Exhibit 10.1
STOCK PURCHASE AGREEMENT
SKE INTERNATIONAL L.L.C.
("BUYER")
▇▇▇▇▇▇▇ ▇▇▇▇▇ CORPORATION
("SELLER")
▇▇▇▇▇ SUPPORT SERVICES, INC.
("TARGET")
APRIL 28, 2000
1. DEFINITIONS.
2. PURCHASE AND SALE OF TARGET SHARES.
(A) BASIC TRANSACTION.
(B) ESCROW.
(C) TOTAL CONSIDERATION AND TERMS.
(D) NET PAYABLE ADJUSTMENT.
(E) NONCOMPETE.
(F) THE CLOSING.
(G) DELIVERIES AT THE CLOSING.
3. REPRESENTATIONS AND WARRANTIES OF BUYER AND SELLER.
(A) REPRESENTATIONS AND WARRANTIES CONCERNING BUYER.
(i) Organization of Buyer.
(ii) Authorization of Transaction.
(iii) Noncontravention.
(iv) Brokers' Fees.
(v) Ability to Consummate Transaction.
(vi) Investment Purpose Only.
(B) REPRESENTATIONS AND WARRANTIES CONCERNING SELLER.
(i) Authorization of Transaction.
(ii) Noncontravention.
(iii) Brokers' Fees.
(iv) Target Shares.
4. REPRESENTATIONS AND WARRANTIES CONCERNING TARGET.
(A) CORPORATE EXISTENCE AND CAPITALIZATION.
(B) AUTHORIZATION OF TRANSACTION.
(C) NONCONTRAVENTION.
(D) TITLE TO ASSETS.
(E) BOOKS AND RECORDS.
(F) SUBSIDIARIES.
(G) FINANCIAL STATEMENTS.
(H) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END.
(I) UNDISCLOSED LIABILITIES.
(J) LEGAL COMPLIANCE.
(K) TAX MATTERS.
(i) Filing of Tax Returns.
(ii) Payment of Taxes.
(iii) Audit, Investigations or Claims.
(iv) Lien.
(v) Security for Tax-Exempt Obligations.
(vi) Tax Exempt Use Property.
(vii) Foreign Person.
(viii)C Corporation.
(ix) Wage Withholding.
(x) No Backup Withholding.
(xi) Parachute Payments.
(xii) Changes in Accounting Method.
(L) REAL PROPERTY.
(M) INTELLECTUAL PROPERTY.
(N) CONTRACTS.
(O) LICENSES, PERMITS AND AUTHORIZATIONS.
(P) INSURANCE.
(Q) LITIGATION.
(R) EMPLOYEES.
(S) ENVIRONMENTAL MATTERS.
(T) EMPLOYEE BENEFITS.
(U) GUARANTIES.
(V) GOVERNMENT CONTRACTS.
(W) BROKERS' FEES.
(X) AWARD FEE SCORES.
(Y) DISCLOSURE.
5. PRE-CLOSING COVENANTS
(A) GENERAL.
(B) HSR AND GOVERNMENTAL CONSENTS.
(C) OPERATION OF BUSINESS.
(D) FULL ACCESS.
(E) CONFIDENTIALITY.
(F) CONSENTS; REASONABLE EFFORT; COOPERATION.
(G) NOTICE OF DEVELOPMENTS.
(H) EXCLUSIVITY.
(I) NO SOLICITATIONS.
(J) EMPLOYEE MATTERS.
6. POST-CLOSING COVENANTS
(A) GENERAL.
(B) LITIGATION SUPPORT.
(C) BONDS.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(A) CONDITIONS TO OBLIGATION OF BUYER.
(B) CONDITIONS TO OBLIGATION OF SELLER.
8. CONSENTS TO ASSIGNMENT OR NOVATION; RISK OF LOSS
(A) CONSENTS.
(B) RISK OF LOSS.
9. SURVIVAL; INDEMNIFICATION
(A) SURVIVAL.
(B) INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER.
(C) INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER.
(D) MATTERS INVOLVING THIRD PARTIES.
(E) DETERMINATION OF ADVERSE CONSEQUENCES.
(F) INDEMNIFICATION DEDUCTIBLE.
(G) INDEMNIFICATION LIMITATION.
10. TAX MATTERS
(A) TAX RETURNS.
(B) TAX REFUNDS.
(C) COOPERATION.
(D) DOCUMENTATION.
(E) INFORMATION.
(F) TAXES AND FEES FOR THIS TRANSACTION.
(G) LIABILITY FOR TAXES PRIOR TO CLOSING DATE.
(H) CONTESTS.
11. TERMINATION
(A) TERMINATION BY BUYER AND SELLER.
(B) TERMINATION BY BUYER.
(C) TERMINATION BY SELLER.
(D) TERMINATION DATE.
(E) TERMINATION OF RIGHTS AND DUTIES.
(F) DISPOSITION OF ▇▇▇▇▇▇▇ MONEY.
12. BREACH OF AGREEMENT
(A) BREACH AND OPPORTUNITY TO CURE.
(B) BUYER'S REMEDY OF SPECIFIC PERFORMANCE.
13. MISCELLANEOUS
(A) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.
(B) NO THIRD-PARTY BENEFICIARIES.
(C) ENTIRE AGREEMENT.
(D) FURTHER ASSURANCE.
(E) SUCCESSION AND ASSIGNMENT.
(F) COUNTERPARTS.
(G) HEADINGS.
(H) NOTICES.
(I) GOVERNING LAW.
(J) AMENDMENTS AND WAIVERS.
(K) SEVERABILITY.
(L) EXPENSES.
(M) CONSTRUCTION.
(N) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES.
(O) TIME OF ESSENCE.
(P) NO OTHER REPRESENTATIONS.
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "AGREEMENT") is entered into as of April 28,
2000, by and among SKE International L.L.C., a Delaware limited liability
company ("BUYER"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ Corporation, a Pennsylvania corporation
("SELLER"), and ▇▇▇▇▇ Support Services, Inc., a Texas corporation ("TARGET," and
together with Buyer and Seller, the "PARTIES").
Seller in the aggregate owns all of the outstanding capital stock of Target.
Target is engaged in a business that consists primarily of providing operations,
maintenance and support services to agencies of the United States Government
pursuant to contracts with such agencies and subcontracts under prime contracts
with such agencies (the "BUSINESS").
This Agreement contemplates a transaction in which, on and subject to the terms
hereinafter set forth, Buyer will purchase from Seller, and Seller will sell to
Buyer, all of the outstanding capital stock of Target, as more specifically set
forth herein.
Now, therefore, in consideration of the premises and the mutual promises,
representations, warranties, and covenants herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows.
1. DEFINITIONS.
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Capitalized terms used, but not otherwise defined, herein have the following
meanings:
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, actual damages, dues, penalties, fines, costs, amounts
paid in settlement, liabilities, obligations, taxes, liens, losses, expenses,
and fees, including court costs and reasonable attorneys' fees and expenses.
"APPLICABLE RATE" means 6% per annum.
"AFFILIATE" means, as to any Person, any corporation, partnership, limited
liability company or other entity which controls, is controlled by, or under
common control with, such Person, and as to any Person which is a corporation or
limited liability company, any director, managing member, officer or greater
than 10% shareholder of such Person.
"ANCILLARY AGREEMENTS" mean the (i) Employment Agreements, the Trademark Usage
Agreement, the Noncompete Agreement, and the Escrow Agreement among Buyer,
Seller and a mutually satisfactory escrow agent, and (ii) the letter agreement
of even date herewith between the guarantor thereunder and Seller, all in
connection with the transactions contemplated by this Agreement.
"ASSETS" means all of Target's right, title and interest in and to properties,
assets and rights of any kind, whether tangible or intangible, real or personal,
owned by Target (the "ASSETS").
"BUSINESS" has the meaning set forth in the preface, above.
"BOOKS AND RECORDS" means (a) all records and lists belonging to or relating
exclusively to Target and its customers, suppliers or personnel, (b) all
product, business and marketing plans of Target, and (c) all books, ledgers,
files, reports, plans, drawings and operating records of every kind maintained
by Target and relating to Target.
"BUYER" has the meaning set forth in the preface above.
"CLAIM" means any claim for indemnification pursuant to Section 9 of this
Agreement.
"CLOSING" has the meaning set forth in Section 2(f) below.
"CLOSING DATE" has the meaning set forth in Section 2(f) below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning Target or the
businesses and affairs of Buyer, or their respective Affiliates that is not
already generally available to the public.
"CONTRACT" means any written agreement, contract, lease, purchase order,
memoranda of understanding or other binding contractual commitment of Target.
"▇▇▇▇▇-▇▇▇▇▇ ACT" means the ▇▇▇▇▇-▇▇▇▇▇ Act, as amended (40 U.S.C. Section 276a-
276a-7).
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 3(b) below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(l).
"ENVIRONMENTAL LAWS" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, judgments, orders, codes, or
injunctions, which impose liability for or standards of conduct concerning the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of Hazardous Substances including, The
Resource Conservation and Recovery Act of 1976, as amended, The Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), The Toxic Substances Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, to the extent it relates to the
handling of and exposure to hazardous or toxic materials or similar substances,
and any other so-called "Superfund" or "Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ESCROW AGREEMENT" means the escrow agreement among Buyer, Seller and a mutually
acceptable escrow agent, in the form to be agreed upon between Buyer and Seller,
relating to the holding of certain proceeds and the disbursement of such
proceeds, as set forth herein and therein.
"FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4(g) below.
"FIXTURES" means any fixtures, machinery, installations and building equipment
owned by Target and located at or on any Leased Real Property.
"GAAP" means United States generally accepted accounting principles as in effect
from time to time, except to the extent deviations therefrom are applied in
making the Adjustments.
"GOVERNMENTAL AUTHORITY" means any Federal, state, municipal or local
government, governmental authority, regulatory or administrative agency,
governmental commission, department, board, bureau, court, tribunal, arbitrator
or arbitral body.
"GOVERNMENT CONTRACTS" means contracts or subcontracts held by Target in which
the ultimate contracting party is the United States government or any agency or
instrumentality thereof.
"GOVERNMENT-FURNISHED PROPERTY" means all machinery, equipment, tools, dies,
spare parts and all other personal property and fixtures loaned, bailed or
otherwise furnished by the United States Government to Target pursuant to the
Government Contracts.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT" OR "HSR" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"HAZARDOUS SUBSTANCE" means any hazardous or toxic substance or waste, pollutant
or contaminant including petroleum products, asbestos, PCBs and radioactive
materials.
"INCOME TAX" means any federal, state, local, or foreign income tax, including
any interest, penalty, or addition thereto, whether disputed or not.
"INCOME TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Income Taxes, including any schedule
or attachment thereto, and including any amendment thereof.
"INDEMNIFIED PARTY" has the meaning set forth in Section 9(d)(i) below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 9(d)(i) below.
"INTELLECTUAL PROPERTY" means the following, to the extent related to the
Business (a) all inventions (whether patentable or unpatentable and whether or
not reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium), except that the
computer software referenced in (f) does not include software applications used
by Target pursuant to a master license agreement between the Seller and certain
software vendors.
"KNOWLEDGE" means with respect to the Seller the actual knowledge of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇, H. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
Billions, and ▇▇▇▇▇▇ ▇▇▇▇▇.
"LEASEHOLD IMPROVEMENTS" shall mean all leasehold improvements situated in or on
the Leased Real Property used and owned by Target.
"LOSS CONTRACT" means any Contract for which Target has accrued a loss on its
financial statements or which Target reasonably expects, based on Seller's
Knowledge as of the date of this Agreement and the Closing Date, to result in a
loss.
"MATERIAL ADVERSE CHANGE" means any change relating to the Business or the
Assets which has a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the business,
financial condition, operations, or results of operations of Target and, solely
with respect to the debarment and suspension issue addressed in Section
4(v)(iii) of the Disclosure Schedules and in Section 7(a)(ix) herein, on Buyer
and its Affiliates.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within the Most
Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in Section 4(g)
below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"PARTY" means Buyer, Seller and Target.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, a partnership, a corporation (including a limited
liability corporation), an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"PERSONAL PROPERTY" shall mean all of the personal property, whether tangible or
intangible, owned by Target.
"PRE-CLOSING ENVIRONMENTAL LIABILITIES" means, in connection with the Business
or the Real Property, any written notice, claim, demand, action, suit,
complaint, proceeding or other communication by any Person or Government
Authority alleging liability or potential liability (including but not limited
to liability for investigatory costs, cleanup costs, governmental response
costs, natural resource damages, property damages, personal injuries, fines or
penalties) arising out of, relating to, based on or resulting from circumstances
which, as of the Closing Date, exist and form the basis of any violation or
alleged violation of any Environmental Laws, including the presence, Release or
threatened Release of any Hazardous Substance.
"PURCHASE PRICE" has the meaning set forth in Section 2(c) below.
"REAL PROPERTY" means all real property owned, leased, operated or occupied by
Target as of the date of this Agreement, except for the real property described
in Section 4(l) of the Disclosure Schedule, together with all Leasehold
Improvements or Fixtures located thereon.
"RELEASE" means any spill, leak, discharge, disposal, pumping, pouring,
emitting, emptying, injecting, abandoning, leaching, dumping or allowing to
escape of any Hazardous Substance.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance, charge, or
other security interest, other than (a)(i) mechanic's, materialmen's, and
similar liens, and (ii) other statutory liens, which have been disclosed to
Buyer, with respect to amounts not yet due and payable or which are being
contested in good faith through appropriate proceedings, (b) liens for taxes not
yet due and payable or for taxes that the taxpayer is contesting in good faith
through appropriate proceedings which have been disclosed to Buyer, for which
adequate reserves are maintained and reflected on the Financial Statements, to
the extent required by GAAP, (c) purchase money liens and liens securing rental
payments under capital lease arrangements which are reflected on the Financial
Statements, and (d) other encumbrances set forth in the Disclosure Schedules.
"SERVICE CONTRACT ACT" means the Service Contract Act of 1965, as amended (41
U.S.C. Section 351, ET. SEQ.)
"SUBSIDIARY" means any corporation, partnership, limited liability company,
joint venture or other entity in which Target, directly or indirectly, holds
more than fifty percent (50%) of the voting power of all equity securities or
other ownership interests of such entity, or possesses, directly or indirectly,
power to direct or cause the direction of management or policies (whether
through ownership of voting securities or otherwise).
"SELLER" has the meaning set forth in the preface above.
"TARGET" has the meaning set forth in the preface above.
"TARGET SHARE" means any share of the common stock, par value $1.00 per share,
of Target.
"TAX" or "TAXES" means any federal, state, local or foreign net or gross income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, (including taxes under Code Sec. 59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax, governmental fee or like assessment or charge of any kind
whatsoever, together with any interest and penalties, whether as a primary
obligor or as a result of being a "transferor" (within the meaning of Section
6901 of the Code and any corresponding state and local law) of another person or
a member of an affiliated, consolidated or combined group.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 9(d) below.
2. PURCHASE AND SALE OF TARGET SHARES.
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(a) BASIC TRANSACTION.
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On and subject to the terms and conditions of this Agreement, Buyer
agrees to purchase from Seller, and Seller agrees to sell to Buyer,
all of Seller's Target Shares, free and clear of all restrictions, for
the consideration specified below in this Section 2.
(b) ESCROW.
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Not later than May 10, 2000, Buyer shall deposit with a mutually
satisfactory escrow agent pursuant to the Escrow Agreement in the form
of Exhibit A hereto, the sum of $500,000 (the "Escrow Amount") which
shall constitute ▇▇▇▇▇▇▇ money. Such deposit shall be made pursuant to
the terms of the Escrow Agreement. If the Closing occurs, the Escrow
Amount shall be retained in the escrow account to cover any post-
Closing Net Payable Adjustment as provided in Section 2(d) and
distributed in accordance with the terms of the Escrow Agreement. If
this Agreement is terminated prior to Closing, then the Escrow Amount
shall be distributed as provided in Section 11 of this Agreement.
(c) TOTAL CONSIDERATION AND TERMS.
-----------------------------
The aggregate consideration for Target Shares to be purchased by Buyer
hereunder (the "PURCHASE PRICE") shall, subject to the Net Payable
Adjustment provided below, consist of Fourteen Million Dollars
($14,000,000 USD). It is understood that the net intercompany payable
by Target to Seller as of December 31, 1999, was $2,627,195. At the
Closing, Buyer shall pay to Seller by wire transfer of immediately
available funds to an account or accounts designated in writing by
Seller an amount equal to the Purchase Price, as adjusted pursuant to
Section 2(d)(i) less the Escrow Amount, which shall be retained in
Escrow in accordance with Section 2(b), above.
(d) NET PAYABLE ADJUSTMENT.
----------------------
(i) Seller shall cause to be prepared and delivered to Buyer on the
Closing Date a certificate as to the estimated net payable by
Target to Seller as of the Closing Date (the "Estimated Closing
Date Net Payable"). The Estimated Closing Date Net Payable shall
be compared to the December 31, 1999 Net Payable. If the amount
of the net intercompany payable has increased, the Purchase Price
payable on the Closing Date shall increase dollar-for-dollar. If
the amount of the net intercompany payable has decreased, the
Purchase Price payable on the Closing Date shall decrease
dollar-for-dollar.
(ii) Buyer and Seller shall promptly provide the other party hereto
access to, and copies of, all information reasonably requested by
the other party or its representatives in connection with the
calculation of the Estimated Closing Date Net Payable or to
permit the other party to investigate the basis of any dispute
therewith.
(iii) Buyer shall have a period of 30 days after the Closing Date to
provide Seller with notice setting forth with reasonable
specificity any objection to the Estimated Closing Date Net
Payable (an "Objection Notice"). Failure to provide an Objection
Notice within such 30 day period shall constitute Buyer's
approval of the Estimated Closing Date Net Payable, which shall
then become final. If Buyer timely provides an Objection Notice,
Buyer and Seller shall promptly commence good faith discussions
in an attempt to resolve any issues raised in the Objection
Notice. If Buyer and Seller are unable to resolve such dispute
within 30 days after delivery of the Objection Notice, such
dispute shall be resolved by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or, if ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP is unwilling or unable to act in such capacity, by
another accounting firm mutually acceptable to Buyer and Seller.
The determination of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP of the final Closing
Date Net Payable shall be made within 30 days after delivery to
it of the Objection Notice and its determination shall be final
and binding on the parties. Buyer and Seller shall each pay 50%
of the fees and expenses of such accounting firm.
(iv) Any decreases to the Purchase Price required as a result of the
determination of the final Closing Date Net Payable shall be
promptly reimbursed to Buyer out of the Escrow Amount or, if the
Escrow Agreement has already been terminated and the funds
disbursed to Seller, paid promptly by Seller to Buyer.
(v) Any increases to the Purchase Price required as a result of the
determination of the final Closing Date Net Payable shall be paid
promptly to Seller by Buyer.
(e) NONCOMPETE.
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At the Closing, Seller shall enter into a mutually satisfactory
noncompetition agreement with Buyer in the form of Exhibit B hereto
(the "NONCOMPETITION AGREEMENT").
(f) THE CLOSING.
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Unless agreed to otherwise in writing by the parties, the closing of
the transactions contemplated by this Agreement (the "CLOSING") shall
take place at the offices of ▇▇▇▇▇ ▇▇▇▇ LLP in Washington, D.C.,
commencing at 9:00 a.m. local time on the second business day
following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective
Parties will take at the Closing itself) or such other date as Buyer
and Seller may mutually determine (the "CLOSING DATE").
(g) DELIVERIES AT THE CLOSING.
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At the Closing, (i) Seller will deliver to Buyer the various
certificates, instruments, and documents referred to in Section 7(a)
below, (ii) Buyer will deliver to Seller the various certificates,
instruments, and documents referred to in Section 7(b) below, (iii)
Seller will deliver to Buyer stock certificates representing all of
Seller's Target Shares, endorsed in blank or accompanied by duly
executed assignment documents, and (iv) Buyer will deliver to Seller
the consideration specified in Section 2(c), above.
3. REPRESENTATIONS AND WARRANTIES OF BUYER AND SELLER.
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(a) REPRESENTATIONS AND WARRANTIES CONCERNING BUYER.
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Buyer represents and warrants to Seller that the statements contained
in this Section 3(a) are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 3(a)).
(i) ORGANIZATION OF BUYER.
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Buyer is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of
Delaware.
(ii) AUTHORIZATION OF TRANSACTION.
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Buyer has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and to
perform its respective obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of Buyer,
enforceable in accordance with its terms and conditions, except
as the enforceability hereof may be affected by bankruptcy,
insolvency, fraudulent transfer, reorganization and similar laws
affecting the rights of creditors generally, and by general
principles of equity. Buyer need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the
transactions contemplated by this Agreement, except for the
filing and approvals contemplated by Section 5(b) below.
(iii) NONCONTRAVENTION.
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Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will
violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which Buyer is
subject or any provision of its certificate of organization or
organization agreement.
(iv) BROKERS' FEES.
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Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Seller
could become liable or obligated.
(v) ABILITY TO CONSUMMATE TRANSACTION.
---------------------------------
Buyer has the financial capability to deliver the Cash
Consideration to Seller on the Closing Date pursuant to Section
2(c) hereof.
(vi) INVESTMENT PURPOSE ONLY.
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Buyer is purchasing the Target Shares for investment purposes
only and not with a view towards resale.
(b) REPRESENTATIONS AND WARRANTIES CONCERNING SELLER.
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Seller represents and warrants to Buyer that the statements contained
in this Section 3(b) are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 3(b)), except as
set forth in the disclosure schedules delivered by Seller and Target
to Buyer on the date hereof and initialed by the Parties (the
"DISCLOSURE SCHEDULES"). The Disclosure Schedules will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs
contained in this Agreement.
(i) AUTHORIZATION OF TRANSACTION.
----------------------------
Seller has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of
Seller, enforceable against Seller in accordance with its terms
and conditions, except as the enforceability hereof may be
affected by bankruptcy, insolvency, fraudulent transfer,
reorganization, and similar laws affecting the rights of
creditors generally, and by general principles of equity. Except
as expressly set forth herein, Seller is not required to give any
notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency or
any other Person in order to consummate the transactions
contemplated by this Agreement, except for the HSR filing
contemplated by Section 5(b) and the approval of Seller's Board
of Directors contemplated in Section 7(b)(viii).
(ii) NONCONTRAVENTION.
----------------
Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will
violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which Seller is
subject.
(iii) BROKERS' FEES.
-------------
Seller has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Buyer could
become liable or obligated.
(iv) TARGET SHARES.
-------------
Seller holds of record and owns beneficially 1,000 shares of the
common stock of Target, par value $1.00, constituting all of the
issued and outstanding shares of Target, which are owned, free
and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws),
taxes, Security Interests, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands, except for
that certain Security Interest held by Mellon Bank, N.A. which
Mellon Bank will release prior to the Closing. Seller is not a
party to any option, warrant, purchase right, or other contract
or commitment (other than this Agreement) that could require
Seller to sell, transfer, or otherwise dispose of any capital
stock of Target. Seller is not a party to any voting trust,
proxy, or other agreement or understanding with respect to the
voting of any capital stock of Target. Seller holds of record and
owns beneficially all of the capital stock issued and outstanding
by Target.
4. REPRESENTATIONS AND WARRANTIES CONCERNING TARGET.
------------------------------------------------
Seller and Target represent and warrant to Buyer that the statements
contained in this Section 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 4), except as set forth in
the Disclosure Schedules.
(a) CORPORATE EXISTENCE AND CAPITALIZATION.
--------------------------------------
(i) Target is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Texas. Target is duly
authorized to conduct business as a foreign corporation and is in good
standing under the laws of each jurisdiction where such qualification
is required, except where the lack of such qualification would not
have a Material Adverse Effect. Section 4(a) of the Disclosure
Schedule contains an accurate list of all jurisdictions in which
Target is qualified to do business as a foreign corporation.
(ii) The authorized capital stock of Target consists solely of 1,000
shares of common stock, par value $1.00 per share, of which all 1,000
shares are issued and outstanding. There are no preferred shares or
classes of common shares. All of the issued and outstanding shares of
such common stock have been duly authorized, validly issued, are fully
paid and nonassessable, and are not subject to any preemptive rights.
Seller holds of record and owns beneficially the number of shares of
common stock set forth in Section 3(b), free and clear of all
restrictions on transfer (other than restrictions under the Securities
Act and state securities laws), taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities, claims
and demands, except for the Mellon Bank Security Interest.
(iii) Target has not issued or granted any outstanding options,
warrants, rights or other securities or debt convertible into or
exchangeable or exercisable for shares of the capital stock of Target,
any other commitments or agreements providing for the issuance of
additional shares of the capital stock of Target, the sale of treasury
shares, or for the repurchase or redemption of shares of Target's
capital stock, or any obligations arising from canceled stock. There
are no agreements of any kind which may obligate Target to issue,
purchase, register for sale, redeem or otherwise acquire any of its
securities or interests. There are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to Target.
(iv) There are no voting trusts, shareholder agreements, proxies or
other agreements in effect with respect to the voting or transfer of
Target Shares except for the proxies that may be in place under a
certain proxy agreement with the U.S. Department of Defense into which
Target and Buyer may enter.
(b) AUTHORIZATION OF TRANSACTION.
----------------------------
Target has all requisite corporate power and authority to own, lease
and operate the properties owned by it, to conduct its business as it
is presently being conducted, to execute and deliver this Agreement
and to perform its obligations hereunder. This Agreement has been duly
executed and delivered by Target.
(c) NONCONTRAVENTION.
----------------
Except as set forth in Section 4(c) of the Disclosure Schedule,
neither the execution and the delivery of this Agreement by Seller and
Target, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
Target or any of the Assets is subject or any provision of the charter
or bylaws of Target or (ii) conflict with, result in a material breach
of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any material (whether individually or in the
aggregate) Contract to which Target is a party or by which it is bound
or to which any of the Assets is subject (or result in the imposition
of any Security Interest upon any of the Assets), except where, prior
to or simultaneously with the Closing, such Contract is being
terminated or the consent of the other party thereto will have been
obtained (including the release of the Mellon Bank Security Interest).
Except for the filings contemplated by Section 5(b) below, Target does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give
notice, file, or obtain any authorization, consent, or approval would
not have a Material Adverse Effect.
(d) TITLE TO ASSETS.
---------------
Except as set forth in Section 4(d) of the Disclosure Schedule, Target
has good title to, or a valid leasehold interest in, or, as to
Intellectual Property, valid license of, the property and assets used
by it, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, free and clear of any Security Interests, other than the
Mellon Bank Security Interest.
(e) BOOKS AND RECORDS.
-----------------
Target has made and kept (and given Buyer access to) Books and Records
and accounts, which, in reasonable detail, accurately and fairly
reflect in all material respects, Target. The minute books of Target
which Buyer has been provided the opportunity to review, including all
the regular and special meetings of the board of directors and
shareholders of Target (including all resolutions adopted thereat) and
are complete and accurate in all material respects.
(f) SUBSIDIARIES.
------------
Target has no Subsidiaries, except as set forth in Section 4(f) the
Disclosure Schedule attached hereto.
(g) FINANCIAL STATEMENTS.
--------------------
Attached hereto as Exhibit C are the following financial statements:
unaudited balance sheets, income statements, statements of changes in
stockholders' equity and statements of cash flows of Target for the
fiscal years ended December 31, 1999, 1998 and 1997 (the "UNAUDITED
FINANCIAL STATEMENTS"). Adjustments for purposes of this Section 4(g)
means normal and consistently applied year-end adjustments made to
Target's financial statements for the years ended December 31, 1999,
1998 and 1997.
Prior to the Closing, Seller and Target will deliver to Buyer the
audited balance sheet, income statement, statement of changes in
stockholders' equity and statement of cash flows of Target for the
fiscal year ended December 31, 1999 (the "AUDITED FINANCIAL
STATEMENTS") and unaudited financial statements for the period
beginning on January 1, 2000 and ending on the last day of the month
immediately preceding the month of the Closing Date (the "MOST RECENT
FINANCIAL STATEMENTS").
The Unaudited Financial Statements present, and the Audited Financial
Statements and the Most Recent Financial Statements when delivered
will present, fairly and accurately, in all material respects, the
financial condition of Target as of such dates and the results of
operations of Target for such periods. The Unaudited Financial
Statements have been prepared, and the Audited Financial Statements
will be prepared, in accordance with a "modified GAAP format" as more
fully described in the PricewaterhouseCoopers engagement letter, dated
March 29, 2000, and applied on a consistent basis throughout the
periods covered thereby.
The Most Recent Financial Statements described above will be subject
to normal year-end adjustments (which will not be material
individually or in the aggregate), will lack footnotes and other
presentation items and will be prepared in accordance with a "modified
GAAP format".
(h) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END.
-------------------------------------------------
Since the Most Recent Fiscal Year End, there has not been any Material
Adverse Change in Target. Specifically, without limiting the
generality of the foregoing, since the Most Recent Fiscal Year End,
except as contemplated in this Agreement or as set forth in the
Disclosure Schedules, there has not been any:
(i) change in accounting methods, principles, or practices by Target,
except as required by law or by generally applicable changes
instituted in the accounting profession;
(ii) material damage, destruction or loss (whether or not covered by
insurance) adversely affecting the tangible Assets or the Business;
(iii) cancellation of any material indebtedness or waiver or release
of any material right or claim of Target;
(iv) increase in the rate of compensation payable or to become payable
to, any bonus, incentive compensation, service award or other like
benefit granted, made or accrued, contingently or otherwise, for or to
the credit of, any director, officer or other employee, except as
provided in any employment agreement (including any union contract)
between Target and any such persons or in any employee plan, and
except for any increases in the normal course of business;
(v) addition to or modification of the Employee Benefit Plans,
arrangements or practices affecting the officers, directors, or
employees of Target other than (A) contributions made in accordance
with the normal practices of Target, (B) the extension of coverage to
such persons who became eligible after the Most Recent Fiscal Year
End, or (C) as set forth in the Employee Policy and Procedure Manual,
as provided to Buyer prior to the date hereof,
(vi) cancellation or termination of any material Contract or entry
into any Contract which is not in the ordinary course of the business
of Target;
(vii) sale, assignment or transfer of any material portion of the
Assets, other than in the ordinary course of business, except as
approved in writing in advance by Buyer;
(viii) capital expenditure or the execution of any lease or any
incurring of liability therefor by Target involving payments in excess
of $50,000 or $200,000 in the aggregate with respect to any such
expenditure or lease or otherwise not substantially in accordance with
Target's past practice;
(ix) any indebtedness incurred by Target for borrowed money or any
commitment to borrow money entered into by Target, or any loans made
or agreed to be made by Target except for indebtedness incurred in the
ordinary course of business as part of Target's inventory financing or
under the existing working capital line of credit;
(x) revaluation by Target of any of the Assets, including without
limitation writing off notes, or writing off accounts receivable
except with respect to accounts receivable written off in the ordinary
course of business;
(xi) payment or declaration of any dividends, distributions with
respect to any of Target Shares, or redemption, repurchase or
acquisition by Target of any of Target Shares;
(xii) since December 31, 1999, Seller and Target have not changed or
modified their policies, practices or procedures relative to recording
credits or charges to their intercompany receivables and payables.
Moreover, since December 31, 1999, Seller and Target have not changed
or modified their pricing for intercompany services and any
intercompany sales of assets or the assumption of intercompany
liabilities; or
(xiii) agreement by Target or Seller to do any of the things described
in the preceding clauses (i) through (xii), other than as expressly
provided herein.
(i) UNDISCLOSED LIABILITIES.
-----------------------
Target does not have any liability (whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due, excluding any liability for Taxes) in
excess of $250,000, except for (i) liabilities set forth on the Most
Recent Financial Statements (or in any notes to the Most Recent
Financial Statements), (ii) liabilities which have arisen after the
Most Recent Fiscal Month End in the ordinary course of business, (iii)
liabilities or obligations under the Contracts, and (iv) liabilities
relating to matters which are the subject of the other representations
and warranties concerning Target set forth in this Agreement.
(j) LEGAL COMPLIANCE.
----------------
Target has complied in its operations in all material respects with
all applicable statutes and governmental rules, regulations and
Permits, except where the failure to comply would not have a Material
Adverse Effect. No action, suit, proceeding, hearing, or, to Seller's
Knowledge, investigation, charge, complaint, or written claim, demand
or notice in excess of $100,000 has been filed or commenced against
Target alleging any failure so to comply, nor, to the Knowledge of
Seller, are any such actions threatened, except as identified in
Section 4(j) of the Disclosure Schedule.
(k) TAX MATTERS.
-----------
(i) FILING OF TAX RETURNS.
---------------------
Target has timely filed with the appropriate taxing authorities
all returns (including without limitation information returns and
other material information) in respect of Taxes required to be
filed through the date hereof and will timely file any such
returns required to be filed on or prior to the Closing Date, in
each case, subject to any applicable extensions. The returns and
other information filed are complete and accurate in all material
respects.
(ii) PAYMENT OF TAXES.
----------------
All Taxes that accrue or are payable by Target in respect of
taxable periods that end on or before the Closing Date and for
any taxable periods that begin before the Closing Date and end
thereafter to the extent such Taxes are attributable to the
portion of such period ending on the Closing Date (such period
being referred to herein as a "PRE-CLOSING PARTIAL PERIOD"), as
determined under the closing of the books method of allocation,
have (or will have, on or before the Closing Date) been timely
paid, or an adequate reserve has been established therefor, as
set forth in Section 4(k) of the Disclosure Schedule or in the
Financial Statements. The net intercompany account balance
includes the reserves for such Taxes. Target has no liability for
Taxes in excess of the amounts so paid or reserves so
established.
(iii) AUDIT, INVESTIGATIONS OR CLAIMS.
-------------------------------
Except as set forth in Section 4(k) of the Disclosure Schedule,
there are no pending or threatened audits, investigations or
claims for or relating to any additional Tax liability, and there
are no matters under discussion with any governmental authorities
with respect to Taxes that is likely to result in a material
additional liability of Target for Taxes. Except as set forth in
such Section, neither Target nor Seller has been notified that
any taxing authority intends to audit a Target return for any
period.
(iv) LIEN.
----
There are no liens for Taxes (other than for current Taxes not
yet due and payable) on the Assets.
(v) SECURITY FOR TAX-EXEMPT OBLIGATIONS.
-----------------------------------
None of the Assets directly or indirectly secures any debt the
interest on which is tax-exempt under Section 103(a) of the Code.
(vi) TAX EXEMPT USE PROPERTY.
-----------------------
None of the Assets is "tax exempt use property" within the
meaning of Section 168(h) of the Code.
(vii) FOREIGN PERSON.
--------------
Neither Target nor Seller, is a person other than a United States
person within the meaning of the Code.
(viii) C CORPORATION.
-------------
Target is a C Corporation and has been a C Corporation for each
taxable year since 1987.
(ix) WAGE WITHHOLDINg.
---------------
Target has withheld all material Taxes required to have been
withheld in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other
third party, and such withheld Taxes have either been duly paid
to the proper governmental authority or properly set aside in
accounts for such purpose.
(x) NO BACKUP WITHHOLDING.
---------------------
The transaction contemplated herein is not subject to the backup
withholding provisions of Section 3406 of the Code, or of
Subchapter A of Chapter 3 of the Code or of any other provision
of law.
(xi) PARACHUTE PAYMENTS.
------------------
Target has not made any payments, nor is Target obligated to make
any payments, and is not a party to any agreement that could
obligate it to make any payments that will not be deductible
under Section 280G of the Code.
(xii) CHANGES IN ACCOUNTING METHOD.
----------------------------
Except as set forth in Section 4(k) of the Disclosure Schedule,
Target has not agreed to nor is it required to make any
adjustment pursuant to Section 481(a) of the Code by reason of a
change in accounting method initiated by Target, and Seller has
no Knowledge that the IRS has proposed any such adjustment or
change in accounting method.
(l) REAL PROPERTY.
-------------
(i) Target does not own any real property.
(ii) Section 4(l)(ii) of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to Target for use in the
Business (the "LEASED REAL PROPERTY"). Target has made available to
Buyer correct and complete copies of the leases and subleases listed
in Section 4(l)(ii) of the Disclosure Schedule (as amended to date).
With respect to each lease and sublease listed in Section 4(l)(ii) of
the Disclosure Schedule which relates to more than 2,000 square feet
of net rentable area (a "MATERIAL LEASE"), the lease or sublease is
legal, valid, binding, enforceable, and in full force and effect.
Target has not assigned, transferred, conveyed, mortgaged, deeded in
trust, or encumbered any interest in any such leasehold or
subleasehold. Target enjoys peaceful and undisturbed possession of all
Leased Real Property, and Target has fulfilled in all material
respects all the obligations required to be performed by it through
the date hereof with respect to such Material Leases. Each Material
Lease is transferable (upon receipt of necessary landlord consents) in
connection with the transactions contemplated hereby.
(iii) Except as set forth in Section 4(l)(iii) of the Disclosure
Schedule, Target has received all required material approvals of
governmental authorities (including Permits and material certificates
of occupancy or other similar certificates permitting lawful
occupancy) required in connection with the present use of the space
covered by the Material Leases.
(iv) Target has not received notice of any special assessment relating
to any Real Property for which Target would be liable under any of the
Real Property Leases.
(m) INTELLECTUAL PROPERTY.
---------------------
To the Knowledge of the Seller, Target has not interfered with,
infringed upon, misappropriated, or violated any Intellectual Property
rights of third parties in any material respect, and Target has not
received, within the last two years (or, with respect to the ▇▇▇▇▇
Support Services ▇▇▇▇, five years) any written charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation. To the Knowledge of Seller, no third
party has interfered with, infringed upon, misappropriated, or
violated any Material Intellectual Property rights of Target
constituting part of the Assets.
(i) Section 4(m)(i) of the Disclosure Schedule identifies those items
of Intellectual Property owned by Target and used in the Business, the
loss of which could reasonably be expected to have a Material Adverse
Effect ("MATERIAL INTELLECTUAL PROPERTY"), and identifies each
license, agreement, or other permission which Target has granted to
any third party with respect to any such Material Intellectual
Property (together with any exceptions). Copies of all documents
relating to Material Intellectual Property have been made available to
Buyer. With respect to each item of Intellectual Property required to
be identified in Section 4(m)(i) of the Disclosure Schedule:
(A) the item is not subject to any adverse outstanding
injunction, judgment, order, decree, ruling, or charge, and
(B) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to Seller's Knowledge
threatened which challenges the legality, validity,
enforceability, use, or ownership of the item.
(ii) Section 4(m)(ii) of the Disclosure Schedule identifies each
material item of Intellectual Property that any third party owns and
that Target uses in the Business pursuant to license, sublicense,
agreement, or permission ("MATERIAL NON-OWNED INTELLECTUAL PROPERTY").
Copies of all documents of Material Non-Owned Intellectual Property
have been made available to Buyer. With respect to each item of
Intellectual Property required to be identified in Section 4(m)(ii) of
the Disclosure Schedule:
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force
and effect, provided, however, that no representation is made as
to the ownership of any Material Non-Owned Intellectual Property
or as to the right of Target's licensor, sublicensor or grantor
to grant any such license, sublicense, agreement or permission,
(B) neither Target nor, to the Knowledge of Seller, any other
party to the license, sublicense, agreement, or permission is in
breach or default which would permit termination, modification,
or acceleration thereunder, and
(C) Target has not granted any sublicense or similar right with
respect to the license, sublicense, agreement, or permission.
(iii) With respect to each software license or software sublicense
identified in Sections 4(m)(i) and 4(m)(ii) above to which Seller is a
party, Seller has not granted any sublicense or similar right except
in accordance with the terms and conditions thereof, including the
payment of all applicable royalties, and is not otherwise in material
violation of such license or sublicense agreement.
(n) CONTRACTS.
---------
(i) Buyer has been given the opportunity to review copies of all
currently effective Contracts (other than the BAIT Contract, which is
classified) described in clauses (A) through (L) to which Target is a
party (the "MATERIAL CONTRACTS"), which copies are true and correct in
all material respects, subject to ordinary course extensions,
renewals, and similar changes. Section 4(n) of the Disclosure Schedule
lists:
(A) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Contract
affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property,
providing for payments in excess of $100,000 per annum;
(B) any Contract (or group of related Contracts) (other than a
Government Contract) for the furnishing or receipt of services or
delivery of goods and/or materials, the performance of which will
extend over a period of more than one year after the date of this
Agreement or under which Target paid or received aggregate
consideration in excess of $400,000 during the year ended 1999,
or reasonably expects based upon the operation of the Business as
of the date hereof to pay or receive aggregate consideration in
excess of $400,000 during the year ending 2000;
(C) any Government Contract and all amendments, supplements, and
modifications thereto;
(D) any Contract in excess of $300,000 creating or governing a
partnership, limited liability company, joint venture or any
teaming agreement or other Contract (however named) which teaming
agreement or other Contract involved a sharing of profits,
losses, costs, or liabilities by Target with any other Person;
(E) any note, debenture, guarantee, loan, letter of credit,
surety bond or other agreement, instrument or commitment (or
group of related agreements) in effect as of the date hereof,
under which Target has created, incurred, assumed, or guaranteed
any indebtedness for borrowed money, including any agreement or
commitment for future loans, credit or financing or any
capitalized lease obligation, in excess of $300,000 or under
which Target has imposed a Security Interest on any of the
material Assets, tangible or intangible;
(F) any agreement (other than a teaming agreement) imposing on
Target a restriction or obligation regarding noncompetition;
(G) any Contract involving an obligation of Target to make any
payment to any Affiliate of Target, Seller, or any of Target's
directors, officers or employees (not including salary or similar
compensation reflected on Target's payroll records);
(H) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material
plan or arrangement for the benefit of its current or former
directors, officers, and employees (not including customary
fringe benefits such as accrued vacation or sick leave);
(I) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis which is not
terminable at-will or which provides annual compensation in
excess of $100,000 or severance benefits;
(J) any agreement under which Target has advanced or loaned any
amount which remains outstanding, to any of its directors,
officers, and employees outside the ordinary course of business
and which will not be paid off at or prior to the Closing Date;
(K) each Loss Contract; and
(L) each material amendment, supplement, and modification in
respect of any of the foregoing.
(ii) With respect to each such Material Contract, except as set forth
in Section 4(n) of the Disclosure Schedule, (A) the Contract is legal,
valid, binding, enforceable, and in full force and effect in all
material respects as to Target and, to Seller's Knowledge, as to the
other parties thereto; and (B) neither the Target, nor, to the
Knowledge of Seller, any third party, is in breach or default which
would permit termination, modification, or acceleration under the
Contract.
(iii) Except as set forth on Section 4(n) of the Disclosure Schedule,
Target is not engaged in any renegotiations of any amounts in excess
of $250,000 paid or payable to Target under current or completed
Contracts with any Person having the contractual or statutory right to
demand or require such renegotiation. Target has not received any
written demand for such renegotiation in respect of any such Contract.
Except as set forth on Section 4(n) of the Disclosure Schedule, no
Person, including any government contracting officer or prime
contractor has given Target written notice that any material
adjustments are required to the terms of any Material Contracts.
(o) LICENSES, PERMITS AND AUTHORIZATIONS.
------------------------------------
Section 4(o) of the Disclosure Schedule contains a list of all
material licenses, approvals, consents, franchises and other permits
(including without limitation, all facility security clearances) of or
with any governmental regulatory or administrative authority, whether
foreign, federal, state or local, which are held by Seller and
necessary for the current conduct of the Business as it is now
conducted (each a "PERMIT"). All such Permits are in full force and
effect and there are no proceedings pending or, to Seller's Knowledge,
threatened that seek the revocation, cancellation, suspension or
adverse modification thereof. To the Seller's Knowledge, such Permits
constitute all of the material licenses, approvals, consents,
franchises and permits necessary to permit Target to own, operate, use
and maintain its Assets in the manner in which they are now operated
and maintained and to conduct the Business substantially as currently
conducted. To the Seller's Knowledge, all required filings with
respect to such Permits have been timely made and all required
applications for renewal thereof have been timely filed.
(p) INSURANCE.
---------
Section 4(p) of the Disclosure Schedule includes (i) a complete list
of all workers' compensation and general liability insurance claims
pending with respect to Target, and (ii) a complete list of all
material insurance policies relating to Target.
(q) LITIGATION.
----------
Section 4(q) of the Disclosure Schedule sets forth each instance in
which Target (i) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge, or (ii) is a party or, to Seller's
Knowledge, has received written notice that it has been threatened to
be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator, in which the amount exceeds
$50,000.
(r) EMPLOYEES.
---------
Except as set forth in Section 4(r) of the Disclosure Schedule, as of
the date of this Agreement, no executive officer has given Target
written notice of plans to terminate employment with Target during the
next 12 months. Except as set forth in Section 4(r) of the Disclosure
Statement, Target is not a party to or bound by any collective
bargaining agreement. There are no material complaints against Target
pending before the National Labor Relations Board or any similar state
or local labor agency by or on behalf of any employee of Target.
Target has complied in all material respects with all material laws,
rules and regulations relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar
taxes, and any and all payments and benefits required by the Service
Contract Act (hereinafter collectively referred to as the "EMPLOYMENT
LAWS"). To Seller's Knowledge, Target is not liable for the payment of
taxes, fines, penalties or other amounts, however designated, for
failure to comply with any of the foregoing Employment Laws. There are
no material representation questions, arbitration proceedings, labor
strikes, slow downs or stoppages, grievances or other labor disputes
pending or, to Seller's Knowledge, threatened with respect to Target's
Employees.
(s) ENVIRONMENTAL MATTERS.
---------------------
Target owns no real estate, and each portion of the Leased Real
Property is part of a larger premises also subject to lease agreements
with other tenants. Except as set forth in Section 4(s) of the
Disclosure Schedule, to Seller's Knowledge, (i) Target has complied in
all material respects with any Environmental Laws, (ii) Target is not
required to hold or obtain any environmental permits, certificates,
consents or other settlement agreements, licenses, approvals,
registrations or authorizations under any Environmental Laws, (iii) no
notice, citation, summons or order has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or
review is pending or threatened by any governmental or other entity
relating to the Leased Real Property or Target's operations with
respect to any alleged violation by Target of any Environmental Law or
with respect to any use, possession, generation, treatment, storage,
recycling, transportation or disposal of any Hazardous Substances by
or on behalf of Target, (iv) there are no facts or circumstances
related to environmental matters concerning the Leased Real Property
that could reasonably be expected to lead to any future material
environmental claims against Target under current Environmental Laws,
and (v) there have been no environmental inspections, investigations,
studies, audits, tests, reviews or other analyses conducted in
relation to any Leased Real Property, Target or the Business which
have not been provided or reported to Target.
(t) EMPLOYEE BENEFITS.
-----------------
(i) Section 4(t) of the Disclosure Schedule lists each material
Employee Benefit Plan that Target maintains or to which Target
contributes.
(ii) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in all material respects with
the applicable requirements of ERISA, the Code, and other applicable
laws.
(iii) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBG-C-l's, and Summary Plan
Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan.
(iv) All contributions for any period ending on or before the Closing
Date which are not yet due have been paid to each such Employee
Pension Benefit Plan or accrued in accordance with the past custom and
practice of Target. All premiums or other payments for all periods
ending on or before the Closing Date have been paid with respect to
each such Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
(v) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code
Section 401 (a) and has received a favorable determination letter from
the Internal Revenue Service.
(vi) Copies of the plan documents and summary plan descriptions, the
most recent determination letter received from the Internal Revenue
Service, the most recent Form 5500 Annual Report, and all related
trust agreements, insurance contracts, and other funding agreements
which implement each such Employee Benefit Plan have been made
available to Buyer.
(vii) With respect to each Employee Benefit Plan that Target maintains
or ever has maintained or to which it contributes, ever has
contributed, or ever has been required to contribute, Target has not
incurred any material liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any
withdrawal liability) or under the Code with respect to any such
Employee Benefit Plan which is an Employee Pension Benefit Plan.
(viii) Target never has contributed to, nor ever has been required to
contribute to, any Multiemployer Plan nor has any material liability
(whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due),
including any withdrawal liability, under any Multiemployer Plan.
(ix) Target does not maintain nor ever has maintained nor ever has
contributed to, nor ever has been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life
insurance or other welfare-type benefits for current or future retired
or terminated employees, their spouses, or their dependents (other
than in accordance with Code Section 498(B).
(u) GUARANTIES.
----------
Except for joint ventures, teaming arrangements and other matters
covered under the Government Contracts, Target is not a guarantor or
otherwise responsible for any material liability or obligation
(including indebtedness) of any other Person. Section 4(u) of the
Disclosure Schedule sets forth a list of all material guaranties
provided by any corporate Affiliate of Target for the benefit of
Target or with respect to the Business.
(v) GOVERNMENT CONTRACTS.
--------------------
With respect to each Government Contract:
(i) To Seller's Knowledge, during the past five years, no payment has
been made by Target, or by any Person authorized to act on Target's
behalf, to any Person in connection with any such Government Contract,
in violation of applicable procurement, criminal or civil laws or
regulations or in violation of (or requiring disclosure pursuant to)
the Foreign Corrupt Practices Act.
(ii) With respect to each material Government Contract, except as set
forth in section 4(v) of the Disclosure Schedule, to Seller's
Knowledge (A) Target has complied with all material terms and
conditions of such Government Contract, including all clauses,
provisions and requirements incorporated expressly, by reference or by
operation of law therein, (B) Target has complied in all material
respects with all requirements of applicable laws pertaining to such
Government Contract, (C) all representations and certifications
executed, acknowledged or set forth in such Government Contract were
complete and correct in all material respects as of their effective
date, and Target has complied in all material respects with all such
representations and certifications, and (D) neither the United States
Government nor any prime contractor, subcontractor or other Person has
notified Seller in writing that Target has breached or violated any
applicable law (except where the failure to comply would not have a
Material Adverse Effect), or any material certification,
representation, clause, provision or requirement pertaining to such
Government Contract. Without limiting the generality of the foregoing,
the laws, regulations and requirements encompassed by this warranty
include laws, regulations and requirements regarding bribes,
gratuities, disclosure of cost or pricing data, submission of false
claims to the Government, kickbacks, receipt or possession of
contractor bid and proposal information and source selection
information (as defined in Section 3.104-5 of the Federal Acquisition
Regulations), and restrictions on the activities of former Government
employees.
(iii) Except as identified in Section 4(v) of the Disclosure Schedule,
Target is not currently, and has not been in the past five (5) years,
debarred or suspended from doing business with any Federal government
agency, nor has any such suspension or debarment action been
commenced. No show cause notices, notices of termination for default
or cure notices have been issued against Target in the past five
years, except, as to any such cure notices, those with respect to
which cure has been made in the ordinary course of business.
(iv) Target is not currently and has not been in the past five (5)
years, under administrative, civil or criminal indictment or, to
Seller's Knowledge, investigation, with respect to any alleged
irregularity, misstatement or omission arising under or in any way
relating to any such Government Contract, except for the suspension
and debarment and investigation identified in Section 4(v) of the
Disclosure Schedule.
(v) Target has never been denied a security clearance necessary to
perform any Government Contract unless such clearance has later been
granted.
(vi) Target is not currently and has not been in the past five years
subject to any administrative, civil or criminal claim or indictment
that arises out of or relates to any alleged or actual violation of
the Service Contract Act, ▇▇▇▇▇-▇▇▇▇▇ Act or any wage determination
issued pursuant to said Acts.
(w) BROKERS' FEES.
-------------
Target has no liability or obligation to pay any fees or commissions
to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(x) AWARD FEE SCORES.
----------------
Section 4(x) of the Disclosure Schedule identifies completely and
accurately for each Government Contract constituting part of the
Assets, the award fee scores for calendar years 1999 and 1998.
(y) DISCLOSURE.
----------
To the Knowledge of the Seller, the representations and warranties
contained in this Section 4 do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements and information contained in this Section 4 not
misleading.
5. PRE-CLOSING COVENANTS.
---------------------
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing Date.
(a) GENERAL.
-------
Each of the Parties will use its reasonable efforts to cooperate with
the other parties in order to consummate and make effective the
transactions contemplated by this Agreement.
(b) HSR AND GOVERNMENTAL CONSENTS.
-----------------------------
(i) Buyer and Seller will give any notices to, make any filings with,
and use reasonable efforts to obtain as promptly as practicable any
authorizations, consents, and approvals of governments and
governmental agencies. Without limiting the generality of the
foregoing, each of the Parties will file any Notification and Report
Forms and related material that it may be required to file with the
Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. Any fees
in connection with such filing and any review or processing thereof
shall be paid by the Buyer. Buyer and Seller will each use its
reasonable efforts to obtain a waiver from the applicable waiting
period, and will make any further filings pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act that may be necessary in connection therewith.
(ii) Buyer, Target and Seller will give any required notices to, make
any required filings with, and use reasonable efforts to obtain as
promptly as practicable authorizations, consents, and approvals by the
Defense Security Service, the Council on Foreign Investment in the
United States, and any other necessary government authority, of
Buyer's acquisition of Target Shares and the continued performance of
classified Government Contracts by Target following the Closing.
(c) OPERATION OF BUSINESS.
---------------------
From the date hereof to the Closing Date, Target and Seller shall not,
and Seller will not permit Target to, engage in any practice, take any
action, or enter into any transaction outside the ordinary course of
the Business. Without limiting the generality of the foregoing, except
with the written consent of Buyer, Target shall not and Seller will
not cause Target to:
(i) change or amend the Articles of Incorporation or Bylaws of Target;
(ii) enter into, extend, materially modify, terminate or renew any
Material Contract other than in the ordinary course of business;
(iii) sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any material Assets, or any interests
therein other than in the ordinary course of business;
(iv) except as otherwise required by law, and except for the retention
bonuses and other matters described in Section 5(c) of the Disclosure
Schedule, take any action relating to Target's employees with respect
to the grant of any salary increase, bonus, severance or termination
pay (otherwise than pursuant to policies or agreements of Target in
effect on the date hereof and described in Target's Employee Policy
and Procedure Manual or in Section 5(c) of the Disclosure Schedule),
or with respect to any increase of benefits payable under its
severance or termination pay policies or agreements in effect on the
date hereof or increase in any material respect the compensation or
fringe benefits of any employee or pay any benefit not required by any
existing Employee Plan, agreement or policy;
(v) make any change in the key management structure of Target,
including, without limitation, the hiring of additional officers or
the termination of existing officers other than in the ordinary course
of business;
(vi) adopt, enter into or amend any Employee Plan, agreement
(including, without limitation, any collective bargaining or
employment agreement), trust, fund or other arrangement for the
benefit or welfare of its employees other than in the ordinary course
of business;
(vii) acquire by merger or consolidation with, or merge or consolidate
with, or purchase substantially all of the assets of, or otherwise
acquire any material assets or business of any corporation,
partnership, association or other business organization or division
thereof;
(viii) make any capital expenditures or commitments in excess of
$100,000 in the aggregate, except any such expenditures disclosed to
Buyer prior to the date hereof;
(ix) make any loans or advances in excess of $5,000 to any Person
other than in the ordinary course of business;
(x) make any material tax election or settlement or compromise with
tax authorities that would affect the Assets or the Business after the
Closing hereunder, except as set forth in Section 5(c)(x) of the
Disclosure Schedule;
(xi) intentionally do any other act that would cause any
representation or warranty in this Agreement to be or become untrue in
any material respect;
(xii) fail to maintain the tangible Assets in their current state of
repair, excepting normal wear and tear or casualty, or fail to replace
consistent with Target's past practice inoperable, worn out, obsolete
or destroyed Assets;
(xiii) make any changes in accounting policies or practices except as
set forth in Section 5(c)(xiii) of the Disclosure Schedule; provided
that Seller shall cause Target to report to Buyer promptly any
additional such changes Target proposes to make, and Buyer shall not
withhold its consent to any such change if the same would not
reasonably be deemed to have an adverse effect on Target or Buyer
after the Closing Date;
(xiv) declare, set aside, or pay any dividend or make any distribution
with respect to its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock;
(xv) suffer any Material Adverse Change;
(xvi) take on or incur debt or other business liabilities except those
relating to normal business activities; or
(xvii) enter into any agreement, or otherwise become obligated, to do
any action prohibited hereunder.
(d) FULL ACCESS.
-----------
Seller and Target will permit representatives of Buyer to have full
access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of Target, to all premises,
properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to the Business.
(e) CONFIDENTIALITY.
---------------
Except (i) for any governmental filings required in order to complete
the Transactions, and (ii) as Buyer and Seller may agree or consent in
writing, Buyer, Seller and Target will treat and hold as such any
Confidential Information it receives from the other Party or its
representatives, in the course of the reviews contemplated by Section
5(d) or otherwise, and will not use any of the Confidential
Information except in connection with this Agreement; provided,
however, that any party hereto may disclose such information to its
legal and financial advisors, lenders, financing sources and their
respective legal advisors and representatives so long as such Persons
agree to maintain the confidentiality of such information in
accordance with this Section 5(e). If this Agreement is terminated for
any reason whatsoever, each Party will return to the other Party or
destroy all tangible embodiments (and all copies) of the Confidential
Information, including all information prepared by the receiving party
or such receiving party's representatives, which are in its possession
or the possession of its representatives. Any provision hereof to the
contrary notwithstanding, information not so destroyed (or returned)
will remain subject to these confidentiality provisions
(notwithstanding any termination of this Agreement) until the second
anniversary of the date of this Agreement. The foregoing
confidentiality provisions shall not apply to such portions of the
information received which (i) are or become generally available to
the public through no action by the receiving party or by such party's
representatives, (ii) are or become available to the receiving party
on a nonconfidential basis from a source, other than the disclosing
party or its representatives, which the receiving party believes,
after reasonable inquiry, is not prohibited from disclosure of such
information by a contractual, legal or fiduciary obligation, and shall
not apply to any disclosure after the Closing by Buyer of any
information relating solely to Target.
(f) CONSENTS; REASONABLE EFFORT; COOPERATION.
----------------------------------------
Target and Seller will make reasonable efforts to obtain in writing
the consents of third parties, in connection with the consummation of
the Transactions, listed on Exhibit D attached hereto, such consents
to be substantially in the form set forth in such Exhibit D (the
"REQUIRED CONSENTS").
(g) NOTICE OF DEVELOPMENTS.
----------------------
Buyer will give written notice to Seller of any development causing a
breach of any of the representations and warranties in Section 3(a)
which has not previously been disclosed to Seller, with reasonable
promptness after Buyer gains knowledge thereof. If Buyer has knowledge
of a breach of any of the representations and warranties contained
herein prior to Closing, but fails to notify Seller of the breach
prior to Closing and thereafter closes, Buyer shall be precluded from
seeking indemnification hereunder for damages related to that known
breach; provided that knowledge of Buyer shall not include matters for
which Seller had Knowledge and failed to disclose to Buyer.
"Knowledge" of Seller for purposes of the immediately preceding
sentence means the actual knowledge of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, H. ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇. Seller will give
written notice to Buyer of any development causing a breach of any of
the representations and warranties in Section 3(b) or 4 above relating
to Target, the Business, the Assets or the transactions contemplated
hereby, which has not previously been disclosed, with reasonable
promptness after Seller has Knowledge thereof. Buyer will give Seller
notice, as soon as reasonably practicable after Buyer has knowledge
thereof, of any material inaccuracy of the representations and
warranties of Seller or Target with regard to the Business or the
Assets of which Buyer gains knowledge from Buyer's or its agents' due
diligence investigation with regard to this Agreement.
(h) EXCLUSIVITY.
-----------
Prior to the Closing or other termination of this Agreement in
accordance with the terms hereof, Seller will not (and Seller will not
cause or permit Target to) accept an offer from any Person relating to
the acquisition of any capital stock or other voting securities, or
any portion of the Assets, of Target. Seller will not vote its Target
Shares in favor of any such nonpermitted acquisition structured as a
merger, consolidation, or share exchange.
(i) NO SOLICITATIONS.
----------------
From the date hereof through the Closing Date or termination of this
Agreement in accordance with the terms hereof, neither Target nor
Seller shall directly or through an agent disclose any information
about Target, solicit, respond to requests for information about
Target, participate in or initiate discussions or negotiations with
any Person or group of Persons (other than Buyer or any of its
Affiliates) concerning any merger, sale of assets, sale of shares of
capital stock or similar transactions involving Target or the
Business.
(j) EMPLOYEE MATTERS.
----------------
Upon the Closing, Buyer will enter into employment agreements with
five key executive officers (▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Billions,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇) of Target (collectively, the "Covered
Employees"). The Employment Contracts will pay the Covered Employees
at least 90% of their current salaries (including bonuses) and will
not terminate for at least six months, unless the Covered Employee is
terminated earlier for cause as defined in the employment agreements.
Notwithstanding the foregoing, after the Closing, Buyer may modify the
terms of, or terminate the employment of, all other employees of
Target. It is acknowledged and agreed that Buyer shall have no
obligation to pay, or cause Target after the Closing to pay, any
severance or termination payments to any employee by virtue of the
termination by Seller, or by Target with Seller's consent, of such
employee's employment with Target effective as of the Closing Date.
6. POST-CLOSING COVENANTS.
----------------------
The Parties agree as follows with respect to the period following the
Closing.
(a) GENERAL.
-------
In case at any time after the Closing any further action is necessary
to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such
further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor
under Section 9 below). The Parties acknowledge and agree that from
and after the Closing Buyer will be entitled to possession of the
Books and Records, but will provide copies thereof to Seller promptly
upon request therefor. Buyer will provide all reasonable cooperation
with Seller in connection with obtaining any information reasonably
necessary for preparation of financial statements and tax returns.
Seller shall promptly forward to Target, any invoices received by
Seller after Closing for goods or services provided to or on behalf of
Target prior to Closing and Target will be responsible for paying or
otherwise resolving such amounts. Seller shall also promptly forward
to Target any payments, reimbursements or credits received by Seller
from third parties after Closing that are owed to Target. Target shall
promptly reimburse to Seller any payments made by Seller after Closing
with respect to worker's compensation and general liability insurance
claims to the extent of reserves accrued for such claims on the books
of Target at Closing.
(b) LITIGATION SUPPORT.
------------------
In the event and for so long as any Party actively is contesting or
defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any
fact, circumstance, condition, occurrence, event, incident, action,
failure to act, or transaction prior to the Closing Date directly
involving the Business, each of the other Parties will make all
reasonable efforts to cooperate with him or it and his or its counsel
in the contest or defense, make available their personnel, and provide
such testimony and access to their books and records as shall be
reasonably necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending Party (unless
the contesting or defending Party is entitled to indemnification
therefor under Section 9 below).
(c) BONDS.
-----
Seller shall continue to guaranty existing performance bonds of Target
for up to 60 days following the Closing to allow coverage of Target
while Buyer seeks replacement bonds. Buyer will use reasonable best
efforts to obtain replacement bonds as promptly as practicable so as
to enable Seller to discontinue its existing bonds. Seller will effect
such discontinuance as promptly as practicable. Buyer and Target,
jointly and severally, will reimburse Seller for the following: (i)
all actual costs associated with maintaining or guarantying the
existing bonds (including the pro rata amount of any prepayments with
respect thereto) after Closing for the benefit of Target, (ii) all
actual payments made by Seller with respect to such existing bonds
after Closing, and (iii) all Adverse Consequences incurred by Seller
as a result of maintaining or guarantying such existing bonds after
the Closing. Notwithstanding anything to the contrary contained
herein, Target's obligation to reimburse Seller under this Section
6(c) shall expire upon the earlier of (A) replacement of the last
performance bond and release of Seller from all liability under such
bonds, or (B) receipt by Seller of evidence satisfactory to Seller of
the guarantor's financial condition.
7. CONDITIONS TO OBLIGATION TO CLOSE.
---------------------------------
(a) CONDITIONS TO OBLIGATION OF BUYER.
---------------------------------
The obligation of Buyer to consummate the transactions to be performed
by it in connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in Sections 3(b) and
4 above shall be true and correct in all material respects at and as
of the Closing Date (except for those expressly relating to a
different date) unless the aggregate amount of all breaches of such
representations and warranties exceeds $500,000;
(ii) Seller shall have performed and complied in all material respects
with all of its covenants hereunder through the Closing;
(iii) no action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge
would prevent consummation of any of the transactions contemplated by
this Agreement or have a Material Adverse Effect;
(iv) all applicable waiting periods (and any extensions thereof) under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated;
(v) Buyer shall have received from counsel to Seller an opinion
substantially in the form set forth in Exhibit E attached hereto,
addressed to Buyer, reasonably satisfactory to Buyer and its counsel
and dated as of the Closing Date;
(vi) Buyer shall have received from Seller such certificates of its
duly authorized officers and others, evidencing compliance with the
conditions set forth in this Section 7(a) and containing such other
customary information as may be reasonably requested by Buyer;
(vii) Buyer shall have received the consents set forth in Section 5(b)
hereof;
(viii) Prior to Closing, Buyer shall have received written approval
from Defense Security Service of its proposed proxy agreement and
Target's retention of its classified Government Contracts in a form
satisfactory to Buyer from authorized U.S. Government officials;
(ix) Buyer shall be satisfied that (A) the previous debarment or
suspension of Target with respect to the Air Force Office of
Contractor Compliance matter described in Section 4(v) of the
Disclosure Schedule is resolved, and (B) Target will not be required
with respect to such debarment and suspension matter to enter into an
Administrative Agreement which imposes on Target any requirements
other than the adoption of training programs which would be materially
burdensome to Target or Buyer and its Affiliates; provided that prior
to Closing Buyer shall have used its reasonable best efforts to
achieve a resolution of such debarment and suspension matter which
meets the requirements of this condition;
(x) Seller shall have executed and delivered to Buyer the
Noncompetition Agreement in the form attached as Exhibit B hereto;
(xi) Seller shall have executed and delivered to Buyer a five-year
trademark license agreement, in the form attached as Exhibit F hereto,
authorizing Buyer to use the name of Target;
(xii) Between the date hereof and the earlier of termination of this
Agreement or the Closing Date, Seller shall make ▇▇▇▇▇▇ ▇▇▇▇▇ and/or
▇▇▇▇ ▇▇▇▇▇▇ reasonably available to work jointly with Buyer to obtain
a confirmation reasonably acceptable to Buyer from the U.S. Government
that Target will not be precluded from bidding on and receiving base
telecommunications contracts or from being awarded options under
existing base telecommunication contracts by virtue of the
transactions contemplated by this Agreement; provided that, in
recognition of the sensitivity of this issue and the potential for
damaging the Business, Buyer will act prudently and judiciously so as
to avoid impairing Target's existing relationships.
(xiii) Seller shall cause the Audited Financial Statements to be
delivered to Buyer, including the final audit report and/or opinion
and the audit shall not reveal a decrease in Target's shareholders'
equity (excluding goodwill) of $500,000 or more from that reflected in
the unaudited balance sheet of Target as of December 31, 1999;
(xiv) Seller shall cause a good standing certificate or certificate of
existence, dated as of the Closing Date, from the Secretary of State
of Texas to be delivered to Buyer;
(xv) Seller shall deliver to Buyer evidence reasonably satisfactory to
Buyer that the Mellon Bank Security Interest and any other Security
Interests, including but not limited to any assignments of Government
Contract proceeds, with respect to the Assets have been released; and
(xvi) Since the date of execution of this Agreement, Target will have
made commercially reasonable efforts, and Seller will have made
commercially reasonable efforts to cause Target, to keep the Business
and Assets substantially intact, including its present operation,
physical facilities, and relationships with employees, lessors,
licensors, suppliers and customers, subject to customary commercial
practice.
Buyer may waive any condition specified in this Section 7(a) in
writing, or by consummating the transactions contemplated hereby.
(b) CONDITIONS TO OBLIGATION OF SELLER.
----------------------------------
The obligation of Seller to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3(a) above
shall be true and correct in all material respects at and as of the
Closing Date (except for those expressly relating to a different
date);
(ii) Buyer shall have performed and complied in all material respects
with all of its covenants hereunder through the Closing;
(iii) no action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge
would prevent consummation of any of the transactions contemplated, by
this Agreement;
(iv) all applicable waiting periods (and any extensions thereof) under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated;
(v) Seller shall have received from counsel to Buyer an opinion
substantially in the form set forth in Exhibit G attached hereto,
addressed to Seller, reasonably satisfactory to Seller and its
counsel, and dated as of the Closing Date. Seller also shall have
received on or before May 10, 2000 an opinion in form and substance
reasonably satisfactory to Seller and its counsel as to (i) the
enforceability of the letter agreement of even date herewith between
the Seller and the guarantor thereunder and (ii) the joint and several
liability of such guarantor's parent entity under such letter
agreement in accordance with French law;
(vi) Seller shall have received from Buyer resolutions adopted by the
Board of Directors of Buyer approving this Agreement, the Ancillary
Agreements and the transactions contemplated hereby and thereby,
certified by Buyer's corporate secretary or assistant secretary;
(vii) The Ancillary Agreements to which Buyer or Seller is a party in
the forms attached as exhibits hereto shall have been executed in the
forms initialed by the parties for identification as of the date of
this Agreement, and Buyer shall have executed and delivered to Seller
the Escrow Agreement;
(viii) The Seller's board of directors, or an authorized committee
thereof, shall have duly authorized and approved this Agreement and
the transactions contemplated thereunder; and
(ix) Seller shall have received from Buyer such certificates of its
duly authorized officers and others, evidencing compliance with the
conditions set forth in this Section 7(b) and containing such other
customary information as may be reasonably requested by Seller.
8. CONSENTS TO ASSIGNMENT OR NOVATION; RISK OF LOSS.
------------------------------------------------
(a) CONSENTS.
--------
Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign or novate any
Contract, or any claim or right or any benefit arising thereunder or
resulting therefrom, if an attempted assignment or novation thereof,
without the consent of a third party thereto, would constitute a
breach thereof or in any way adversely affect the rights of Target
thereunder. If such consent is not obtained, or if an attempted
assignment or novation thereof would be ineffective or would affect
the rights thereunder so that Target would not receive all such
rights, Seller and Buyer will cooperate, in all reasonable respects
but without material cost to Seller which is not promptly reimbursed
by Buyer, to obtain such consent as soon as practicable and, until
such consent is obtained, to provide to Target the benefits under any
Contract to which such consent relates (with Target responsible for
all the liabilities and obligations thereunder). Recognizing that any
action taken by Seller pursuant to this Section 8(a) is at the request
of and for the benefit of Buyer, Buyer agrees to indemnify and hold
harmless Seller from and against any claim, loss, liability, damages,
cost or expense (including reasonable attorneys' fees and expenses)
arising from or related to any breach or default under such contracts
by Target following the Closing Date or any action taken by Seller
pursuant to the terms of this Section 8(a) at the request of Buyer. No
failure of a Contract to be transferred shall be deemed to affect any
amount payable to Seller pursuant to any provision of Section 2 of
this Agreement, except to the extent such failure is the result of any
breach by Target or Seller of any covenant, representation or warranty
contained herein.
(b) RISK OF LOSS.
------------
If any material portion of the tangible Assets is destroyed or damaged
by fire or any other cause prior to the Closing Date which destruction
or damage disables Target from carrying on, or materially impairs
Target's ability to carry on a material part of the Business, Seller
shall give written notice to Buyer as soon as reasonably practicable
after, but in any event within five business days of, Seller obtaining
Knowledge thereof including information as to the amount of insurance,
if any, believed to cover such destruction or damage. In such event,
prior to the Closing, Buyer shall have the option, which shall be
exercised by written notice to Seller within 10 days after receipt of
Seller's notice or, if there are not 10 days prior to the Closing
Date, as soon as practicable prior to the Closing Date, of (i) closing
with such Assets in their destroyed or damaged condition, in which
event Buyer shall be entitled to the proceeds of any insurance or
other proceeds payable with respect to such loss and, subject to the
limitations set forth in Section 9 hereof, to indemnification for any
uninsured portion of such loss to the extent provided by such Section
9, and the full purchase price shall be paid, (ii) if agreed by
Seller, excluding such Assets from the transaction contemplated
hereby, in which case the purchase price shall be reduced by the
amount allocated to such Assets, as mutually agreed between the
Parties, and Seller shall be entitled to promptly receive any
insurance or other proceeds payable with respect to such loss, or
(iii) after providing Target with a reasonable opportunity to repair
such destruction or damage, terminating this Agreement in accordance
with Section 11, below.
9. SURVIVAL; INDEMNIFICATION.
-------------------------
(a) SURVIVAL.
--------
Notwithstanding any investigation at any time conducted by any of the
Parties hereto, each of the Parties hereto shall be entitled to rely
on the representations and warranties of the other Parties set forth
in this Agreement and in any schedule, exhibit, or other document
delivered pursuant to this Agreement. All of the representations and
warranties of the Parties contained in this Agreement shall survive
the Closing and continue in full force and effect for a period of two
years thereafter except as otherwise expressly set forth herein and
except that those representations made with respect to the matters set
forth in Sections 4(a)(ii) and (iii), 4(k), 4(s) and 4(t) and any
claim with respect thereto shall survive until ninety (90) days after
the expiration of the applicable statute of limitations (with
extensions) with respect to the matters addressed in those Sections.
The termination after Closing of the representations and warranties
provided herein shall not affect the rights of a party in respect of
any claim made by such party in a writing received by the other party
prior to the expiration of the applicable survival period provided
herein. Any claim for indemnification described in Section 9(b)(ii)
below shall survive until 90 days after the expiration of the
applicable statute of limitations (with extensions) with respect to
matters covered thereby. All other claims for indemnification
hereunder, except with respect to breaches of Sections 6(c), 10(b) and
10(g), must be asserted within three years of Closing.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER.
-----------------------------------------------
In the event Target or Buyer suffers Adverse Consequences after the
Closing as a result of (i) the breach by Seller or Target of any of
their respective representations and warranties contained in Section
3(b) or 4 hereof or of any covenant in this Agreement, or (ii) any
Pre-Closing Environmental Liability, (each, a "BUYER INDEMNIFICATION
MATTER"), provided that Buyer makes a written claim for
indemnification against Seller within the survival period described
above, then Seller and Target, jointly and severally, shall indemnify
and hold harmless Buyer and its Affiliates, and their respective
directors, officers, shareholders and employees (collectively, the
"BUYER PARTIES") from and against any Adverse Consequences Buyer
Parties may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences Buyer Parties may
suffer after the end of any applicable survival period) directly
resulting from or caused by such Buyer Indemnification Matter
(calculated as set forth in subsection (e) below).
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER.
------------------------------------------------
In the event (i) Buyer breaches any of its representations or
warranties contained herein, (ii) Buyer breaches any of its covenants
contained herein, or (iii) Buyer or Target terminates the employment
of any Target employees after Closing, (each, a "SELLER
INDEMNIFICATION MATTER"), and a claim is made against Seller or any of
Seller Parties (as defined below) with respect thereto, provided that
Seller or such Seller Party makes a written claim for indemnification
against Buyer within the survival period described above, then Buyer
agrees to indemnify, save, and hold harmless Seller and its Affiliates
and their respective directors, officers, shareholders and employees
(collectively, the "SELLER PARTIES") from and against any Adverse
Consequences such Seller Parties may suffer through and after the date
of the claim for indemnification (including any Adverse Consequences
such Seller Parties may suffer after the end of any applicable
survival period) resulting from or caused by Seller Indemnification
Matter (calculated as set forth in subsection (e) below.
(d) MATTERS INVOLVING THIRD PARTIES.
-------------------------------
(i) If any third party shall notify any Party (the "INDEMNIFIED
PARTY") with respect to any matter (a "THIRD PARTY CLAIM") which may
give rise to a claim for indemnification against any other Party (the
"INDEMNIFYING PARTY") under this Section 9, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing
within 30 days after the Indemnified Party has knowledge thereof;
provided, however, that the Indemnified Party's failure to provide
timely such notice shall not bar the Indemnified Party's right to
indemnification hereunder if the Indemnified Party can establish that
such failure has not materially prejudiced the Indemnifying Party's
ability to defend the claim or proceeding.
(ii) Any Indemnifying Party will have the right, at its sole cost and
expense, to assume the defense of the Third Party Claim with counsel
of its choice reasonably satisfactory to the Indemnified Party at any
time within 10 business days after the Indemnified Party has given
notice of the Third Party Claim; PROVIDED, HOWEVER, that the
Indemnifying Party shall periodically thereafter provide the
Indemnified Party with reasonably sufficient evidence of the ability
of the Indemnifying Party to satisfy its obligations under this
Section 9 with respect to such Third Party Claim. In the event that
the Indemnifying Party assumes the defense as set forth hereunder, the
Indemnifying Party shall conduct the defense of the Third Party Claim
with reasonable diligence thereafter. The Indemnified Party may retain
separate co-counsel at its sole cost and expense and participate in
the defense of the Third Party Claim, provided that Indemnifying
Party's counsel will consult with such co-counsel, but shall remain in
sole control of such action.
(iii) So long as the Indemnifying Party has assumed and is conducting
the defense of the Third Party Claim in accordance with Section
9(d)(ii) above, (A) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld, conditioned or delayed unreasonably) unless
the judgment or proposed settlement involves only the payment of money
damages by one or more of the Indemnifying Parties and does not impose
any material injunction or other equitable relief upon the Indemnified
Party and (B) the Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying
Party (not to be withheld, conditioned or delayed unreasonably).
(iv) In the event none of the Indemnifying Parties assumes and
conducts the defense of the Third Party Claim in accordance with
Section 9(d)(ii) above. However, (A) the Indemnified Party may defend
against the Third Party Claim in any manner it reasonably may deem
appropriate; provided that the Indemnified Party shall conduct the
defense of the Third Party Claim with reasonable diligence and (B) the
Indemnifying Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim to the extent provided in this Section 9. In such event, (1) the
Indemnifying Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, and
the Indemnified Party's counsel will consult with such co-counsel but
shall remain in sole control of such proceeding, and (2) the
Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party (not to be
withheld, conditioned or delayed unreasonably).
(e) DETERMINATION OF ADVERSE CONSEQUENCES.
-------------------------------------
The Parties shall make appropriate adjustments for tax consequences
(net of tax benefits received) and insurance coverage (net of
insurance proceeds received) in determining Adverse Consequences for
purposes of this Section 9. In calculating Adverse Consequences with
respect to actual out-of-pocket costs paid by an Indemnified Party,
there shall be included interest at the Applicable Rate from the date
such costs are paid. The parties agree to use commercially reasonable
efforts to make claims on and pursue recovery with respect to
insurance on account of such matters. All indemnification payments
under this Section 9 shall be deemed adjustments to the Purchase
Price.
(f) INDEMNIFICATION DEDUCTIBLE.
--------------------------
(i) Seller will have no liability pursuant to Section 9(b) for the
first $300,000 of Adverse Consequences in the aggregate, which amount
shall constitute a deductible.
(ii) With respect to indemnification pursuant to Section 9(c)(i),
Buyer will have no liability for the first $300,000 of Adverse
Consequences in the aggregate, which amount shall constitute a
deductible.
(g) INDEMNIFICATION LIMITATION.
--------------------------
(i) In no event will Seller be liable under Section 9(b) for Adverse
Consequences in an aggregate amount of more than $4,000,000 (the
"Seller Cap"), provided that the Seller Cap shall automatically reduce
to $2,000,000 in the aggregate on the first anniversary of the Closing
Date except with respect to any Buyer Indemnification Matters properly
asserted by Buyer in accordance with the terms of this Agreement prior
to such first anniversary.
(ii) With respect to indemnification pursuant to Section 9(c)(i), in
no event will Buyer be liable for Adverse Consequences in an aggregate
amount of more than $4,000,000 (the "Buyer Cap"), provided that the
Buyer Cap shall automatically reduce to $2,000,000 in the aggregate on
the first anniversary of the Closing Date except with respect to any
Seller Indemnification Matters properly asserted by Seller in
accordance with the terms of this Agreement prior to such first
anniversary.
(h) EXCLUSIVE REMEDY.
----------------
After Closing the sole and exclusive remedy of the Parties for breach
of this Agreement, including a breach of the representations and
warranties contained herein, shall be indemnification pursuant to this
Section 9.
10. TAX MATTERS.
-----------
The following provisions shall govern the allocation of responsibility as
between Buyer and Seller for certain tax matters:
(a) TAX RETURNS.
-----------
Seller shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for Target for all periods ending on or prior to
the Closing Date which are filed after the Closing Date. All Tax
Returns for Target prepared by Seller shall be prepared in a manner
consistent with past practices, except as otherwise required by
applicable law. Buyer shall, and shall cause Target to, promptly
provide and make available to Seller all information it may request
for the purpose of preparing and filing any such return or working on
any audit that relates to or arises from such Tax Returns.
(b) TAX REFUNDS.
-----------
Any Tax refunds that are received by Buyer or by Target, and any
amounts credited against Taxes to which Buyer or Target become
entitled, that relate to Tax periods ending on or before the Closing
Date shall be for the account of Seller, and Buyer and Target shall
pay over to Seller, for distribution to Seller pro rata, any such
refund or the amount of any such credit within fifteen (15) days after
receipt or entitlement thereto.
Buyer shall, if Seller so requests and at Seller's expense, cause
Target to file for and obtain any refund to which Seller is entitled
under this Section 10(b); provided that Seller shall not file to
obtain any refund that would have the effect of increasing any Tax
liability of Target for any taxable period ending after the Closing
Date without obtaining Buyer's consent, which consent shall not
unreasonably be withheld.
Buyer shall permit Seller to represent Target before the relevant
taxing authority with respect to such refund claim, provided that
Seller (i) shall keep Buyer informed regarding the progress and
substantive aspects of any such refund claim, and (ii) shall not
compromise or settle any such refund claim if such compromise or
settlement would have the effect of increasing any Tax liability of
Target for any taxable period ending after the Closing Date without
obtaining Buyer's consent, such consent not to be unreasonably
withheld.
In addition, to the extent that a claim for refund or a proceeding
results in a payment or credit against Taxes by a taxing authority to
Buyer or Target of any amount accrued on the books of Target as of the
Closing Date, Buyer shall pay such amount to Seller, for distribution
to Seller, pro rata, within fifteen (15) days after receipt or
entitlement thereto. In the event that any refund or credit of Taxes
for which a payment has been made pursuant to this Section 10(b) is
subsequently reduced or disallowed, Seller shall indemnify and hold
harmless Target for any Taxes assessed against Target (except for any
penalties that would otherwise be included as part of such Taxes,
unless such refund was sought at the request of Seller) by reason of
the reduction or disallowance.
(c) COOPERATION.
-----------
Buyer and Seller shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing
of any Tax Returns for Target and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of
records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder.
(d) DOCUMENTATION.
-------------
Buyer and Seller further agree, upon request, to use all reasonable
efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions
contemplated hereby).
(e) INFORMATION.
-----------
Buyer and Seller further agree, upon request, to provide each other
with all information that either party may be required to report
regarding Target or any transaction contemplated by this Agreement
pursuant to the Code and all Treasury Department Regulations
promulgated thereunder, and which is exclusively in the possession of
the other party.
(f) TAXES AND FEES FOR THIS TRANSACTION.
-----------------------------------
Any transfer, documentary, sales, use, stamp, registration and other
such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement and the transactions contemplated
hereby, shall be paid by Seller when due, and Seller will, at its own
expense, file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees, and, if required by applicable
law.
(g) LIABILITY FOR TAXES PRIOR TO CLOSING DATE.
-----------------------------------------
Seller shall have sole liability for any Taxes that relate to the
operations of Target on or prior to the Closing Date, except to the
extent that such Taxes have been accrued on Target's books as of the
Closing Date. Except as otherwise provided herein, Seller shall have
no liability with respect to any Taxes of any kind with respect to
Target or its Assets or operations (i) with respect to all tax periods
beginning after the Closing Date, (ii) with respect to any tax period
of Target beginning before the Closing Date and ending after the
Closing Date, but only with respect to the portion thereof beginning
after the Closing Date, or (iii) with respect to any pre-Closing
partial period, but only to the extent such Taxes were paid prior to
Closing or are provided for on the Books and Records of the Business
as of the Closing Date.
(h) CONTESTS.
--------
Seller and Buyer agree to give prompt notice to each other of any
proposed adjustment to Taxes for periods of Target ending on or prior
to the Closing Date or any pre-Closing partial period. Seller and
Buyer shall cooperate with each other in the conduct of any audit or
other proceedings involving Target for such periods and each Party may
participate at its own expense, provided that Target may only
participate if the proposed adjustment affects an item of Tax for any
period that includes the day after the Closing or if the proposed
adjustment affects any taxable period beginning after the Closing
Date.
Seller shall have the right to control the conduct of any such audit
or proceeding for which Seller agrees that any resulting Tax allocable
to any period prior to or including the Closing Date is covered by the
indemnity provided in Section 9 of this Agreement, (such audit or
other proceeding, a "SELLER'S CONTEST"), provided that: (i) Seller
shall keep Buyer informed regarding the progress and substantive
aspect of any Seller's Contest, and (ii) Seller shall not compromise
or settle any Seller's Contest without Buyer's consent, which consent
may not be unreasonably withheld. If Seller chooses to direct a
Seller's Contest, Buyer shall provide powers of attorney authorizing
Seller to represent Target before the relevant taxing authority and
such other documents as are reasonably necessary for Seller to control
the conduct of any Seller's Contest.
11. TERMINATION.
-----------
(a) TERMINATION BY BUYER AND SELLER.
-------------------------------
Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing.
(b) TERMINATION BY BUYER.
--------------------
Buyer may terminate this Agreement by giving written notice to Seller
at any time prior to the Closing (A) in the event Seller has breached
any material representation, warranty, or covenant contained in this
Agreement in any material respect, Buyer has notified Seller of the
breach, and the breach has continued without cure for a period of 10
business days after the notice of breach (provided that, breach of
Seller's representations and warranties if uncured shall not give rise
to a right to terminate hereunder unless the inaccuracies constituting
such breach or breaches exceed $500,000 in the aggregate), (B) if the
Closing shall not have occurred on or before the Termination Date (as
defined below), by reason of the failure of any condition precedent
under Section 7(a) hereof (unless the breach of any representation,
warranty, or covenant of Buyer contained in this Agreement is a
material factor therein), (C) if consummation of the transactions
contemplated by this Agreement is enjoined, prohibited or otherwise
restrained by the terms of a final, non-appealable order or judgment
of a court of competent jurisdiction, or (D) if such termination would
be authorized pursuant to Section 8(b) hereof.
(c) TERMINATION BY SELLER.
---------------------
Seller may terminate this Agreement by giving written notice to Buyer
at any time prior to the Closing (A) in the event Buyer has breached
any material representation, warranty, or covenant contained in this
Agreement in any material respect, Seller has notified Buyer of the
breach, and the breach has continued without cure for a period of 10
business days after the notice of breach (provided that, there shall
be no cure period for Buyer's failure to deposit the Escrow Amount by
May 10, 2000 pursuant to Section 2(b) hereof or to deliver by May 10,
2000 the opinion required by the second sentence of Section 7(b)(v)),
(B) if the Closing shall not have occurred on or before the
Termination Date (unless the failure to close by such date is due to
the breach of any representation, warranty, or covenant of Target or
Seller contained in this Agreement), or (C) if consummation of the
transactions contemplated by this Agreement is enjoined, prohibited or
otherwise restrained by the terms of a final, non-appealable order or
judgment of a court of competent jurisdiction.
(d) TERMINATION DATE.
----------------
"TERMINATION DATE" means the later of (i) May 31, 2000, (ii) 10
business days after delivery to Buyer of the Audited Financial
Statements, or (iii) 10 business days after expiration or termination
of the applicable waiting period under ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, but in
any event not later than July 12, 2000.
(e) TERMINATION OF RIGHTS AND DUTIES.
--------------------------------
If any Party terminates this Agreement pursuant to Sections 11(a), (b)
or (c) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided,
however, that the confidentiality provisions contained in Section 5(e)
above shall survive termination.
(f) DISPOSITION OF ▇▇▇▇▇▇▇ MONEY.
----------------------------
The ▇▇▇▇▇▇▇ money deposit (together with interest earned thereon)
shall be returned promptly to Buyer upon termination of this Agreement
unless this Agreement is terminated pursuant to (i) the failure of the
$500,000 condition precedent concerning representations and warranties
containing materiality thresholds set forth in Section 11(b)(A), (ii)
Section 11(c)(A), or (iii) Section 11(c)(B), in which case the ▇▇▇▇▇▇▇
money deposit (together with the interest earned thereon) shall be
paid promptly to Seller.
12. BREACH OF AGREEMENT.
-------------------
(a) BREACH AND OPPORTUNITY TO CURE.
------------------------------
If any party shall breach the terms of this Agreement or default in
the performance of its obligations to be performed hereunder prior to
Closing the nondefaulting Party shall have the right to provide Seller
or Buyer, as applicable, with notice specifying in reasonable detail
the nature of such breach or default. If such breach or default has
not been cured within the time period specified in Section 11 above,
or by two business days prior to the Closing Date, if earlier, then
the Party giving such notice may (i) terminate this Agreement in
accordance with Section 11, (ii) extend the Closing Date for a period
not in excess of 10 business days, if such default has not been cured
by the Closing Date (but no such extension shall constitute a waiver
of such nondefaulting Party's right to terminate as a result of such
default), (iii) exercise the remedies available to such Party at law
or in equity, and/or (iv) proceed to Closing.
(b) BUYER'S REMEDY OF SPECIFIC PERFORMANCE.
--------------------------------------
Seller agrees that Target Shares represent unique property that cannot
be readily obtained on the open market and that Buyer would be
irreparably injured if Seller's obligation to sell Target Shares to
Buyer pursuant to this Agreement is not specifically enforced after
default. Therefore, Buyer shall have the right to specifically enforce
Seller's obligation to sell Target Shares to Buyer pursuant to this
Agreement, and Seller agrees to waive the defense in any such suit
that Buyer has an adequate remedy at law and to interpose no
opposition, legal or otherwise, as to the propriety of specific
performance as a remedy. As a condition to seeking specific
performance, Buyer shall not be required to have tendered the Cash
Consideration, but shall be ready, willing and able to do so.
13. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.
---------------------------------------
No Party shall issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior
written approval of Buyer and Seller; PROVIDED, HOWEVER, that any
Party may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the
disclosing Party will advise the other Parties prior to making the
disclosure). The Parties agree to cooperate with each other in
drafting any press releases and public announcements.
(b) NO THIRD-PARTY BENEFICIARIES.
----------------------------
This Agreement shall not confer any rights or remedies upon any Person
other than the Parties and their respective successors and permitted
assigns; provided that Buyer Parties and Seller Parties are intended
third party beneficiaries of Section 9 hereof.
(c) ENTIRE AGREEMENT.
----------------
This Agreement (including the documents referred to herein)
constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the
Parties, written or oral, to the extent they relate in any way to the
subject matter hereof.
(d) FURTHER ASSURANCE.
-----------------
Each Party to this Agreement shall execute such documents and take, or
cause Target to take, such further actions as may reasonably be
necessary to implement the provisions of this Agreement.
(e) SUCCESSION AND ASSIGNMENT.
-------------------------
This Agreement shall be binding upon and inure to the benefit of the
Parties named herein and their respective successors and permitted
assigns. None of the Parties may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior
written approval of Buyer and Seller; PROVIDED, HOWEVER, either Seller
or Buyer may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates or as collateral to its
financing source, (ii) designate one or more of its Affiliates to
perform its obligations hereunder (in any or all of which cases under
clause (i) or (ii) the original Seller or Buyer, as the case may be,
nonetheless shall remain fully responsible for the performance of all
obligations hereunder designated as the obligations of Seller or
Buyer, as the case may be), and (iii) after the Closing Date, assign
its rights and obligations under this Agreement to any Person in
connection with a sale or other disposition of substantially all of
the Business or substantially all of Target's assets, or capital stock
without the consent of Seller.
(f) COUNTERPARTS.
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will
constitute one and the same instrument.
(g) HEADINGS.
--------
The Section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) NOTICES.
-------
All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or
other communication hereunder shall be deemed duly given when
personally delivered against a signed receipt or delivered by
recognized overnight courier (and then at the time of delivery or when
delivery is refused) or if it is sent by certified mail, return
receipt requested, postage prepaid (and then three business days after
deposited in such mail) and addressed to the intended recipient as set
forth below:
If to Seller:
H. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇ Corporation
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Buyer:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SKE International, L.L.C.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ ▇▇▇
▇▇▇▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means, but no such notice, request,
demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to
be delivered by giving the other Parties notice in the manner herein
set forth.
(i) GOVERNING LAW.
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This Agreement shall be governed by and construed in accordance with
the domestic laws of the State of Delaware without giving effect to
any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Delaware.
(j) AMENDMENTS AND WAIVERS.
----------------------
No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by Buyer and Seller. No waiver
by any Party of any default, misrepresentation, or breach of warranty
or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any
rights arising by virtue of any prior or subsequent such occurrence.
(k) SEVERABILITY.
------------
Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
(l) EXPENSES.
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Except as otherwise set forth herein, each of the Parties will bear
its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions
contemplated hereby.
(m) CONSTRUCTION.
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The Parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of, proof shall
arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean including
without limitation.
(n) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES.
--------------------------------------------------
The Exhibits, Annexes, and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
(o) TIME OF ESSENCE.
---------------
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
(p) NO OTHER REPRESENTATIONS.
------------------------
Except for the representations and warranties in this Agreement or in
any certificate or schedule delivered pursuant to this Agreement,
neither Seller nor Target or any representative of either: (i) will be
deemed to have made any representations, warranties or assurances of
any kind, and (ii) will have any obligation or liability to Buyer in
respect of any oral or written statement or assurance made to Buyer in
connection with the transactions contemplated hereby.
* * * * *
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
SKE INTERNATIONAL L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President
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Date: April 28, 2000
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▇▇▇▇▇ SUPPORT SERVICES, INC.
By: /s/ H. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Senior Vice President
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Date: April 28, 2000
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▇▇▇▇▇▇▇ ▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: CEO
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Date: April 28, 2000
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