health, welfare or other employee or former employee
benefit plan, program, policy or arrangement (collectively referred to as
"Company Plans").
3.15 Safety Matters. Schedule 3.15 contains a copy of all material
safety data sheets, toxicology studies and environmental studies of the
Company.
3.16 Entities Owned. Schedule 1.1.10 hereto sets forth the name of
any corporation, partnership, firm, association, business organization, entity
or enterprise owned by the Company directly or indirectly. Except as disclosed
in Schedule 1.1.10, all the ownership interests of the Company in such entities
are directly or ultimately owned by the Company, free and clear of all liens,
encumbrances or adverse claims of every kind, and all such ownership interests
are duly and validly authorized and issued, fully paid and nonassessable, and
were not issued in violation of the preemptive rights of any past or present
stockholder.
3.17 Affiliate Relationships.
3.17.1 In this Agreement the term "affiliate" means with
respect to any person, any other person which directly or indirectly, by itself
or through one or more intermediaries, controls, or is controlled by, or is
under direct or indirect common control with, such person. The term "control"
means the possession, directly or indirectly, of the power to direct, or cause
the direction of, the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
3.17.2 Except as set forth on Schedule 3.17 hereto, neither
the Company, the Members nor any affiliate of the Members, and no manager or
employee of or consultant to the Company owns, directly or indirectly, in whole
or in part, any property, assets or right, tangible or intangible, which is
associated with any property, asset or right owned by the Company or which the
Company is operating or using or the use of which is necessary for its
business. Also included in Schedule 3.17 is the disclosure of any
relationships which any Member, affiliate of a Member, director, officer,
employee, agent or consultant of the Company has with any other corporation,
partnership, firm, association or business organization, entity or enterprise
which is a competitor, potential competitor, supplier or customer of the
Company.
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3.18 Investment Company. The Company is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company," a "subsidiary company" of a "holding company" or an "affiliate" of a
"holding company" or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
3.19 No Material Adverse Change. Except as specifically set forth
on Schedule 3.19, since the Balance Sheet Date there have not been: (a) any
change in the Company's Articles of Organization or Operating Agreement, (b)
any material adverse change of any nature whatsoever in the financial
condition, assets, liabilities (contingent or otherwise), income, business or
prospects of the Company; (c) any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting the properties or business
of the Company; (d) any change in the authorized capital of the Company or in
its securities outstanding or any change in its Member Interests; (e) any
declaration or payment of any dividend or distribution in respect of the Member
Interests or any direct or indirect redemption, purchase or other acquisition
of any of the Member Interests of the Company; (f) any contract or commitment
entered into by the Company or any incurrence by the Company or agreement by
the Company to incur any liability or make any capital expenditures in excess
of $3,000, except in the normal course of business; (g) any increase in the
compensation, bonus, sales commissions or fee arrangement payable or to become
payable by the Company to any of its officers, directors, Members, employees,
consultants or agents; (h) any work interruptions, labor grievances or claims
filed, proposed law or regulation (the existence of which is known, or under
the normal course of business should be known, to the Members) or any event or
condition of any character materially adversely affecting the business or
future prospects of the Company; (i) any creation, assumption or permitting to
exist of any mortgage, pledge or other lien or encumbrance upon any assets or
properties whether now owned or hereafter acquired, except as set forth in
Schedule 3.4; (j) any sale or transfer, or any agreement to sell or transfer,
any material assets, properties or rights of the Company to any person,
including, without limitation, the Members and their respective affiliates; (k)
any cancellation, or agreement to cancel, any indebtedness or other obligation
owing to the Company, including, without limitation, any indebtedness or
obligation of the Members or any of their affiliates; (1) any plan, agreement
or arrangement granting any preferential rights to purchase or acquire any
interest in any of the assets, properties or rights of the Company or requiring
consent of any party to the transfer and assignment of any such assets,
properties or rights; (m) any purchase or acquisition, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets of the
Company; (n) any negotiation for the acquisition of any business or start-up of
any new business; (o) any merger or consolidation or agreement to merge or
consolidate with or into any other corporation (except the transactions
contemplated by this Agreement); (p) any waiver of any material rights or
claims of the Company; (q) any breach, amendment or termination of any material
contract, agreement, license, permit, permit application or other right to
which the Company is a party; (r) any discharge, satisfaction, compromise or
settlement of any claim, lien, charge or encumbrance or payment of any
obligation or liability, contingent or otherwise, other than current
liabilities as of the Balance Sheet Date, current liabilities incurred since
the Balance Sheet Date in the ordinary course of business and prepayments of
obligations in accordance with normal and customary past practices; or (s) any
transaction by the Company outside the ordinary course of its business or
prohibited hereunder.
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3.20 Access. The Company has provided the Purchaser and the
Purchaser's lenders, underwriters and placement agents and their respective
representatives the opportunity to make a full investigation of the properties,
operations and financial condition of the Company and afforded the Purchaser
and the Purchaser's lenders, underwriters and placement agents and their
respective representatives reasonable access to the offices, buildings, real
properties, machinery and equipment, inventory and supplies, records, files,
books of account, tax returns, agreements and commitments and personnel of the
Company to allow for a full investigation by such persons.
3.21 Disclosure. No representation or warranty by the Company or
the Members in this Agreement, the Schedules hereto or any certificate
delivered by the Company or the Shareholders to the Purchaser pursuant to the
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit any material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they are or were
made, not misleading.
3.22 Company Material Adverse Effect. The term "Company Material
Adverse Effect" shall mean an adverse effect on the properties, assets,
financial position, results of operations, long-term debt, other indebtedness,
cash flows or contingent liabilities of the Company in an amount of $25,000 or
more.
3.23 Restricted Securities.
(1) The Company and Members acknowledge that the shares
of Purchaser Common Stock to be acquired by the Company hereunder, and
then by the Members by distribution from the Company, have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and are being acquired for the Company or Members'
own account for investment and not with a view to the distribution
thereof, and the Purchaser Common Stock will be subject to the Stock
Transfer Restriction Agreement in Exhibit 7.3.3 hereto.
(2) The Company and each Member has the knowledge and
experience in financial and business matters to enable it to evaluate
the merits and risks of entering this Agreement and the transactions
contemplated hereby and acquiring shares of Purchaser Common Stock.
(3) The Company and each Member is able to bear the
economic risks of its investment in the Purchaser Common Stock,
including the risk of a loss of the value of the Purchaser Common
Stock.
(4) The Company and the Members has been represented by
legal counsel in this transaction and they and their representatives,
including such counsel, have been given the opportunity to ask
questions of, and receive answers from, the officers of the Purchaser
concerning the terms of the transactions contemplated by this
Agreement and the affairs and the business and financial condition of
the Purchaser.
(5) The Company and each Member has received a
Confidential Private Placement Memorandum ("PPM") concerning the
Purchaser and an investment in shares of Purchaser
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Common Stock, and each of them and their representatives have been
given such access to all documents, books and additional information
concerning Purchaser which they have requested regarding Purchaser.
(6) The Company and each Member and their representatives
have conducted such investigations in making a decision to approve
this Agreement and the transactions contemplated hereby as they have
deemed necessary and advisable.
(7) The Company and each Member acknowledge and agree
that the Purchaser Common Stock to be issued to the Company and
Members may not be disposed of except in accordance with the
requirements of the Securities Act and any applicable state securities
laws and the Stock Transfer Restriction Agreement.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company and the
Members as follows:
4.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is duly qualified and authorized to do business in all other states where
required to be qualified and authorized except where the failure to obtain such
qualification will not have a Purchaser Material Adverse Effect (as defined
below). The only operations of Purchaser prior to the date hereof has been to
coordinate and implement the various steps appropriate for the consolidation of
the ownership of certain founding companies into the Purchaser contingent on
the successful completion of the IPO as described in the PPM.
4.2 Capitalization of Purchaser. The total authorized capital
stock of Purchaser is as set forth and described in the Purchaser's PPM
delivered to the Company and the Members in connection with the transactions
contemplated by this Agreement. The outstanding shares of Purchaser Common
Stock have been duly and validly issued and are fully paid and non-assessable.
4.3 Authority. Purchaser has full right, power, legal capacity
and authority to execute, deliver and perform this Agreement and all documents
and instruments referred to herein or contemplated hereby and to consummate the
transactions contemplated herein and thereby (the "Purchaser Related
Documents"). This Agreement has been duly executed and delivered by Purchaser
and constitutes, and all Purchaser Related Documents, when executed and
delivered by Purchaser will constitute, legal, valid and binding obligations of
Purchaser, enforceable in accordance with their respective terms and conditions
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
applied in a proceeding at law or in equity).
4.4 Consents. No approval, consent, order or action of or filing
with any court, administrative agency, governmental authority or other third
party is required for the execution, delivery or performance by the Purchaser
of this Agreement or the Purchaser Related Documents or the consummation by the
Purchaser of the transactions contemplated thereby, except as may be
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described in the PPM and except for (i) the filing of the Purchaser's
registration statement with respect to the IPO ("Registration Statement") with
the U.S. Securities and Exchange Commission ("SEC") pursuant to the Securities
Act and the SEC's declaration of effectiveness of such Registration Statement
and the completion of all necessary filings required thereunder, and (ii) the
obtaining of all necessary consents and approvals required pursuant to state
securities or "blue sky" laws in connection with the IPO.
4.5 Defaults. Purchaser is not in default under or in violation
of, and the execution, delivery and performance of this Agreement and Purchaser
Related Documents and the consummation by Purchaser of the transactions
contemplated hereby and thereby will not result in a default under or in
violation of (i) any mortgage, indenture, charter or bylaw provision, contract,
agreement, lease, commitment or other instrument of any kind to which Purchaser
is a party or by which Purchaser or any of its properties or assets may be
bound or affected or (ii) any law, rule or regulation applicable to Purchaser
or any court injunction, order or decree, or any valid and enforceable order of
any governmental agency in effect as of the date hereof having jurisdiction
over Purchaser, which default or violation could adversely affect the ability
of Purchaser to consummate the transactions contemplated hereby or will have a
Purchaser Material Adverse Effect.
4.6 Financial Statements. Purchaser has provided certain
financial statements of the Purchaser to the Members ("Purchaser Financial
Statements") and such Purchaser Financial Statements have been prepared in
accordance with GAAP, are true and correct in all material respects, and are
fair presentations of the consolidated financial position, results of
operations and cash flows of Purchaser and its then existing consolidated
subsidiaries as of the dates and for the periods indicated. The books and
records of Purchaser have been kept in reasonable detail and accurately and
fairly reflect the transactions of Purchaser.
4.7 Taxes. Purchaser has either accrued, discharged or caused to
be discharged, as the same have become due, or the Purchaser Financial
Statements contain adequate accruals and reserves for, all taxes, interest
thereon, fines and penalties of every kind and character, attributable or
relating to the properties and business of Purchaser.
4.8 Compliance. Purchaser has full power, authority and legal
right and has all licenses, permits, qualifications, and other documentation
(including permits required under applicable Environmental Law) necessary to
own and/or operate its businesses, properties and assets and to carry on its
businesses as being conducted on the date of this Agreement, and such
businesses are now being conducted and such assets and properties are being
owned and/or operated in compliance with all applicable laws (including
Environmental Law), ordinances, rules and regulations of any governmental
agency of the United States, any state or political subdivision thereof, or any
foreign jurisdiction, all applicable court or administrative agency decrees,
awards and orders and all such licenses, permits, qualifications and other
documentation, except where the failure to comply will not have a Purchaser
Material Adverse Effect, and there is no existing condition or state of facts
which would give rise to a violation thereof or a liability or default
thereunder, except where a violation, liability or default will not have a
Purchaser Material Adverse Effect.
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4.9 Investment Company. Purchaser is not an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company," a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
4.10 Access. Purchaser has cooperated fully in permitting the
Members and their representatives to make a full investigation of the
properties, operations and financial condition of Purchaser; and afforded the
Shareholders and their representatives reasonable access to the offices,
buildings, real properties, machinery and equipment, inventory and supplies,
records, files, books of account, tax returns, agreements and commitments and
personnel of Purchaser.
4.11 Disclosure. No representation or warranty by Purchaser in
this Agreement and neither the PPM nor any statement contained in any
certificate delivered by Purchaser to the Shareholders pursuant to this
Agreement contains any untrue statement of a material fact or omits any
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they are or were made, not misleading.
4.12 Purchaser Material Adverse Effect. The term "Purchaser
Material Adverse Effect" shall mean an adverse effect on the properties,
assets, financial position, results of operations, long-term debt, other
indebtedness, cash flows or contingent liabilities of Purchaser and its
consolidated subsidiaries, taken as a whole, in an amount of $25,000 or more.
5. CERTAIN OTHER ACTIONS, COVENANTS AND DOCUMENTS
The Company and the Members further agree with the Purchaser that from
the date hereof through the Closing Date:
5.1 Conduct of Business. The Members shall cause the Company to,
and the Company shall, conduct its operations according to its ordinary and
usual course of business to preserve substantially intact its business
organization, keep available the services of its officers and employees, and
maintain its present relationships with licensors, suppliers, distributors,
customers and others having significant business relationships with it. The
Company and Members agree to confer with the Purchaser to keep it informed with
respect to the general status of the on-going operations of the business of the
Company. Without limiting the generality of the foregoing, and except as
otherwise contemplated herein or agreed to by Purchaser, the Members will cause
the Company to, and the Company shall:
(1) carry on its business in substantially the same
manner as heretofore carried on and not introduce any material new
method of management, operation or accounting, nor provide discounted
services;
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(2) maintain its properties, facilities, equipment and
other assets, including those held under leases, in good working
order, condition and repair, ordinary wear and tear excepted;
(3) perform all of its obligations under all contracts to
which the Company is a party including all debt and lease instruments
and other agreements (including the Acquired Contracts) relating to or
affecting its business, assets, properties, equipment and rights, and
pay all vendors, suppliers, and other third parties (including
mechanics and materialmen) as and when its bills are due and pay in
full all payroll obligations when due;
(4) keep in full force and effect its present insurance
policies or other comparable insurance coverage;
(5) use its best efforts to maintain and preserve its
business organization intact, retain its present employees and
maintain its relationships with suppliers, customers and others having
business relations with the Company;
(6) refrain from effecting any change in the capital
structure of the Company; refrain from incurring any expenditures
outside the normal course of business, including any capital
expenditures in excess of $10,000, without prior written notification
to the Purchaser;
(7) refrain from starting or acquiring any new businesses
without the prior written consent of the Purchaser;
(8) maintain its present salaries and commission levels
for all officers, directors, employees or agents, except for the usual
and customary merit increases for employees;
(9) refrain from declaring or paying any bonuses, fees,
extraordinary commissions or any other unusual distributions to the
Members, management, sales agents, employees or other personnel
without prior written notification to the Purchaser;
(10) promptly notify the Purchaser of the receipt by the
Company or any Member of any notice or claim, written or oral, of (a)
default or breach by the Company under, or of any termination (other
than at the end of the stated term thereof) or cancellation, or threat
of termination (other than at end of the stated term thereof) of
cancellation, of any company contract, (b) any loss of, damage to or
disposition of, any of the properties, assets or the products of the
Company of a value of $10,000 or more, singly or in the aggregate
(other than the sale or use of inventories in the ordinary course of
business), (c) any claim or litigation threatened or instituted, or
any other adverse event or occurrence involving or affecting the
Company or any of its assets, properties, operations, businesses or
employees, and (d) any proposal made by any third party received by
the Company, or of which any Member obtains knowledge, in respect of
any sale or other disposition, direct or indirect, of the assets
(other than the sale or use of inventories in the ordinary course of
business), businesses or outstanding ownership or voting interests of
the Company;
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(11) comply with and cause to be complied with all
applicable laws, rules, regulations and orders of all federal, state
and local governments or governmental agencies affecting or relating
to the Company or its assets, properties, operations, businesses or
employees except where the failure to comply will not have a Company
Material Adverse Effect;
(12) refrain from any sale, disposition, distribution or
encumbrance of any of its properties or assets and refrain from
entering into any agreement or commitment with respect to any such
sale, disposition, distribution or encumbrance (other than the sale or
use of inventories in the ordinary course of business);
(13) refrain from any purchase or redemption of any
ownership or voting interest of the Company and, refrain from issuing
any ownership interest other than the issuance of Class B Membership
Interests upon exercise of options described in Schedule 3.2;
(14) refrain from making any change in any accounting
principle, classification, policy or practice;
(15) refrain from effecting any amendment to the
organizational and governing instruments of the Company;
(16) refrain from entering into or agreeing to enter into
any merger or consolidation by the Company with or into, and refrain
from acquiring all or substantially all of the assets, capital stock
or business of, any person, corporation, partnership, association or
other business organization or division of any thereof;
(17) maintain its present debt and lease agreements and
instruments (except those that expire on their stated maturity or
lease termination dates); refrain from entering into any amendment
thereto or new debt or lease agreements or instruments; refrain from
increasing any indebtedness for borrowed money or issuing or selling
any debt securities or letters of credit; and refrain from making any
payments of any indebtedness or interest or other amounts thereon or
with respect thereto (other than regularly scheduled principal and
interest payments and payments of principal, interest and fees under
revolving lines of credit);
(18) manage working capital in the ordinary course
consistent with past practice and refrain from introducing any new
method of management or operation, providing any discounted services
or products, discounting any receivables or taking any action to
accelerate payment of any receivable prior to its due date; and
(19) except for customer contracts entered into in the
ordinary course of business, refrain from entering into any contract,
lease, undertaking, commitment, mortgage, indenture, note, security
agreement, license or other agreement (a) involving the receipt or
expenditure of more than $25,000 over the term thereof, (b) containing
provisions calling for the sale or purchase of raw materials, product
or service at prices that vary from the market prices of such raw
materials, products or services generally prevailing in customary
third-party
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markets, (c) which include "take or pay", "meet or release", "most
favored nations" or similar pricing or delivery arrangements, (d) with
any officer, director, Member or affiliate of the Company, (e)
requiring the Company to indemnify or hold harmless any other person
or entity, (f) evidencing any warranty obligation of the Company with
respect to goods, services or products sold or leased by it (other
than warranties given in the normal course of business containing
substantially the same terms as those presently in effect), or (g)
imposing on the Company any confidentiality, non-disclosure or
non-compete obligation.
5.2 Cooperation. The Company and each Member will cooperate fully
with the Purchaser as to arrangements for the consummation of the transactions
contemplated hereby in an orderly fashion. The Company and the Members will
use their reasonable efforts to obtain, as soon as possible, all required
consents or approvals, and will take all other reasonable action which is
necessary or desirable to effect the assignment to Purchaser of the Licenses,
Personal Property Leases, Assumed Contracts, Real Property Leases, Real
Property, and Prepaid Items, as well as the telephone numbers and goodwill of
the Company and other rights of the Company related to the Acquired Assets.
5.3 Filings, Etc. Each Member and the Company will make all
filings which are required to be made by them to lawfully consummate the
transactions contemplated hereby.
5.4 Access. The Members and the Company will cooperate fully in
permitting the Purchaser and the Purchaser's lenders, underwriters and
placement agents and their respective representatives, advisers, consultants,
appraisers, auditors, engineers and other experts to make a full investigation
of the properties, operations and financial condition of the Company and will
afford the Purchaser and the Purchaser's lenders, underwriters and placement
agents and their respective representatives, advisers, consultants, appraisers,
auditors, engineers and other experts reasonable access to the offices,
buildings, real properties, machinery and equipment, inventory and supplies,
records, files, books of account, tax returns, agreements and commitments and
personnel of the Company. Without limitation of the foregoing, the Members and
the Company shall provide the Purchaser with such reasonably available
financial information (and schedules with respect thereto) with respect to the
Company as the Purchaser may reasonably request and will cooperate with and
assist representatives of the Purchaser in the preparation of such financial
information (and any opinions or reports with respect thereto) with respect to
the Company as the Purchaser may reasonably request. Notwithstanding the
above, the Purchaser and its respective lenders, underwriters and placement
agents and their respective representatives, advisers, consultants, appraisers,
engineers and other experts shall incur no liability with respect to control,
operation or management (or alleged control, operation or management) of the
Company as a result of the covenants in this Section 5.4.
5.5 Satisfaction of Conditions. The Company and the Members shall
(i) use all reasonable efforts to obtain, as soon as possible, all governmental
approvals required to be obtained by the Company and make, as soon as possible,
all filings with any governmental authority required on the part of the Company
to consummate the transactions contemplated hereby, (ii) use their reasonable
efforts to obtain, as soon as possible, all other consents to and approvals
required to be obtained by the Company to consummate the transactions
contemplated hereby, and (iii) otherwise use their
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reasonable efforts to satisfy the conditions set forth in Section 7 of this
Agreement to the extent that such satisfaction is within their control.
5.6 Capital Budget. Exhibit 5.6 attached hereto contains the
capital expenditures budget of the Company from August 31, 1997 through
December 31, 1998, if any. Unless otherwise consented to by the Purchaser,
prior to the Closing, the Company will make capital expenditures only in
accordance with such budget.
5.7 Exclusivity. The Company and the Members shall not (i)
solicit, initiate, or encourage the submission of any proposal or offer from
any person or entity relating to the acquisition of any capital stock or other
voting securities, or any substantial portion of the assets of the Company
(including any acquisition structured as a merger, consolidation, or share
exchange) or (ii) participate in any negotiations or discussions regarding,
furnishing any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any person or entity in
favor of any such acquisition. The Members and the Company will promptly
notify the Purchaser if any person or entity makes any proposal, offer,
inquiry, or contact with respect to any of the foregoing.
5.8 Covenant Not to Compete.
(i) Effective upon Closing for the considerations
specified in this Agreement and in recognition that the covenants by
the Members and the Company in this Section are a material inducement
to Purchaser to enter into and perform this Agreement, the Company and
each Member agrees that for the period (the "Restricted Period") from
the date hereof to (a) the date which is one year after the Closing
Date with respect to Members who are not employees of the Company and
(b) with respect to Members who are employees of the Company, the date
which is the later to occur of two years after the Closing Date or one
year following termination of such Member's employment regardless of
the reason for such termination, such Member will not represent,
engage in, carry on, directly or indirectly, any business with any
person or entity who was a customer or client of the Company during
the one year period preceding the beginning of the Restricted Period
(or any customer or client of an affiliate of the Company for which
the Shareholder has materially assisted such affiliate in serving such
customer or client ("Assisted Affiliate")) or any business within 100
miles of the city or county limits of any city or county in the United
States or foreign countries where the Company or any Assisted
Affiliates has an office or in which the Company provides services
which produce Company revenues of an amount equal to 2% or more of the
Company's revenues for the twelve complete calendar months preceding
the time of termination, which business competes with any business,
services or products produced, sold, conducted, developed, or in the
process of development by the Company or jointly by the Company and an
Assisted Affiliate, including any business that involves the
furnishing of information technology services that are the type of
services furnished by the Company, either for himself, as a member or
equity owner of a partnership or limited liability company, or as a
shareholder (other than as a shareholder of less than one percent (1%)
of the issued and outstanding stock of a publicly-held company whose
gross revenues exceed $100 million), investor, owner, officer, or
director of a company or other entity, or as an employee, agent,
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trustee, manager, associate or consultant of any person, partnership,
corporation or other entity.
(ii) The Company and each Member agree that the
limitations set forth herein on their rights to compete with Purchaser
and its affiliates as set forth above are reasonable and necessary for
the protection of Purchaser and its affiliates. In this regard, each
Member specifically agrees that the limitations as to period of time
and geographic area, as well as all other restrictions on the
activities of the Member specified herein, are reasonable and
necessary for the protection of Purchaser and its affiliates. Each
Member agrees that, in the event that the provisions of this Section
should ever be deemed to exceed the scope of business, time or
geographic limitations permitted by applicable law, such provisions
shall be and are hereby reformed to the maximum scope of business,
time or geographic limitations permitted by applicable law.
(iii) Each Member agrees that the remedy at law for any
breach by such Member of this Section 5.8 will be inadequate and that
Purchaser shall be entitled to injunctive relief.
5.9 Limitation on Assignments to Purchaser. Notwithstanding
anything herein contained to the contrary, this Agreement shall not constitute
nor require an assignment to the Purchaser of any claim, lease, easement,
permit, license, contract or other right if an attempted assignment of the same
without the consent of any party would constitute a breach thereof unless and
unless and until such consent shall have been obtained. In the case of any
such claim, lease, easement, permit license, contract or other right which
cannot effectively be transferred to Purchaser without such consent, the
Members and the Company will each use all reasonable efforts to obtain such
consent promptly and if such consent is not obtained, the Company and the
Purchaser agree to enter into such reasonable arrangements as may be
appropriate to provide Purchaser with benefits purported to be vested in
Purchaser pursuant to the terms of this Agreement had such consent been
obtained.
5.10 Release. The Members and the Company do hereby release,
acquit and discharge Purchaser from any and all liabilities, obligations,
claims, demands, actions or causes of action arising from or relating to the
Acquired Assets, prior to the Closing Date other than those based on
obligations of Purchaser under this Agreement, including, without limitation,
any claim arising from any event, occurrence, act, omission or condition
relating to the Acquired Assets occurring or existing on or prior to the
Closing Date.
6. CERTAIN AGREEMENTS
The parties hereto further agree as follows:
6.1 Audit. Prior to Closing and at Purchaser's expense, Deloitte
and Touche, L.L.P. may complete an audit of the Company through December 31,
1997, and such additional review work as may be requested by the Purchaser
through and including the Closing Date (or other periods subsequent to December
31, 1997), and provide its report to the Purchaser and the Members.
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6.2 Confidentiality. Prior to Closing, none of the Purchaser, the
Company nor the Member will disclose the terms of this Agreement to any person
other than their respective directors, officers, agents or representatives,
except as otherwise provided herein or unless required by law. The Company may
make appropriate disclosures of the general nature of the Exchange to its
employees, vendors and customers to protect the Company's goodwill and to
facilitate the Closing. The Purchaser may disclose pertinent information
regarding the Exchange to its existing and prospective investors, lenders, or
investment bankers or financial advisors for the purpose of obtaining
financing, including, without limitation, financing related to the IPO or other
offerings of its securities. The Purchaser may describe this Agreement and the
transactions contemplated hereby in any registration statement filed by the
Purchaser under the Securities Act and in reports filed by the Purchaser under
the Securities Exchange Act of 1934, and may file this Agreement as an exhibit
to any thereof. The Purchaser may also make appropriate disclosures of the
general nature of the Exchange and the identity, nature and scope of the
Company's operations to prospective acquisition candidates in connection with
the Purchaser's efforts to effect additional acquisitions.
6.3 Company Plans. Except as otherwise provided in this
Agreement, the Company Plans (within the meaning of Section 3.14 hereto), in
effect at the date of this Agreement, shall remain in effect at least until
Closing.
6.4 Tax-Free Exchange. None of the Members, the Purchaser or the
Company shall knowingly take or fail to take any action, which action or
failure to act would jeopardize the qualification of the Exchange as an
exchange within the meaning of Section 351 of the Code.
6.5 Sale of Motor Vehicles. The Members and the Company agree to
effect the sale of any Company-owned motor vehicle primarily used by an
executive management employee to such employee prior to the Closing at a price
equal to the depreciated book value of the vehicle as included in the Company
Financial Statements.
7. CONDITIONS PRECEDENT; CLOSING DELIVERIES
7.1 Conditions Precedent to the Obligations of the Purchaser. The
obligations of the Purchaser to effect the Exchange under this Agreement are
subject to the satisfaction of each of the following conditions, unless waived
by the Purchaser in writing to the extent permitted by applicable law.
Provisions in this Section 7.1 requiring the delivery of documents and
certificates to Purchaser shall be deemed satisfied by delivery of such
materials to the Escrow Agent for later release to Purchaser upon satisfaction
of the conditions contained in the Escrow Agreement.
7.1.1 Accuracy of Representations and Warranties. The
representations and warranties of the Members and the Company contained in this
Agreement, the Schedules and Exhibits hereto, or in any closing certificate or
document delivered to the Purchaser pursuant hereto shall be true and correct
at and as of the Closing Date as though made as of that time, other than such
representations and warranties as are specifically made as of another date, and
the Members and the Company shall each have delivered to the Purchaser a
certificate to that effect.
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7.1.2 Performance of Covenants. The Members and the
Company shall have performed and complied with all covenants of this Agreement
to be performed or complied with by them at or prior to the Closing Date, and
the Members and the Company shall each have delivered to the Purchaser a
certificate to that effect.
7.1.3 Legal Actions or Proceedings. No legal action or
proceeding shall have been instituted after the date hereof against the Company
or any Member or against the Purchaser arising by reason of the Exchange or any
of the transactions contemplated by this Agreement, which is reasonably likely
(i) to restrain, prohibit or invalidate the consummation of the transactions
contemplated by this Agreement, (ii) to have a Company Material Adverse Effect
or (iii) to have a Purchaser Material Adverse Effect after giving effect to the
consummation of the transactions contemplated by this Agreement, and the
Members and the Company shall each have delivered to the Purchaser a
certificate to that effect.
7.1.4 Approvals. The Company and the Members shall have
acquired all of the consents, approvals and waivers of third parties and of any
regulatory body or authority, whether required contractually or by applicable
law or otherwise, necessary for the execution, delivery and performance of this
Agreement (including the Company Related Documents and the Member Related
Documents) by the Company and the Members prior to the Closing Date, and the
Members and the Company shall each have delivered to the Purchaser a
certificate to that effect.
7.1.5 Closing Deliveries. All documents required to be
executed or delivered at Closing by the Members or the Company pursuant to
Section 7.3 of this Agreement shall have been so executed and delivered.
7.1.6 No Loss or Damage. No material loss or damage shall
have occurred on or prior to the Closing Date to any of the properties or
assets of the Company.
7.1.7 Licenses, etc. The Purchaser shall have obtained, or
will obtain under this Agreement, all such licenses and permits as are legally
required for the continued operation of the business of the Company after the
Closing Date, substantially the same as before.
7.1.8 No Material Adverse Change. Since the Balance Sheet
Date there shall not have been any event that in the reasonable judgment of the
Purchaser, adversely affects the properties, assets, financial condition,
results of operations, cash flows, businesses or prospects of the Company to a
material extent.
7.1.9 IPO. The Purchaser shall have completed the IPO on
terms acceptable to it, and the net proceeds thereof shall have been received
by the Purchaser.
7.1.10 Certain Corporate Actions. All necessary owner and
manager resolutions, waivers and consents required by the Company to consummate
the transactions contemplated hereunder shall have been executed and delivered.
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7.2 Conditions Precedent to the Obligations of the Members and the
Company. The obligations of the Members and the Company under this Agreement
are subject to the satisfaction of each of the following conditions, unless
waived by the Members and the Company in writing. Provisions in this Section
7.2 requiring the delivery of documents and certificates to the Company and the
Members shall be deemed satisfied by delivery of such materials to the Escrow
Agent for later release to the Company and the Members upon satisfaction of the
conditions contained in the Escrow Agreement.
7.2.1 Accuracy of Representations and Warranties. The
representations and warranties of the Purchaser contained in this Agreement or
in any closing certificate or document delivered to the Members or the Company
pursuant hereto shall be true and correct on and as of the Closing Date as
though made at and as of that date other than such representations and
warranties as are specifically made as of another date, and the Purchaser shall
have delivered to the Members and the Company a certificate to that effect.
7.2.2 Performance of Covenants. The Purchaser shall have
performed and complied with all covenants of this Agreement to be performed or
complied with by them at or prior to the Closing Date and the Purchaser shall
have delivered to the Members and the Company a certificate to such effect.
7.2.3 Approvals. Purchaser shall have acquired all of the
consents, approvals and waivers specified under Section 4.4 prior to the
Closing Date, and Purchaser shall deliver to the Members and the Company a
certificate to that effect.
7.2.4 Closing Deliveries. All documents required to be
executed or delivered at Closing by Purchaser pursuant to Section 7.5 of this
Agreement shall have been so executed and delivered.
7.3 Deliveries by the Company or the Members at the Closing. At
the Closing, simultaneously with the deliveries by the Purchaser specified in
Section 7.5 below, and in addition to any deliveries required to be made by the
Members and the Company pursuant to any other transaction document at the
Closing, the Company or the Members, as applicable, shall deliver or cause to
be delivered to the Escrow Agent the following:
7.3.1 Closing Certificates. The Members and the Company
shall execute and deliver the Escrow Agreement in the form of Exhibit 2.1 and
the certificates and documents required pursuant to Sections 7.1.1, 7.1.2,
7.1.3, 7.1.4 and 7.1.5.
7.3.2 Instruments of Transfer. At the Closing, the Company
shall deliver executed landlord's estoppel letters in a form satisfactory to
Purchaser with respect to all Real Property Leases, and the Company shall
execute and deliver to Purchaser the following documents:
(i) a general Conveyance, Transfer, Assignment
and Assumption Agreement, in the form attached as Exhibit 7.3.2(i)
hereto, conveying all of the Acquired Assets other than the Real
Property Leases to Purchaser;
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(ii) an Assignment and Assumption of the Real
Property Leases, in the form attached as Exhibit 7.3.2(ii) hereto; and
(iii) such other instruments of transfer as shall
be reasonably necessary or appropriate to vest in Purchaser good and
indefeasible title to the Acquired Assets and to evidence the
assignment by the Company and the Assumption by Purchaser of the
Assumed Obligations.
7.3.3 Stock Transfer Restriction Agreement. The Company and
the Members shall execute and deliver a Stock Transfer Restriction Agreement,
effective as of the Closing Date, substantially in the form set forth in
Exhibit 7.3.3.
7.3.4 Employment Agreements. Each Employee of the Company
specified on Exhibit 7.3.4 hereto shall execute and deliver an Employment
Agreement with SCS Delaware, effective as of the Closing Date, substantially in
the form of the applicable form of the three forms of Employment Agreement set
forth in Exhibit 7.3.4A, as stated by each employee's name on Exhibit 7.3.4.
7.3.5 Opinion of Counsel for the Members and the Company.
The Members and the Company shall deliver the favorable opinion of ▇▇▇▇▇ &
▇▇▇▇▇▇, dated as of the Closing Date, substantially in the form and to the
effect set forth in Exhibit 7.3.5 attached hereto.
7.3.6 Documents.. The Company and the Members shall
execute and deliver, the documents, certificates, opinions, instruments and
agreements required to be executed and delivered by the Company or any Member
at the Closing as contemplated hereby or as may be reasonably requested by the
Purchaser.
7.4 No Waiver. The consummation of the Closing shall not be
deemed to be a waiver by the Purchaser of any of its rights or remedies against
the Members or the Company hereunder for any breach of warranty, covenant or
agreement by the Company or the Members herein irrespective of any knowledge of
or investigation made by or on behalf of the Purchaser; provided, however, that
if the Company shall disclose in writing to the Purchaser prior to the Closing
Date a specified breach of a specifically identified representation, warranty,
covenant or agreement of the Company or a Member herein by the Company or a
Member, and requests a waiver thereof by the Purchaser, and the Purchaser shall
waive any such specifically identified breach in writing prior to the Closing
Date, the Purchaser, for themselves and for each Purchaser Indemnified Party
(as defined below) shall be deemed to have waived their respective rights and
remedies hereunder for, and the Members and the Company shall have no liability
with respect to any such specifically identified breach to the extent so
identified by the Company and so waived by the Purchaser.
7.5 Deliveries by the Purchaser at the Closing. At the Closing,
simultaneously with the deliveries by the Members specified in Section 7.3
above, and in addition to any other deliveries to be made by the Purchaser
pursuant to any other transaction document at the Closing, the Purchaser, as
applicable, shall deliver or cause to be delivered to the Members and the
Company the following:
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7.5.1 Closing Certificates. The Purchaser shall execute
and deliver the Escrow Agreement in the form of Exhibit 2.1, the certificates
and documents required pursuant to Sections 7.2.1, 7.2.2, 7.2.3 and 7.2.4.
7.5.2 Instruments of Transfer. At the Closing, the
Purchaser shall execute and deliver to the Company the following documents:
(i) the general Conveyance, Transfer, Assignment
and Assumption Agreement, in the form attached as Exhibit 7.5.2(i)
hereto;
(ii) the Assignment and Assumption of the Real
Property Leases, in the form attached as Exhibit 7.5.2(ii) hereto; and
(iii) such other instruments or documents as shall
be reasonably necessary or appropriate to vest in Purchaser good and
indefeasible title to the Acquired Assets and to evidence the
Assumption by Purchaser of the Assumed Obligations.
7.5.3 Opinion of Counsel for the Purchaser. The Purchaser
shall deliver the favorable opinion of its legal counsel dated as of the
Closing Date, substantially in the form and to the effect set forth in Exhibit
7.5.3.
7.5.4 Closing Consideration. The Purchaser shall deliver
the Closing Consideration to the Company as set forth in Section 1.5 hereof.
7.6 No Waiver. The consummation of the Closing shall not be
deemed to be a waiver by the Members or the Company of any of their rights or
remedies hereunder for breach of any warranty, covenant or agreement herein by
the Purchaser irrespective of any knowledge of or investigation with respect
thereto made by or on behalf of any Member or the Company; provided, however,
that if the Purchaser shall disclose in writing to the Members prior to the
Closing a specified breach of a specifically identified representation,
warranty, covenant or agreement of the Purchaser contained herein by the
Purchaser, and requests a waiver thereof by the Company and the Members, and
the Company and the Members shall waive any such specifically identified breach
in writing prior to the Closing, the Company and the Members shall be deemed to
have waived their rights and remedies hereunder for, and the Purchaser shall
have no liability or obligation to the Members or the Company with respect to,
any such specifically identified breach, to the extent so identified by the
Purchaser and waived by the Company and the Members.
7.7 Conditions Precedent to Completion of the Closing. The
obligations of the parties to consummate the Exchange under this Agreement on
the IPO Closing Date are subject to the satisfaction of each of the following
conditions (unless waived by each of the parties in writing):
7.7.1 Legal Actions or Proceedings. No legal action or
proceeding shall have been instituted after the date hereof against the Company
or the Members which is reasonably likely (i) to restrain, prohibit or
invalidate the consummation of the transactions contemplated by this Agreement,
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(ii) to have a Company Material Adverse Effect or (iii) to have a Purchaser
Material Adverse Effect after giving effect to the consummation of the
transactions contemplated by this Agreement.
7.7.2 IPO. The Purchaser shall have completed the IPO on
terms described in the Registration Statement for the IPO, and the net proceeds
thereof shall have been received by the Purchaser.
7.8 Delivery of the Closing Consideration. On the IPO Closing
Date, the Purchaser shall deliver the Closing Consideration to the Company and
the Escrow Agent shall release and deliver all documents and certificates held
in escrow to the appropriate parties.
8. SURVIVAL; INDEMNIFICATIONS
8.1 Survival. The representations and warranties set forth in
this Agreement and the other documents, instruments and agreements contemplated
hereby shall survive after the date hereof to the extent provided herein. The
representations and warranties of the Members and the Company in the Member
Related Documents and the Company Related Documents other than those of the
Members in Sections 3.4 and 3.9, shall survive for a period of twenty-four (24)
months after the date hereof and the representations and warranties of the
Members contained in Sections 3.4 and 3.9 shall survive for the maximum period
permitted by applicable law. The representations and warranties of Purchaser
herein and in the Purchaser Related Documents shall survive for a period of
twenty-four (24) months after the date hereof. The periods of survival of the
representations and warranties as stated above in this Section 8.1 are referred
to herein as the "Survival Period." The liabilities of the parties under their
respective representations and warranties shall expire as of the expiration of
the applicable Survival Period and no claim for indemnification may be made
with respect to any breach of any representation or warranty, the applicable
Survival Period of which shall have expired, except to the extent that written
notice of such breach shall have been given to the party against which such
claim is asserted on or before the date of such expiration. The covenants and
agreements of the parties herein and in other documents and instruments
executed and delivered in connection with the closing of the transactions
contemplated hereby shall survive for the maximum period permitted by law.
8.2 Indemnification.
8.2.1 Purchaser Indemnified Parties. Subject to the
provisions of Sections 8.1 and 8.3 hereof, the Company and the Members, jointly
and severally, shall indemnify, save and hold harmless Purchaser and any of its
assignees (including lenders) and all of their respective officers, directors,
employees, representatives, agents, advisors and consultants and all of their
respective heirs, legal representatives, successors and assigns (collectively,
the "Purchaser Indemnified Parties") from and against any and all damages,
liabilities, losses, claims, deficiencies, penalties, interest, expenses,
fines, assessments, charges and costs, including reasonable attorneys' fees and
court costs (collectively "Losses") arising from, out of or in any manner
connected with or based on:
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(i) the breach of any covenant of the Company or any
Member or the failure by the Company or the Members to perform any
obligation of any Member or the Company contained herein or in any
Company Related Document or Member Related Document;
(ii) any inaccuracy or breach of any representation or
warranty of any Member contained herein or in any Member Related
Document;
(iii) any inaccuracy or breach of any representation or
warranty of the Company contained in any Company Related Document;
(iv) any act, omission, occurrence, event, condition or
circumstance occurring or existing at any time on, before or after the
Closing and involving or related to the Excluded Assets; and
(v) any act, omission, occurrence, event, condition or
circumstance occurring or existing at any time on or before the IPO
Closing Date and involving or related to the Acquired Assets or the
properties, business or operations now or previously owned or operated
by the Company.
8.2.2 Minimum Losses. For purposes of this Section 8.2.2,
Losses shall be calculated with respect to any inaccuracy or breach of any
representation or warranty without giving effect to any clause which would
permit such inaccuracy or breach up to an amount which would be deemed a
Company or Purchaser Material Adverse Effect. The Company and the Members
shall have no obligation under Section 8.2.1 until the aggregate amount of all
such Losses equal or exceed $75,000 (whether or not any particular loss
resulted in a Company Material Adverse Effect), at which time the Company and
the Members shall be subject to the provisions of Section 8.2.1 with respect to
any Losses of the Purchaser Indemnified Parties above the $75,000 allowance.
8.2.3 Purchaser Indemnity. Subject to the provisions of
Sections 8.1 and 8.3, Purchaser shall indemnify, save and hold harmless the
Company, the Members and all of their respective heirs, legal representatives,
successors and assigns from and against all Losses arising from, out of or in
any manner connected with or based on:
(i) any breach of any covenant of Purchaser or the
failure by Purchaser to perform any of its obligations contained
herein or in the Purchaser Related Documents;
(ii) any inaccuracy or breach of any representation or
warranty of Purchaser contained herein or in the Purchaser Related
Documents; and
(iii) any act, omission, event, condition or circumstance
occurring or existing at any time after (but not on or before) the IPO
Closing Date that involve or relate to the Acquired Assets or the
Assumed Obligations; provided, however, that this clause (iii) shall
not apply to any Losses to the extent that such Losses result from
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any Member's acts or omissions after the date hereof as an officer,
director and/or employee of Purchaser or its affiliates.
8.3 Limitations. The aggregate liability of the Members and the
Company under Section 8.2.1 shall not exceed the aggregate Purchase Price.
Each Member's individual liability under Section 8.2.1 shall not exceed the pro
rata portion of the Purchase Price attributable to such Member's Member
Interest based on the ratios for sharing of distributions under the Company's
Articles of Organization and Operating Agreement. The aggregate liability of
the Purchaser under Section 8.2.3 shall not exceed the amount of the aggregate
Purchase Price paid with Purchaser Common Stock. Neither the Company's nor a
Member's indemnity obligation under Section 8.2.1 shall extend to any breach by
another Member of any covenant, or to a failure by another Member to perform
any obligation, under such other Member's Member Related Document.
8.4 Procedures for Indemnification.
8.4.1 Notice. The party (the "Indemnified Party") that may
be entitled to indemnity hereunder shall give prompt notice to the party
obligated to give indemnity hereunder (the "Indemnifying Party") of the
assertion of any claim, or the commencement of any suit, action or proceeding
in respect of which indemnity may be sought hereunder. Any failure on the part
of any Indemnified Party to give the notice described in this Section 8.4.1
shall relieve the Indemnifying Party of its obligations under this Article 6
only to the extent that such Indemnifying Party has been prejudiced by the lack
of timely and adequate notice (except that the Indemnifying Party shall not be
liable for any expenses incurred by the Indemnified Party during the period in
which the Indemnified Party failed to give such notice). Thereafter, the
Indemnified Party shall deliver to the Indemnifying Party, promptly (and in any
event within 10 days thereof) after the Indemnified Party's receipt thereof,
copies of all notices and documents (including court papers) received by the
Indemnified Party relating to such claim, action, suit or proceeding.
8.4.2 Legal Defense. The Purchaser shall have the
obligation to assume the defense or settlement of any third-party claim, suit,
action or proceeding in respect of which indemnity may be sought hereunder,
provided that (i) the Members and the Company shall at all times have the
right, at their option, to participate fully therein, and (ii) if the Purchaser
does not proceed diligently to defend the third-party claim, suit, action or
proceeding within 10 days after receipt of notice of such third-party claim,
suit, action or proceeding, the Members and the Company shall have the right,
but not the obligation, to undertake the defense of any such third-party claim,
suit, action or proceeding.
8.4.3 Settlement. The Indemnifying Party shall not be
required to indemnify the Indemnified Party with respect to any amounts paid in
settlement of any third-party suit, action, proceeding or investigation entered
into without the written consent of the Indemnifying Party; provided, however,
that if the Indemnified Party is a Purchaser Indemnified Party, such
third-party suit, action, proceeding or investigation may be settled without
the consent of the Indemnifying Party on 10 days' prior written notice to the
Indemnifying Party if such third-party suit, action, proceeding or
investigation is then unreasonably interfering with the business or operations
of the Company and the settlement is commercially reasonable under the
circumstances; and provided further, that if the Indemnifying Party gives 10
days' prior written notice to the Indemnified Party of a settlement offer
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which the Indemnifying Party desires to accept and to pay all Losses with
respect thereto ("Settlement Notice") and the Indemnified Party fails or
refuses to consent to such settlement within 10 days after delivery of the
Settlement Notice to the Indemnified Party, and such settlement otherwise
complies with the provisions of this Section 8.4, the Indemnifying Party shall
not be liable for Losses arising from such third-party suit, action, proceeding
or investigation in excess of the amount proposed in such settlement offer.
Notwithstanding the foregoing, no Indemnifying Party will consent to the entry
of any judgment or enter into any settlement without the consent of the
Indemnified Party, if such judgment or settlement imposes any obligation or
liability upon the Indemnified Party other than the execution, delivery or
approval thereof and customary releases of claims with respect to the subject
matter thereof.
8.4.4 Cooperation. The parties shall cooperate in
defending any such third-party suit, action, proceeding or investigation, and
the defending party shall have reasonable access to the books and records, and
personnel in the possession or control of the Indemnified Party that are
pertinent to the defense. The Indemnified Party may join the Indemnifying
Party in any suit, action, claim or proceeding brought by a third party, as to
which any right of indemnity created by this Agreement would or might apply,
for the purpose of enforcing any right of the indemnity granted to such
Indemnified Party pursuant to this Agreement.
8.5 Subrogation. Each Indemnifying Party hereby waives for itself
and its affiliates any rights to subrogation against any Indemnified Party or
its insurers for Losses arising from any third-party claims for which it is
liable or against which it indemnifies any Indemnified Party and, if necessary,
each Indemnifying Party shall obtain waivers of such subrogation from its, his
or her insurers.
9. TERMINATION
9.1 Grounds for Termination. This Agreement may be terminated
only as provided below.
9.1.1 Prior to Closing. The parties may terminate this
Agreement at any time prior to the Closing only as provided below:
(i) Mutual Consent. Purchaser and the Company may
terminate this Agreement by mutual written consent at any time prior
to the Closing;
(ii) Termination by Purchaser. Purchaser may terminate
this Agreement by giving written notice thereof to the Company at any
time prior to the Closing: (a) in the event that the Members or the
Company has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect,
Purchaser has notified the Members and the Company of the breach, and
the breach has continued without cure until the earlier of 20 days
after the notice of such breach or the Closing Date, whichever is
earlier, (b) if the Registration Statement for the IPO has not been
filed with the Securities and Exchange Commission on or before
December 31, 1997, or (c) if the IPO Closing Date shall not have
occurred on or before April 30, 1998, by reason of the failure of any
condition
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precedent under Section 7.1 hereof (unless the failure results
primarily from Purchaser itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(iii) Termination by the Company. The Company may
terminate this Agreement by giving written notice thereof to Purchaser
at any time prior to the Closing: (a) in the event the Purchaser has
breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, the Company has notified
Purchaser of the breach, and the breach has continued without cure
until the earlier of 20 days after the notice of such breach or the
Closing Date, whichever is earlier, (b) if the Registration Statement
for the IPO has not been filed with the Securities and Exchange
Commission on or before December 31, 1997, or (c) if the IPO Closing
Date shall not have occurred on or before April 30, 1998, by reason of
the failure of any condition precedent under Section 7.2 hereof
(unless the failure results primarily from the Company and the Member
breaching any representation, warranty, or covenant contained in this
Agreement).
9.1.2 After the Closing Date. This agreement may be
terminated after the Closing only as follows:
(i) Termination of Underwriting Agreement. Upon
termination, prior to the successful completion of the IPO, of the
agreement between Purchaser and certain investment banking firms (the
"Underwriting Agreement") under which such firms agree to purchase
shares of Purchaser Common Stock from Purchaser on a firm commitment
basis for resale to the public initially at the IPO Price, Purchaser
or the Company may each terminate this Agreement by providing written
notice to the other.
(ii) Automatic Termination. This Agreement shall
terminate automatically and without action on the part of any party
hereto if the IPO is not consummated within 10 business days after the
Closing.
9.2 Effect of Termination. If this Agreement is terminated as
permitted under Section 9.1, such termination shall be without liability of any
party to any other party, except that such termination shall be without
prejudice to any and all remedies the parties may have against each other for
breach of this Agreement.
10. MISCELLANEOUS
10.1 Notice. Any notice, delivery or communication required or
permitted to be given under this Agreement shall be in writing, and shall be
mailed, postage prepaid, or delivered, to the addresses given below, or sent by
telecopy to the telecopy numbers set forth below, as follows:
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To the Company or the Members:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Software Consulting Services America, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇
Attorneys at Law
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To the Purchaser:
BrightStar Information Technology Group, Inc.
Attn: President
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Chamberlain, Hrdlicka, White, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or other such address as shall be furnished in writing by any such party to the
other party, and such notice shall be effective and be deemed to have been
given as of the date actually received.
To the extent any notice provision in any other agreement, instrument
or document required to be executed or executed by the parties in connection
with the transactions contemplated herein contains a notice provision which is
different from the notice provision contained in this Section 10.1 with respect
to matters arising under such other agreement, instrument or document, the
notice provision in such other agreement, instrument or document shall control.
10.2 Further Documents. The Members and the Company shall, at any
time and from time to time after the date hereof, upon request by the Purchaser
and without further consideration, execute and deliver such instruments or
other documents and take such further action as may be
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reasonably required in order to perfect any other undertaking made by the
Members or the Company hereunder.
10.3 Assignability. Neither the Company nor any Member shall
assign this Agreement in whole or in part without the prior written consent of
the Purchaser, except by the operation of law. The Purchaser may assign its
rights under this Agreement, the Company Related Documents and the Member
Related Documents without the consent of any of the Members or the Company.
10.4 Exhibits and Schedules. The Exhibits and Schedules (and any
appendices thereto) referred to in this Agreement are and shall be incorporated
herein and made a part hereof.
10.5 Entire Agreement. This Agreement constitutes the full
understanding of the parties, a complete allocation of risks between them and a
complete and exclusive statement of the terms and conditions of their agreement
relating to the subject matter hereof and supersedes any and all prior
agreements, whether written or oral, that may exist between the parties with
respect thereto. Except as otherwise specifically provided in this Agreement,
no conditions, usage of trade, course of dealing or performance, understanding
or agreement purporting to modify, vary, explain or supplement the terms or
conditions of this Agreement shall be binding unless hereafter made in writing
and signed by the party to be bound, and no modification shall be effected by
the acknowledgment or acceptance of documents containing terms or conditions at
variance with or in addition to those set forth in this Agreement. No waiver
by any party with respect to any breach or default or of any right or remedy
and no course of dealing shall be deemed to constitute a continuing waiver of
any other breach or default or of any other right or remedy, unless such waiver
be expressed in writing signed by the party to be bound. Failure of a party to
exercise any right shall not be deemed a waiver of such right or rights in the
future.
10.6 Headings. Headings as to the contents of particular articles
and sections are for convenience only and are in no way to be construed as part
of this Agreement or as a limitation of the scope of the particular articles or
sections to which they refer.
10.7 CONTROLLING LAW. THE VALIDITY, INTERPRETATION AND PERFORMANCE
OF THIS AGREEMENT AND ANY DISPUTE CONNECTED HEREWITH SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
10.8 Public Announcements. Neither the Company nor any Member
shall make any press release, public announcement, or public confirmation or
disclose any other information regarding this Agreement or the contents hereof
without the consent of the Purchaser.
10.9 No Third Party Beneficiaries. Except as set forth in Article
8, no person or entity not a party to this Agreement shall have rights under
this Agreement as a third party beneficiary or otherwise.
10.10 Amendments and Waivers. This Agreement may be amended only by
the Purchaser, the Company, and the Members, by an instrument in writing signed
on behalf of each such party. Any
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term or provision of this Agreement (other than any requirements for Member
approvals) may be waived in writing at any time by the party which is, or whose
owners are, entitled to the benefits thereof.
10.11 No Employee Rights. Nothing herein expressed or implied shall
confer upon any employee of the Company, any other employee or legal
representatives or beneficiaries of any thereof any rights or remedies,
including any right to employment or continued employment for any specified
period, of any nature or kind whatsoever under or by reason of this Agreement,
or shall cause the employment status of any employee to be other than
terminable at will.
10.12 Non-Recourse. No recourse for the payment of any amounts due
hereunder or for any claim based on this Agreement or the transactions
contemplated hereby or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Purchaser in this Agreement
shall be had against any incorporator, organizer, promoter, shareholder,
officer, director, employee or representative as such (other than the Members
as set forth herein), past, present or future, of the Purchaser or of any
successor corporation, whether by virtue of any constitution, statute or rule
of law, or by enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such obligations are those of the Purchaser as a
corporate entity.
10.13 When Effective. This Agreement shall become effective only
upon the execution and delivery of one or more counterparts of this Agreement
by each of the Purchaser, the Company and the Members.
10.14 Takeover Statutes. If any "fair price," "moratorium,"
"control share acquisition" or other form of anti-takeover statute or
regulation shall become applicable to the transactions contemplated hereby,
Purchaser, and the Company and its Members shall grant such approvals and take
such actions as are necessary so that the transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated herein and otherwise act to eliminate or minimize the effects of
such statute or regulation on the transactions contemplated herein.
10.15 Number and Gender of Words. Whenever herein the singular
number is used, the same shall include the plural where appropriate and words
of any gender shall include each other gender where appropriate.
10.16 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future laws,
such provisions shall be fully severable as if such invalid or unenforceable
provisions had never comprised a part of the Agreement; and the remaining
provisions of the Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid
or unenforceable provision, there shall be automatically as a part of this
Agreement, a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
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10.17 Multiple Counterparts. This Agreement may be executed in a
number of identical counterparts. If so executed, each of such counterparts is
to be deemed an original for all purposes and all such counterparts shall,
collectively, constitute one agreement, but, in making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart.
10.18 No Rule of Construction. All of the parties hereto have been
represented by counsel in the negotiations and preparation of this Agreement;
therefore, this Agreement will be deemed to be drafted by each of the parties
hereto, and no rule of construction will be invoked respecting the authorship
of this Agreement.
10.19 Expenses. Each of the parties shall bear all of their own
expenses in connection with the negotiation and closing of this Agreement and
the transactions contemplated hereby; provided that Purchaser shall pay all
expenses associated with the accounting and auditing fees and expenses of
Deloitte and Touche, L.L.P. and the reasonable legal fees of the Company
relating to this Agreement; provided further that all fees, costs and expenses
(other than the fees and expenses of Deloitte & Touche, L.L.P.) incurred by the
Company and payable by the Purchaser in connection with the negotiation and
closing of this Agreement and the transactions contemplated hereby shall be
included in Current Liabilities of the Company for purposes of determining Net
Working Capital.
10.20 Broker's Fees. Any broker's, finder's or similar fees
incurred by the Company or the Members shall be paid by the Company and/or the
Members, and the Company and the Members will indemnify the Purchaser from any
liability or costs respecting the same.
10.21 Section 351 Plan of Exchange. Simultaneously with the
execution hereof, the parties hereto shall execute the Section 351 Plan of
Exchange in the form set forth in Exhibit 10.22 hereto.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered on the date first hereinabove written.
PURCHASER:
BRIGHTSTAR INFORMATION
TECHNOLOGY GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President
COMPANY:
SOFTWARE CONSULTING SERVICES
AMERICA, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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MEMBERS:
WELLINGTON INVESTMENTS
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: DIRECTOR
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇'▇▇▇▇▇▇
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