ASSET PURCHASE AGREEMENT
BY AND AMONG
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION,
▇▇▇▇▇▇▇ TECHNOLOGIES, INC.
AND
▇▇▇▇▇▇▇ TECHNOLOGIES SYSTEMS DIVISION, INC.
MARCH 30, 2001
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 2.03 ▇▇▇▇ of Sale
Exhibit 2.04-B Assignment and Assumption Agreement
Exhibit 7.03(h) Novation Agreement
Exhibit 7.03(k) Estoppel Certificate
Schedules
Schedule 2.01 List of Assets
Schedule 2.02 Excluded Assets
Schedule 2.04-A Assumed Liabilities
Schedule 3.03 Allocation of Purchase Price
Schedule 5.00 Disclosure Schedule
Schedule 5.24 Aged Accounts Receivable List
Schedule 7.03(c) Consents and Assignments
Schedule 7.03(i) Key Employees
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("AGREEMENT") is made and entered into as
of March 30, 2001, by and among Science Applications International
Corporation, a Delaware corporation ("SAIC"), ▇▇▇▇▇▇▇ Technologies, Inc., a
Delaware corporation ("SHAREHOLDER"), and ▇▇▇▇▇▇▇ Technologies Systems
Division, Inc., a California corporation ("▇▇▇▇▇▇▇"), who agree as follows:
RECITALS
A. SAIC desires to acquire the business operations, properties,
capabilities and experience of the Contract Research and Development,
Electronics Technology, High Power Microwave and Pulsed Power business units
of ▇▇▇▇▇▇▇ (collectively, the "BUSINESS UNITS"), by purchasing certain of
▇▇▇▇▇▇▇'▇ properties and employing certain of ▇▇▇▇▇▇▇'▇ personnel.
▇. ▇▇▇▇▇▇▇ is willing to sell to SAIC the Business Units and to permit
SAIC to employ certain of its personnel.
C. SAIC deems the purchase of the Business Units from ▇▇▇▇▇▇▇ under the
provisions and conditions hereof to be in the best interests of SAIC and its
stockholders. ▇▇▇▇▇▇▇ ▇▇▇▇▇ the sale of the Business Units to SAIC under the
provisions and conditions hereof to be in the best interests of ▇▇▇▇▇▇▇ and
its shareholder.
ARTICLE I
DEFINITIONS
1.01 CERTAIN DEFINITIONS. Each of the following terms is defined in
the article, section, provision or paragraph of this Agreement set forth
opposite such term:
DEFINED TERM SECTION
Affiliate 5.09
Agreement Preamble
Ancillary Instrument 10.03(a)(ii)
Approved Claim 10.03(b)
Associate 5.09
Assumed Liabilities 2.04
Assumption Agreement 2.04
▇▇▇▇ of Sale 2.03
Business Units Recital A
Buyer Indemnification Event 10.03(a)(iv)
Buyer MAE 6.01
DEFINED TERM SECTION
Company Policies 5.17
Competitive Activities 8.01(a)(i)
Confidential Information 8.03(a)
Deductible 10.08(e)
Dispute 11.04(a)
Dispute Notice 11.04(a)
Employee Plans 5.12(a)
Environmental Laws 5.16(c)
Environmental Permits 5.16(c)
ERISA 5.12(a)
ERISA Affiliates 5.12(a)
Excluded Assets 2.02
Immediate family 5.09
Indemnification Notice 10.06(a)
Indemnification Objection Notice 10.06(a)
Indemnifying Party(ies) 10.06(a)
Indemnitee(s) 10.06(a)
Initial Payment 3.02(a)
Lien 5.04
Material Adverse Effect 5.01
▇▇▇▇▇▇▇ Preamble
▇▇▇▇▇▇▇ Parties 10.05
Multiemployer plan 5.12(b)
Noncompete Period 8.01(a)(ii)
Permitted Indemnification Claim 10.06(a)
Permits 5.18
Permitted Lien 5.05(b)
Purchase Price 3.01
Purchase Price Statement 3.02(b)
Purchase Price Statement Objection Notice 3.02(b)
Rejected Claim 10.03(b)
Related Party 5.09
Related Party Agreements 5.09
Returns 5.31(a)(i)
SAIC Preamble
SAIC Parties 10.03(a)
SAIC Stock 9.11
Services Agreement 7.02(d)
Shareholder Preamble
Territory 8.01(a)(iii)
Transition Services Agreement 7.02(e)
Vesting Options 9.11
1.02 ADDITIONAL DEFINITIONS. The following terms, when used in this
Agreement, shall have the meanings set forth below:
"ASSETS" means all of the assets, properties, contracts and
rights, whether tangible or intangible, of every kind and description,
(including but not limited to Intellectual Property Rights), whether or not
any of the foregoing are located at ▇▇▇▇▇▇▇'▇ facilities or premises, that
are owned by ▇▇▇▇▇▇▇ and utilized in conducting the business and operations
of the Business Units, other than those assets, properties and rights utilized
to conduct business generally (e.g., assets utilized in ▇▇▇▇▇▇▇'▇ centralized
administrative functions), and except for the Excluded Assets.
"BALANCE SHEET" means the unaudited, unadjusted statement of net
assets for the Business Units dated as of December 31, 2000.
"BALANCE SHEET DATE" means December 31, 2000.
"CAS" means the cost accounting standards of the United States
government.
"CERTIFIED FINANCIAL STATEMENTS" means the Balance Sheet and the
related statement of income for the ▇▇▇▇▇▇▇ fiscal year ending December 31,
2000, in each case with respect to the Business Units, certified by the Chief
Financial Officer of ▇▇▇▇▇▇▇.
"CLAIM" means claims, demands, actions, causes of action, suits,
proceedings and administrative proceedings.
"CLOSING" means the closing of the transactions contemplated in
this Agreement.
"CLOSING DATE" means the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"DAMAGES" means assessments, losses, damages, liabilities, debts,
charges (including judgments and decrees which give rise to any of the
foregoing), costs and expenses, including, without limitation, interest,
penalties, court costs, attorneys' fees and expenses.
"DISCLOSURE SCHEDULE" means and refers to the disclosure schedule
set forth on SCHEDULE 5.00, which relates exclusively to the Business Units
and identifies exceptions to the warranties and representations set forth in
Article V, and which shall be prepared by ▇▇▇▇▇▇▇ and delivered to SAIC at
least three (3) days before the Closing.
"GAAP" means U.S. generally accepted accounting principles and
procedures.
"HOLDBACK AMOUNT" means the amount (if any) by which the Purchase
Price (as finally determined pursuant to Section 3.02(b)) exceeds the Initial
Payment, reduced by the aggregate amount of Approved Claims and Permitted
Indemnification Claims.
"INDEPENDENT ACCOUNTANT" means such "Big 5" or regional accounting
firm of good reputation as is mutually agreed upon by SAIC and ▇▇▇▇▇▇▇.
"INTELLECTUAL PROPERTY RIGHTS" means any and all United States and
foreign (i) patents and patent applications (including without limitation
docketed patent disclosures awaiting filing, reissues, divisions,
continuations, continuations-in-part and extensions), patent disclosures
awaiting filing determination, inventions and improvements thereto, (ii)
trademarks, service marks, certification marks, trade names, trade dress,
logos, business and product names, slogans, and registrations and applications
for registration thereof, excluding the name "▇▇▇▇▇▇▇" and any version thereof,
alone or in combination with other words or symbols, (iii) copyrights and
registrations thereof, (iv) inventions, processes, designs, formulae, trade
secrets, know-how, industrial models, confidential, technical and business
information, manufacturing, engineering and technical drawings, and product
specifications, (v) intellectual property rights similar to any of the
foregoing, (vi) computer software, and (vii) copies and tangible embodiments
thereof (in whatever form or medium, including without limitation electronic
media), in each case that are necessary to conduct the Business Units as
conducted on the date hereof.
"KEY EMPLOYEES" means each of the employees of ▇▇▇▇▇▇▇'▇ Business
Units identified on SCHEDULE 7.03(K).
"LEASE" means any real property lease or sublease and any
modification, amendment or notice relating thereto to which ▇▇▇▇▇▇▇ is a party
and with respect to which ▇▇▇▇▇▇▇ and SAIC will enter into an assignment,
sublease or similar arrangement in connection with the transactions
contemplated hereby.
"▇▇▇▇▇▇▇'▇ KNOWLEDGE" means the knowledge of ▇▇▇▇▇▇▇'▇ officers
and directors and ▇▇▇▇▇▇ ▇▇▇▇▇, including matters with respect to which such
individuals should have knowledge after a reasonable inquiry.
"NON-DISCLOSURE AGREEMENT" means the Non-Disclosure Agreement
dated October 10, 2000, by and among ▇▇▇▇▇▇▇, Shareholder and SAIC.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or agency or instrumentality
thereof.
"PRE-CLOSING DATE TAX PERIOD" means any Tax period ending on or
before the Closing Date, and, with respect to a Tax period that begins on or
before the Closing and ends thereafter, the portion of such Tax period ending
on the Closing Date.
"SAIC BUSINESS UNIT" means and refers to the operating unit or
division within SAIC which, after the Closing, will conduct the Business Units
and will employ the Transferred Employees.
"SUBSIDIARY" of any Person means any corporation or other entity
(and any predecessor thereof) of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other Persons performing similar functions are directly or indirectly owned
by such Person.
"TANGIBLE NET BOOK VALUE" means the book value of the Assets (net
of depreciation or amortization) less the Assumed Liabilities as of the Closing
Date, determined (i) in accordance with GAAP consistently applied and (ii)
adjusted under the following circumstances: (a) as specifically provided in
this Agreement or any exhibit or schedule hereto, and (b) to reflect those
adjustments mutually agreed to by SAIC and ▇▇▇▇▇▇▇ or as resolved by the
Independent Accountant pursuant to Section 3.02(b) if SAIC and ▇▇▇▇▇▇▇ are
unable to agree. For purposes of the Closing, the Tangible Net Book Value
shall be estimated at Six Million One Hundred Forty-Nine Thousand
($6,149,000), subject to future adjustment pursuant to Section 3.02(b).
"TAX" or "TAXES" means any tax, levy, charge or fee, including
federal, state, local or foreign income, alternative minimum, corporation,
gross receipts, value-added, transfer, social security, employment, payroll,
license, sales, use, excise, property, accumulated earnings, personal holding
company, franchise, withholding, estimated or other similar tax, duty or
other governmental charge or assessment or deficiencies thereof, and
including any interest, penalties or additions to tax attributable to the
foregoing, imposed by any governmental authority (a "GOVERNMENTAL AUTHORITY").
"TAX RETURN" means any return, report, declaration, form, claim
for refund or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"TRANSFERRED EMPLOYEE" means any individual employed by ▇▇▇▇▇▇▇
who, in connection with the transactions contemplated hereby, is offered
employment with SAIC and becomes an employee of the SAIC Business Unit.
ARTICLE II
SALE, TRANSFER AND CONVEYANCE OF ASSETS
2.01 PURCHASE AND SALE OF ASSETS. Subject to the provisions and
conditions of this Agreement, and in reliance upon the representations,
warranties and covenants herein contained, on the Closing Date, ▇▇▇▇▇▇▇
shall sell, assign, transfer, convey and deliver to SAIC, and SAIC shall
purchase from ▇▇▇▇▇▇▇, all of the interest of ▇▇▇▇▇▇▇ of every kind and
description in the Assets, including, but not limited to, the assets,
properties, contracts, rights and proposals set forth on SCHEDULE 2.01
attached hereto.
2.02 EXCLUDED ASSETS. Notwithstanding anything to the contrary set
forth herein, the Assets shall not include those assets, properties, contracts
or rights which are set forth on SCHEDULE 2.02 attached hereto ("EXCLUDED
ASSETS").
2.03 TRANSFER OF TITLE. On the Closing Date, ▇▇▇▇▇▇▇ shall execute
and deliver to SAIC or its assigns a ▇▇▇▇ of sale, which shall be
substantially in the form of EXHIBIT 2.03 ("▇▇▇▇ OF SALE") together with
such other endorsements, assignments and other good and sufficient
instruments of sale, transfer and conveyance, in form and substance
reasonably satisfactory to SAIC and its legal counsel, as shall be effective
to vest in SAIC or its assigns all of ▇▇▇▇▇▇▇'▇ right and title to, and
interest in, the Assets in conformity with the representations and warranties
of ▇▇▇▇▇▇▇ herein.
2.04 LIABILITIES TO BE ASSUMED. SAIC agrees to assume only the
liabilities specifically set forth on SCHEDULE 2.04-A ("ASSUMED LIABILITIES").
On the Closing Date, SAIC shall execute and deliver to ▇▇▇▇▇▇▇ an assignment
and assumption agreement, which shall be substantially in the form of EXHIBIT
2.04-B ("ASSUMPTION AGREEMENT") to reflect SAIC's assumption of the Assumed
Liabilities. Except as expressly set forth in this Section 2.04, SAIC will
not assume or be obligated to perform any liabilities of any nature (whether
known, unknown, absolute, accrued, contingent, inchoate or otherwise) relating
to the business, operations, property or assets of ▇▇▇▇▇▇▇. Except as
expressly set forth in this SCHEDULE 2.04-A, SAIC shall not assume and shall
not be deemed to assume, without limitation, any of the following liabilities
or obligations: (i) any liability or obligation for any ▇▇▇▇▇▇▇ Taxes or
accrued salaries, workers' compensation, medical or sick pay of or relating
to any ▇▇▇▇▇▇▇ employees, (ii) obligations under any contracts with ▇▇▇▇▇▇▇
employees, (iii) pension or profit sharing liabilities or severance
liabilities, or (iv) any liability or obligation arising out of or resulting
from ▇▇▇▇▇▇▇'▇ breach of any contract or other agreement or from any violation
of any federal, state, local or foreign government's laws or regulations.
The assumption by SAIC of any contract, lease or other agreement of ▇▇▇▇▇▇▇,
as set forth on SCHEDULE 2.04-A, shall include only payment and performance
obligations thereunder which accrue or arise after the Closing Date; in no
event shall SAIC assume or be deemed to assume any liability of any nature
(whether known, unknown, absolute, accrued, contingent or otherwise) relating
to the performance under any such contract, lease or agreement which accrued
prior to the Closing Date, unless such liability is included within the
Assumed Liabilities.
2.05 FURTHER ASSURANCES REGARDING TRANSFER. From time to time after
the Closing Date, ▇▇▇▇▇▇▇, at the reasonable request of SAIC but without
further consideration, shall execute and deliver such other and further
instruments of sale, assignment, transfer and conveyance and take such other
and further action as SAIC reasonably may request in order to vest in SAIC
or its assigns and put SAIC or its assigns in possession of the Assets and
to transfer to SAIC or its assigns all contracts and rights included in the
Assets.
ARTICLE III
CONSIDERATION AND PAYMENT
3.01 CONSIDERATION. In full consideration for the Assets, SAIC (i)
shall pay to ▇▇▇▇▇▇▇ (a) [Four Million One Hundred Eighty-Eight Thousand]
Dollars ($4,188,000) plus (b) the Tangible Net Book Value (collectively, the
"PURCHASE PRICE"), (ii) shall assume and become responsible for the Assumed
Liabilities, and (iii) shall fulfill and perform all of its other obligations
set forth herein.
3.02 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid to
▇▇▇▇▇▇▇ in accordance with the following:
(a) INITIAL PAYMENT. On the Closing Date, SAIC shall pay to
▇▇▇▇▇▇▇, by wire transfer to such accounts as are designated by ▇▇▇▇▇▇▇ to
SAIC in writing, an aggregate amount equal to Nine Million Five Hundred
Thirty-Seven Thousand Dollars ($9,537,000) (the "INITIAL PAYMENT").
(b) DETERMINATION OF PURCHASE PRICE. As soon as practicable
after the Closing, but in no event later than thirty (30) days after the
Closing Date, ▇▇▇▇▇▇▇ shall calculate the Tangible Net Book Value as of the
Closing Date and prepare and deliver to SAIC a statement setting forth a
detailed calculation of the Tangible Net Book Value and the Purchase Price
("PURCHASE PRICE STATEMENT") and all supporting schedules (as previously
identified by SAIC to ▇▇▇▇▇▇▇). SAIC then shall have sixty (60) days
following receipt of the Purchase Price Statement to give ▇▇▇▇▇▇▇ written
notice of its objection to any item or calculation contained in the Purchase
Price Statement ("PURCHASE PRICE STATEMENT OBJECTION NOTICE"). If SAIC does
not deliver to ▇▇▇▇▇▇▇ a Purchase Price Statement Objection Notice within
such sixty (60)-day period, such Purchase Price Statement shall be deemed
final and conclusive with respect to the determination of the Tangible Net
Book Value and the Purchase Price and shall be binding on the parties for
such purpose. If, however, SAIC delivers to ▇▇▇▇▇▇▇ a Purchase Price
Statement Objection Notice, the parties shall meet and shall attempt in good
faith to resolve such objections. If the parties are unable to resolve
SAIC's objections within thirty (30) days following such objections, the
parties promptly shall refer such objections and ▇▇▇▇▇▇▇'▇ responses thereto
to the Independent Accountant for review, and the Independent Accountant
shall (x) resolve all such objections, (y) make any necessary revisions to
the Purchase Price Statement, and (z) deliver the Purchase Price Statement
(as so revised, if applicable) to SAIC and ▇▇▇▇▇▇▇ within fifteen (15) days
after receiving written instructions to resolve all objections set forth
therein. The parties shall make available to the Independent Accountant
such books, records and supporting documentation as the Independent
Accountant deems reasonably necessary to make its determination. The
Independent Accountant may evaluate only items or matters identified in
the Purchase Price Statement Objection Notice, and the Independent
Accountant's findings shall not exceed the amount claimed by either party
with respect thereto. The Purchase Price Statement as finalized by the
Independent Accountant shall be deemed final and conclusive with respect
to the Tangible Net Book Value and the Purchase Price and shall be binding
on SAIC and ▇▇▇▇▇▇▇ for such purposes. The fees and expenses of the
Independent Accountant in resolving all such objections shall be borne
one-half by SAIC, on the one hand, and one-half by ▇▇▇▇▇▇▇, on the other
hand (which may be satisfied by offset against the Holdback Amount).
(c) PAYMENT OF HOLDBACK AMOUNT. If the Purchase Price (as
finally determined pursuant to Section 3.02(b) above) exceeds the sum of
Initial Payment, subject to SAIC's rights of set-off and indemnification
pursuant to Article X hereof, no later than the later of (i) the date which
is six (6) months after the Closing Date and (ii) seven (7) days after the
final determination of the Purchase Price, SAIC shall pay to ▇▇▇▇▇▇▇ such
excess (the Holdback Amount). Notwithstanding the foregoing, if the
Purchase Price (as finally determined pursuant to Section 3.02(b) above)
exceeds Ten Million Three Hundred Thirty-Seven Thousand Dollars ($10,337,000),
then within five (5) days of the final determination of the Purchase Price,
SAIC shall pay to ▇▇▇▇▇▇▇ ninety percent of the amount by which the Purchase
Price exceeds Ten Million Three Hundred Thirty-Seven Thousand Dollars
($10,337,000). For example, if the final Purchase Price is Ten Million Five
Hundred Thirty-Seven Thousand Dollars ($10,537,000), then SAIC shall pay to
▇▇▇▇▇▇▇ One Hundred Thousand Eighty Dollars ($180,000) within five (5) days
of final determination of the Purchase Price. SAIC would pay to ▇▇▇▇▇▇▇ the
additional Eight Hundred Twenty Thousand Dollars ($820,000) (the Holdback
Amount), subject to SAIC's rights of set-off and indemnification pursuant to
Article X hereof, no later than the later of (i) the date which is six
(6) months after the Closing Date and (ii) seven (7) days after the final
determination of the Purchase Price.
(d) REMITTANCE OF OVERPAYMENT. If the Initial Payment exceeds
the Purchase Price (as finally determined pursuant to Section 3.02(c) above),
no later than seven (7) days after final determination of the Purchase Price,
▇▇▇▇▇▇▇ shall pay to SAIC in cash the amount of such excess.
3.03 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Assets in a manner to be determined by the parties in good
faith in conjunction with determination of the Tangible Net Book Value. A
preliminary allocation, based upon the parties' mutual best estimate of the
Purchase Price, is set forth on SCHEDULE 3.03 attached hereto. Each party
hereto shall report this transaction for federal and state tax purposes in
accordance with the final allocation of the Purchase Price, which shall be
reflected on a revised, final SCHEDULE 3.03 to be attached hereto.
ARTICLE IV
CLOSING
4.01 CLOSING. The Closing shall be held at 10:00 a.m. Pacific Standard
Time on the Closing Date at SAIC at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as shall be mutually agreed by the
parties hereto. The Closing shall be effective as of 11:59 p.m. Pacific
Standard Time on the Closing Date. On the Closing Date, the documents
described in Article VII shall be exchanged by the parties, and all other
actions contemplated by this Agreement to be completed at the Closing shall be
completed.
4.02 SIMULTANEOUS TRANSACTIONS. All transactions to be effectuated at
the Closing shall be deemed to have taken place simultaneously, and no such
transaction shall be deemed to have been completed until all transactions are
completed and all documents delivered.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ represents and warrants to SAIC as of the Closing Date (unless
otherwise indicated) as follows:
5.01 CORPORATE EXISTENCE AND POWER. ▇▇▇▇▇▇▇ is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of California, and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals
required to carry on the Business Units as now conducted. ▇▇▇▇▇▇▇ is duly
qualified to do business as a foreign corporation and is in good standing
in each jurisdiction, including foreign countries, where the character of
the Assets or the nature of the Business Units makes such qualification
necessary, except for those jurisdictions where the failure to be so
qualified could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), Assets or the results of operations or prospects of the
Business Units (a "MATERIAL ADVERSE EFFECT").
5.02 CORPORATE AUTHORIZATION. ▇▇▇▇▇▇▇ has all requisite corporate
power and corporate authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation by ▇▇▇▇▇▇▇ of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of ▇▇▇▇▇▇▇. This Agreement has been duly executed and delivered by
▇▇▇▇▇▇▇ and constitutes a valid and binding agreement of ▇▇▇▇▇▇▇ enforceable
against it in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
5.03 AUTHORIZATION AND CONSENTS. The execution, delivery and
performance by ▇▇▇▇▇▇▇ of this Agreement and the consummation of sale of the
Assets require no action by or in respect of, or filing with, any
governmental body, agency, official or authority. With respect to any
written agreements, Section 5.03 of the Disclosure Schedule lists each
consent or approval of any Person which is necessary for consummation by
▇▇▇▇▇▇▇ of the transactions contemplated hereby, including assignment of
all contracts and contract rights included within the Assets.
5.04 NON-CONTRAVENTION. The execution, delivery and performance of
this Agreement and the consummation by ▇▇▇▇▇▇▇ of the transactions
contemplated hereby do not and will not (i) contravene or conflict with the
articles of incorporation or bylaws of ▇▇▇▇▇▇▇, (ii) contravene or conflict
with any applicable provision of any law, regulation, rule, judgment,
injunction, order or decree binding upon or applicable to ▇▇▇▇▇▇▇, (iii)
assuming compliance with the matters, and receipt of the consents or
approvals, referred to in Section 5.03, require notice or constitute a default
under, or give rise to a right of termination, cancellation or acceleration
of any right or obligation of ▇▇▇▇▇▇▇ or to a loss of any benefit to which
▇▇▇▇▇▇▇ is entitled under any provision of any material agreement, contract
or other instrument or any license, franchise, permit or other similar
authorization held by ▇▇▇▇▇▇▇ which is included in the Assets, or (iv) result
in the creation or imposition of any Lien on any of such Assets. For
purposes of this Agreement, "Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such Asset.
5.05 PROPERTY AND TITLE TO ASSETS.
(a) The Assets do not include any ownership interest in any
real property. ▇▇▇▇▇▇▇ has delivered to SAIC true, correct and complete
copies of each Lease. Each such Lease is listed in Section 5.05(a) of the
Disclosure Schedule. Except as set forth in Section 5.05(a) of the
Disclosure Schedule, (i) each Lease is valid, binding and enforceable by
▇▇▇▇▇▇▇ in accordance with its terms, and is in full force and effect, (ii)
in each case, ▇▇▇▇▇▇▇ has been in peaceable possession since the commencement
of the Lease, and there are no material existing defaults by ▇▇▇▇▇▇▇ or, to
▇▇▇▇▇▇▇'▇ Knowledge, the lessors thereunder, (iii) no event or circumstance
has occurred which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a material
default under any such Lease or which would give rise to any right of the
lessor to terminate the Lease or assert any Claim or seek any Damages
thereunder, (iv) neither ▇▇▇▇▇▇▇ nor, to ▇▇▇▇▇▇▇'▇ Knowledge, the lessor
with respect to any such Lease has violated any of the terms or conditions
of any such Lease in any material respect, (v) no written waiver, indulgence
or postponement of ▇▇▇▇▇▇▇'▇ obligations under any such Lease has been
granted to ▇▇▇▇▇▇▇ by the lessor under any such Lease, and (vi) ▇▇▇▇▇▇▇ has
paid, satisfied or discharged all material obligations under each Lease due
and payable on or before the Closing Date, including the payment of rent and
all operating expenses. Each property leased by ▇▇▇▇▇▇▇ is, in all
material respects, in a state of good maintenance and repair and is, in all
material respects, adequate and suitable for the purposes for which it
presently is being used. The zoning of each parcel of property described in
any Lease permits the presently existing improvements and the continuation
of the business presently being conducted on such parcel.
(b) ▇▇▇▇▇▇▇ possesses either good and marketable title to or,
in the case of leased property and assets, valid leasehold interests in, all
personal, tangible and intangible property and assets included in the Assets,
except for properties and assets sold since the Balance Sheet Date in the
ordinary course of business consistent with past practice. None of the
Assets is subject to any Lien, except for (i) Liens disclosed on the Balance
Sheet or Section 5.05(b)(i) of the Disclosure Schedule, (ii) Liens for taxes
not yet due or being contested in good faith (and for which adequate accruals
or reserves have been established on the Balance Sheet), or (iii) Liens which
do not materially detract from the value or materially interfere with any
present or intended use of such property or assets (collectively, "PERMITTED
LIENS").
(c) All leases of material personal property are in good
standing and are valid, binding and enforceable in accordance with their
respective terms, and there does not exist under any such lease (i) any
default by ▇▇▇▇▇▇▇ or any event involving ▇▇▇▇▇▇▇ which with notice or lapse
of time or both would constitute a default or (ii) to ▇▇▇▇▇▇▇'▇ Knowledge,
any default by any other Person or any event involving any other Person which
with notice or lapse of time or both would constitute such a default.
5.06 FINANCIAL STATEMENTS; RELATED INFORMATION.
(a) The Certified Financial Statements (i) fairly present, in
all material respects, in conformity with GAAP applied on a consistent basis,
the financial position of the Business Units as of the dates thereof and their
results of operations for the periods then ended (subject to normal year-end
adjustments), and (ii) except as indicated therein, reflect all claims against
and all debts and liabilities of the business and operations the Business
Units, fixed or contingent, as at the respective dates thereof required to be
reflected or disclosed therein in accordance with GAAP, and the related
statements of income, fairly present the results of operations for the periods
indicated.
(b) Based upon all facts and circumstances which are known to
▇▇▇▇▇▇▇, or could be known to ▇▇▇▇▇▇▇ after a diligent inquiry, no reserves
for warranty claims or completion or performance reserves are or were required
to be included or reflected in the Certified Financial Statements.
(c) Except for the Excluded Assets, the Assets constitute all
of the material tangible personal property, contracts, subcontracts, assets,
Intellectual Property Rights and systems used or held for use or necessary to
conduct the business of the Business Units as currently conducted by ▇▇▇▇▇▇▇.
5.07 CONTROL OF ESSENTIAL RECORDS. Except as set forth in Section
5.07 of the Disclosure Schedule, none of the records, systems, controls, data
or information which are material to the operation of the Business Units are
recorded, stored, maintained, operated or otherwise wholly or partly dependent
upon or held by any means (including any electronic, mechanical or
photographic process, whether or not computerized) which (including all means
of access thereto and therefrom) are not under the exclusive ownership and
direct control of ▇▇▇▇▇▇▇.
5.08 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date,
▇▇▇▇▇▇▇ has conducted the Business Units in the ordinary course consistent
with past practice and, except as disclosed in Section 5.08 of the Disclosure
Schedule, there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts relating to the Business Units which, individually or
in the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect;
(b) any sale, lease, license or other disposition of any assets
or properties of the Business Units, other than in the ordinary course of
business consistent with past practices;
(c) any creation or assumption by ▇▇▇▇▇▇▇ of any Lien (other
than Permitted Liens) on any of the Assets;
(d) any material condemnation, seizure, damage, destruction or
other casualty loss (whether or not covered by insurance) affecting any of
the Assets;
(e) any contract or agreement entered into, amended or
terminated by ▇▇▇▇▇▇▇ or the other party to the contract or agreement or any
relinquishment by ▇▇▇▇▇▇▇ or the other party to the contract or agreement of
any contract or other right, in either case, material to the Business Units;
(f) any (i) grant of any contract providing for severance or
termination pay to any Transferred Employee, (ii) entering into or renewal of
any employment, deferred compensation, retirement or other similar agreement
(or any amendment to any such existing agreement) with any Transferred
Employee, (iii) increase in benefits payable under any existing severance or
termination pay policies or employment agreements to which any Transferred
Employee is subject, (iv) any other increase in compensation, bonus or other
benefits payable to any Transferred Employee, other than, in the case of
clause (vi), any such increases payable to employees other than in the
ordinary course of business consistent with past practice;
(g) any labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representative thereof to
organize any Transferred Employees, or any lockouts, strikes, slowdowns,
work stoppages or threats thereof by or with respect to such employees; or
(h) any notice of default or any other claim, allegation or
other assertion that ▇▇▇▇▇▇▇ has been or will be in breach or violation of
any provision of any contract, agreement or instrument to which ▇▇▇▇▇▇▇ is a
party and which is included in the Assets or the Assumed Liabilities.
5.09 Related Party Transactions. Section 5.09(a) of the Disclosure
Schedule contains a complete list of all contracts, agreements and
understandings (oral or written) affecting the Business Units between ▇▇▇▇▇▇▇
and any Related Party ("RELATED PARTY AGREEMENTS"). Except as disclosed in
Section 5.09(a) of the Disclosure Schedule, ▇▇▇▇▇▇▇ and a Related Party have
not been parties to any material transaction affecting the Business Units on
other than arm's-length terms. For purposes of this Agreement (i) the term
"RELATED PARTY" means any Key Employee or any ▇▇▇▇▇▇▇ director or officer,
or any affiliate (other than the Shareholder or any Subsidiary of the
Shareholder), associate or member of the immediate family of the foregoing;
and (ii) the terms "AFFILIATE", "ASSOCIATE" and "IMMEDIATE FAMILY" shall
have the meanings provided under Rules 12b-2, 12b-2 and 16a-1,
respectively, of the Exchange Act.
5.10 MATERIAL CONTRACTS.
(a) Section 5.10(a) of the Disclosure Schedule sets forth as
of the date of this Agreement all of the following contracts or agreements,
whether oral or written, included in the Assets or Assumed Liabilities:
(i) any lease (a) for real property or (b) for personal
property providing for annual rentals for such personal property lease of
$10,000 or more or aggregate payments for such personal property lease of
$50,000 or more;
(ii) any agreement for the purchase of materials, software,
supplies, goods, services, equipment or other assets providing for either
individual payments of $10,000 or more or aggregate annual payments of
$50,000 or more;
(iii) any sales, distribution or other similar agreement
providing for the sale of materials, supplies, goods, services, equipment or
other assets that provides for either individual payments of $10,000 or more
or aggregate annual payments of $25,000 or more;
(iv) any partnership, joint venture or other similar
agreement or arrangement;
(v) any agreement relating to the acquisition or
disposition of any business (whether by merger, sale of stock, sale of assets
or otherwise);
(vi) any agreement relating to indebtedness for borrowed
money or the deferred purchase price of property (in either case, whether
incurred, assumed, guaranteed or secured by any asset);
(vii) any option, license (including any software license
other than commercial-off-the-shelf licenses), franchise or similar agreement;
(viii) any agency, dealer, sales representative, marketing
or other similar agreement;
(ix) any agreement that limits the freedom of ▇▇▇▇▇▇▇ to
compete in any line of business or with any Person or in any area after the
Closing Date;
(x) any agreement containing any right of first refusal
or similar right;
(xi) any agreement pursuant to which ▇▇▇▇▇▇▇ has hired or
retained a consultant providing for aggregate annual payments of $10,000 or
more;
(xii) any agreement entered into within the past year
between ▇▇▇▇▇▇▇ and/or the Shareholder and a third party pursuant to which
the third party is subject to confidentiality or non-disclosure obligations
in connection with the divestiture of the Business Units;
(xiii) any agreement under which ▇▇▇▇▇▇▇ agrees to indemnify
any party other than in the ordinary course of business; or
(xiv) any other agreement, commitment, arrangement or plan
that is material to the Business Units.
(b) Each agreement, contract, plan, lease or commitment
disclosed in Section 5.10(a) the Disclosure Schedule or required to be
disclosed in the Disclosure Schedule is a valid and binding agreement of
▇▇▇▇▇▇▇, and is in full force and effect, and neither ▇▇▇▇▇▇▇ nor, to
▇▇▇▇▇▇▇'▇ Knowledge, any other party thereto is in default or breach in any
material respect under the terms of any such agreement, contract, plan, lease
or commitment, and, to ▇▇▇▇▇▇▇'▇ Knowledge, no event or circumstance has
occurred that, with notice or lapse of time or both, would constitute any
event of default thereunder.
(c) Section 5.10(c) of the Disclosure Schedule sets forth a
summary of all outstanding proposals of or relating to the Business Units.
(d) True and complete copies of each agreement, contract,
proposal, plan, lease, arrangement or commitment disclosed in Section 5.10(a)
or 5.10(c) of the Disclosure Schedule have been delivered or made available
to SAIC.
5.11 LITIGATION. Except as set forth in Section 5.11 of the Disclosure
Schedule, there is no action, suit, investigation or proceeding pending
against, or to ▇▇▇▇▇▇▇'▇ Knowledge threatened against or affecting the Assets
or the Business Units, before any court or arbitrator or any governmental body,
agency or official, which in any manner challenges or seeks to prevent, enjoin,
alter or materially delay any of the transactions contemplated hereby; nor, to
▇▇▇▇▇▇▇'▇ Knowledge, is there any valid basis for any such action, suit,
investigation or proceeding. ▇▇▇▇▇▇▇ is not subject to any judgment, order or
decree which may have a Material Adverse Effect, and no action, suit,
investigation or proceeding pending or threatened against ▇▇▇▇▇▇▇ (whether or
not described in Section 5.11 of the Disclosure Schedule) will have or
reasonably should be expected to have a Material Adverse Effect.
5.12 EMPLOYEE BENEFIT PLANS.
(a) Section 5.12(a) of the Disclosure Schedule contains a
correct and complete list identifying (i) each material "employee benefit
plan", as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974 ("ERISA"), (ii) each employment, severance or similar contract,
plan, arrangement or policy, and (iii) each other plan or arrangement (written
or oral) providing for compensation, bonuses, profit-sharing, stock option or
other stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance coverage (including any self-
insured arrangements), health or medical benefits, disability benefits,
workers' compensation, supplemental unemployment benefits, severance benefits
and post-employment or retirement benefits (including compensation, pension,
health, medical or life insurance benefits), in each case which is
maintained, administered or contributed to by ▇▇▇▇▇▇▇ or any ERISA Affiliate
and covers any Transferred Employee. Copies of such agreements, plans,
policies and arrangements (and, if applicable, related trust agreements) and
all amendments thereto and written interpretations thereof have been
furnished, or will be made available upon request, to SAIC together with the
most recent annual report (Form 5500 including, if applicable, Schedule B
thereto) prepared in connection with any such plan. Such plans are referred
to collectively herein as the "EMPLOYEE PLANS." For purposes of this Section
5.12, "ERISA AFFILIATE" of any Person means any other Person which, together
with such Person, would be treated as a single employer under Section 414 of
the Code.
(b) Neither ▇▇▇▇▇▇▇ nor any ERISA Affiliate maintains, or has
within the past five years maintained, any plan that constitutes or
constituted a "MULTIEMPLOYER PLAN," as defined in Section 3(37) of ERISA, or
that is or was subject to Title IV of ERISA.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during
the period from its adoption to date, and each trust forming a part thereof
is exempt from tax pursuant to Section 501(a) of the Code. ▇▇▇▇▇▇▇ has
furnished to SAIC copies of the most recent Internal Revenue Service
determination letters with respect to each such Employee Plan. Each Employee
Plan has been maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, including
but not limited to ERISA and the Code, which are applicable to such Plan.
(d) Except as set forth in Section 5.12(d) of the Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not (i) entitle any Transferred Employee to severance pay or (ii)
accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any Employee Plan. There is no contract, agreement, plan or arrangement
covering any Transferred Employee, individually or collectively, that could
give rise to the payment of any amount that would not be deductible pursuant
to the terms of Sections 162m or 280G of the Code.
(e) Except for the Assumed Liabilities, all contributions and
payments accrued under each Employee Plan relating to the employees of the
Business Units, determined in accordance with prior funding and accrual
practices, as adjusted to include proportional accruals for the period ending
at the Closing Date, have been, or will be, discharged and paid by ▇▇▇▇▇▇▇
in the normal course of business.
5.13 COMPLIANCE WITH LAWS AND COURT ORDERS. ▇▇▇▇▇▇▇ (with respect to
the Business Units) is not in violation of, nor has it violated, nor is
▇▇▇▇▇▇▇ (with respect to the Business Units) under investigation with respect
to, nor has ▇▇▇▇▇▇▇, been threatened to be charged with or given notice of
any violation of, any applicable material law, rule, regulation, judgment,
injunction, order or decree, which would have a Material Adverse Effect.
▇▇▇▇▇▇▇ has not received any written notice to the effect that ▇▇▇▇▇▇▇ (with
respect to the Business Units) is not in compliance with any applicable law,
statute, ordinance, regulation, judgment, injunction, order or decree.
5.14 FINDERS' FEES. There is no investment banker, broker, finder or
other intermediary which has been retained by, or is authorized to act on
behalf of, ▇▇▇▇▇▇▇ or any of its Subsidiaries who might be entitled to any
fee or commission upon consummation of the transactions contemplated by this
Agreement.
5.15 PATENTS AND OTHER PROPRIETARY RIGHTS.
(a) Section 5.15 of the Disclosure Schedule contains a complete
and accurate list of all patents, patent applications, trademarks, service
marks, trade names, registered copyrights and domain names used or held by
▇▇▇▇▇▇▇ for use in the Business Units and all registrations and applications
for registration of trademarks, service marks, copyrights and domain names
or any other registrations or applications for registration for the
foregoing Intellectual Property Rights specifying as to each such item, as
applicable: (i) the owner of the item, (ii) the jurisdictions in which the
item is issued or registered or in which any application for issuance or
registration has been filed, and (iii) the respective issuance, registration
or application number of the item. Except as explicitly indicated in
Section 5.15 of the Disclosure Schedule all of the patents, trademark and
service ▇▇▇▇ registrations, copyright registrations, and domain name
registrations indicated in Section 5.15 of the Disclosure Schedule are valid
and in full force, are held of record in the name of ▇▇▇▇▇▇▇ and are not the
subject of any cancellation or reexamination proceeding or any other
proceeding challenging their extent or validity. Except as further
explicitly indicated in Section 5.15 of the Disclosure Schedule, ▇▇▇▇▇▇▇ is
the applicant of record in all patent applications, and applications for
trademark, service ▇▇▇▇, trade dress, and copyright registration indicated
in Section 5.15 of the Disclosure Schedule, and no opposition, extension of
time to oppose, interference, rejection, or refusal to register has been
received in connection with any such applications. Other than as disclosed
in Section 5.15 of the Disclosure Schedule, ▇▇▇▇▇▇▇ holds all of the
patents, patent applications, trademarks, service marks, trade names,
registered copyrights, domain names free and clear of all liens,
encumbrances and other claims.
(b) ▇▇▇▇▇▇▇ has valid rights to use, whether through ownership,
licensing or otherwise, all Intellectual Property Rights necessary to conduct
the Business Units as presently conducted. Except as disclosed in Section
5.15 of the Disclosure Schedule, ▇▇▇▇▇▇▇ has not assigned, hypothecated or
otherwise encumbered any such Intellectual Property Rights, and none of the
licenses included in the Intellectual Property Rights purport to grant sole
or exclusive licenses to another Person, including, without limitation sole
or exclusive licenses limited to specific fields of use. The transactions
contemplated by this Agreement will not result in any termination, loss or
impairment of any Intellectual Property Right utilized in the conduct of the
Business Units (other than the loss of the right to use the name "▇▇▇▇▇▇▇" or
any variant thereof) nor require payment of any fee to owners of Intellectual
Property Rights licensed to ▇▇▇▇▇▇▇ and utilized in conducting the business
and operations of the business. Except as disclosed in Section 5.15 of the
Disclosure Schedule, (i) to ▇▇▇▇▇▇▇'▇ Knowledge, there are no infringements
by any other party of any of the Intellectual Property Rights, and (ii)
▇▇▇▇▇▇▇ has not entered into any agreement to indemnify any other party
against any charge of infringement of any of its Intellectual Property Rights
except for any such violations or infringements as do not, individually or
in the aggregate, materially affect the Assets. Except as disclosed in
Section 5.15 of the Disclosure Schedule, the Business Units have not and do
not violate or infringe any Intellectual Property Rights of any other Person,
and ▇▇▇▇▇▇▇ has not received any communication alleging that the Business
Units violate or infringe any intellectual property right of any other
Person. ▇▇▇▇▇▇▇ (with respect to the Business Units) has not been sued at
any time for infringing any intellectual property right of another Person.
Except as disclosed in Section 5.15 of the Disclosure Schedule, to
▇▇▇▇▇▇▇'▇ Knowledge, none of the processes, techniques and formulae,
research and development results and other know-how relating to the
business, the value of which is contingent upon maintenance of the
confidentiality thereof, has been disclosed by ▇▇▇▇▇▇▇ or any of its
Affiliates to any Person other than those Persons who are bound to hold
such information in confidence pursuant to confidentiality agreements or
by operation of law. Except as disclosed in Section 5.15 of the
Disclosure Schedule, the information contained in any agreement pursuant
to which ▇▇▇▇▇▇▇ or the other party is subject to confidentiality and
disclosure obligations is not necessary in order to conduct the business
of the Business Units in all material respects as currently conducted by
▇▇▇▇▇▇▇.
(c) Except as disclosed in Section 5.15 of the Disclosure
Schedule, no security holder or director, officer, employee (including both
current and former employees), consultant (including both current and former
consultants) or independent contractor (including both current and former
contractors) of ▇▇▇▇▇▇▇ or any affiliate of ▇▇▇▇▇▇▇ owns, directly or
indirectly, in whole or in part, any Intellectual Property Rights utilized
by ▇▇▇▇▇▇▇ in conducting the business and operations of the Business Units,
nor has any such person asserted any claim of ownership of, or interest in,
the Intellectual Property Rights utilized by ▇▇▇▇▇▇▇ in conducting the
business and operations of the Business Units. No security holder or
director, officer, employee (including both current and former employees),
consultant (including both current and former consultants) or independent
contractor (including both current and former contractors) of ▇▇▇▇▇▇▇ or
any affiliate of ▇▇▇▇▇▇▇ receives or claims entitlement to compensation of
any form for the past or continuing use by ▇▇▇▇▇▇▇ of any Intellectual
Property Rights utilized in conducting the business and operations of the
Business Units. Except as indicated in Section 5.15 of the Disclosure
Schedule, ▇▇▇▇▇▇▇ does not pay, and will not subsequently be required to
pay, to any other Person any royalties or license transfer fess for the
continuing and interrupted use of any Intellectual Property Rights licensed
from any other Person and utilized in conducting the business and
operations of the Business Units.
5.16 ENVIRONMENTAL MATTERS.
(a) With respect to the Business Units, except as identified
in Section 5.16 of the Disclosure Schedule:
(i) no notice, notification, demand, request for
information, citation, summons or order has been received, no complaint has
been filed, no penalty has been assessed, and no investigation, action,
claim, suit, proceeding or review (or any basis therefor) is pending or, to
▇▇▇▇▇▇▇'▇ Knowledge, is threatened by any governmental entity or other
Person with respect to any matters relating to ▇▇▇▇▇▇▇ and relating to or
arising out of any Environmental Law;
(ii) there are no material liabilities of or relating to
▇▇▇▇▇▇▇ of any kind whatsoever whether accrued, contingent, absolute,
determined, determinable or otherwise, arising under or relating to any
violation of any Environmental Law, and to ▇▇▇▇▇▇▇'▇ Knowledge, there are no
facts, conditions, situations or set of circumstances that could reasonably
be expected to result in or be the basis for any such liability; and
(iii) ▇▇▇▇▇▇▇ is and has been in compliance in all
material respects with all Environmental Laws and has obtained and is in
compliance in all material respects with all Environmental Permits.
(b) With respect to the Business Units, to ▇▇▇▇▇▇▇'▇ Knowledge,
there has been no environmental investigation, study, audit, test, review or
other analysis conducted in relation to the current or prior business of
▇▇▇▇▇▇▇ or any property or facility now or previously owned, leased or
operated by ▇▇▇▇▇▇▇ which has not been made available to SAIC.
(c) For purposes of this Section 5.16, the following terms
shall have the meanings set forth below:
"▇▇▇▇▇▇▇" shall include any entity that is, in whole or
in part, a predecessor of ▇▇▇▇▇▇▇;
"ENVIRONMENTAL LAWS" means any federal, state, local and
foreign law (including, without limitation, common law), treaty, judicial
decision, regulation, rule, judgment, order, decree, injunction, permit or
governmental restriction or requirement or any agreement or contract with
any Governmental Authority or other third party, whether now or hereinafter
in effect, relating to human health and safety, the environment or to
pollutants, contaminants, wastes or chemicals or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials; and
"ENVIRONMENTAL PERMITS" means all permits, licenses,
franchises, certificates, approvals and other similar authorizations of
governmental authorities relating to or required by Environmental Laws and
affecting the business of ▇▇▇▇▇▇▇ or any of its Subsidiaries as currently
conducted.
5.17 INSURANCE COVERAGE. Section 5.17 of the Disclosure Schedule
incorporates a list of all insurance policies and fidelity bonds maintained
by ▇▇▇▇▇▇▇ relating to the Assets or the Business Units (the "COMPANY
POLICIES"), and ▇▇▇▇▇▇▇ has provided SAIC with accurate summaries of all such
Company Policies. There is no claim by ▇▇▇▇▇▇▇ pending under any of such
Company Policies as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds or in respect of which such
underwriters have reserved their rights. All premiums payable under all such
Company Policies have been timely paid and ▇▇▇▇▇▇▇ otherwise has complied in
all material respects with the terms and conditions of all such policies and
bonds. Section 5.17 of the Disclosure Schedule also indicates the dates
since which such Company Policies (or other policies and bonds providing
substantially similar insurance coverage) have been in effect. Such Company
Policies are of the type and in amounts customarily carried by Persons
conducting businesses similar to the Business Units. To ▇▇▇▇▇▇▇'▇ Knowledge,
there is no threatened termination of, material premium increase with respect
to, or material alteration of coverage under, any of such Company Policies.
The Company Policies providing comprehensive general liability and workers'
compensation insurance provide coverage with respect to events occurring prior
to the Closing Date notwithstanding that ▇▇▇▇▇▇▇ may terminate coverage for
the Business Units under such Company Policies for events occurring after the
Closing Date.
5.18 LICENSES AND PERMITS. ▇▇▇▇▇▇▇ has obtained and maintains all
material governmental licenses, authorizations, consents and approvals
required to carry on as now conducted the Business Units. Section 5.18 of
the Disclosure Schedule correctly lists each material license, franchise,
permit, certificate, approval or other similar authorization affecting, or
relating in any way to, the Assets or the Business Units (collectively, the
"PERMITS"), and each pending application for any Permit, together with the
name of the government agency or entity issuing such Permit or with which
such application is pending. Except as set forth on Section 5.18 of the
Disclosure Schedule, (i) the Permits are valid and in full force and effect
and (ii) ▇▇▇▇▇▇▇ is not in default under, and no condition exists that with
notice or lapse of time or both would constitute a default under, the
Permits.
5.19 EMPLOYEES. Section 5.19 of the Disclosure Schedule sets forth
a true and complete list of (i) the names, titles, annual salaries and other
compensation of all Transferred Employees and the wage rates for all
non-salaried Transferred Employees (by classification) and (ii) the names
of all independent contractors or consultants and the terms and conditions
pursuant to which they are compensated. To ▇▇▇▇▇▇▇'▇ Knowledge, none of
the Transferred Employees identified on Section 5.19 of the Disclosure
Schedule has indicated to ▇▇▇▇▇▇▇ that he or she intends to resign, retire
or discontinue his or her relationship with the Business Units as a result
of the transactions contemplated by this Agreement.
5.20 LABOR MATTERS. With respect to the Business Units, ▇▇▇▇▇▇▇ is
in compliance in all material respects with all currently applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours. ▇▇▇▇▇▇▇ is not engaged in any unfair labor
practice, and there exists no basis for the assessment of any unpaid wages
with respect to any Transferred Employee. There is no unfair labor practice
complaint pending or, to ▇▇▇▇▇▇▇'▇ Knowledge, threatened against ▇▇▇▇▇▇▇
before the National Labor Relations Board or any state or local authority
or agency with respect to any Transferred Employee or the Business Units.
None of the Transferred Employees are covered in a collective bargaining
agreement or are members of any union, and no union representation or
organization campaign or effort exists with respect to any of the
Transferred Employees.
5.21 BUSINESS RECORDS. ▇▇▇▇▇▇▇ has maintained adequate business
records with respect to the Assets and the Business Units, and ▇▇▇▇▇▇▇ is
not aware of any material deficiencies in such business records.
5.22 CUSTOMERS. Section 5.10 of the Disclosure Schedule lists all
material customer contracts included in the Assets. Except as set forth on
Section 5.22 of the Disclosure Schedule, to ▇▇▇▇▇▇▇'▇ Knowledge, no customer
presently intends to materially decrease the amount of business it does
under existing contracts with the Business Units, whether as a result of
any announcement of the transactions contemplated by this Agreement or
otherwise.
5.23 CUSTOMER AND THIRD PARTY APPROVAL. The work substantially
completed by ▇▇▇▇▇▇▇ prior to the Closing Date which will require either
customer or third party approval or acceptance but which has not yet
received the required customer or third party approval or acceptance will
meet all material requirements and specifications of the contract as
modified through the Closing Date in all material respects.
5.24 ACCOUNTS RECEIVABLE. Except as set forth on Section 5.24 of
the Disclosure Schedule, all accounts receivable, unbilled work in process
and other debts due or recorded in the financial statements of the Business
Units as being due to ▇▇▇▇▇▇▇ as of the Closing Date were actually made in
the ordinary course of business and will be good and collectible in full in
the ordinary course of business, net of reserves and allowances provided in
the Balance Sheet. None of such accounts receivable or other debts is, at
the Closing Date, subject to any defense, counterclaim or set-off. ▇▇▇▇▇▇▇
has delivered to SAIC a complete and accurate list of all receivables of
the Business Units as of the Balance Sheet Date, a copy of which is
attached hereto as SCHEDULE 5.24.
5.25 ABSENCE OF UNLAWFUL PAYMENTS. Neither ▇▇▇▇▇▇▇, nor, to
▇▇▇▇▇▇▇'▇ Knowledge, (a) any director, officer, agent or employee acting
on behalf of ▇▇▇▇▇▇▇, or (b) any other Person acting on behalf of ▇▇▇▇▇▇▇
with respect to the Business Units, has used any corporate or other funds
for unlawful contributions, payments, gifts or entertainment, or made any
unlawful expenditures relating to political activity to government
officials or others or established or maintained any unlawful or
unrecorded funds. Neither ▇▇▇▇▇▇▇, nor, to ▇▇▇▇▇▇▇'▇ Knowledge, (i) any
director, officer, agent or employee acting on behalf of ▇▇▇▇▇▇▇, or (ii)
any other Person acting on behalf of ▇▇▇▇▇▇▇, has accepted or received
any unlawful contributions, payments, gifts or expenditures with respect
to the Business Units.
5.26 SERVICE LIABILITY. There is no action, suit, proceeding, inquiry
or investigation by or before any court or governmental or other regulatory
or administrative agency or commission pending or, to ▇▇▇▇▇▇▇'▇ Knowledge,
threatened against or involving ▇▇▇▇▇▇▇ relating to any services performed
by ▇▇▇▇▇▇▇ and alleged to have been defective or improperly rendered or not
in compliance with contractual requirements.
5.27 GOVERNMENT PROCUREMENT RULES. ▇▇▇▇▇▇▇ has taken reasonable
and appropriate steps to assure that its business with the federal
government has been conducted in conformance with the Federal Acquisition
Regulations and the statutes, laws and regulations referred to therein,
and other applicable statutes, regulations or laws and accounting
requirements. ▇▇▇▇▇▇▇ has not obtained and is not performing any federal
contract in a manner that is inconsistent with those procurement laws or
accounting requirements in any material respect.
5.28 GOVERNMENT REVIEW. Section 5.28 of the Disclosure Schedule
lists all material governmental reviews, audits or investigations of a
similar nature, whether pending, threatened or completed within the three-year
period preceding the Closing Date, relating to the performance or
administration by ▇▇▇▇▇▇▇ of government contracts or subcontracts included
in the Assets.
5.29 GOVERNMENT CLAIMS. Except as set forth in Section 5.29 of the
Disclosure Schedule, no state of facts exists that would constitute valid
grounds for the assertion of a material claim by a Governmental Authority
against ▇▇▇▇▇▇▇ for any of the following: (a) defective pricing or (b) CAS
noncompliance, (c) fraud or (d) false claims or false statements. To
▇▇▇▇▇▇▇'▇ Knowledge, except as set forth in Section 5.29 of the Disclosure
Schedule, no state of facts exists that would constitute valid grounds for
the assertion of a material claim by a Governmental Authority against the
Company for either (y) unallowable costs as defined in the Federal
Acquisition Regulations at Part 31, including those that may be included in
indirect cost claims for prior years that have not yet been finally agreed
to by the Defense Contract Audit Agency and/or the Administrative Contracting
Officer; or (z) any other monetary claims relating to the performance or
administration by ▇▇▇▇▇▇▇ of government contracts or subcontracts.
5.30 GOVERNMENT FURNISHED PROPERTY. Except as set forth in Section
5.30 of the Disclosure Schedules, all property or equipment furnished to the
Business Units prior to the Closing Date by the United States government or
any other customer that has not been returned to such customer is properly
accounted for and in the possession of ▇▇▇▇▇▇▇. All such property and
equipment is in good operating condition and state of repair, reasonable
wear and tear excepted.
5.31 TAXES. As of the Closing Date:
(a) except as set forth in Section 5.31 of the Disclosure
Schedule:
(i) all material Tax Returns, statements, reports and
forms (including estimated tax or information returns and reports) required
to be filed with any Governmental Authority with respect to any Pre-Closing
Date Tax Period by or on behalf of ▇▇▇▇▇▇▇ relating to the Business Units
(collectively, the "RETURNS"), have been or will be, to the extent required
to be filed on or before the date hereof, filed when due in accordance with
all applicable laws;
(ii) all such Returns are, or will be at the time of
filing, true, complete, and accurate in all material respects;
(iii) all material Taxes shown as due and payable on the
Returns that have been filed have been timely paid, or withheld and remitted
to the appropriate Governmental Authority;
(iv) the charges, accruals and reserves for Taxes with
respect to ▇▇▇▇▇▇▇ for any Pre-Closing Date Tax Period (including any Pre-
Closing Date Tax Period for which no Return has yet been filed) reflected on
the books of ▇▇▇▇▇▇▇ (excluding any provision for deferred income taxes) are
adequate to cover such Taxes in all material respects;
(v) ▇▇▇▇▇▇▇ is not delinquent in the payment of any
material Tax;
(vi) ▇▇▇▇▇▇▇ has not granted any extension or waiver of
the statute of limitations period applicable to any Return, which period
(after giving effect to such extension or waiver) has not yet expired;
(vii) there is no claim, audit, action, suit, proceeding
or investigation now pending or, to ▇▇▇▇▇▇▇'▇ Knowledge, threatened against
or with respect to ▇▇▇▇▇▇▇ in respect of any Tax or Return;
(viii) all information set forth in the Balance Sheet
relating to any Tax Asset or any Tax matters is true and complete in all
material respects;
(ix) ▇▇▇▇▇▇▇ has not entered into any agreement or
arrangement with any Governmental Authority with regard to the Tax liability
of ▇▇▇▇▇▇▇;
(x) ▇▇▇▇▇▇▇ has not participated in or cooperated with
an international boycott within the meaning of Section 999 of the Code nor
has been requested to do so in connection with any transaction or proposed
transaction; and
(xi) ▇▇▇▇▇▇▇ has withheld and paid all material Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, shareholder, or
other third party.
(b) Section 5.31 of the Disclosure Schedule contains a list
of all jurisdictions (whether foreign or domestic) to which any Tax is paid
by ▇▇▇▇▇▇▇.
5.32 ACCURACY AND COMPLETENESS OF INFORMATION. No statement contained
in (i) any representation or warranty made by the Company herein, or in any
exhibit or schedule attached hereto or (ii) in the Disclosure Schedule
contains any untrue statement of a material fact or omits to state any
material fact necessary, in order to make the statements herein or therein
not misleading in light of the circumstances in which they are made. The
financial projections relating to ▇▇▇▇▇▇▇ delivered to SAIC are the financial
projections ▇▇▇▇▇▇▇ utilized in connection with its operations.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SAIC
SAIC represents and warrants to ▇▇▇▇▇▇▇ as follows:
6.01 CORPORATE EXISTENCE AND POWER. SAIC is a limited liability
company duly organized, validly existing and in good standing under the laws
of Delaware, is qualified to do business in the State of California and has
all powers and all governmental licenses, authorizations, permits, consents
and approvals required to carry on its business as now conducted, except for
those licenses, authorizations, permits, consents and approvals the absence
of which could not, individually or in aggregate, reasonably be expected to
have a Buyer MAE. For purposes of this Agreement, the term "BUYER MAE"
means a material adverse effect on the condition (financial or otherwise),
business, assets or results of operations of SAIC and its Subsidiaries taken
as a whole.
6.02 AUTHORIZATION. SAIC has all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by SAIC of this Agreement, and the
consummation by SAIC of the transactions contemplated hereby have been duly
authorized by all necessary action. This Agreement has been duly executed
and delivered by SAIC and constitutes a valid and binding agreement of SAIC
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
6.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by SAIC of this Agreement and the consummation by SAIC of the
transactions described herein require no action by or in respect of, or
filing with, any governmental body, agency, official or authority.
6.04 NON-CONTRAVENTION. The execution, delivery and performance by
SAIC of this Agreement and the consummation by SAIC of the transactions
contemplated hereby do not and will not (i) contravene or conflict with the
certificate of incorporation or bylaws of SAIC, (ii) assuming compliance
with the matters referred to in Section 6.03, contravene or conflict with
any applicable law, rule, regulation, judgment, order or decree binding upon
SAIC or (iii) require notice or constitute a default under, or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of SAIC or to a loss of any benefit to which SAIC is entitled
under, any agreement, contract or other instrument binding upon SAIC or
(iv) result in the creation or imposition of any Lien on any asset SAIC,
with such exceptions, in the case of clauses (iii) and (iv), as would not,
individually or in the aggregate, have a Buyer MAE or materially adversely
affect the transactions contemplated hereby.
ARTICLE VII
CONDITIONS TO CLOSING
7.01 GENERAL CONDITIONS. The obligations of the parties to effect the
Closing and consummate the transactions described herein shall be subject to
the following conditions unless waived in writing by all parties:
(a) NO ORDERS; LEGAL PROCEEDINGS. No law or order shall have
been enacted, entered, issued, promulgated or enforced by any governmental
entity, nor shall any action have been instituted and remain pending or have
been threatened and remain so by any governmental entity at what otherwise
would be the Closing Date, which prohibits or restricts or would (if
successful) prohibit or restrict the transactions contemplated by this
Agreement or which would not permit the Business Units to continue to be
conducted as presently conducted unimpaired following the Closing Date.
(b) THIRD PARTY APPROVALS. To the extent required by applicable
law, all permits, consents, approvals and waivers required to be obtained from,
and notices required to be given to, any governmental entity or a third party
(other than those third party consents which the parties agree shall be
obtained post-Closing) shall have been received, obtained or given, as the case
may be, on or prior to the Closing Date.
(c) NO ACTIONS. No action or proceeding shall have been
instituted or threatened by any governmental agency or regulatory body, nor
any preliminary nor permanent injunction issued by any court or public
authority, restraining or prohibiting the transactions contemplated by this
Agreement.
7.02 CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇▇▇ AND THE SHAREHOLDER. The
obligation of ▇▇▇▇▇▇▇ and the Shareholder to effect the Closing is subject
to the fulfillment, prior to or at the Closing, of each of the following
conditions, except to the extent waived in writing by ▇▇▇▇▇▇▇ or the
Shareholder:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of SAIC contained in this Agreement or in any certificate,
schedule, exhibit or other document delivered pursuant to the provisions of
this Agreement, or in connection herewith, shall be true and correct in all
material respects as of the date when made and again at and as of the
Closing Date (except that any representation or warranty already qualified
as to materiality shall be true in all respects) as though made at that time.
(b) COVENANTS. SAIC shall have performed and complied in all
material respects with all covenants, agreements and conditions required by
this Agreement to be performed or complied with by SAIC prior to or at the
Closing Date.
(c) CLOSING CERTIFICATE. ▇▇▇▇▇▇▇ shall have received a
certificate, dated the Closing Date, from a Corporate Vice President, the
Secretary or Assistant Secretary of SAIC, stating that each of the
conditions set forth in Section 7.01(a), (b) and (c) and 7.02(a) and (b)
hereof, to the best of his or her knowledge, has been satisfied.
(d) SERVICES AGREEMENT. SAIC shall have executed and
delivered to ▇▇▇▇▇▇▇ a Services Agreement, in a form mutually agreeable to
the parties, relating to certain services to be provided by SAIC to ▇▇▇▇▇▇▇
(the "Services Agreement").
(e) Transition Services Agreement. SAIC and the Shareholder
shall have executed and delivered to ▇▇▇▇▇▇▇ a Transition Services Agreement,
in a form mutually agreeable to the parties, relating to certain transition
services to be provided by ▇▇▇▇▇▇▇ and the Shareholder to SAIC (the
"Transition Services Agreement").
(f) Assumption Agreement. SAIC shall have executed and
delivered to ▇▇▇▇▇▇▇ the Assumption Agreement.
(g) Initial Payment. SAIC shall have wired the Initial Payment
to an account designated by ▇▇▇▇▇▇▇.
7.03 Conditions to Obligations of SAIC. The obligation of SAIC to
effect the Closing is subject to the fulfillment, prior to or at the Closing,
of each of the following conditions, except to the extent waived in writing
by SAIC:
(a) Representations. The representations and warranties of
▇▇▇▇▇▇▇ contained in this Agreement or in any certificate, schedule, exhibit
or other document delivered pursuant to the provisions of this Agreement, or
in connection herewith, shall be true and correct in all material respects
as of the date when made, and again at and as of the Closing Date (except
that any representation or warranty already qualified as to materiality
shall be true in all respects) as though made at that time.
(b) Covenants. ▇▇▇▇▇▇▇ shall have performed and complied in
all material respects with all covenants, agreements and conditions required
by this Agreement to be performed or complied with by them prior to or at
the Closing Date.
(c) Consents and Assignments. ▇▇▇▇▇▇▇ shall have obtained and
provided to SAIC each approval, consent and assignment agreement listed in
Schedule 7.03(c), each in form and substance reasonably satisfactory to SAIC.
(d) Closing Certificate. SAIC shall have received a
certificate dated the Closing Date from the President and Secretary of
▇▇▇▇▇▇▇ stating that each of the conditions set forth in Section 7.01(a), (b)
and (c) and Section 7.03(a), (b) and (c) hereof, to the best of their
knowledge, has been satisfied.
(e) Due Diligence. SAIC shall have approved, in its sole and
absolute discretion, its due diligence review of the Assets and the Business
Units.
(f) ▇▇▇▇ of Sale. ▇▇▇▇▇▇▇ shall have delivered to SAIC a duly
authorized and executed ▇▇▇▇ of Sale.
(g) Absence of Liens. At or prior to the Closing, ▇▇▇▇▇▇▇
shall have delivered to SAIC a UCC search report dated as of a recent date
issued by the Secretary of State of Delaware and each state in which ▇▇▇▇▇▇▇
is qualified to do business indicating that there are no filings under the
Uniform Commercial Code on file with such Secretary of State which name
▇▇▇▇▇▇▇ as debtor or otherwise indicating any lien on the Assets, except
for (i) the liens which SAIC has approved, in its sole discretion, and
(ii) liens with respect to which ▇▇▇▇▇▇▇ will deliver releases on or before
the Closing Date duly executed by the lender or other creditor which is the
holder of such lien.
(h) Novation Agreement. ▇▇▇▇▇▇▇ shall have executed and
delivered to SAIC a Novation Agreement, which shall be in the form of Exhibit
7.03(h), relating to ▇▇▇▇▇▇▇'▇ United States government contracts which are
assigned to SAIC pursuant hereto.
(i) Key Employees. All of the Key Employees identified on
Schedule 7.03(i) shall have indicated his or her agreement to accept
employment with SAIC or shall have agreed to become consultants to SAIC after
the Closing on terms and conditions acceptable to SAIC in its sole and
absolute discretion (contingent upon the Closing and effective on the Closing
Date); provided, such Key Employees are offered salaries and benefits
reasonably comparable to their current salaries and benefits.
(j) Staff. At least eighty-five percent (85%) of the current
employees of ▇▇▇▇▇▇▇ who are offered employment with SAIC shall have accepted
employment with SAIC on terms and conditions acceptable to SAIC in its sole
and absolute discretion (contingent upon the Closing and effective on the
Closing Date); provided, such employees are offered salaries and benefits
reasonably comparable to their current salaries and benefits.
(k) Assignments; Subleases; Estoppels. Each of the assignment
of lease agreements, sublease agreements and related landlord consents and
estoppel certificates attached thereto as (or identified on) Exhibit 7.03(k)
shall have been executed and delivered by the applicable parties thereto
(other than SAIC).
(l) Board Resolutions. ▇▇▇▇▇▇▇ shall have delivered to SAIC
certified resolutions of its Board of Directors approving the execution of
this Agreement and the consummation of the transactions contemplated hereby.
(m) Services Agreement. ▇▇▇▇▇▇▇ shall have executed and
delivered to SAIC the Services Agreement.
(n) Transition Services Agreement. ▇▇▇▇▇▇▇ and the Shareholder
shall have executed and delivered to SAIC the Transition Services Agreement.
(o) Assumption Agreement. ▇▇▇▇▇▇▇ shall have executed and
delivered to SAIC the Assumption Agreement.
ARTICLE VIII
COVENANT NOT TO COMPETE; NON-SOLICITATION; CONFIDENTIALITY
8.01 Noncompetition.
(a) Definitions. For the purposes of this Section 8.01, the
following definitions will apply:
(i) "Competitive Activities" means the provision of the
following professional services to the United States Government or commercial
technology companies: the services of physicists, engineers, and computer
scientists in the areas of shock physics, plasma physics, hydrodynamics,
counter terrorism, chemical and biological agent defeat, nuclear weapon
effects, seismology, geothermal reservoirs, spacecraft environment
interactions, electronics and sensor technology, high power microwave and
pulse power technology and simulation software to the extent such activities
are currently conducted by the Business Units.
(ii) "Noncompete Period" means the period beginning on
the Closing Date and ending on the third anniversary of the Closing Date.
(iii) "Territory" means the North America.
(b) Obligations.
(i) ▇▇▇▇▇▇▇ previously has conducted the Competitive
Activities throughout the Territory. ▇▇▇▇▇▇▇ and the Shareholder agree that
to protect adequately the interest of SAIC in the Assets and the Business
Units, it is essential that any covenant not to compete with respect thereto
cover all Competitive Activities and the entire Territory.
(ii) ▇▇▇▇▇▇▇ and the Shareholder shall not, during the
Noncompete Period, in any manner, directly or indirectly or by assisting
others, engage in any activity or business that conducts, in any manner, any
of the Competitive Activities anywhere in the Territory. Notwithstanding
the foregoing, in no event shall the Shareholder and its affiliates be
prohibited from engaging in business activities associated with the
technology, products and lines of business, as described in the Annual
Report to Shareholders on Form 10-K for fiscal year ended December 31, 2000.
8.02 Non-solicitation. During the period of two (2) years commencing
on the Closing Date, (i) ▇▇▇▇▇▇▇ and the Shareholder shall not induce or
solicit (directly or indirectly) any employee to leave the employ of the SAIC
Business Unit (or its successor) or engage (directly or indirectly) the
services (as an employee, consultant, independent contractor or otherwise)
of any such employee, without the prior express written consent of SAIC and
(ii) the SAIC Business Unit shall not induce or solicit (directly or
indirectly) any employee to leave the employ of ▇▇▇▇▇▇▇ (or its successor) or
engage (directly or indirectly) the services (as an employee, consultant,
independent contractor or otherwise) of any such employee, without the prior
express written consent of ▇▇▇▇▇▇▇ or Shareholder. Notwithstanding the above,
neither party shall be precluded from hiring any such employee who (i)
initiates discussions regarding such employment without any direct or indirect
solicitation by the hiring party, (ii) responds to any public advertisement
placed by the hiring party or (iii) has been terminated by the other party or
its affiliates prior to commencement of employment discussions between the
hiring party and such employee.
8.03 Nondisclosure.
(a) Confidential Information. "Confidential Information" shall
mean business, technical or financial information of ▇▇▇▇▇▇▇ included in the
Assets or otherwise transferred to SAIC hereunder, to the extent that such
information has been maintained by ▇▇▇▇▇▇▇ and/or the Shareholder in
confidence and has commercial value because it is not generally known to
others. Confidential Information may include technical data, hardware and
software specifications, computer programs, system documentation, user
manuals, prototypes, analyses, information related to product planning,
pricing, marketing, research and development, financial data, customer lists
and data.
(b) Restrictions. During the period of three (3) years
commencing on the Closing Date, ▇▇▇▇▇▇▇ and the Shareholder shall (i) not
use such Confidential Information for any purpose, (ii) not disclose such
Confidential Information to anyone except those of its Affiliates, employees,
contractors, consultants or advisors who have a need to know for the
permitted purposes, (iii) protect the confidentiality of and take all
reasonable steps to prevent disclosure or unauthorized use of such
Confidential Information in order to prevent it from falling into the public
domain or the possession of persons not legally bound to maintain its
confidentiality, (iv) not reverse engineer such Confidential Information nor
utilize or disseminate such Confidential Information for the purpose of
reverse engineering, and (v) not produce any product nor offer any service
of any nature whatsoever based in whole or in part on such Confidential
Information nor cause or assist any other Person in doing so.
(c) Exclusions. The restrictions on use and disclosure of
Confidential Information set forth herein shall not apply to information that
(i) is in or enters the public domain through no wrongful act of ▇▇▇▇▇▇▇ or
the Shareholder; (ii) is independently developed by ▇▇▇▇▇▇▇ or the Shareholder
subsequent to the Closing; (iii) is rightfully received by ▇▇▇▇▇▇▇ or the
Shareholder subsequent to Closing from a third party without restriction and
without breach of this Agreement; (iv) is approved for release by SAIC's
written authorization; or (v) is required to be disclosed by order of a
governmental agency, legislative body or a court of competent jurisdiction.
8.04 Severability. If a judicial or arbitral determination is made
that any provision of this Article VIII constitutes an unreasonable or
otherwise unenforceable restriction against either party, the provisions of
this Article VIII shall be rendered void to the extent that such judicial or
arbitral determination finds such provision to be unreasonable or otherwise
unenforceable. In this regard, ▇▇▇▇▇▇▇, the Shareholder and SAIC hereby
agree that any judicial authority construing this Agreement shall be
empowered to sever any portion of the Territory, and prohibited Competitive
Activities or any time period from the coverage of this Article VIII and to
apply the provisions of this Article VIII to the remaining portion of the
Territory, the remaining business activities and the remaining time period
not so severed. Moreover, notwithstanding the fact that any provision of
this Article VIII is determined not to be specifically enforceable, the
non-breaching party nevertheless shall be entitled to recover monetary
damages as a result of the breach of the specific covenants not to engage
in any Competitive Activities, not to solicit employees or consultants or
not to disclose Confidential Information set forth in Sections 8.01, 8.02
or 8.03 (as the case may be). The time period during which the prohibitions
set forth in this Article VIII shall apply shall be tolled and suspended for
a period equal to the aggregate time during which the breaching party
violates such prohibitions in any respect.
8.05 Injunctive Relief. ▇▇▇▇▇▇▇ and the Shareholder agree that any
remedy at law for any breach of the provisions contained in this Article VIII
shall be inadequate and that SAIC shall be entitled to injunctive relief in
addition to any other remedy SAIC might have under this Agreement.
ARTICLE IX
CERTAIN OTHER COVENANTS AND AGREEMENTS
9.01 Consents and Filings. Each party shall (and shall cause its
Affiliates to) use all commercially reasonable efforts to obtain or make, as
the case may be, as soon as possible, all filings and requests for
governmental approvals as may be required to be obtained or made by it
(and/or any of its Affiliates) in order to enable such party (and/or any of
its Affiliates) to perform its obligations under this Agreement.
9.02 Announcements. No party will issue any press release or
otherwise make any public statement with respect to the transactions
contemplated hereby without the prior written consent of the other party(ies),
except as and to the extent that such party or any of its Affiliates
determines in good faith that it is so obligated by law or stock exchange
rules, in which case such party shall give notice to the other party in
advance of such party's or its Affiliate's intent to make such announcement
or issue such press release and the parties hereto shall use all reasonable
efforts to cause a mutually agreeable release or announcement to be issued.
9.03 Delivery of Books and Records. At the Closing, ▇▇▇▇▇▇▇ will
deliver to SAIC all original contracts, books and records that are directly
and solely related to the Assets and Assumed Liabilities. Upon request by
SAIC within three (3) years after the Closing, ▇▇▇▇▇▇▇ will deliver to SAIC
complete copies of any other documents relating to the Business Units in
▇▇▇▇▇▇▇'▇ possession. ▇▇▇▇▇▇▇ will notify SAIC in writing prior to
destroying any such documents, and give SAIC an opportunity to obtain such
documents for its records. SAIC understands and acknowledges that ▇▇▇▇▇▇▇
intends to sell to Titan Systems Corporation ("Titan") certain assets and
operations not sold to SAIC hereunder and that Titan or ▇▇▇▇▇▇▇ may require
access to these books and records from time to time in the future.
Assuming such sale is consummated and Titan agrees to a reciprocal provision,
SAIC agrees to make such books and records available to ▇▇▇▇▇▇▇ or Titan for
three years or longer if required by Federal Acquisition Regulations, as
reasonably required for a legitimate purpose on a non-interference basis
after being provided at least two (2) days advance notice by Titan.
9.04 Closing Audit. In connection with SAIC's closing audit, ▇▇▇▇▇▇▇
shall afford SAIC (and its attorneys, accountants and other representatives)
reasonable access to its properties and personnel and will make available to
SAIC all contracts, agreements, books, papers and records relating to the
properties, assets, businesses, operations, prospects, obligations and
liabilities of and associated with ▇▇▇▇▇▇▇ as SAIC reasonably may request.
In this regard, Deloitte & Touche, LLP, or such other firm of independent
public accountants as SAIC may designate, shall be entitled to examine and
review the working papers of ▇▇▇▇▇▇▇ used or produced in connection with
the preparation or compilation of its financial statements relating to the
operations or financial condition of the Business Units.
9.05 Litigation Support. If and for so long as any party hereto
actively is contesting or defending against any third party action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand in
connection with (i) any transaction contemplated under this Agreement or
(ii) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, or
transaction on or prior to the Closing Date involving the Assets or the
Business Units, the other party will cooperate with the contesting or
defending party and his or its counsel in the contest or defense, make
available its personnel, and provide such testimony and access to its books
and records as reasonably shall be necessary with respect to the contest or
defense, all at the sole cost and expense of the contesting or defending
party (unless the contesting or defending party is entitled to
indemnification therefor as provided elsewhere in this Agreement).
9.06 Cooperation. After the Closing, the parties shall cooperate in
good faith to facilitate the transfer of the Assets and the Business Units
in the manner contemplated hereunder with minimum disruption for the parties.
Each party shall provide the other such reasonable access to its books,
records and employees as may be required to carry out the purposes of this
Section 9.06. In addition, ▇▇▇▇▇▇▇ shall cooperate with SAIC and do all
things reasonably necessary to assure that all costs, fees and expenses
incurred by ▇▇▇▇▇▇▇ prior to the Closing Date and by SAIC after the Closing
Date which are billable to clients under contracts included within the Assets
to be novated or assigned to and assumed by SAIC as a result of the
transactions contemplated hereby shall be billed properly, which ▇▇▇▇ will
be prepared and delivered by SAIC. Upon receipt of payments which relate to
the contracts included in the Assets to be novated or assigned to and
assumed by SAIC, ▇▇▇▇▇▇▇ shall promptly identify those payments and remit
such payments to SAIC within five (5) days after identification by ▇▇▇▇▇▇▇.
Likewise, SAIC shall pay promptly to ▇▇▇▇▇▇▇ any sums received after the
Closing Date which are not part of the Assets sold hereunder and properly
belong to ▇▇▇▇▇▇▇.
9.07 Personnel Matters. ▇▇▇▇▇▇▇ shall use reasonable and commercially
practicable efforts to assist SAIC in hiring all ▇▇▇▇▇▇▇ employees to whom
SAIC offers employment (a list of which employees will be provided to
▇▇▇▇▇▇▇). ▇▇▇▇▇▇▇ shall not take any action, directly or indirectly, to
prevent or discourage any such ▇▇▇▇▇▇▇ employee from being employed by SAIC
as of the Closing Date and shall not solicit, invite or induce or entice any
such employee to remain in the employ of ▇▇▇▇▇▇▇ or otherwise attempt to
retain the services of any such employee, except with the prior written
consent of SAIC. At the Closing, ▇▇▇▇▇▇▇ shall waive, for the benefit of
SAIC, any and all restrictions in any oral or written agreement with any of
the Key Employees or any other ▇▇▇▇▇▇▇ employee SAIC hires, relating to (a)
noncompetition with ▇▇▇▇▇▇▇ subsequent to termination of employment
therewith and/or (b) the maintenance of confidentiality of any information
for the benefit of ▇▇▇▇▇▇▇, to the extent such information is related to the
Assets, the Business Units and SAIC's unrestricted enjoyment of the benefits
thereof. In addition, the parties agree that the Transition Services
Agreement will contain terms and conditions under which employees of ▇▇▇▇▇▇▇
and the Shareholder will be made available for services to SAIC during a
transition period. Similarly, the Services Agreement will contain terms and
conditions regarding services SAIC will provide to ▇▇▇▇▇▇▇.
9.08 Assignment of Contracts. After the Closing Date, SAIC and
▇▇▇▇▇▇▇ shall cooperate to assign to SAIC all contracts set forth on Exhibit
2.01. SAIC and ▇▇▇▇▇▇▇ will do all things reasonably necessary and prepare
all documents and certifications required for novation or assignment of such
contracts in a timely and accurate manner. If any such contract cannot be
assigned or novated after a good faith effort by the parties hereto, SAIC and
▇▇▇▇▇▇▇ shall take all reasonable and commercially practicable action as is
necessary to subcontract the work under such contracts to SAIC.
9.09 Transfer Taxes. All sales, use, transfer, stamp, conveyance, or
other similar Taxes, duties, excises or governmental charges imposed by any
Governmental Authority, domestic or foreign, with respect to the sale of the
Assets shall be borne entirely by SAIC.
9.10 Transaction Expenses. Each party shall pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and
the transactions contemplated hereby, whether or not the Closing occurs.
9.11 SAIC Stock Option Pool. Subject to the approval of the stock
option committee of SAIC, SAIC shall make available to the SAIC Business
Unit's key employees and other staff members a pool of vesting stock options
("Vesting Options") to acquire shares of SAIC's class A common stock ("SAIC
Stock"). The Vesting Options (i) will be issued pursuant to SAIC's 1998
Stock Option Plan, as amended or replaced, as soon as practicable following
the Closing, (ii) will vest over a four (4) year period in accordance with
SAIC's standard vesting schedule in effect on the date of award, (iii) will
be subject to SAIC's standard Non-Qualified Stock Option Agreement and
Confirmation, and (iv) will be issued as soon as practicable following
Closing. The exercise price with respect to the Vesting Options shall be the
formula price for each share of SAIC Stock, as determined by SAIC's Board of
Directors, for each share of SAIC Stock which is in effect on the date the
Vesting Options are awarded.
9.12 Employee Benefits. Effective as of the Closing Date, Transferred
Employees will be provided the opportunity to participate in SAIC's stock
ownership program and SAIC's employee benefit plans and programs in the same
manner, and to the same extent, as SAIC's similarly situated employees
participate in such plans and programs and SAIC shall recognize the years
and/or hours of service to ▇▇▇▇▇▇▇ by the Transferred Employees for purposes
of computation of vesting and eligibility determinations under such plans and
programs.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
CLAIMS AGAINST HOLDBACK AMOUNT; INDEMNIFICATION
10.01 Survival. All covenants, agreements, representations, and
warranties of the parties contained in this Agreement or incorporated herein
by reference shall (i) survive the Closing for the periods of time specified
in Section 10.08, notwithstanding any investigation made by or on behalf of
any party hereto, and (ii) be deemed to be made as of the date hereof and as
of the Closing Date, in each case, subject to the limitations set forth in
Section 10.08 below.
10.02 Statements as Representations. All statements contained in this
Agreement (including the Recitals hereto), the Disclosure Schedule, and each
exhibit, agreement, certificate or instrument delivered pursuant to this
Agreement shall be deemed covenants or representations and warranties (as
appropriate) within the meaning of this Article X.
10.03 SAIC Claims Against Holdback Amount.
(a) Right of Set-Off. Subject to the provisions and conditions
of this Article X, the portion of the Holdback Amount to be delivered to
▇▇▇▇▇▇▇ pursuant to Section 3.02(d) shall be reduced for any Damages
asserted against, imposed upon or incurred by SAIC or any of its
Subsidiaries, directors, officers, employees, agents or representatives
(the "SAIC Parties") resulting from, relating to or arising out of:
(i) any breach of a representation, warranty, covenant
or agreement of ▇▇▇▇▇▇▇ contained in or made pursuant to this Agreement;
(ii) any breach of a representation, warranty, covenant
or agreement of ▇▇▇▇▇▇▇ contained in or made pursuant to any agreement,
contract or instrument which is required to be executed by any of them in
connection with the Closing or pursuant to this Agreement ("Ancillary
Instrument");
(iii) any event, state of facts, circumstances or
condition occurring or existing prior to the Closing, or any act or omission
of ▇▇▇▇▇▇▇ or any of its Subsidiaries, affiliates, directors, officers,
employees, agents or representatives prior to the Closing which relates to
the Assets or the Business Units, excluding in any such case the Assumed
Liabilities; or
(iv) any liability in respect of any Taxes assessed
against or with respect to the Assets or the Business Units attributable to
the Pre-Closing Date Tax Period.
The matters and events described in clauses (a)(i) through (iv) above
are referred to as the "Buyer Indemnification Events."
(b) Procedure In Event of Claimed Set-Off. If SAIC asserts a
claim for set-off against the Holdback Amount pursuant to Section 10.03(a),
it promptly shall provide an Indemnification Notice to ▇▇▇▇▇▇▇ and the
individuals specified in Section 11.06 in accordance with the procedures set
forth in Section 10.06(a) hereof. Within thirty (30) days after the date of
such Indemnification Notice, ▇▇▇▇▇▇▇ either shall approve the claim for set-
off and the amount thereof (thereafter, an "Approved Claim") or shall
disapprove the claim or the amount thereof (thereafter, a "Rejected Claim"),
or both. If ▇▇▇▇▇▇▇ fails to approve or disapprove a claim or the amount of
Damages asserted with respect thereto within the requisite period, the claim
shall be deemed to be an Approved Claim. SAIC shall be entitled to set-off
the amount of any Approved Claim against the Holdback Amount. SAIC and
▇▇▇▇▇▇▇ shall resolve their disagreements with respect to any Rejected Claim
in accordance with the dispute resolution procedures set forth in Section
11.04. SAIC shall be entitled to withhold the stated amount of any Rejected
Claim from the Holdback Amount pending resolution of the claim. If,
pursuant to the procedures set forth in Section 11.04, it ultimately is
determined that any further portion of the Holdback Amount relating to such
Rejected Claim is then due to ▇▇▇▇▇▇▇, SAIC agrees to pay such additional
portion of the Holdback Amount to ▇▇▇▇▇▇▇.
10.04 Indemnification by ▇▇▇▇▇▇▇. In addition to SAIC's right to
deduct the aggregate amount of Damages arising from a Buyer Indemnification
Event from the Holdback Amount, subject to the terms, conditions and
limitations of this Article X, ▇▇▇▇▇▇▇ shall indemnify, defend and hold
harmless the SAIC Parties from and against all Damages suffered by, imposed
upon or incurred by any Indemnitee(s) or, resulting from, relating to or
arising out of any Buyer Indemnification Event.
10.05 Indemnification by SAIC. Subject to the provisions and
conditions of this Article X, SAIC shall indemnify, defend and hold harmless
▇▇▇▇▇▇▇ and any of its Subsidiaries, directors, officers, employees, agents
or representatives (the "▇▇▇▇▇▇▇ Parties") from and against all Damages
asserted against, imposed upon or incurred by it, resulting from, relating
to or arising out of:
(a) any breach of any representation, warranty, covenant or
agreement of SAIC contained in or made pursuant to this Agreement or any
Ancillary Instrument.
(b) any event, state of facts, circumstances or condition
occurring or existing after the Closing, or any act or omission of SAIC or
its subsidiaries, affiliates, directors, officers, employees, agents or
representatives after the Closing which relates to the Assets or the Business
Units.
10.06 Notice of Indemnification Claims.
(a) Notice of Claims. If (i) a claim is made by a third party
against any party that is subject to a right of indemnification hereunder or
(ii) any party hereto becomes aware of facts or circumstances establishing
that such party has experienced or incurred Damages or will experience or
incur Damages subject to set-off or indemnification under this Article X,
then such party (hereinafter, an "Indemnitee" or "Indemnitees") shall give
to the other party or parties (hereinafter, the "Indemnifying Party" or the
"Indemnifying Parties") written notice of such claim ("Indemnification
Notice") as soon as reasonably practicable but in no event more than thirty
(30) days after the Indemnitee has received notice of or obtains actual
knowledge of such claims (provided that failure to give such notice shall
not limit the Indemnifying Party's indemnification obligation hereunder
except to the extent that the delay in giving, or failure to give, the
notice adversely affects the Indemnifying Party's ability to defend against
the claim). To the extent practicable, the Indemnification Notice will
describe with reasonable specificity (x) the nature of and the basis for
the set-off or indemnification claim, including any relevant supporting
documentation, and (y) an estimate of all Damages associated therewith.
If the Indemnifying Party or Indemnifying Parties do not object within
thirty (30) days after receipt of the Indemnification Notice to the
propriety of the set-off or indemnification claims described as being
subject to set-off or indemnification pursuant to Section 10.03, 10.04 or
10.05 or the amount of Damages asserted in the Indemnification Notice,
the set-off or indemnification claims described in the Indemnification
Notice shall be deemed final and binding upon the Indemnifying Party(ies)
(hereinafter, "Permitted Indemnification Claim"). If the Indemnifying Party
contests the propriety of an indemnification claim described on the
Indemnification Notice and/or the amount of Damages associated with such
claim, then the Indemnifying Party shall deliver to the Indemnitee a
written notice detailing with reasonable specificity all specific
objections the Indemnitee has with respect to the indemnification claims
contained in the Indemnification Notice ("Indemnification Objection
Notice"). If the Indemnifying Party and the Indemnitee are unable to
resolve the disputed matters described in the Indemnification Objection
Notice within fifteen (15) business days after the date the Indemnifying
Party received the Indemnification Objection Notice, the disputed matters
will be subject to the dispute resolution procedures set forth in Section
11.04 hereof. Any undisputed indemnification claims contained in the
Indemnification Notice shall be deemed to be final and binding upon the
Indemnifying Party(ies) and shall constitute an Approved Claim and a
Permitted Indemnification Claim. If the arbitrator's determination of the
disputed matters results in all or any portion of an indemnification claim
properly being subject to set-off or indemnification pursuant to Section
10.03, 10.04 or 10.05, such claim or portion thereof shall be final and
binding upon the Indemnifying Party(ies) and shall constitute an Approved
Claim and/or a Permitted Indemnification Claim.
(b) Defense of Third Party Claims. An Indemnitee against whom
a third party claim is made shall give the Indemnifying Party an opportunity
to defend such claim, at the Indemnifying Party's sole expense and with
counsel selected by the Indemnifying Party and reasonably satisfactory to
the Indemnitee, provided that such Indemnitee at all times also shall have
the right to participate fully in defense at its sole expense. Failure of
an Indemnifying Party to give an Indemnitee written notice of its election
to defend such claim within thirty (30) days after receipt of notice thereof
shall be deemed a waiver by such Indemnifying Party of its right to defend
such claim. If an Indemnifying Party shall elect not to assume the defense
of such claim (or if such Indemnifying Party shall be deemed to have waived
its right to defend such claim), the Indemnitee against whom such claim is
made shall have the right, but not the obligation, to undertake the sole
defense of, and to compromise or settle, the claim on behalf, for the
account, and at the risk and expense, of the Indemnifying Party (including
without limitation the payment by such Indemnifying Party of the Indemnitees'
reasonable attorneys' fees); provided, however, that if the Indemnitee
undertakes the sole defense of such claim on behalf of the account, and at
the risk and expense of the Indemnifying party, it shall defend such claim
in good faith and shall apprise the Indemnifying Party from time to time as
the Indemnitee deems appropriate of the progress of such defense. If one
or more of the Indemnifying Parties assumes the defense of such claim, the
obligation of such Indemnifying Party hereunder as to such claim shall
include taking all steps necessary in the defense or settlement of such
claim. The Indemnifying Party, in the defense of such claim, shall not
consent to the entry of any judgment or enter into any settlement (except
with the written consent of the Indemnitee) which does not include as an
unconditional term thereof the giving by the claimant to the Indemnitee
against whom such claim is made of a release from all liability in respect
of such claim (which release shall exclude only any obligations incurred
in connection with any such settlement). If the claim is one that cannot
by its nature be defended solely by the Indemnifying Party, then the
Indemnitee shall make available, at the Indemnifying Party's expense, all
information and assistance that the Indemnifying Party reasonably may request.
10.07 Determination of Damages. Damages with respect to any Approved
Claim or Permitted Indemnification Claim shall be determined without regard
to any materiality or knowledge qualification set forth in any representation,
warranty or covenant. The Indemnifying Party or Indemnifying Parties shall
pay to the Indemnitee the entire amount of all Damages associated with any
Permitted Indemnification Claim within thirty (30) days after such claim is
determined to be a Permitted Indemnification Claim pursuant to Section 10.06
above.
10.08 Limitations on Indemnity.
(a) Termination of Indemnification Rights. The representations
and warranties contained in or made pursuant to this Agreement or any
Ancillary Instrument and the related indemnity obligations set forth in this
Article X shall terminate on, and no claim or action with respect thereto may
be brought after, the date that is eighteen (18) months after the Closing
Date, except that (i) the representations and warranties contained in
Sections 5.01, 5.02, 5.03, 5.04 and 5.05 and in Article VI, shall survive
indefinitely, and (ii) the representations and warranties contained in
Section 5.16 and 5.31 will survive until the termination of any applicable
statute of limitations. Notwithstanding the foregoing, the representations
and warranties which terminate or expire as set forth herein, and the
liability of any Indemnifying Party hereto with respect thereto pursuant to
this Article X, shall not terminate with respect to any claim, whether fixed
or not fixed as to liability or liquidated as to amount, with respect to
which the Indemnifying Party has been given an Indemnification Notice prior
to such termination or expiration pursuant to the preceding sentence. No
covenant or agreement of any party hereto shall survive Closing, except that
any covenant or agreement that, by its terms or context, is intended to
survive the Closing, shall survive the Closing for the period specified
therein or contemplated thereby.
(b) Continuing Obligations. The obligations of the
Indemnifying Parties shall continue with respect to any claims for Damages
asserted by any Indemnitee prior to the last date upon which such Indemnitee
may assert such claims until resolution thereof.
(c) Mitigation and Insurance. SAIC shall undertake commercially
reasonable efforts to mitigate all Damages incurred hereunder until such time
as any claim for Damages hereunder is finally and fully resolved, including
the time during which ▇▇▇▇▇▇▇ may be pursuing claims with respect to such
Damages under and with respect to any policy or policies of insurance
maintained by ▇▇▇▇▇▇▇ prior to the Closing Date. In addition, if and to the
extent that such Damages are or may be covered by any such policy or policies
of insurance maintained by ▇▇▇▇▇▇▇ prior to the Closing Date, SAIC shall
provide reasonable and commercially practical cooperation and assistance to
▇▇▇▇▇▇▇ in conjunction with their efforts to make any and all claims under
and with respect to such insurance policies, and any proceeds of such
insurance policies which actually are paid or become payable to SAIC shall
be applied to offset any Damages which otherwise would be paid or become
payable by ▇▇▇▇▇▇▇ hereunder, provided that the prosecution or resolution of
any claims under or with respect to such insurance policies shall not ▇▇▇▇▇,
impair, or delay SAIC's' ability to pursue its rights under this Article X.
(d) Aggregate Indemnity Limitations.
(i) Absent a finding of fraud or intentional
misrepresentation, ▇▇▇▇▇▇▇ shall not be obligated to make any indemnification
payment pursuant to this Article X, for Damages under Sections 10.03(a)(i)
and (ii), to any SAIC Party, on account of any Permitted Indemnification
Claim to the extent such indemnification payment, together with all other
indemnification payments in respect of Approved Claims and Permitted
Indemnification Claims (including amounts subject to set-off pursuant to
Section 10.03), would exceed the Purchase Price.
(ii) Absent a finding of fraud or intentional
misrepresentation, SAIC shall not be obligated to make any indemnification
payment pursuant to this Article X, for Damages under Section 10.05(a), to
any ▇▇▇▇▇▇▇ Party on account of any Permitted Indemnification Claim to the
extent such indemnification payment, together with all other indemnification
payments in respect of Approved Claims and Permitted Indemnification
Claims would exceed the Purchase Price.
(e) Basket. Notwithstanding anything to the contrary contained
in this Agreement, no Indemnitee shall be entitled to set-off or
indemnification under this Article X, for Damages under Sections 10.03(a)(i),
10.03(a)(ii) and 10.05(a), unless and until the aggregate amount of Damages
that the Indemnifying Party otherwise would be obligated to pay pursuant to
the provisions of this Agreement exceeds Fifty Thousand Dollars ($50,000)
(the "Deductible"); thereafter, the Indemnitee shall be entitled to
indemnification as to all such Damages in excess of the initial Fifty
Thousand Dollars ($50,000).
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01 Amendment and Modifications. This Agreement may be amended,
modified and supplemented only by written agreement between the parties
hereto which states that it is intended to be a modification of this
Agreement.
11.02 Waiver of Compliance. Any failure of ▇▇▇▇▇▇▇ or SAIC to comply
with any obligation, representation, warranty, covenant, agreement or
condition herein may be waived in writing by the other applicable parties,
but such waiver or failure to insist upon strict compliance with such
obligation, representation, warranty, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
11.03 Remedies; Waiver. To the maximum extent permitted by law, all
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available under applicable
law. No failure on the part of any party to exercise or delay in exercising
any right hereunder shall be deemed a waiver thereof, nor shall any single
or partial exercise preclude any further or other exercise of such or any
other right.
11.04 Dispute Resolution.
(a) Negotiated Resolution. If any dispute arises (i) out of
or relating to, this Agreement or any alleged breach thereof, or (ii) with
respect to any of the transactions or events contemplated hereby ("Dispute"),
the party desiring to resolve such Dispute shall deliver a written notice
describing such Dispute with reasonable specificity to the other parties
("Dispute Notice"). If any party delivers a Dispute Notice pursuant to this
Section 11.04, or if any Indemnifying Party delivers to any Indemnitee an
Indemnification Objection Notice pursuant to Section 10.06, the parties
involved in the Dispute shall meet at least twice within the thirty (30)
day period commencing with the date of the Dispute Notice or the
Indemnification Objection Notice (as the case may be) and in good faith
shall attempt to resolve such Dispute or the Rejected Claim (as the case
may be).
(b) Mediation. If any Dispute or Rejected Claim is not
resolved or settled by the parties as a result of negotiation pursuant to
Section 11.04(a) above, the parties shall submit the Dispute or Rejected
Claim to non-binding mediation before a retired judge of a federal District
Court or California Supreme Court, or some similarly qualified, mutually
agreeable individual. The parties shall bear the costs of such mediation
equally.
(c) Arbitration. If the Dispute or Rejected Claim is not
resolved by mediation pursuant to Section 11.04(b) above, or if the parties
fail to agree upon a mediator, within ninety (90) days after the Dispute
Notice or Indemnification Objection Notice (as the case may be), the Dispute
or Rejected Claim shall be settled by arbitration conducted in the State of
California which shall be in accordance with the rules and procedures of
JAMS/Endispute then in effect with respect to commercial disputes. The
arbitration of such issues, including the determination of any amount of
damages suffered by any party hereto by reason of the acts or omissions of
any party, shall be final and binding upon all parties. Notwithstanding the
foregoing, the arbitrator shall not be authorized to award punitive damages
with respect to any such claim or controversy, nor shall any party seek
punitive damages relating to any matter under, arising out of or relating
to this Agreement in any other forum. Except as otherwise set forth in the
Agreement, the cost of any arbitration hereunder, including the cost of the
record or transcripts thereof, if any, administrative fees, and all other
fees involved including reasonable attorneys' fees incurred by the party
determined by the arbitrator to be the prevailing party, shall be paid by
the party determined by the arbitrator not to be the prevailing party, or
otherwise allocated in an equitable manner as determined by the arbitrator.
11.05 Notices. All notices, requests, demandsand other communications
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given if delivered by hand, facsimile, electronic media,
overnight courier or mailed, certified or registered mail with postage
prepaid:
(a) SAIC: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Sector Controller
Science Applications International
Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇/▇ ▇▇▇-▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Corporate Vice President
Science Applications International
Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇/▇ ▇▇-▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
And to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Corporate Counsel
Science Applications International
Corporation
10260 Campus Point Drive, M/S ▇-▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as SAIC shall furnish
to ▇▇▇▇▇▇▇ in writing.
(b) ▇▇▇▇▇▇▇: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
General Counsel
▇▇▇▇▇▇▇ Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as ▇▇▇▇▇▇▇ shall furnish to
SAIC in writing.
11.06 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other party.
11.07 Governing Law. This Agreement and the legal relationship among
the parties hereto shall be governed and construed under the laws of the
State of California.
11.08 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Signature by telecopy shall be sufficient to evidence a party's intention
to be bound hereby, provided that such party forwards his or her original
signature to the other parties by first class mail or overnight delivery
service.
11.09 Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
11.10 Entire Agreement. This Agreement, including the exhibits and
schedules hereto, the Disclosure Schedule and the other documents and
certificates delivered pursuant to the terms hereof, and the Non-Disclosure
Agreement set forth the final, complete and exclusive agreement and
understanding of the parties hereto in respect of the subject matter
contained herein, and supersede all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral
or written, by any officer, employee or representative of any party hereto.
11.11 Third Parties. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person or corporation other than the parties
hereto or their successors and assigns any rights or remedies under or by
reason of this Agreement.
11.12 Further Assurances. Each of the parties hereto agrees that from
time to time, at the request of the other party hereto and without further
consideration, it will execute and deliver such other documents and take such
other action as such other party may reasonably request in order to consummate
more effectively the transactions contemplated hereby. The parties shall
cooperate with each other in such actions and in securing requisite approvals.
Each party shall execute and deliver both before and after the Closing such
further certificates, agreements and other documents and take such other
actions as the other party reasonably may request to consummate or implement
the transactions contemplated hereby or to evidence such events or matters.
11.13 Representation by Counsel; Interpretation. ▇▇▇▇▇▇▇ and SAIC
each acknowledge that each party to this Agreement has been represented by
counsel in connection with this Agreement and the transactions contemplated
by this Agreement. Accordingly, any rule of law or any legal decision that
would require interpretation of any claimed ambiguities in this Agreement
against the party that drafted it has no application and any such right is
expressly waived. The provisions of this Agreement shall be interpreted in
a reasonable manner to effect the intent of ▇▇▇▇▇▇▇ and SAIC.
11.14 Calendar Days. All references to days shall be deemed to refer
to calendar days unless this Agreement specifically refers to "business days,"
in which event Saturdays, Sundays and Federal holidays shall be excluded.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
"SAIC"
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Corporate Vice President
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Attest: By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Corporate Counsel
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"▇▇▇▇▇▇▇"
▇▇▇▇▇▇▇ TECHNOLOGIES SYSTEMS
DIVISION, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Chief Financial Officer
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Attest: By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Secretary
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"SHAREHOLDER"
▇▇▇▇▇▇▇ TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Chief Financial Officer
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Attest: By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Secretary
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TABLE OF CONTENTS
ARTICLE I 1
DEFINITIONS 1
1.01 Certain Definitions 1
1.02 Additional Definitions 3
ARTICLE II 5
SALE, TRANSFER AND CONVEYANCE OF ASSETS 5
2.01 Purchase and Sale of Assets 5
2.02 Excluded Assets 5
2.03 Transfer of Title 5
2.04 Liabilities to be Assumed 5
2.05 Further Assurances Regarding Transfer 6
ARTICLE III 6
CONSIDERATION AND PAYMENT 6
3.01 Consideration 6
3.02 Payment of Purchase Price 6
3.03 Allocation of Purchase Price 7
ARTICLE IV 8
CLOSING 8
4.01 Closing 8
4.02 Simultaneous Transactions 8
ARTICLE V 8
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇ 8
5.01 Corporate Existence and Power 8
5.02 Corporate Authorization 8
5.03 Authorization and Consents 9
5.04 Non-contravention 9
5.05 Properties and Title to Assets 9
5.06 Financial Statements; Related Information 10
5.07 Control of Essential Records 10
5.08 Absence of Certain Changes 10
5.09 Related Party Transactions 11
5.10 Material Contracts 12
5.11 Litigation 13
5.12 Employee Benefit Plans 13
5.13 Compliance with Laws and Court Orders 14
5.14 Finders' Fees 14
5.15 Patents and Other Proprietary Rights 14
5.16 Environmental Matters 16
5.17 Insurance Coverage 17
5.18 Licenses and Permits 17
5.19 Employees 18
5.20 Labor Matters 18
5.21 Business Records 18
5.22 Customers 18
5.23 Customer or Third Party Approval 18
5.24 Accounts Receivable 18
5.25 Absence of Unlawful Payments 18
5.26 Service Liability 19
5.27 Government Procurement Rules 19
5.28 Governmental Review 19
5.29 Government Claims 19
5.30 Government Furnished Property 19
5.31 Taxes 19
5.32 Accuracy and Completeness of Information 20
ARTICLE VI 21
REPRESENTATIONS AND WARRANTIES OF SAIC 21
6.01 Corporate Existence and Power 21
6.02 Authorization 21
6.03 Governmental Authorization 21
6.04 Non-contravention 21
ARTICLE VII 22
CONDITIONS TO CLOSING 22
7.01 General Conditions 22
7.02 Conditions to Obligations of ▇▇▇▇▇▇▇ and the
Shareholder 22
7.03 Conditions to Obligations of SAIC 23
ARTICLE VIII 24
COVENANT NOT TO COMPETE; NON-SOLICITATION; CONFIDENTIALITY 24
8.01 Noncompetition 24
8.02 Non-solicitation 25
8.03 Nondisclosure 25
8.04 Severability 26
8.05 Injunctive Relief 26
ARTICLE IX 27
CERTAIN OTHER COVENANTS AND AGREEMENTS 27
9.01 Consents and Filings 27
9.02 Announcements 27
9.03 Delivery of Books and Records 27
9.04 Closing Audit 27
9.05 Litigation Support 27
9.06 Cooperation 28
9.07 Personnel Matters 28
9.08 Assignment of Contracts 28
9.09 Transfer Taxes 28
9.10 Transaction Expenses 29
9.11 SAIC Stock Option Pool 29
9.12 Employee Benefits 29
ARTICLE X 29
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; CLAIMS AGAINST
HOLDBACK AMOUNT; INDEMNIFICATION 29
10.01 Survival 29
10.02 Statements as Representations 29
10.03 SAIC Claims Against Holdback Amount 29
10.04 Indemnification by ▇▇▇▇▇▇▇ 30
10.05 Indemnification by SAIC 30
10.06 Notice of Indemnification Claims 31
10.07 Determination of Damages 32
10.08 Limitations on Indemnity 32
ARTICLE XI 34
MISCELLANEOUS PROVISIONS 34
11.01 Amendment and Modifications 34
11.02 Waiver of Compliance 34
11.03 Remedies; Waiver 34
11.04 Dispute Resolution 34
11.05 Notices 35
11.06 Assignment 36
11.07 Governing Law 36
11.08 Counterparts 36
11.09 Headings 36
11.10 Entire Agreement 36
11.11 Third Parties 36
11.12 Further Assurances 36
11.13 Representation by Counsel; Interpretation 37
11.14 Calendar Days 37