Stock Purchase Agreement - Macro International Inc., Opinion Research Corp., Lewis D. Eigen and Ramona E. F. Arnett
STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT, made this 31st day of October, 2000, by and
among Macro International Inc., a Delaware corporation ("Buyer"), Opinion
Research Corporation, a Delaware corporation ("Parent") and Lewis D. Eigen and
Ramona E. F. Arnett (each individually, a "Stockholder" and together the
"Stockholders").
BACKGROUND
----------
Stockholders own all of the issued and outstanding shares of capital
stock (the "Shares") of Social & Health Services, Ltd., a Maryland corporation
(the "Corporation"), the number of such Shares owned by each Stockholder being
set forth opposite such Stockholder's name on Schedule 4(a). Parent owns all of
-------------
the issued and outstanding shares of capital stock of Buyer.
Buyer desires to purchase, and Stockholders desire to sell, all of the
Shares upon the terms hereinafter set forth in this Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Acquisition of Stock. At the Closing (as hereinafter defined),
--------------------
Stockholders shall sell, convey, transfer and assign to Buyer the Shares, free
and clear of all liens, security interests, pledges, claims and encumbrances of
every kind, nature and description.
2. Purchase Price; Adjustment.
--------------------------
(a) In consideration of the sale, conveyance, transfer and assignment
of the Shares to Buyer, Buyer shall pay Stockholders the following (the
"Purchase Price"):
(i) at the Closing, the sum of $3,000,000 shall be payable by wire
transfer, pursuant to the wire transfer instructions attached as Schedule
--------
2(a)(i), to be allocated among Stockholders in accordance with the percentages
-------
set forth opposite each Stockholders name on Schedule 4(a);
-------------
<PAGE>
(ii) the sum of $1,000,000 shall be payable by delivery as soon as
practicable after the Closing of certificates evidencing that number of shares
of common stock of Parent (the "Common Shares") representing a value of
$1,000,000, based on the average of the closing price of the Common Shares for
the twenty business days immediately preceding the Closing Date, to be allocated
among Stockholders in accordance with the percentages set forth opposite each
Stockholder's name Schedule 4(a); and
-------------
(iii) the sum of $750,000 shall be payable by wire transfer to the bank and
account designated by Stockholders in writing, to be allocated among
Stockholders in accordance with the percentages set forth opposite each
Stockholders name on Schedule 4(a), ten (10) days after the final determination
-------------
of the Closing Tangible Net Worth (as defined herein).
(b) It is the intention of the parties that Corporation's Net Worth (as
hereinafter defined) at the Closing (the "Closing Tangible Net Worth") be equal
to or greater than $2,000,000. If the Closing Tangible Net Worth is determined
to be less than $2,000,000, any such deficiency shall be paid by Stockholders to
Buyer by wire transfer of immediately available funds to the bank and account
designated by Buyer in writing, (A) if no amounts or items shown on the Tangible
Net Worth Statement (as hereinafter defined) have been disputed as provided
herein, within 10 days after delivery to Stockholders of the Tangible Net Worth
Statement, and (B) if any amounts or items shown on the Tangible Net Worth
Statement have been disputed, within 10 business days following the resolution
of all such disputed amounts or items as provided herein. As used in this
Agreement, the term "Tangible Net Worth" means the amount by which the sum of
the book value of the assets (excluding goodwill and other intangible assets) of
Corporation exceeds the sum of the book value of the liabilities of Corporation,
calculated in accordance with generally accepted accounting principles ("GAAP"),
consistently applied. Within ninety 90 days following the Closing Date,
Stockholders and Stockholders' independent public accountants shall prepare and
deliver to Buyer a statement setting forth the Closing
<PAGE>
Tangible Net Worth (the "Tangible Net Worth Statement"). During such period of
90 days, Buyer shall provide Stockholders and Stockholders' accountants
reasonable access during normal business hours, upon reasonable advance notice,
to the books and records of Corporation; provided, however, that Stockholders
-------- -------
shall schedule such access through an authorized representative of Buyer and in
such a way as to avoid material disruption of the normal business of
Corporation. For a period of 60 days after the date of delivery to Buyer of the
Tangible Net Worth Statement, Stockholders shall provide Buyer and Buyer's
accountants reasonable access during normal business hours, upon reasonable
advance notice, to the work papers used by Stockholders and Stockholders'
accountants in preparing the Tangible Net Worth Statement. Unless Buyer notifies
Stockholders in writing within 60 days after delivery to Buyer of the Tangible
Net Worth Statement that Buyer disputes one or more amounts or items shown on
the Tangible Net Worth Statement, the Tangible Net Worth Statement shall be
final, conclusive and binding on the parties hereto. If Buyer notifies
Stockholders in writing within 60 days after delivery to Buyer of the Tangible
Net Worth Statement that Buyer disputes one or more amounts or items shown on
the Tangible Net Worth Statement, then Buyer and Stockholders shall promptly
thereafter meet in good faith to attempt to resolve any and all such disputed
amounts or items. If Buyer and Stockholders are unable to agree upon a
resolution of any disputed amount within 15 days after receipt by Buyer of
Stockholders' notice regarding the existence of such disputed amount or item,
then such disputed amount or item shall be resolved by an independent nationally
recognized accounting firm, selected by mutual agreement of Buyer and
Stockholders, which is not then providing, and has not provided during the one-
year period immediately preceding the Closing Date, services to any of (i)
Buyer, or any of its affiliates or (ii) Corporation, or any of its affiliates (
"Independent Accountants"). If Buyer and Stockholders are unable to agree on
mutually acceptable Independent Accountants during the 15 day period referred to
in the immediately preceding sentence, then such Independent Accountants shall
be
<PAGE>
selected by mutual agreement of Buyer's independent public accountant and
Stockholders' independent public accountant. The resolution of such disputed
amounts and items by the Independent Accountants shall be final, conclusive and
binding upon the parties. The fees and expenses of the Independent Accountants
shall be borne equally by Buyer and Stockholders.
3. Other Agreements.
----------------
(a) At Closing, Corporation and Lewis Eigen shall enter into an employment
agreement substantially in the form attached hereto as Exhibit "A" (the "Eigen
Employment Agreement").
(b) At Closing, Corporation and Lewis Eigen shall enter into an agreement
not to compete substantially in the form attached hereto as Exhibit "B" (the
"Eigen Non-Compete Agreement").
4. Individual Representations, Warranties and Agreements of Stockholders. As
---------------------------------------------------------------------
material inducement to Buyer to enter into this Agreement and to close
hereunder, each Stockholder individually (severally and not jointly) makes the
following representations, warranties and agreements to and with Buyer, which
representations, warranties and agreements shall be true and correct as of the
date of this Agreement and as of the Closing Date:
(a) Ownership of Corporation. Stockholder is the beneficial and record owner
------------------------
of the Shares listed next to Stockholder's name on Schedule 4(a). Stockholder
-------------
has, and at Closing shall transfer to Buyer, good, marketable and unencumbered
title to such Shares, free and clear of all liens, security interests, pledges,
claims, options and rights of others. There are no restrictions on any
Stockholder's right to transfer such Shares to Buyer pursuant to this Agreement.
(b) Due Authorization; Valid and Binding Agreement. The execution, delivery
----------------------------------------------
and performance of this Agreement by Stockholder has been duly authorized by all
necessary action, corporate or otherwise. This Agreement and the documents
contemplated hereby to be executed and delivered by Stockholder have been or
will be duly executed and delivered by the
<PAGE>
Stockholder, as the case may be, and constitute, or will constitute when
executed and delivered, the legal, valid and binding obligations of Stockholder,
enforceable against Stockholder in accordance with their respective terms,
except as the enforceability hereof or thereof may be limited by bankruptcy,
insolvency, moratorium and other similar laws affecting creditors' rights
generally and by general principles of equity.
(c) Agreement Not in Breach of Other Instruments Affecting Stockholder. The
------------------------------------------------------------------
execution and delivery of this Agreement, the consummation of the transactions
provided for herein, and the fulfillment of the terms hereof by Stockholder do
not and will not, with or without the giving of notice, the lapse of time, or
both, result in the breach of any of the terms and provisions of, or constitute
a default under, or conflict with, any agreement, governing documents or other
instrument by which Stockholder is bound, any judgment, decree, order, or award
of any court, governmental body, or arbitrator, or any applicable law, rule or
regulation.
5. Representations, Warranties and Agreements of Stockholders as to
----------------------------------------------------------------
Corporation. As material inducement to Buyer and Parent to enter into this
------------
Agreement and to close hereunder, Stockholders, jointly and severally, hereby
make the following representations, warranties and agreements to and with Buyer
and Parent, which representations, warranties and agreements shall be true and
correct as of the date of this Agreement and the Closing Date:
(a) Corporate Status of Corporation; Outstanding Stock. Corporation is a
--------------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland, has the power and authority to own its properties and
to carry on its business as it is now being conducted, and is duly qualified to
do business as a foreign corporation in the jurisdictions specified in Schedule
--------
5(a)(1), which constitute(s) all the jurisdictions in which the failure to so
-------
qualify would have a material adverse effect on Corporation. Corporation has an
authorized capital consisting of 100,000 shares of Common Stock, $1.00 par value
per share, of which 1,000 shares, constituting the Shares, are outstanding and
owned by Stockholders. All of the Shares
<PAGE>
are validly issued, fully paid and non-assessable. There are no shares of
Corporation's capital stock held in its treasury. There are no options,
warrants, rights, shareholder agreements or other instruments or agreements
outstanding giving any person the right to acquire any shares of capital stock
of Corporation, nor are there any commitments to issue or execute any such
options, warrants, rights, shareholder agreements, or other instruments or
agreements. There are no outstanding stock appreciation rights or similar rights
measured with respect to any of Corporation's capital stock, nor are there any
instruments or agreements giving anyone the right to acquire any such rights.
The minute books and stock records of Corporation are complete and accurate and
all signatures included therein are the genuine signatures of the persons
indicated as signing. True, correct and complete copies of Corporation's minute
books and stock records, including Corporation's Certificate of Incorporation
and By-Laws and all amendments to both, have been delivered to Buyer.
Corporation is not in default under or in violation of any provision of its
Certificate of Incorporation or its By-Laws.
(b) Subsidiaries and Joint Ventures; Corporate Status and Outstanding Stock of
--------------------------------------------------------------------------
Subsidiaries. Corporation has no direct or indirect subsidiaries or, except as
------------
set forth on Schedule 5(b) hereto, any direct or indirect interest of any kind
-------------
in any corporation, partnership, joint venture, limited liability company,
association or other entity.
(c) Officers; Directors; Bank Accounts. Set forth on Schedule 5(c) is a
---------------------------------- -------------
correct and complete list of all directors and officers of Corporation, all bank
accounts and safe deposit boxes of Corporation and all persons authorized to
sign checks drawn on such accounts and to have access to such safe deposit
boxes.
(d) Financial Statements. The reviewed balance sheet of Corporation as at
--------------------
December 31, 1997, 1998 and 1999 and the internally generated balance sheet as
at June 30, 2000, and the related statements of income (loss) and cash flows for
the fiscal years or the 8 month period(s), as the case may be, ended on the
dates of such balance sheets, and all related schedules and notes
<PAGE>
to the foregoing, copies of all of which constitute Schedule 5(d), were prepared
-------------
in accordance with GAAP, consistently applied throughout the periods reported
upon and with past periods, and fairly and accurately present (subject to any
estimates therein which are in accordance with GAAP) the financial position of
Corporation as at the dates of such balance sheets, and the results of the
operations and cash flows of Corporation for the periods ended on such dates.
(e) Real Estate.
-----------
(i) Corporation does not have any obligation or duty relating to, or
any right, title or interest in, any real estate except those premises disclosed
on Schedule 5(e) which Corporation leases or subleases, as tenant or subtenant
-------------
(the "Leased Properties"). Disclosed on Schedule 5(e) are all title insurance
-------------
policies insuring Corporation's interest in any of the Leased Properties, true
and correct copies of which are included in Schedule 5(e). All Leased Properties
-------------
are available to be used without restriction in the conduct and operation of the
business of Corporation. To Stockholders' knowledge, the Leased Properties are
in good operating condition and repair and do not require any repairs other than
normal routine maintenance to maintain them in good condition and repair.
(ii) Corporation has not received any written notice from any
insurance company which has issued a policy with respect to any of the Leased
Properties or from any public official or board of fire underwriters (or other
body exercising similar functions) claiming any defects or deficiencies in, or
suggesting or requesting the performance of any repairs, alterations or other
work to, any of the Leased Properties, except for any notices as to which all
defects and suggested repairs, alterations or other work have been fully
performed. Corporation has not received any notice from the Landlord under any
of the Leases (as hereinafter defined) that such landlord's insurance premium
for landlord's fire and extended coverage insurance for the building of which
such tenant's Leased Property is a part has increased on account of the
operations and activities conducted by such tenant at its Leased Property.
<PAGE>
(iii) There are no property management, employment, service, equipment,
supply, security, maintenance, construction, concession or other agreements with
respect to or affecting the Leased Properties to which Corporation is a party
that will burden Buyer after the date hereof, except as disclosed on Schedule
--------
5(e)(iii).
---------
(iv) All certificates of occupancy and all other licenses, permits,
authorizations, consents, certificates and approvals required by all
governmental authorities having jurisdiction over the Leased Properties to the
extent required to be obtained by Corporation as tenant or subtenant under the
Leases, any requisite certificates of the local board of fire underwriters (or
other body exercising similar functions) to the extent required to be obtained
by Corporation as tenant or subtenant under the Leases, have been issued for the
Leased Properties, have been paid for (to the extent applicable) and to the
extent payable by Corporation), are unconditional, valid and in full force and
effect, and will not be invalidated, violated or otherwise adversely affected by
the execution or performance of this Agreement or the consummation of any of the
transactions contemplated herein. Corporation is in material compliance with all
laws applicable to Corporation for its use and occupancy of the Leased
Properties.
(v) Neither Corporation nor either of Stockholders has received notice
of any condemnation proceedings or any other proceeding in the nature of eminent
domain (a "Taking") pending against any of the Leased Properties, and to
Stockholders' knowledge, no Taking has been threatened.
(vi) To Stockholders' knowledge, all essential utilities (including, but
not limited to, water, sanitary sewer, storm sewer, gas, electricity and
telephone service) are available to each of the Leased Properties.
(vii) (A) Stockholders have delivered to Buyer true, correct and complete
copies of all written Leases or subleases and any and all amendments and
supplements thereto
<PAGE>
and descriptions thereof if oral as well as all related non-disturbance
agreements from mortgagees or paramount lessors, (collectively, the "Leases") of
the Leased Properties, all of which are listed on Schedule 5(e)(vii); (B) except
------------------
as disclosed on Schedule 5(e)(vii), Corporation is the holder of the lessee's or
------------------
sublessee's interest, as applicable, in each Lease and Corporation has not
assigned any Lease or any interest therein or subleased any portion of the
Leased Properties; (C) each Lease is in full force and effect; (D) Corporation
is paying its rent currently and has not asserted any claim for set-off against
rent which has not been resolved; (E) Corporation is not and, to Stockholders'
knowledge, no landlord under any Lease is in default under any Lease, and no
event has occurred which, with the giving of notice or passage of time or both,
would constitute a default by Corporation or Stockholders' knowledge, any
landlord under any Lease; and (F) except as disclosed on Schedule 5(e)(vii),
------------------
neither the execution or performance of this Agreement nor the consummation of
any of the transactions contemplated herein will result in a breach of or
constitute a default under any of the Leases.
(f) Personal Property. Except as disclosed on Schedule 5(f), (A) Corporation
----------------- -------------
has good, valid and marketable title to all personal property, tangible and
intangible (including, but not limited to, Intellectual Property, as defined
below) owned by it, free and clear of all liens, mortgages, pledges, security
interests, restrictions, prior assignments, licenses to third parties,
encumbrances and claims of every kind or character, (B) Corporation is the
owner, custodian of federal property, lessee or licensee of all the personal
property now located in or upon the premises occupied by Corporation and of all
personal property that it uses in the operation of its business, and (C) all
equipment, furniture and fixtures, and other tangible personal property of
Corporation is in good operating condition and repair and does not require any
repairs other than normal routine maintenance including reasonable periodic
replacement to maintain such property in good operating condition and repair.
<PAGE>
(g) Intellectual Property. Except as set forth on Schedule 5(g), Corporation
--------------------- -------------
is the sole and exclusive owner of, has the right to use, or is indemnified for
or otherwise protected from any risk for using the Intellectual Property
disclosed on Schedule 5(g), constituting all Intellectual Property rights and
-------------
licenses required for the conduct of its business. As used herein, "Intellectual
Property" shall include trademarks, trade names, logos, service marks,
copyrights, patents, pending patent applications, shoprights, know-how, trade
secrets, computer programs and computer software and the like and other items
commonly known as intellectual property. The Intellectual Property listed on
Schedule 5(g) is the only Intellectual Property used by Corporation in the
-------------
operation of its business. Except as set forth on Schedule 5(g), no claim has
-------------
been asserted against Corporation involving any conflict or claim of conflict of
Corporation's Intellectual Property with the Intellectual Property of others or
asserting any rights in Corporation's Intellectual Property. Stockholders have
no knowledge of any basis for any such claim or conflict. Stockholders have no
knowledge of any infringement of Corporation's Intellectual Property that would
have a material adverse effect on Corporation. No trademark owned by Corporation
is involved in any opposition, invalidation or cancellation proceeding, and to
Stockholders' knowledge, no such proceeding is threatened. Within the past five
years, Corporation has not done business under, and has not been known by, any
name other than its current corporate name or a trade name disclosed on Schedule
--------
5(g).
----
(h) Software. Except as set forth on Schedule 5(h), the computer software
-------- -------------
used by or on behalf of Corporation in connection with its respective businesses
has been developed by Corporation, or purchased or licensed from others for
Corporation's use. Neither Corporation, nor Stockholders have any knowledge of
any claim or proceeding asserted or, to Corporation's or Stockholders'
knowledge, threatened in which infringement by such software upon the rights of
any third parties is alleged. Corporation has complied in all material respects
with all its software license agreements. Corporation shall not be in breach of
any software license
<PAGE>
agreement as a result of entering into this Agreement or by consummating any of
the transactions contemplated hereunder.
(i) Year 2000 Warranty. Corporation's information technology is year 2000
------------------
compliant. For purposes of this subparagraph 5(i), "information technology"
shall mean software, firmware, hardware and similar or related items of
automated and computerized systems developed by or on behalf of Corporation, and
"year 2000 compliant" means the accurate processing of date/time data
(including, but not limited to, displaying, calculating, comparing and
sequencing) from, into and between the twentieth and twenty-first centuries, and
the year 2000 and leap year calculations.
(j) Accounts Receivable. The accounts receivable of Corporation outstanding as
-------------------
of the Closing Date constitutes on such date a valid claim in the full amount
thereof against the debtor charged therewith on the books of Corporation and was
acquired in the ordinary course of Corporation's business. Such accounts
receivable will be fully collected to the extent of the face value thereof, no
later than 120 days after such account receivable is due. No account debtor has
any valid set-off, deduction or defense with respect thereto and no account
debtor has asserted any such set-off, deduction or defense. Any account
receivable not collected in full within 120 days after the Closing Date
("Uncollected Accounts") shall be repurchased by Stockholders' from Buyer at
their uncollected face value within 10 days notice thereof from Buyer to
Stockholders provided that Buyer shall retain and make available to Stockholders
and their representatives during normal business hours, upon reasonable advance
notice, all invoices, books and records associated with the Uncollected
Accounts. Buyer and Corporation shall assist Stockholders to collect the
Uncollected Accounts at Corporation's expense provided that Stockholders shall
be required to reimburse Corporation for any such expenses found to be
"unallowable costs" by a Final Decision of a Contracting Officer pursuant to the
Contract Disputes Act of 1978 (hereinafter the "Unallowable Costs") or otherwise
not actually reimbursed
<PAGE>
to Corporation within 24 months after such expenses are incurred.
Notwithstanding the foregoing, after such 24-month period, (x) Stockholder shall
be liable and shall properly pay Buyer for any reimbursed costs that are
subsequently disallowed upon audit or review, and (y) Buyer shall promptly
return to Stockholders any costs paid by Stockholders to Buyer hereunder if
subsequently allowed and reimbursed by the U.S. government.
(k) Insurance. Corporation maintains insurance policies bearing the numbers,
---------
for the terms, with the companies, in the amounts, having the named insureds,
providing the general coverage, and with the premiums disclosed on Schedule
--------
5(k). All of such policies are in full force and effect, Corporation is not in
----
default of any provision thereof and all premiums due (without regard to any
grace period) with respect to such policies have been paid. Corporation has not
been refused any insurance for which it has applied and has not received notice
from any issuer of any policy issued to it of the insurer's intention to cancel
or refusal to renew any such policy issued by such insurer. True, correct and
complete copies of all such policies have been delivered to Buyer.
(l) Liabilities. Except as qualified in any other representation or warranty
-----------
contained herein, at the Closing, Corporation shall not have any liabilities,
whether fixed, contingent, or otherwise, except as and to the extent reflected
on the Tangible Net Worth Statement as determined to be final, conclusive and
binding on all parties under subparagraph 2(b) hereof, or disclosed on Schedule
--------
5(l) or on any other Schedule to this Agreement.
----
(m) Contracts, Leases, Agreements and Other Commitments.
---------------------------------------------------
(i) All of the Company Agreements (as hereinafter defined) are in full
force and effect and are valid, binding and enforceable against the respective
parties thereto in accordance with their respective terms. Corporation and, to
Stockholders' knowledge, all other parties to all of the Company Agreements have
performed all obligations required to be
<PAGE>
performed to date under the Company Agreements and none of Corporation, or, to
Stockholders' knowledge, any such other party is in default or in arrears under
the terms thereof, and no condition exists or event has occurred which, with the
giving of notice or lapse of time or both, would constitute a default
thereunder. Except as set forth on Schedule 5(m)(i), The execution of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not, with or without the giving of notice, the lapse of time, or both,
result in an impairment or termination of, or result in a breach of any of the
terms or provisions of, or constitute a default under, or conflict with, any
Company Agreement. Except as set forth on Schedule 5(m)(i), none of the terms or
----------------
provisions of any Company Agreement materially adversely affects, or with the
passage of time may be reasonably anticipated to materially adversely affect,
the business, prospects, conditions, affairs or operations of Corporation, or
any of its properties or assets. Stockholders have no knowledge of any intention
by any party to terminate or amend any Company Agreement or, if Corporation or
any Subsidiary intends to request a renewal, of any intention to refuse to renew
the same upon expiration of its term.
(ii) Schedule 5(m)(ii) discloses (a) all outstanding written and oral
-----------------
proposals, bids, offers or guaranties made by Corporation which, if accepted,
would result in any or could impose any debts, obligations or liabilities upon
Corporation, and (b) unexpired warranties relating to Corporation's products or
services, detailing the products or services covered by each warranty.
(iii) For purposes of subparagraph 5(m) the term "Company Agreements" means (A)
any large written, oral or implied contract or agreement, including but not
limited to any large contract or agreement for the purchase or sale of
merchandise or for the rendition of services, (B) any written, oral or implied
lease, or (C) any written, oral or implied power of attorney, guaranty, surety
arrangement or other commitment granted by Corporation to or for the benefit of
any third party). A "large" agreement or contract shall mean an agreement or
contract
<PAGE>
pursuant to which Corporation is obligated to pay, or provide services valued
at, or is entitled to receive, amounts in excess of $100,000.
(n) Labor Relations, Employees.
--------------------------
(i) Set forth on Schedule 5(n)(i) is a list of:
----------------
(A) all collective bargaining agreements and any written amendments thereto,
as well as all arbitration awards decided under any such collective bargaining
agreements, and all oral assurances or modifications, past practices, and/or
arrangements made in relation thereto, to which Corporation is a party or by
which it is bound; and
(B) all employment, managerial, advisory, independent contractor or consulting
agreements or agreements protecting proprietary or confidential processes to
which Corporation is a party or by which it is bound.
(ii) Set forth on Schedule 5(n)(ii) is a list of all full time employees of
-----------------
Corporation on October 1, 2000 broken down by location, together with their rate
of compensation, compensation arrangement, title, union affiliation (if any),
original date of hire, accrued severance pay, vacation benefits, sick leave
benefits (if payable in cash upon termination of employment) and any wage or
salary increases, bonus or increase in any other direct or indirect compensation
for each employee of Corporation to the extent not in the ordinary course of
Corporation's business, consistent with past practices.
(iii) Set forth on Schedule 5(n)(iii) is a list of the names and ages of all
------------------
retired or former employees of Corporation, if any, who are receiving or are
entitled to receive (now or in the future) from Corporation funded or unfunded
pensions, funded or unfunded welfare benefits, or any deferred compensation,
including their current annual funded or unfunded pension rates, their current
annual funded or unfunded welfare costs, and the amounts of such deferred
compensation to which they are entitled.
<PAGE>
(iv) Stockholders have delivered to Buyer true, complete and correct
copies of all of the documents referred to in Schedule 5(n)(i) hereof and all of
----------------
the personnel policies, handbooks, procedures, and forms of employment
applications relating to the employees of Corporation.
(v) Except as set forth on Schedule 5(n)(v):
----------------
(A) there is no union representing or purporting to represent any
of the employees of Corporation and Corporation is not subject to any collective
bargaining agreements with any union representing or purporting to represent the
employees of Corporation or any Subsidiary;
(B) there have been no strikes, slowdowns, or other work
stoppages, lockouts, grievance proceedings, arbitrations, labor disputes,
lawsuits, administrative proceedings or representation questions pending or, to
Stockholders' knowledge, threatened, against Corporation;
(C) Corporation has complied in all material respects with all
laws relating to the employment of labor, including any provisions thereof
relating to wages, overtime, bonuses, severance pay, benefits, COBRA, WARN,
state and local equivalents to the WARN Act, FMLA, FLSA, state wage/hour laws,
hours, federal and state Occupational Safety and Health regulations, workers'
compensation, collective bargaining, and the payment of social security,
unemployment compensation and similar taxes, and Corporation is not liable for
any arrears of wages or any taxes or penalties for failure to comply with any of
the foregoing; and
(D) there are no charges, suits, actions, administrative
proceedings or investigations, and/or claims, instituted by or against, pending,
or to Stockholders' knowledge, threatened against, affecting, naming and/or
involving Corporation, whether domestic or foreign, before any court,
governmental agency, department, board of instrumentality, or before any
arbitrator (collectively "Actions"), concerning or in any way
<PAGE>
related to the employees of Corporation, including, without limitation, Actions
involving unfair labor practices, failure to pay wages or overtime, breach of
implied or express employment contract, wrongful discharge and/or any other
restriction on the right of Corporation to terminate its respective employees,
employment discrimination, occupational safety and health, and workers'
compensation; and
(E) there are no post-employment benefits, including but not
limited to retiree medical, retiree life and retiree accidental death and
disability benefits for current or former employees of Corporation.
(vi) to Stockholders' knowledge, there are no express or implied
agreements, policies, practices, or procedures, whether written or verbal,
pursuant to which any employee or agent or contractor of Corporation is not
terminable at will. Except as set forth on Schedule 5(n)(vi), Stockholders have
no knowledge of, or reason to believe that, any senior employee of Corporation
will leave the employ of Corporation as a result of the transactions
contemplated hereby.
<PAGE>
(o) Employee Benefit Plans.
----------------------
(i) Schedule 5(o)(i) is a complete and accurate list of all employee
----------------
benefit plans which Corporation, and any of its ERISA Affiliates (as hereinafter
defined) maintain, sponsor, contribute to, are liable for (directly or
indirectly) or are bound, legally or otherwise, including, without limitation,
any profit-sharing, deferred compensation, bonus, payroll, sick leave, stock
option, stock purchase, stock bonus, employee stock ownership plan (within the
meaning of Section 4975(e)(7) of the Code), pension, retirement, vacation,
change of control, disability, severance, insurance, welfare or incentive pay
policy, agreement, practice or arrangement; any plan, agreement or arrangement
providing for fringe benefits or perquisites to employees, officers, directors
or agents of Corporation, and any of its ERISA Affiliates, including but not
limited to benefits relating to employer-supplied automobiles, clubs, medical,
dental, hospitalization, life insurance and other types of insurance, retiree
medical, retiree life insurance and any other type of benefits for retired and
terminated employees; any employment agreement; and any other plan, policy
agreement or arrangement whether or not an "employee benefit plan" (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") through the date of this Agreement) (herein referred to
individually as "Plan" and collectively as "Plans"). For purposes of this
Agreement, "ERISA Affiliate" means all persons and entities which are treated as
---------------
being under common control with Corporation, or any ERISA Affiliate under
Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended
("Code").
(ii) True and complete copies of the following documents with respect to
any Plan of Corporation and each ERISA Affiliate, as applicable, have been
delivered to the Purchaser: (A) the most recent Plan document and trust
agreement (including any amendments thereto), (B) the last two IRS Form 5500
filings and schedules thereto, (C) the most recent IRS determination letter, (D)
all summary plan descriptions, (E) a written description of each material
<PAGE>
non-written Plan, (F) each written communication to employees intended to
describe a Plan or any benefit provided by such Plan, (G) the most recent
actuarial report, and (H) all correspondence with the IRS, the Department of
Labor and the Pension Benefit Guaranty Corporation ("PBGC") concerning any
controversy. Each report described in clause (G) accurately reflects the funding
status of the Plan to which it relates and subsequent to the date of such report
there has been no adverse change in the funding status or financial condition of
such Plan.
(iii) Except as set forth on Schedule 5(o)(iii), each Plan is and has
------------------
been maintained in compliance in all material respects with applicable law,
including but not limited to ERISA, and the Code and with any applicable
collective bargaining agreements or other contractual obligations.
(iv) With respect to any Plan that is subject to Section 412 of the Code
("412 Plan"), there has been no failure to make any contribution, pay any amount
due or meet the minimum funding standards as required by Section 412 of the
Code, Section 302 of ERISA or the terms of any such Plan. No 412 Plan has
incurred a minimum funding deficiency within the meaning of Section 412 of the
Code whether or not waived. The assets of Corporation, and its ERISA Affiliates
are not now, nor will they after the passage of time, be subject to any lien
imposed under Code Section 412(n) or ERISA Section 302 by reason of a failure of
Corporation, or any ERISA Affiliate to make timely installments or other
payments required under Code Section 412.
(v) As of the date hereof, no Plan that is subject to Title IV of ERISA
has any "Unfunded Pension Liability." For purpose of this Agreement, Unfunded
Pension Liability means, as of any determination date, the amount, if any, by
which the present value of all benefit liabilities (as that term is defined in
Section 4001(a)(16) of ERISA) of a plan subject to Title IV of ERISA exceeds the
fair market value of all assets of such plan, all determined using the
<PAGE>
actuarial assumptions that would be used by the PBGC in the event of a
termination of the plan on such determination date.
(vi) Except as reflected on Schedule 5(o)(vi), there are no pending or, to
-----------------
Stockholders' knowledge threatened claims, actions or lawsuits, other than
routine claims for benefits in the ordinary course, asserted or instituted
against (A) any Plan or its assets, (B) any ERISA Affiliate with respect to any
412 Plan, or (C) any fiduciary with respect to any Plan for which Corporation,
or any ERISA Affiliate may be directly or indirectly be liable, through
indemnification obligations or otherwise.
(vii) Neither Corporation, nor any ERISA Affiliate has within the past
six years incurred and or reasonably expects to incur (A) any withdrawal
liabilities as defined in Section 4201 of ERISA or any actual or contingent
liability under Section 4204 of ERISA (collectively, "Withdrawal Liability") and
no event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in Withdrawal Liabilities, or any liability under Sections
4063, 4064, 4071 or 4243, or (B) any outstanding liability under Title IV of
ERISA with respect to any 412 Plan.
(viii) Except as set forth on Schedule 5(o)(viii), within the last six
-------------------
years, neither Corporation, nor any ERISA Affiliate has transferred any assets
or liabilities of a 412 Plan subject to Title IV of ERISA which had, at the date
of such transfer, an Unfunded Pension Liability or has engaged in a transaction
which may be subject to Section 4212(c) or Section 4069 of ERISA.
(ix) Neither Corporation nor any ERISA Affiliate has engaged, directly or
indirectly, in a non-exempt prohibited transaction (as defined in Section 4975
of the Code or Section 406 of ERISA) in connection with any Plan.
(x) Except as reflected on Schedule 5(o)(x), there is no unfunded
----------------
liability with respect to any Plan that is a non-tax qualified deferred
compensation plan.
<PAGE>
(xi) Neither Buyer nor its affiliates will have (A) an obligation to make
contribution(s) to any multi-employer plan (as defined in Section 3(37) of
ERISA), or (B) any Withdrawal Liability (whether imposed and not yet paid or
calculated assuming a complete or partial withdrawal of Corporation, or any
ERISA Affiliate as of such date not yet imposed) as a result of the transactions
described in this Agreement.
(xii) Except as reflected on Schedule 5(o)(xii), during the last two years
------------------
there have been no amendments to any Plan, no written interpretation or
announcement (whether or not written) by Corporation, any Subsidiary, or any
ERISA Affiliate relating to any Plan, there have been and are no negotiations,
demands, or proposals which are pending that concern any Plan, nor has any Plan
been established, which resulted in or could reasonably be anticipated to result
in a material increase in (A) the accrued or promised benefits of any employees
of Corporation, or any ERISA Affiliate and (B) any material increase in the
level of expense incurred in respect thereof.
(xiii) There has been no "Reportable Event" (within the meaning of ERISA)
with respect to any 412 Plan subject to Title IV of ERISA within the last five
years.
(xiv) Neither Corporation nor any ERISA Affiliate sponsors, maintains or
has obligations, direct, contingent or otherwise, with respect to any Plan that
is subject to the laws of any country other than the United States.
(xv) No ERISA Affiliate maintains an employee stock ownership plan ("ESOP")
(within the meaning of Section 4975(e)(7) of the Code) or other plan holding
securities of Corporation, or any ERISA Affiliate.
(xvi) Each Plan that provides welfare benefits has been operated in
compliance with all requirements of Sections 601 through 608 of ERISA and (A)
Section 162(i)(2) and (k) of the Code and regulations thereunder (prior to 1989)
and (B) Section 4980B of the Code and
<PAGE>
regulations thereunder after 1988, relating to the continuation of coverage
under certain circumstances in which coverage would otherwise cease.
(xvii) Neither Corporation nor any ERISA Affiliate has contributed to a
nonconforming group health plan (as defined under Code Section 5000(c) and no
ERISA Affiliate has incurred a tax under Section 5000(a) of the Code which could
become a liability of Corporation, or any ERISA Affiliate. Except as reflected
on Schedule 5(o)(xvii), neither Corporation nor any ERISA Affiliate has
-------------------
maintained, sponsored or provided post-retirement medical benefits, post-
retirement death benefits or other post-retirement welfare benefits to its
current employees or former employees, except as required by Section 4980B of
the Code and at the sole expense of the participant or the beneficiary of the
participant. Corporation has complied in all respects with the requirements of
the Health Insurance Portability and Accountability Act of 1996 with respect to
each Plan that provides welfare benefits. Corporation does not maintain any plan
which is an "employee welfare benefit plan" (as such term is defined under
Section (l) of ERISA) that has provided any "disqualified benefit" (as such term
is defined in Section 4976(b) of the Code) with respect to which an excise tax
could be imposed under Section 4976.
(xviii) Except as reflected on Schedule 5(o)(xviii), each of Corporation,
--------------------
and its ERISA Affiliates has funded each Plan in accordance with the terms of
such Plan through the date hereof, including the payment of applicable premiums
on any insurance contract funding a Plan, for coverage provided through the date
hereof.
(xix) Each Plan that is intended to be a tax qualified plan under Section
401(a) of the Code ("Tax Qualified Plan") has been determined by the Internal
Revenue Service to qualify under Section 401 of the Code, and the trusts created
thereunder have been determined to be exempt from tax under the provisions of
Section 501 of the Code, and nothing has occurred,
<PAGE>
including the adoption of or failure to adopt any Plan amendment, which would
adversely affect its qualification or tax-exempt status.
(xx) No Tax Qualified Plan has been amended since the date of its most recent
IRS determination letter which would materially increase its cost and no Plan
has been amended in a manner that would require security to be provided in
accordance with Section 401(a)(29) of the Code.
(xxi) Except as contemplated herein or required by law, the execution of this
Agreement and the consummation of the transactions contemplated hereby do not
constitute a triggering event under any Plan, policy, arrangement, statement,
commitment or agreement, whether or not legally enforceable, which (either alone
or upon the occurrence of any additional or subsequent event) will result in any
obligation of Corporation, or any ERISA Affiliate to make any payment (whether
of severance pay, including, and not limited to, salary, related vacation pay,
pension pay and other similar payments and costs, or otherwise) or to
accelerate, vest or increase the amount of benefits payable to any employee or
former employee or director of Corporation, or any ERISA Affiliates. Except as
listed on Schedule 5(o)(xxi), no Plan or agreement provides for the payment of
------------------
severance benefits upon the termination of any employee's employment. No amounts
paid or payable by Corporation, will fail to be deductible for federal income
tax purposes by reason of Section 280 of the Code.
(xxii) Except as set forth on Schedule 5(o)(xxii), the Tangible Net Worth
Statement, when delivered, will properly and adequately reflects any and all
liabilities and obligations of Corporation and its ERISA Affiliates relating to
any period ending on or prior to the date hereof to or in respect of current and
former employees of Corporation or any ERISA Affiliates or the Plans, for (A)
unpaid compensation, salaries, wages, vacation pay, disability payments and
other payroll items (including, without limitation, bonus, incentive or deferred
compensation), (B) unpaid contributions, costs and expenses to or in respect of
any Plans, and
<PAGE>
(C) severance or other termination benefits relating to, resulting from or
arising in respect of any termination of employment occurring on or prior to the
date hereof.
(xxiii) Any surrender, finance or penalties charges (and the total dollar
amount thereof) that would be imposed on the investments held by any Tax
Qualified Plan (including plans with a cash or deferred arrangement under
Section 401(k) of the Code) on the liquidation of the investments in such plans
is reflected on Schedule 5(o)(xxiii).
--------------------
(p) Litigation. Except for the matters set forth on Schedule 5(p),
---------- -------------
Corporation is not a party to, or to Stockholders' knowledge, threatened with,
any suit, action, arbitration, administrative or other proceeding, either at law
or in equity, or governmental investigation by or before any Court, governmental
department, commission, board, agency or instrumentality, domestic or foreign;
Stockholders have no knowledge of any basis for any suit, action, arbitration,
or administrative or other proceeding against Corporation; there is no judgment,
decree, award or order outstanding against Corporation; Corporation is not
contemplating the institution by it of any suit, action, arbitration,
administrative or other proceeding; and Stockholders have no knowledge of any
occurrence that may reasonably be expected to result in a claim for damages
against Corporation. As to each of the matters set forth on Schedule 5(p),
subject to a retention no greater than $10,000 per case, the insurance carriers
of Corporation have agreed to indemnify Corporation against any loss resulting
to Corporation therefrom.
(q) Suppliers and Customers. Schedule 5(q) is a complete and accurate list of
----------------------- -------------
the names of all suppliers and customers of Corporation which respectively
contributed more than 5% of all sales and services to, and orders and use of
services from, Corporation for the 8 month period ended August 31, 2000
("Suppliers" and "Customers"). Except as set forth on Schedule 5(q), the
-------------
relationship of Corporation with its Suppliers and Customers are good commercial
working relationships and no Supplier or Customer has canceled or otherwise
terminated, or to Stockholders' knowledge, threatened to cancel or otherwise
terminate, its relationship with
<PAGE>
Corporation, or has during the last twelve months decreased materially, or to
Stockholders' knowledge, threatened to decrease or limit materially, its
business with Corporation. Stockholders have no knowledge, or reason to believe
that the acquisition of the Shares by Buyer will adversely affect the
relationship of Corporation with any such Supplier or Customer.
(r) Conflicting Interests. Except as disclosed on Schedule 5(r), no director,
--------------------- -------------
officer, manager or employee of Corporation and no Stockholder or relative or
Affiliate of any of the foregoing (a) has any pecuniary interest in any supplier
or customer of Corporation or any Subsidiary or in any other business enterprise
with which Corporation conducts business or with which Corporation is in
competition; (b) is indebted to Corporation; (c) is a party to any transaction
or agreement with Corporation (apart from such person's status as an employee,
member or stockholder as such); or (d) has any business or other interest in
conflict with the interests of Corporation.
The term "Affiliate" as used in this Agreement shall have the meaning given
to such term under the Securities Exchange Act of 1934, as amended.
(s) Compliance with Law and Regulations. Except as disclosed on Schedule 5(s),
----------------------------------- -------------
Corporation is in compliance with, and has at all times during the past six
years complied in all material respects with the requirements of law, Federal,
state and local, and all requirements of all governmental bodies or agencies
having jurisdiction over it, the conduct of its business, the use of its
properties and assets, and all premises occupied by it. Without limiting the
foregoing, Corporation has paid all monies to obtain and obtained and now holds
all licenses, permits, certificates, and authorizations needed or required for
the conduct of its business as currently conducted and the current use of its
properties and the premises occupied by it. Except as set forth on Schedule
--------
5(s), Corporation has properly filed all reports and other documents required to
----
be filed within the past six years with any Federal, state, local and foreign
government or subdivision or agency thereof other than those the filing date for
which (including all extensions
<PAGE>
to which it is currently entitled) has not passed and the failure to file would
have a material adverse effect on Corporation. Corporation has not received any
written notice from any Federal, state or municipal authority or any insurance
or inspection body that any of its properties, facilities, equipment, or
business procedures or practices fails to comply with any applicable law,
ordinance, regulation, building or zoning law, or requirement of any public
authority or body. All licenses, permits, orders and approvals issued by any
governmental body or agency currently in effect and pertaining to the property,
assets or business of Corporation and the Subsidiaries are listed on Schedule
--------
5(s) and, except as noted on Schedule 5(s), none of the items so listed will
---- -------------
lapse or expire as a result of the transactions contemplated hereby. To the
knowledge of Stockholders, there are no regulations or legislation pending
before any Federal, state, local or foreign government agency, administration
body or legislature which, if adopted, would have a material adverse effect on
the business of Corporation.
(t) Agreement Not in Breach of Other Instruments Affecting Corporation;
-------------------------------------------------------------------
Governmental Consent. Except as disclosed on Schedule 5(t), the execution and
-------------------- -------------
delivery of this Agreement, the consummation of the transactions provided for
herein, and the fulfillment of the terms hereof: (i) will not result in the
imposition of any lien, security interest or encumbrance on any asset of
Corporation or in the breach of any of the terms and provisions of, or result in
a termination, impairment or modification of or constitute a default under, or
conflict with, or cause any acceleration of any obligation of Corporation under,
or permit any other party to modify or terminate, any agreement or other
instrument by which Corporation is bound, any judgment, decree, order, or award
of any court, governmental body, or arbitrator, or any applicable law, rule or
regulation; (ii) do not require the consent of any governmental authority or
other person; (iii) will not result in any limitation or restriction of any
right of Corporation; and (iv) will not contravene Corporation's Certificate of
Incorporation, bylaws or similar corporate documentation of Corporation.
<PAGE>
(u) Environmental Matters.
---------------------
(i) Except as set forth in Schedule 5(u), Corporation is and at all times
-------------
have been in full compliance with all Environmental Laws (as hereinafter
defined) governing its business, operations, properties and assets, which
compliance includes, but is not limited to: (A) the possession by Corporation of
all permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof; (B)
all requirements relating to the Discharge (as hereinafter defined) and Handling
of Regulated Substances (as hereinafter defined) and Wastes (as hereinafter
defined); (C) all requirements relating to notice, record keeping and reporting;
and (D) all applicable writs, orders, judgments, injunctions, governmental
communications, decrees, informational requests or demands issued pursuant to,
or arising under, any Environmental Law. Corporation has not received any
written communication from any governmental authority, employee, group or third
party alleging that it is not in such full compliance and, to Stockholders'
knowledge, there are no circumstances that may prevent or interfere with such
full compliance in the future. All permits and other governmental authorizations
currently held by Corporation pursuant to any Environmental Laws are identified
in Schedule 5(u).
-------------
(ii) There are no Environmental Claims (as hereinafter defined) pending or, to
Stockholders' knowledge, threatened against Corporation.
(iii) For purposes of this Agreement:
(A) "Discharge" means any manner of spilling, leaking, dumping,
discharging, release or emitting, as any of such terms may further be defined in
any Environmental Law, into any medium including, without limitation,
groundwater, surface water, soil or air.
(B) "Environmental Claim" means any notice, lien, claim, action,
cause of action, order, communication, investigation, or proceeding (written or
oral) by
<PAGE>
any person or entity alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup, removal or
remediation costs, governmental response costs, natural resource damages,
property damages, personal injuries, or penalties) arising out of, based on or
resulting from (a) the presence, or release into the environment of any
Regulated Substance at any location, whether or not owned or operated by
Corporation, and (b) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
(C) "Environmental Law" means any and all federal, state, regional,
county and local laws, regulations, codes, orders, plans, injunctions, decrees,
rulings, and judicial or administrative interpretations thereof, which govern,
purport to govern, or relate to pollution, protection of the environment
(including, without limitation, ground water, surface water, soil and air) and
public health and safety, including, without limitation: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. 9601, et seq.
------
(collectively, "CERCLA"); the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and subsequent Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. 6901, et seq. (collectively, "RCRA");
------
the Hazardous Materials Transportation Act, as amended, 49 U.S.C. 1801, et seq.;
-------
the Clean Water Act, as amended, 33 U.S.C. 1311, et seq.; the Toxic Substances
-------
Control Act, as amended, 15 U.S.C. 2601, et seq.; the Emergency Planning and
-------
Community Right-to-Know Act of 1986, as amended, 42 U.S.C. 11001, et seq.
------
("EPCRA"); and the Occupational Safety and Health Act of 1970, as amended, 29
U.S.C. 651, et seq. ("OSHA").
------
(D) "Handling" means any manner of generating, accumulating, storing,
treating, disposing of, transporting, transferring, labeling, handling,
manufacturing or using, as any such terms may further be defined in any
Environmental Law, of any Regulated Substance.
<PAGE>
(E) "Regulated Substance" shall be broadly construed to include
without limitation any chemical, pollutant, contaminant, material, waste, toxic
or hazardous substance, petroleum, petroleum product, asbestos, asbestos
containing material, and PCB regulated, listed, or controlled by, under or
pursuant to any Environmental Law.
(F) "Waste" shall be broadly construed to include bulky wastes,
construction and demolition debris, garbage, solid wastes, liquid wastes,
recyclable materials, sludge, special wastes, used oils, and plant and yard
trash as those terms are defined under any Environmental Law.
(v) Tax Matters.
-----------
(i) Definitions. The following terms shall have the meanings set forth in
-----------
this subparagraph 5(v) for purposes of this subparagraph 5(v) and Paragraph 14
of this Agreement:
(A) "Affiliated Group" means any affiliated group within the meaning
of Code Section 1504(a) or similar group defined under a similar provision of
state, local or foreign law.
(B) "Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute. All references to specific sections of the Internal
Revenue Code shall be deemed to include any provisions of the Internal Revenue
Code (or a related statute) which replace or supersede the sections in effect at
the time this Agreement is executed.
(C) "Excess Loss Account" has the meaning set forth in Regulation
Section 1.1502-19.
(D) "Intercompany Transaction" has the meaning set forth in
Regulation Section 1.1502-13.
(E) "Regulation" or "Treasury Regulation" means regulations issued
under the Code as such regulations may be amended. All references herein to
specific sections of
<PAGE>
the Regulations shall be deemed also to refer to any provisions of the
Regulations which replace or supersede the sections in effect at the time of the
execution of this Agreement.
(F) "Return" and "Returns" mean any return, report, declaration, estimate,
information statement, claim for refund, notice, form or any other kind of
document, including any schedule or attachment thereto, and including amended
versions of any of the foregoing, relating to or required to be filed in
connection with any Tax.
(G) "Subsidiary" and "Subsidiaries" means any corporation, partnership,
limited liability company, joint venture, association or any other entity
(including any comparable foreign entity) with respect to which Corporation, one
or more other Subsidiaries or Corporation together with one or more other
Subsidiaries own a majority of the common stock of the corporation or a majority
of the equity interests in any other entity or has the power to vote or direct
the voting of a majority of the voting power in the corporation or other entity.
(H) "Tax" and "Taxes" means any federal, state (including District of
Columbia), local, foreign (including possessions or territories of the United
States) or other tax (whether income, gross receipts, franchise, excise,
customs, sales, use, value added, ad valorem, real or personal property,
license, transfer, employment, social security or any other kind of tax or
payment in lieu of tax no matter how denominated including any amount payable by
Corporation and any Subsidiary pursuant to a tax-sharing or other agreement
relating to the sharing or payment of tax), or any assessment, levy, impost,
withholding, fee or other governmental charge in the nature of a tax, and shall
include all additions to tax, interest, penalties and fines with respect
thereto.
(ii) Tax Matters Relating to Corporation and Subsidiaries.
----------------------------------------------------
(A) Corporation and each Subsidiary has filed or will file when due in a
timely fashion all Returns that are required to be filed on or before the date
hereof or the
<PAGE>
Closing Date by or with respect to Corporation and any Subsidiary (taking into
account all extensions of time within which to file to which they are entitled
or which they may have been granted). All such Returns are correct and complete.
Neither Corporation nor any Subsidiary is the current beneficiary of any
extension of time within which to file any Return. No claim has been made by a
taxing authority in a jurisdiction where Corporation and any Subsidiary does not
file Returns that any of them is or may be subject to or liable for any Tax
imposed by that jurisdiction.
(B) All Taxes for which each of Corporation and any Subsidiary is liable and
that are due on or before the date hereof or the Closing Date (whether or not
shown to be due on any Return) have been paid when due in a timely fashion
(taking into account all extensions of time within which to file to which they
are entitled or which they may have been granted). There are no liens on any
assets of Corporation or any Subsidiary that arose in connection with any
failure (or alleged failure) to pay any Tax other than liens for Taxes not yet
due and payable or for Taxes that Corporation or any Subsidiary or Stockholders
are contesting in good faith through appropriate proceedings as set forth on
Schedule 5(v)(ii)(B).
--------------------
(C) Corporation and each Subsidiary has withheld or collected and paid or
deposited all Taxes required to have been withheld or collected and paid or
deposited in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, member, partner or other third party.
(D) No taxing authority has asserted or, to Stockholders' knowledge, threatened
to assert, any adjustment, deficiency or assessment for any Taxes against
Corporation or any Subsidiary (with respect to Taxes of Corporation or any
Subsidiary), and no basis exists for any such adjustment, deficiency or
assessment which would result in additional taxes owed by Corporation or any
Subsidiary (with respect to Corporation or any Subsidiary) for any period for
which Returns have been filed. Schedule 5(v)(ii)(D) lists all federal, state,
--------------------
local, and foreign
<PAGE>
income Returns filed with respect to Corporation and any Subsidiary for taxable
periods ended on or after December 31, 1993 and indicates those Returns of
Corporation and any Subsidiary that have been audited and those Returns of
Corporation and the Subsidiaries with respect to Taxes of Corporation and any
Subsidiary that currently are the subject of audit. Stockholders have delivered
to Buyer correct and complete copies of all federal, state, local and foreign
income tax Returns filed, examination reports issued, and statements of
deficiencies assessed against or agreed to by Corporation or any Subsidiary
(with respect to Taxes of Corporation or any Subsidiary) since December 31,
1993.
(E) Neither Corporation nor any Subsidiary (with respect to Taxes of
Corporation or the Subsidiaries) have waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
adjustment, assessment or deficiency except for such waivers or extensions
which, by their terms, have elapsed as of the date of this Agreement.
(F) Except as set forth on Schedule 5(v)(ii)(F), neither Corporation nor any
--------------------
Subsidiary has any income or gain that may be reportable for a period ending
after the date hereof or the Closing Date without the receipt of an equal amount
of cash, which is attributable to a transaction occurring in or a change in
accounting method made for a period ending on or prior to the date hereof or the
Closing Date.
(G) There are no currently outstanding requests made by any of Corporation or a
Subsidiary or Stockholders (with respect to Taxes of Corporation or any
Subsidiary) for tax rulings, determinations or information that could affect the
Taxes of Corporation or any Subsidiary (with respect to Taxes of Corporation or
any Subsidiary).
(H) Schedule 5(v)(ii)(H) lists all Returns (other than income tax returns)
--------------------
filed with respect to Corporation and any Subsidiary for taxable periods ending
on and after December 31, 1995.
<PAGE>
(I) Neither Corporation nor any Subsidiary has been obligated to deduct and
withhold Taxes under Code Section 1441.
(J) Neither of Stockholders is a nonresident alien individual within the
meaning of Code Section 7701(b).
(K) Neither Corporation nor any Subsidiary is or was, within the past six
years, a party to any Tax allocation or sharing agreement except as set forth on
Schedule 5(v)(ii)(K). Neither Corporation nor any Subsidiary has been a member
--------------------
of an Affiliated Group defined in Code Section 1504(a) filing a consolidated
federal income Tax Return (other than a group the common parent of which is
Corporation) and does not have any liability for the Taxes of any person (other
than any of Corporation and its Subsidiaries) under Regulation Section 1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee or
successor by contract or otherwise. Neither Corporation nor any Subsidiary has
been a member of a group of companies filing a unitary, consolidated or combined
state Return except as set forth on Schedule 5(v)(ii)(K).
--------------------
(L) Schedule 5(v)(ii)(L) sets forth the following information with respect to
--------------------
each of Corporation and its Subsidiaries (or, in the case of clause (b) below,
with respect to each of the Subsidiaries) as of the beginning of its current
taxable year (as well as on an estimated pro forma basis as of the close of
business on the Closing Date giving effect to the passage of time and the
consummation of the transactions contemplated hereby): (a) the federal income
tax basis in its assets; (b) the federal income tax basis in the shares of each
Subsidiary (or the amount of any Excess Loss Account); (c) the amount of any net
operating loss carry forward, net capital loss carry forward, unused investment
or other credit, unused foreign tax credit, or excess charitable contribution
allocable to Corporation and each Subsidiary; (d) the amount of any deferred
income or gain or loss allocable to Corporation and each Subsidiary arising out
of any Intercompany Transaction; and (e) the tax elections affecting the
character, source, timing
<PAGE>
and computation of income, gain, loss, deduction and credits of Corporation and
each Subsidiary.
(M) The unpaid Taxes of each of Corporation and its Subsidiaries (a) did not,
as of the balance sheet date of December 31, 1999, exceed the reserve for Tax
liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax items) set forth on the face of the
balance sheet of Corporation and the Subsidiaries as of December 31, 1999
(rather than in any notes thereto), and (b) will not exceed that reserve as
adjusted for the passage of time through the Closing Date.
(N) Neither Corporation nor any Subsidiary has been a United States real
property holding corporation within the meaning of Code Section 897(c)(2) during
the applicable period specified in Code Section 897(c)(1)(A)(ii).
(O) Neither Corporation nor any Subsidiary has participated in or cooperated
with an international boycott within the meaning of Code Section 999.
(P) No consent under Code Section 341(f) has been filed and no agreement has
been entered which would require such consent to be filed with respect to
Corporation or any Subsidiary.
(Q) Neither Corporation nor any Subsidiary has made any payments, is obligated
to make any payments, or is a party to any agreement or arrangement that
obligates it to make payments of any "excess parachute payment" within the
meaning of Code Section 280G.
(R) Each of Corporation and its Subsidiaries has disclosed on its federal
income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Code
Section 6662.
(S) With respect to Corporation's and its Subsidiaries' contractors,
consultants and other independent personnel (the "Contractors"), Corporation and
its Subsidiaries, based upon representations by the Contractors, have evaluated
and classified the
<PAGE>
Contractors as independent contractors and employees in accordance with Internal
Revenue Service rules and regulations. Corporation and its Subsidiaries have
maintained, monitored and continue to maintain and monitor those Contractors who
are independent contractors to assure that, based upon representations by the
Contractors, it is in compliance with Internal Revenue Service rules and
regulations.
(w) Conduct of Business; No Material Adverse Change. Except as set forth in
-----------------------------------------------
Schedule 5(w), since December 31, 1999, (i) Corporation has conducted its
-------------
business consistent with past practices in the ordinary and usual course, and
(ii) there has not been and, to Stockholders' knowledge, there is not threatened
any material adverse change in the financial condition, business, prospects or
affairs of Corporation, taken as a whole, or any material physical damage or
loss to any of their respective properties or assets or to the premises occupied
by them (whether or not such damage or loss is covered by insurance).
(x) Statements and Other Documents Not Misleading. Neither this Agreement,
---------------------------------------------
including all Exhibits and Schedules, nor the closing documents, nor any other
financial statement, document or other instrument heretofore or hereafter
furnished by Corporation or any Stockholder to Buyer in connection with the
transaction contemplated hereby contains or will contain any untrue statement of
any material fact or omits or will omit to state any material fact necessary to
be stated in order to make any statement contained therein, document or other
instrument not misleading. Except as set forth on Schedule 5(x), there is no
-------------
material fact known to Stockholders, other than publicly available information
or information generally known to the government contracting industry or related
to the economy which is not unique or specific to the Corporation, which
materially adversely affects the business, prospects, financial condition or
affairs of Corporation, any of its properties or any of its assets or
liabilities which has not been set forth in this Agreement or the Schedules
hereto.
<PAGE>
(y) No Broker or Finder. Corporation has not incurred any obligation,
-------------------
contingent or otherwise, to a broker, finder, agent or other intermediary for
introducing the parties in connection with, or otherwise procuring, this
Agreement or the transaction(s) contemplated hereby.
(z) Securities Representation.
-------------------------
(i) The Common Shares to be delivered to Stockholders will not be
registered under federal or state securities laws, but rather, issued pursuant
to an exemption therefrom. Each Stockholder is acquiring the Common Shares to be
issued to it without a view to any distribution or resale thereof, other than a
resale that, in the opinion of Stockholders' counsel, which opinion is
satisfactory to Parent, may be made without violating the registration
provisions of the Securities Act of 1933, as amended (the "Securities Act"), or
applicable state securities laws. The Common Shares are "restricted securities"
within the meaning of Rule 144 under the Securities Act and have not been
registered under the Securities Act and therefore must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from registration is available.
(ii) Each Stockholder understands that there shall be endorsed on the
certificate evidencing the Common Shares issued pursuant to this Agreement a
legend substantially similar to the following:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
LAWS OF ANY OTHER JURISDICTION AND ARE "RESTRICTED SECURITIES" AS DEFINED
BY RULE 144 UNDER THE 1933 ACT. THE SHARES MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT REGISTERING THE SHARES UNDER THE 1933 ACT, OR IN LIEU THEREOF, AN
OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY TO THE ISSUER OF THE
SHARES, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT."
<PAGE>
6. Representations, Warranties and Agreements of Buyer. As material inducement
---------------------------------------------------
to Stockholders to enter into this Agreement and to close hereunder, Buyer makes
the following representations, warranties and agreements to and with
Stockholders, which representations, warranties and agreements shall be true and
correct as of the date of this Agreement and as of the Closing Date:
(a) Corporate Status and Authority. Buyer is a corporation duly organized,
------------------------------
validly existing and in good standing under the laws of the State of Delaware,
and has the corporate power and authority to execute, deliver and perform this
agreement and the documents contemplated hereby, including, without limitation,
to acquire the Shares to be acquired hereunder. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer, and this Agreement and the
documents contemplated hereby to be executed and delivered by Buyer, have been
or will be duly executed and delivered by Buyer, as the case may be, and
constitute, or will constitute when executed and delivered, the valid and
binding obligation of Buyer, enforceable against it in accordance with their
respective terms, except as enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium and other similar laws affecting creditors'
rights generally and by general principles of equity.
(b) Agreement Not in Breach of Other Instruments Affecting Buyer. The
------------------------------------------------------------
execution and delivery of this Agreement, the consummation of the transactions
provided for herein, and the fulfillment of the terms hereof by Buyer do not and
will not, with or without the giving of notice, the lapse of time, or both,
result in the breach of any of the terms and provisions of, or constitute a
default under, or conflict with, or cause any acceleration of any obligation of
Buyer under, any agreement, indenture or other instrument by which Buyer is
bound, Buyer's Certificate of Incorporation or By-Laws, any judgment, decree,
order, or award of any court, governmental body, or arbitrator, or any
applicable law, rule, or regulation.
<PAGE>
(c) No Broker or Finder. Buyer has not taken any action, or incurred any
-------------------
obligation, contingent or otherwise, which would give rise to a valid claim
against Stockholders and/or Corporation by a broker, finder, agent or other
intermediary for introducing the parties in connection with, or otherwise
procuring, this Agreement or the transaction(s) contemplated hereby.
(d) Shares Not Registered. Buyer acknowledges and agrees that the Shares
---------------------
have not been registered under the Securities Act, or registered or qualified
under any State Acts, and are "restricted securities" within the meaning of SEC
Rule 144. Buyer is acquiring the Shares for Buyer's own account, as a principal,
for investment purposes and not with a view to or for the sale or other
disposition thereof. Buyer agrees that it will not sell, assign, distribute or
otherwise dispose of the Shares in violation of the Securities Act or any
applicable State Act.
(e) Disclosure. No representation or warranty made by Buyer in this
----------
Agreement contains any untrue statement of a material fact, or omits or will
omit to state a material fact necessary to make the statements or facts
contained herein not misleading in light of the circumstances under which they
were furnished.
7. Representations, Warranties and Agreements of Parent. As material
----------------------------------------------------
inducement to Stockholders to enter into this Agreement and to close hereunder,
Parent makes the following representations, warranties and agreements to and
with Stockholders, which representations, warranties and agreements shall be
true and correct as of the date of this Agreement and as of the Closing Date:
(a) Corporate Status and Authority. Parent is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the corporate power and authority to execute, deliver and
perform this agreement and the documents contemplated hereby. The execution,
delivery and performance of this Agreement by Parent has been duly authorized by
all necessary corporate action on the part of Parent, and this Agreement
<PAGE>
and the documents contemplated hereby to be executed and delivered by Parent,
have been or will be duly executed and delivered by Parent, as the case may be,
and constitute, or will constitute when executed and delivered, the valid and
binding obligation of Parent, enforceable against it in accordance with their
respective terms, except as enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium and other similar laws affecting creditors'
rights generally and by general principles of equity.
(b) Agreement Not in Breach of Other Instruments Affecting Parent. The
-------------------------------------------------------------
execution and delivery of this Agreement, the consummation of the transactions
provided for herein, and the fulfillment of the terms hereof by Parent do not
and will not, with or without the giving of notice, the lapse of time, or both,
result in the breach of any of the terms and provisions of, or constitute a
default under, or conflict with, or cause any acceleration of any obligation of
Parent under, any agreement, indenture or other instrument by which Parent is
bound, Parent's Certificate of Incorporation or By-Laws, any judgment, decree,
order, or award of any court, governmental body, or arbitrator, or any
applicable law, rule, or regulation.
(c) SEC Documents; Financial Statements. Each of Parent's most recent
-----------------------------------
statement, annual, quarterly and other report, registration statement (without
exhibits) and definitive proxy statement filed by Parent with the SEC since
January 1, 1999 (the "Parent SEC Documents"), as of their respective filing
dates, complied in all material respects with the requirements of the Exchange
Act or the Securities Act, as the case may be, and none of the Parent SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a subsequently filed Parent
SEC Document and except that no representation is made as to information
supplied by or on behalf of Stockholders. The financial statements of Parent
included in the Parent SEC Documents (the "Parent Financial Statements") comply
as to form in all material respects with
<PAGE>
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles consistently applied (except in the case of
unaudited statements, as permitted by Form 10-Q of the Exchange Act) and fairly
present the consolidated financial position of Parent at the dates thereof and
the consolidated results of their operations and changes in financial position
for the periods then ended (subject, in the case of unaudited statements, to
normal, recurring audit adjustments). There has been no change in Parent's
accounting policies or estimates except as described in the notes to the Parent
Financial Statements.
8. Continuation and Survival of Representations and Warranties.
-----------------------------------------------------------
(a) The representations and warranties hereunder shall survive the
consummation of the transaction provided for in this Agreement, shall continue
in full force and effect, and shall provide the basis for the remedies set forth
herein or otherwise available to the non-breaching party. Notwithstanding the
foregoing, the representations and warranties set forth in Paragraphs 5 and 6
shall expire on the third anniversary of the Closing, except for the
representations and warranties that are set forth in subparagraphs 5(o), 5(p),
5(u) and 5(v) which shall expire upon expiration of the applicable statute of
limitations, and provided further that there shall be no expiration with respect
to Knowing Misrepresentations on the part of Stockholders. Knowing
Misrepresentation shall mean any breach of a representation or warranty that is
qualified as to Stockholders' knowledge or any knowing breach of a
representation or warranty that is not qualified as to Stockholders' knowledge.
(b) Each representation, warranty and covenant contained herein is
independent of all other representations, warranties and covenants contained
herein (whether or not covering an identical or a related subject matter) and
must be independently and separately complied with and satisfied. Exceptions or
qualifications to any representations or warranties contained herein shall not
be construed as exceptions or qualifications to any other warranty or
representation.
<PAGE>
Buyer and Parent shall use their best efforts to provide the Stockholders or
their counsel with the results of its due diligence investigation prior to the
time of Closing. Notwithstanding the foregoing, no representation or warranty
contained herein shall be deemed to have been waived, affected or impaired by
any investigation made by, or knowledge of, Buyer or Parent.
9. Closing Date. The Closing of the transactions provided for in this
------------
Agreement (herein sometimes called the "Closing") shall take place at the
offices of Buyer's counsel, Wolf, Block, Schorr and Solis-Cohen LLP, 1650 Arch
Street, 22nd Floor Philadelphia, PA, at 10:00 A.M. on October 31, 2000, or at
such other place, date and time as shall be agreed to between Buyer and
Stockholders. The date and time of Closing is sometimes herein called the
"Closing Date".
10. Deliveries by Stockholders at Closing. At the Closing, Stockholders will
-------------------------------------
deliver or cause to be delivered to Buyer the following in form and substance
reasonably acceptable to counsel to Buyer:
(a) stock certificates representing the Shares, duly endorsed by the relevant
Stockholders in blank, or with stock transfer powers executed by such
Stockholders in blank attached;
(b) a certified copy of the Certificate of Incorporation of Corporation and all
amendments thereto, issued by the Maryland Department of Assessments and
Taxation and dated as of a date within 15 days prior to the Closing Date;
(c) "good standing" and "no tax lien" certificates for Corporation issued by
each jurisdiction in which Corporation is incorporated or qualified to do
business as a foreign corporation, all of which shall be dated as of a date
within 15 days prior to the date hereof;
(d) general releases in favor of Corporation executed by Stockholders and each
director of Corporation, in form and substance satisfactory to counsel for
Buyer, releasing Corporation and each Subsidiary from any and all liability to
such person from claims with respect to matters on or before the Closing Date;
<PAGE>
(e) the Eigen Employment Agreement in the form attached hereto as Exhibit
"A", duly executed by Lewis Eigen;
(f) the Eigen Non-Compete Agreement in the form attached hereto as Exhibit
"B", duly executed by Lewis Eigen;
(g) the favorable legal opinion of Reed Smith Shaw & McClay LLP, counsel
for Stockholders, dated the date of Closing, as to the matters set forth in
Exhibit "C" attached hereto;
(h) Landlord Estoppel Certificates in the form attached hereto as Exhibit
"D" for each of the Leased Properties;
(i) "Nonforeign Certifications" meeting the requirements of Section
1445(b)(2) of the Code; and
(j) all such further documents, instruments and agreements which may be
reasonably requested by Buyer or its counsel to effect and carry out any
provision of this Agreement.
11. Deliveries by Buyer at Closing. Concurrently with the execution of this
------------------------------
Agreement, Buyer will deliver or cause to be delivered to Stockholders the
following:
(a) the sum of $3,000,000 payable in the manner set forth in subparagraph
2(a)(i);
(b) the Common Shares valued at $1,000,000 as provided in subparagraph
2(a)(ii);
(c) the Certificate of the Secretary of Buyer, dated as of the date
hereof, confirming that the necessary corporate action has been taken to
authorize the consummation by Buyer of the transaction provided for herein;
(d) the Eigen Employment Agreement in the form attached hereto as Exhibit
"A", duly executed by Buyer;
(e) the Eigen Non-Compete Agreement in the form attached hereto as Exhibit
"B", duly executed by Buyer; and
(f) the favorable legal opinion of Wolf, Block, Schorr and Solis-Cohen
LLP, counsel for Buyer, dated the date of Closing, as to the matters set forth
in Exhibit "E" attached hereto.
<PAGE>
12. Indemnification of Buyer.
------------------------
(a) Basic Provision. Subject to Paragraph 12(e), Stockholders (in this
---------------
Paragraph 12 sometimes referred to collectively as the "Indemnitor") hereby
jointly and severally indemnify and agree to hold harmless Buyer, Parent,
Corporation and each of their respective successors, assigns and each such
entity's officers, directors, shareholders and agents (in this Paragraph 12
sometimes referred to collectively as the "Buyer Indemnified Parties") (each of
whom shall be a third party beneficiary hereof) from, against and in respect of
the amount of any and all Deficiencies (as hereinafter defined) (except any
Deficiencies resulting from any misrepresentation, breach of representation or
warranty, or any non-fulfillment of any representation, warranty, covenant or
agreement on the part of Stockholders contained in Paragraph 4 herein, to which
Stockholders indemnify and agree to hold harmless severally only).
(b) Definition of "Deficiencies". As used in this Paragraph 12,
----------------------------
"Deficiencies" means any and all loss or damage incurred by the Buyer
Indemnified Parties resulting from:
(i) any misrepresentation, breach of any representation or warranty,
or any non-fulfillment of any representation, warranty, covenant or agreement on
the part of Stockholders contained in Paragraphs 4 and 5 herein;
(ii) any misrepresentation contained in any statement, report,
certificate or other document or instrument delivered to Buyer or Parent
pursuant to this Agreement or contained in any Schedule attached hereto;
(iii) any Plan maintained by Corporation, any Subsidiary or any ERISA
Affiliate: (i) that is not, or any time since its inception was not, in
compliance in all material respects with ERISA; (ii) that is or was required to
be qualified under the Code and is not, or any time from its inception was not,
so qualified; (iii) as to which any reporting or disclosure requirement of ERISA
or the Code has not been satisfied; (iv) that has engaged in any non-exempt
prohibited transaction under ERISA or the Code; (v) as to which there has been
any
<PAGE>
Reportable Event which has not been properly reported; (vi) that concern any
liability to the PBGC under Title IV of ERISA; (vii) that concern any liability
of a "multi-employer plan" (as defined in Section 4001(a)(3) of ERISA) under
Title IV of ERISA; (viii) that concern any notice any benefit continuation
requirements of COBRA or (ix) as to which any suit, proceeding or claim is
brought against Corporation or any of its ERISA Affiliates, or any Plan which
includes current employees or former employees of Corporation or any of its
ERISA Affiliates by reason of their employment by Corporation or any of its
ERISA Affiliates, or any fiduciary or former fiduciary of any such plan,
provided, however, that the obligation of Corporation and ERISA Affiliates to
indemnify Buyer and/or Parent pursuant to the provisions of this Paragraph 12
shall not apply to or include any loss, claim, damage liability, cost or expense
which is based upon or arose out of an act, omission, event, condition or
circumstance of Buyer, Parent or their respective affiliates which occurred
after the date hereof.
(iv) any Taxes of Corporation or any Subsidiary with respect to any Tax year or
portion thereof ending on or before the Closing Date (or for any Tax year
beginning before and ending after the Closing Date to the extent allocable (as
determined in a manner consistent with subparagraph 14(a)(ii) hereof to the
portion of such period beginning before and ending on the Closing Date), to the
extent such Taxes are not reflected in the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) shown on the Net Worth Statement as determined to
be final, conclusive and binding on all parties pursuant to subparagraph 2(b)
hereof;
(v) any unpaid Taxes of any person (other than that of Corporation or any
Subsidiary under Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign law), for which Corporation is liable as a transferee or
successor, by contract or operation of law, or otherwise;
<PAGE>
(vi) any liabilities or obligations of Corporation to any director,
officer, employee, consultant or other person arising as a result of the
acquisition by Buyer of the Shares; and
(vii) any and all actions, suits, proceedings, demands, assessments,
penalties, liabilities, judgments, reasonable attorneys' fees, costs, expenses
and interest incident to any of the foregoing (the "Deficiency Costs").
(c) Procedures for Establishment of Deficiencies. In the event that any claim
--------------------------------------------
shall be asserted against Buyer, Parent, or Corporation which, if sustained,
would result in a Deficiency, Buyer or Parent, as the case may be, within a
reasonable time after learning of such claim, shall notify the Indemnitor of
such claim, and shall extend to the Indemnitor a reasonable opportunity to
defend against such claim, at the Indemnitor's sole expense and through legal
counsel reasonably satisfactory to Buyer or Parent, as the case may be, and
utilizing any insurance coverage which may be available with respect to such
claim and/or costs and expenses of the defense thereof; provided that the
Indemnitor proceeds in good faith, expeditiously and diligently. Buyer or
Parent, as the case may be, shall, at its option and expense, have the right to
participate in any defense undertaken by the Indemnitor with legal counsel of
its own selection. If the Indemnitor, in the reasonable judgment of Buyer or
Parent, as the case may be, after written notice to Indemnitor and reasonable
opportunity to cure has failed to prosecute such defense in good faith in an
expeditious and diligent manner, Buyer or Parent, as the case may be, shall have
the right to defend and/or settle such claim on behalf of the Indemnitor at the
Indemnitor's expense utilizing any insurance coverage which may be available
with respect to such claim and/or costs and expenses of the defense thereof. No
settlement or compromise of any claim which may result in a Deficiency may be
made by the Indemnitor without the prior written consent of Buyer or Parent, as
the case may be, unless the proposed settlement is solely a monetary settlement
and prior to such settlement or compromise Stockholders acknowledge in
<PAGE>
writing their obligation to pay in full the amount of the settlement and all
associated expenses, subject to the limitations set forth in this Paragraph 12,
and Buyer or Parent, as the case may be, is furnished with a full release from
the claimant in form and substance reasonably satisfactory to Buyer or Parent,
as the case may be. In connection with the defense against the claim, Buyer or
Parent, as the case may be, shall make reasonably available (and shall cause
Corporation to make reasonably available) to Stockholders and their accountants,
attorneys, agents, and representatives during normal business hours the books
and records (including any accountant's work papers), contracts, agreements,
documents, instruments and other information relating to the claim, upon
reasonable advance notice to Buyer or Parent, as the case may be, and shall
otherwise cooperate in good faith with Stockholders with respect to the defense
against the claim, including in connection with compliance with any subpoena,
request for documents, or similar request for discovery; provided, however, that
Stockholders shall schedule such access or requests through an authorized
representative of Buyer or Parent, as the case may be, and in such a way as to
avoid material disruption of the normal business operations of Corporation.
(d) Payment of Deficiencies.
-----------------------
(i) If, within a period of 15 business days after the giving of
written notice by Buyer or Parent, as applicable, of a Deficiency in the manner
required under subparagraph 12(c), Indemnitor shall not give written notice to
Buyer or Parent, as the case may be, announcing its intention to contest such
assertion of Buyer or Parent, as the case may be, (such notice by the Indemnitor
being hereinafter called the "Contest Notice"), such assertion of Buyer or
Parent, as the case may be, shall be deemed accepted and the amount of the
Deficiency shall be deemed established. In the event, however, that a Contest
Notice is given to Buyer or Parent, as applicable, within said 15 day period,
then the contested assertion of a Deficiency shall be settled by arbitration to
be held in Wilmington, Delaware in accordance with the commercial arbitration
rules of the American Arbitration Association then obtaining. The determination
of the
<PAGE>
arbitrator(s) shall be delivered in writing to Stockholders and Buyer or Parent,
as the case may be, and shall be final, binding and conclusive upon all of the
parties hereto, and the amount of the Deficiency, if any, determined to exist by
the arbitrator(s) shall be deemed established.
(ii) Buyer, Parent and Stockholders may agree in writing, at any time,
as to the existence and amount of a Deficiency, and, upon the execution of such
agreement, such Deficiency shall be deemed established. Any amounts required to
be paid with respect to an established Deficiency but not paid by the Indemnitor
within 10 business days after such Deficiency is established (the "Deficiency
Payment Date") shall bear interest from the Deficiency Payment Date until the
date paid at an annual rate equal to the rate of interest published as the
"Prime Rate" in The Wall Street Journal on the Deficiency Payment Date plus 3%.
(e) Limitations. With the exception of (i) any Deficiencies resulting from
-----------
any misrepresentation, breach of representation or warranty, or any non-
fulfillment of any representation, warranty, covenant or agreement on the part
of Stockholders contained in Paragraph 4 herein, (ii) any Deficiencies resulting
from a Knowing Misrepresentation on the part of Stockholders or (iii) any
Deficiencies resulting from a breach of the representation contained in
subparagraph 5(y), with respect to which there shall be no limitations, (A)
there shall be no liability for any Deficiency unless and until the aggregate of
all Deficiencies incurred by Buyer Indemnified Parties exceeds $100,000, in
which event there shall be liability for Deficiencies only to the extent such
Deficiencies exceed $50,000, and (B) the maximum aggregate amount of
Deficiencies against which the Buyer Indemnified Parties shall be entitled to be
indemnified under this Paragraph 12 with respect to all claims hereunder shall
be $3,000,000. Buyer or Parent shall not be entitled to be reimbursed by the
Stockholders for any asserted Deficiency unless (x) Buyer has determined in good
faith or, if Buyer's determination is challenged by Stockholders, Buyer's
regularly engaged independent auditors shall have determined in good faith, that
the Deficiency is neither a direct cost attributable to an open contract with
the U.S. government or, in
<PAGE>
the case of a Deficiency Cost, an indirect cost reimbursable by the U.S.
government for the year in which such cost was incurred, and therefore would be
deemed an Unallowable Cost, or (y) Buyer has asked for reimbursement for such
direct or indirect cost in the year in which such cost is incurred, and such
cost has been found to be an Unallowable Cost or has not actually been
reimbursed by the U.S. government within 24 months of the cost having been
incurred. Notwithstanding the foregoing, after such 24-month period, (xx)
Stockholders shall be liable and shall promptly pay Buyer for any reimbursed
costs that are subsequently disallowed upon audit or review, and (yy) Buyer
shall promptly return to Stockholders any costs paid by Stockholders to Buyer
hereunder if subsequently allowed and reimbursed by the U.S. government. The
rights of indemnification provided for in this Paragraph 12 shall be the sole
and exclusive remedy of the Buyer Indemnified Parties with respect to any
Deficiencies, Deficiency Costs, and any other claims by and of the Buyer
Indemnified Parties against Stockholders or either of them arising out of or
relating to this Agreement and/or the transactions contemplated by this
Agreement.
13. The Indemnification of Stockholders.
-----------------------------------
(a) Basic Provision. Buyer and Parent (in this Paragraph 13 sometimes
---------------
referred to as the "Indemnitor") hereby indemnifies, defends and agrees to hold
harmless Stockholders, each of their respective successors, assigns, agents and
representatives (in this Paragraph 13 sometimes referred to collectively as the
"Stockholder Indemnified Parties"), (each of whom shall be a third party
beneficiary hereof) from, against and in respect of the amount of any and all
Buyer Deficiencies, as the case may be (as hereinafter defined).
(b) Definition of "Buyer Deficiencies". As used in this Paragraph 13,
---------------------------------
"Buyer Deficiencies" means:
(i) any and all loss or damage resulting from any misrepresentation,
breach of warranty, or any non-fulfillment of any warranty, representation,
covenant or agreement on the part of Buyer or Parent contained herein; and
<PAGE>
(ii) any and all acts, suits, proceedings, demands, assessments, judgments,
reasonable attorneys' fees, costs and expenses incident to any of the foregoing.
(c) Procedures for Establishment of Buyer Deficiencies. In the event that
--------------------------------------------------
any claim shall be asserted by any party against an Indemnitee which, if
sustained, would result in a Buyer Deficiency, Stockholders, within a reasonable
time after learning of such claim, shall notify the applicable Indemnitor of
such claim, and shall extend to the Indemnitor a reasonable opportunity to
defend against such claim, at the Indemnitor's sole expense and through legal
counsel reasonably acceptable to Stockholders, and utilizing any insurance
coverage which may be available with respect to such claim and/or costs and
expenses of the defense thereof provided that the Indemnitor proceeds in good
faith, expeditiously and diligently. Stockholders shall, at their option and
expense, have the right to participate in any defense undertaken by the
Indemnitor with legal counsel of their own selection. If the Indemnitor, in the
reasonable judgment of Stockholders, after written notice to Indemnitor and
reasonable opportunity to cure has failed to prosecute such defense in good
faith in an expeditions and diligent manner, Stockholders shall have the right
to defend and/or settle such claim on behalf of the Indemnitor at the
Indemnitor's expense. No settlement or compromise of any claim which may result
in a Buyer Deficiency may be made by the Indemnitor without the prior written
consent of Stockholders, unless the proposed settlement is solely a monetary
settlement and prior to such settlement or compromise Buyer or Parent, as the
case may be, acknowledges in writing its obligation to pay in full the amount of
the settlement and all associated expenses, subject to the limitations set forth
in this Paragraph 13, and Stockholders are furnished with a full release from
the claimant in form and substance reasonably satisfactory to Stockholders.
(d) Payment of Deficiencies.
-----------------------
(i) If, within a period of 15 business days after the giving of
written notice by Stockholders of a Deficiency in the manner requested under
subparagraph 13(c), Indemnitor shall
<PAGE>
not give written notice to Stockholders announcing its intention to contest such
assertion of Stockholders (such notice by the Indemnitor being hereinafter
called the "Contest Notice"), such assertion of the Indemnitee shall be deemed
accepted and the amount of the Buyer Deficiency shall be deemed established. In
the event, however, that a Contest Notice is given to Stockholders within such
15 day period, then the contested assertion of a Buyer Deficiency shall be
settled by arbitration to be held in Wilmington, Delaware in accordance with the
commercial arbitration rules of the American Arbitration Association then
obtaining. The determination of the arbitrator(s) shall be delivered in writing
to Stockholders and Buyer or Parent, as the case may be, and shall be final,
binding and conclusive upon all of the parties hereto, and the amount of the
Deficiency, if any, determined to exist by the arbitrator(s) shall be deemed
established.
(ii) Buyer, Parent and Stockholders may agree in writing, at any time, as
to the existence and amount of a Deficiency, and, upon the execution of such
agreement, such Deficiency shall be deemed established. Any amounts required to
be paid with respect to an established Buyer Deficiency but not paid by the
Indemnitor within 10 business days after such Buyer Deficiency is established
(the "Deficiency Payment Date") shall bear interest from the Deficiency Payment
Date until the date paid at an annual rate equal to the rate of interest
published as the "Prime Rate" in The Wall Street Journal on the Deficiency
Payment Date plus 3%.
(e) Limitations. With the exception of any obligation of Buyer or Parent
-----------
to pay the Purchase Price, with respect to which there shall be no limitations,
(A) there shall be no liability for any Buyer Deficiency unless and until the
aggregate of all Buyer Deficiencies incurred by the Stockholder Indemnified
Parties exceeds $100,000, in which event there shall be liability for Buyer
Deficiencies only to the extent such Buyer Deficiencies exceed $50,000, and (B)
the maximum aggregate amount of Buyer Deficiencies against with the Stockholder
Indemnified Parties shall be entitled to be indemnified under this Paragraph 13
with respect to all claims
<PAGE>
hereunder shall be the amount of the Purchase Price less any cash paid in
consideration of the Purchase Price.
14. Tax Covenants Relating to Corporation.
-------------------------------------
(a) The following provisions shall govern the allocation of responsibility
as between Buyer and Stockholders for certain Tax matters following the Closing
Date:
(i) Stockholders shall timely prepare or cause to be prepared and
file or cause to be filed all Returns for Corporation and each of the
Subsidiaries for all tax periods ending on or prior to the Closing Date which
are to be filed after the Closing Date. Copies of all such returns shall be made
available to Buyer at least 10 days prior to the date on which they are to be
filed. If any such Return indicates that Corporation or any Subsidiary has
incurred any liability for Tax in excess of the amount of such Taxes which are
included in the reserve for Tax liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax income) on
the Net Worth Statement, Stockholders shall pay such excess to Buyer within 15
days after receipt by Stockholders of a request for payment by Buyer.
(ii) Buyer at its expense shall timely prepare or cause to be
prepared and file or cause to be filed all Returns for Corporation and each
Subsidiary for Tax periods which begin before the Closing Date and end after the
Closing Date and shall pay the Taxes due with respect to such Returns. Copies of
all such returns shall be made available to Stockholders at least 10 days prior
to the date on which they are to be filed. During such 10 day period,
Stockholders may provide to Buyer such comments or proposed changes as they deem
appropriate. Stockholders shall pay to Buyer the excess of (x) a pro rated
amount (calculated as described in subparagraph 14(a)(ii)(A) or (B)) of the
Taxes of each of Corporation and the Subsidiaries for any such period over (y)
the amount of the Taxes paid by each of Corporation and the Subsidiaries on or
prior to the Closing Date with respect to such period and the amount of such
Taxes which are included in the reserve for Tax liability (rather than any
reserve for Tax
<PAGE>
liability to reflect timing differences between book and Tax items) on the Net
Worth Statement as determined to be final, conclusive and binding on all parties
pursuant to subparagraph 2(b) hereof. Such payment by Stockholders to Buyer
shall be made within 15 days after receipt by Stockholders of a request for
payment from Buyer which includes the Return, if available, or any other
document used to calculate the pro rated amount of the Taxes.
(A) In the case of all Taxes imposed upon or measured by property or
capital, the pro rated amount shall be based upon the number of days in the
period up to and including the Closing Date divided by the total number of days
in the Tax period.
(B) In the case of all Taxes other than those imposed upon or measured
by property or capital, including but not limited to net income, gross receipts
taxes, sales and use taxes, and payroll taxes, the pro rated amount shall be
based upon the transactions occurring on or before the Closing Date.
(b) All tax sharing agreements or similar agreements with respect to or
involving Corporation shall be terminated as of the Closing Date and, after the
Closing Date, Corporation shall not be bound thereby or have any liability
thereunder.
(c) All transfer (including real estate), documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by
Stockholders when due, and Stockholders shall, at their own expense, file all
necessary 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, Buyer will, and will cause its affiliates to, join
in the execution of any such Returns and other documentation.
(d) Buyer and Stockholders shall cooperate fully (and cause Corporation
and the Subsidiaries to cooperate fully), as and to the extent reasonably
requested by the other party, in connection with the preparation, execution and
filing of Returns pursuant to this Agreement and
<PAGE>
any audit, contest, litigation or other proceeding with respect to Taxes. Such
cooperation shall include 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 themselves, in the case of
Stockholders, and employees, in the case of Buyer, available on a mutually
convenient basis to provide additional information and explanation of any
material. Stockholders agree (i) to retain all books and records with respect to
Tax matters pertinent to Corporation relating to any Tax period beginning before
the Closing Date until the expiration of the stature of limitations (and, to the
extent notified by Buyer, any extensions thereof) of the respective taxable
periods (unless such items were transferred pursuant to this Agreement in which
case Buyer agrees to be bound by the record retention requirements and notice
provisions of this subparagraph), and to abide by all record retention
agreements entered into with any Tax authority, and (ii) to give Buyer
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if Buyer so requests, Stockholders shall allow Buyer
to take possession of such books and records.
(e) Buyer and Stockholders agree, upon request, to use their best effort
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).
(f) Buyer and Stockholders agree, upon request, to provide the other party
with all information that either party may be required to report pursuant to
Code Section 6043 and all Regulations promulgated thereunder.
(g) Buyer shall promptly notify Stockholders in writing of the
commencement of any claim, audit, examination, or other proposed change or
adjustment by any tax authority concerning any Tax or other similar claim or
assessment for which Stockholders may be responsible (a "Tax Claim"); provided,
however, that failure to give such notice shall not relieve
<PAGE>
any party from its obligation to indemnify with respect to any such Tax Claim
except to the extent of actual prejudice. Stockholders shall have the right to
employ counsel of their choice at their expense and to participate with Buyer,
Corporation and any Subsidiaries in resolving any dispute of Taxes with respect
to Tax periods beginning before the Closing Date through the appropriate
administrative offices and in the courts, and shall have primary responsibility
for the conduct of any such proceedings relating solely to periods ending on or
before the Closing Date. Stockholders and Buyer shall be liable on a pro rated
basis (determined as in subparagraph 14(a)(ii) above) for all expenses, costs,
fees (including attorney's and accountant's fees) incurred by Buyer or
Corporation after the Closing Date in connection with the resolution of all Tax
disputes and Tax audits with respect to any tax period which includes the
Closing Date but which does not end on or before the Closing Date. Stockholders
shall make payment of its share of such costs, expenses and fees within 15 days
after receipt of notice of such expenses from Buyer, except that Buyer or Parent
shall not be entitled to be reimbursed by Stockholders for any such costs,
expenses and fees unless (x) Buyer has determined in good faith or, if Buyer's
determination is challenged by Stockholders, Buyer's regularly engaged
independent auditors shall have determined in good faith, that such costs,
expenses and fees are neither a direct cost, expense or fee attributable to an
open contract with the U.S. government or an indirect cost, expense or fee
reimbursable by the U.S. government for the year in which such cost, expense or
fee was incurred, and therefore would be deemed an Unallowable Cost, or (y)
Buyer has asked for reimbursement for such costs, expenses and fees in the year
in which such costs, expenses and fees are incurred, and such costs, expenses
and fees have been found to be Unallowable Costs or have not actually been
reimbursed by the U.S. government within 24 months of the costs, expenses and
fees having been incurred. Notwithstanding the foregoing, after such 24-month
period, (xx) Stockholders shall be liable and shall promptly pay Buyer for any
such reimbursed costs, expenses and fees that are subsequently disallowed upon
audit or review, and (yy) Buyer
<PAGE>
shall promptly return to Stockholders the amount of any costs, expenses and
fees paid by Stockholders to Buyer hereunder if subsequently allowed and
reimbursed by the U.S. government.
(h) Except as otherwise provided in this Paragraph 14, the party
preparing a Return or required to prepare a Return shall control resolution
of any audit or investigation, and any proceedings with taxing authorities,
with respect to the Tax liability relating to such Return. However, the
party entitled to control any such audit, investigation or proceeding may,
at its sole option, extend to the party with economic liability for any
Taxes at issue therein the opportunity to assume the defense of the matter.
(i) The parties agree that each will join in making an election under
Section 338(h)(10) of the Code with respect to the purchase by Buyer of all
of the Shares as contemplated by this Agreement. The parties acknowledge
that pursuant to such election, the Corporation will be treated for federal
income tax purposes (and under state and local income tax laws, to the
extent permitted) as having sold its assets in the manner set forth in
Treasury Regulation Section 1.338(h)(10)-1. The parties acknowledge that
(i) for federal income tax purposes, the Corporation shall be deemed to
have sold all of its assets at the date hereof and distributed the proceeds
received from the Buyer in liquidation of the Corporation, (ii) the
Corporation's final "S" corporation tax year will end at the close of
business on the date hereof, and (iii) as of the opening of business on the
day after the date hereof, Corporation will be deemed to be a new
corporation which purchased all of its assets. The parties shall report all
transactions and make all filings with the Internal Revenue Service (and
state and local income tax authorities, to the extent permitted) consistent
with this election. The election under Section 338(h)(10) of the Code shall
be made on Form 8023 (revised September 1997), shall be prepared and filed
by the Buyer and four copies of Form 8023 shall on the date hereof be
signed by each of the Stockholders. With respect to the Forms 8023 to be
signed on the date hereof, the Buyer shall fill in as much of the
information
<PAGE>
required to be put on the Form and in attachments thereto with respect to
the Corporation, Buyer and Stockholders as is reasonably ascertainable by
the date hereof. The balance of the information required on or with the
Forms shall be filled in and added as soon after the date hereof as
possible. Stockholders agree to provide Buyer with the information which
Buyer needs to include on the Form which relates to Stockholders and the
Corporation. Buyer shall file a completed and fully executed Form 8023 with
the appropriate District Director for the Internal Revenue district as is
provided in the instructions to the Form 8023. Buyer shall provide to
Stockholders copies of the Form 8023 that is filed with the District
Director as soon as it is completed and ready for filing. Each Stockholder
agrees to timely file the copies of the Form 8023 provided to it by the
Buyer in the manner called for in the instructions to the Form 8023.
15. Further Assurances; Registration Rights.
---------------------------------------
(a) Buyer and Stockholders agree to execute and deliver all such
other instruments and take all such other action as any party may
reasonably request from time to time, after the date hereof and without
payment of further consideration, in order to effectuate the transactions
provided for herein. The parties shall cooperate fully with each other and
with their respective counsel and accountants in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, including, without limitation, the preparation of financial
statements and Tax Returns. Buyer agrees to cause Corporation to retain and
make available to Stockholders, as reasonably requested and during normal
business hours, any and all books and records of Corporation concerning
Taxes for each and every Tax period ending on or before or including the
Closing Date for a period of at least six (6) years following the end of
each such Tax period and any and all books and records of Corporation
concerning each of Corporation's contracts for a period of four (4) years
after the date of the "End of Contract" of such contract, which shall be
the latter of the date of Contract Closeout or the date of completion of
performance thereunder.
<PAGE>
(b) Parent agrees to grant Stockholders registration rights with
respect to the Common Shares which are pari-passu and on the same terms and
conditions as any registration rights to be granted to any officer of
Parent or any of its subsidiaries, none of which are in force as of the
date hereof.
16. Consent to Jurisdiction, Service of Process, Appointment of Agent.
-----------------------------------------------------------------
(a) Each Stockholder hereby irrevocably submits to the jurisdiction
of any Delaware State or Federal court sitting in the City of Wilmington
over any suit, action or proceeding arising out of or relating to this
Agreement. Stockholders hereby irrevocably waive, to the fullest extent
permitted by applicable law, any objection which they or any of them may
now have or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in such court and any claim that any such
suit, action or proceeding brought in such a court has been brought in an
inconvenient forum. Buyer, Parent and each Stockholder agrees that, to the
fullest extent permitted by applicable law, a final judgment in any such
suit, action, or proceeding brought in such a court shall be conclusive and
binding upon Buyer, Parent and Stockholders, and may be enforced in any
courts of the jurisdiction of which Buyer, Parent or Stockholders, as the
case may be, is or are or may be subject by a suit upon such judgment,
provided that service or process is effected upon Buyer, Parent or
Stockholders, as the case may be, in one of the manners specified in
subparagraph (b) below or as otherwise permitted by applicable law.
(b) Buyer, Parent and each Stockholder hereby consents to process
being served in any suit, action or proceeding of the nature referred to in
subparagraph (a) above by the mailing of a copy thereof by registered or
certified first-class air mail, postage prepaid, return receipt requested,
to Buyer, Parent or such Stockholder, as the case may be, at such parties
address set forth in subparagraph 17(c) hereof.
(c) Nothing in this Paragraph 16 shall affect the right of Buyer,
Parent or Stockholders to serve process in any manner permitted by law or
affect the right of Buyer, Parent or
<PAGE>
Stockholders to bring proceedings against Buyer, Parent or Stockholders, or
either of them, as the case may be, in the courts of any jurisdiction or
jurisdictions.
2. Miscellaneous.
-------------
(a) Indulgences, Etc. Neither the failure nor any delay on the part
----------------
of any party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any
other or further exercise of the same or of any other right, remedy, power
or privilege, nor shall any waiver of any right, remedy, power or privilege
with respect to any occurrence be construed as a waiver of such right,
remedy, power or privilege with respect to any other occurrence. No waiver
shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.
(b) Controlling Law. This Agreement and all questions relating to its
---------------
validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be
governed by and construed in accordance with the laws of the State of
Delaware, notwithstanding any conflict-of-laws doctrines of such state or
other jurisdiction to the contrary, and without the aid of any canon,
custom or rule of law requiring construction against the draftsman.
(c) Notices. All notices, requests, demands and other communications
-------
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received only when delivered
(personally, by courier service such as Federal Express, or by other
messenger), when sent by electronic facsimile or four days following the
day when deposited in the United States mails, registered or certified air
mail, postage prepaid, return receipt requested, addressed as set forth
below:
(i) If to Buyer:
Macro International Inc.
11785 Beltsville Drive
<PAGE>
Calverton, MD 20705
Attention: Chief Executive Officer
with a copy, given in the manner prescribed above, to:
David Gitlin, Esquire
Wolf, Block, Schorr and Solis-Cohen LLP
1650 Arch Street, 22nd Floor
Philadelphia, PA 19103-2097
If to Parent:
Opinion Research Corporation
23 Orchard Road
Skillman, NJ 08542-0183
Attention: Chief Executive Officer
with a copy, given in the manner prescribed above, to:
David Gitlin, Esquire
Wolf, Block, Schorr and Solis-Cohen LLP
1650 Arch Street, 22nd Floor
Philadelphia, PA 19103-2097
If to Stockholders:
Lewis D. Eigen and
Ramona E. F. Arnett
17 Lake Potomac Court
Potomac, MD 20854-1226
with a copy, given in the manner prescribed above, to:
William M. Weisberg, Esquire
Reed Smith Hazel & Thomas LLP
8251 Greensboro Drive, Suite 1100
McLean, VA 22102-3844
Any party may alter the address to which communications or copies are
to be sent by giving notice of such change of address in conformity with the
provisions of this subparagraph for the giving of notice.
<PAGE>
(d) Exhibits and Schedules. All Exhibits and Schedules attached hereto are
----------------------
hereby incorporated by reference into, and made a part of, this Agreement.
(e) Binding Nature of Agreement. This Agreement shall be binding upon and inure
---------------------------
to the benefit of the parties hereto and their respective successors and
assigns, except that no Stockholder may assign or transfer his rights or
obligations under this Agreement without the prior written consent of Buyer.
(f) Execution in Counterparts. This Agreement may be executed in any number of
-------------------------
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
(g) Provisions Separable. The provisions of this Agreement are independent of
--------------------
and separable from each other, and no provision shall be affected or rendered
invalid or enforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.
(h) Entire Agreement. This Agreement contains the entire understanding between
----------------
the parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as herein contained.
(i) Paragraph Headings. The Paragraph and subparagraph headings in this
------------------
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
(j) Gender and Number. Words used herein, regardless of the number and gender
-----------------
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context indicates is appropriate.
<PAGE>
(k) Number of Days. In computing the number of days for purposes of this
--------------
Agreement, all days shall be counted, including Saturdays, Sundays and Holidays;
provided, however, that if the final day of any time period falls on a Saturday,
Sunday or Holiday; then the final day shall be deemed to be the next day which
is not a Saturday, Sunday or such Holiday. For purposes of this subparagraph,
"Holiday" shall mean a day, other than a Saturday or Sunday, on which national
banks are or may elect to be closed.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their proper and duly authorized officers, on the date first
above written.
MACRO INTERNATIONAL INC.
Attest: /s/ Kevin P. Croke By: /s/ Frank J. Quirk
_______________________________
Name: Frank J. Quirk
Title: Chief Executive Officer
OPINION RESEARCH CORPORATION
Attest: /s/ Kevin P. Croke By: /s/ Douglas L. Cox
_________________________________
Name: Douglas L. Cox
Title: Executive Vice President
/s/ Lewis D. Eigen
____________________________________
Lewis D. Eigen
/s/ Ramona E. F. Arnett
____________________________________
Ramona E. F. Arnett
<PAGE>
SCHEDULE 4(a)
-------------
Stockholder Number of Shares
----------- ----------------
Lewis D. Eigen 500
Ramona E. F. Arnett 500