Stock Purchase Agreement - Titan Corp. and Sencom Corp.
STOCK PURCHASE AGREEMENT
BY AND AMONG
THE TITAN CORPORATION,
SENCOM CORP.,
AND
THE STOCKHOLDERS OF SENCOM CORP.
DATED AS OF MAY 31, 2000
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TABLE OF CONTENTS
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ARTICLES
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ARTICLE I SALE AND PURCHASE OF STOCK......................................................1
SECTION 1.01 Sale and Purchase of Stock.............................................1
SECTION 1.02 Purchase Price.........................................................1
SECTION 1.03 Delivery of Purchase Price.............................................2
SECTION 1.04 Holdback Consideration; Determination of Closing Adjustment............2
SECTION 1.05 Retention Bonus Pool...................................................4
ARTICLE II ADDITIONAL UNDERTAKINGS AND COVENANTS..........................................5
SECTION 2.01 Conduct of Business of Company Until Closing...........................5
SECTION 2.02 Reasonable Best Efforts to Satisfy Conditions..........................7
SECTION 2.03 Other Actions..........................................................7
SECTION 2.04 Certain Tax Matters....................................................8
SECTION 2.05 Access and Information.................................................9
SECTION 2.06 Notification Filing Required under HSR Act.............................9
SECTION 2.07 Access to Company Information..........................................9
SECTION 2.08 Exon-Florio Notice; Mitigation of FOCI.................................9
SECTION 2.09 Appropriate Action; Consents; Filings..................................10
SECTION 2.10 Disclosure.............................................................11
SECTION 2.11 Public Announcements...................................................11
SECTION 2.12 Transaction Expenses...................................................12
SECTION 2.13 Section 338(h)(10) Election............................................12
SECTION 2.14 Waiver of Right of First Refusal.......................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE COMPANY STOCKHOLDERS........12
SECTION 3.01 Organization and Qualification.........................................12
SECTION 3.02 Subsidiaries...........................................................13
SECTION 3.03 Certificate of Incorporation and Bylaws................................13
SECTION 3.04 Capitalization.........................................................13
SECTION 3.05 Authority; Binding Obligation..........................................14
SECTION 3.06 No Conflict; Required Filings and Consents.............................14
SECTION 3.07 Intellectual Property..................................................15
SECTION 3.08 Financial Statements and Condition.....................................16
SECTION 3.09 Absence of Certain Developments........................................17
SECTION 3.10 Absence of Undisclosed Liabilities.....................................18
SECTION 3.11 Litigation; Disputes...................................................19
SECTION 3.12 Real Property Leases...................................................19
SECTION 3.13 Other Agreements; No Default...........................................20
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SECTION 3.14 Labor Relations........................................................20
SECTION 3.15 Pension and Benefit Plans..............................................20
SECTION 3.16 Taxes and Tax Matters..................................................22
SECTION 3.17 Insurance..............................................................24
SECTION 3.18 Arrangements With Related Parties......................................24
SECTION 3.19 Books and Records......................................................24
SECTION 3.20 Assets.................................................................24
SECTION 3.21 Directors and Officers.................................................24
SECTION 3.22 Environmental Matters..................................................25
SECTION 3.23 Y2K Compliance.........................................................25
SECTION 3.24 Government Contracts and Other Commitments.............................25
SECTION 3.25 Relations with Governments.............................................27
SECTION 3.26 Broker's Fees..........................................................27
SECTION 3.27 Security Clearances....................................................27
SECTION 3.28 Disclosure.............................................................27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EACH COMPANY STOCKHOLDER.....................28
SECTION 4.01 Title to Common Stock..................................................28
SECTION 4.02 Authority and Capacity.................................................28
SECTION 4.03 Absence of Violation...................................................28
SECTION 4.04 Restrictions and Consents..............................................29
SECTION 4.05 Binding Obligation.....................................................29
SECTION 4.06 Transfer of Title......................................................29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUIROR......................................29
SECTION 5.01 Organization and Qualification.........................................29
SECTION 5.02 Certificate or Articles of Incorporation and Bylaws....................30
SECTION 5.03 Authority; Binding Obligation..........................................30
SECTION 5.04 No Conflict; Required Filings and Consents.............................30
ARTICLE VI CONDITIONS PRECEDENT...........................................................31
SECTION 6.01 Conditions to Obligations of Each Party Under This Purchase Agreement..31
SECTION 6.02 Additional Conditions to Obligations of Acquiror.......................32
SECTION 6.03 Additional Conditions to Obligations of Company and the Company
Stockholders...........................................................33
ARTICLE VII CLOSING.......................................................................34
SECTION 7.01 Closing of Sale and Purchase...........................................34
SECTION 7.02 Deliveries by the Company Stockholders.................................34
SECTION 7.03 Deliveries by Company..................................................34
SECTION 7.04 Deliveries by Acquiror.................................................35
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER............................................35
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SECTION 8.01 Termination............................................................35
SECTION 8.02 Effect of Termination..................................................36
SECTION 8.03 Amendment..............................................................36
SECTION 8.04 Extension; Waiver......................................................37
ARTICLE IX SURVIVAL OF REPRESENTATIONS; REMEDIES..........................................37
SECTION 9.01 Survival of Representations............................................37
SECTION 9.02 Indemnification by Company Stockholders; Right to Offset...............37
SECTION 9.03 Indemnification by Acquiror............................................40
SECTION 9.04 Third Party Claims.....................................................42
SECTION 9.05 No Recourse Against the Company........................................43
SECTION 9.06 Remedies Cumulative....................................................44
ARTICLE X GENERAL PROVISIONS..............................................................44
SECTION 10.01 Notices...............................................................44
SECTION 10.02 Headings..............................................................45
SECTION 10.03 Severability..........................................................45
SECTION 10.04 EntireAgreement.......................................................45
SECTION 10.05 Assignment............................................................46
SECTION 10.06 No Brokers............................................................46
SECTION 10.07 Parties in Interest...................................................46
SECTION 10.08 Mutual Drafting.......................................................46
SECTION 10.09 Governing Law.........................................................46
SECTION 10.10 Counterparts..........................................................46
SECTION 10.11 Singular and Plural...................................................47
SECTION 10.11 Post-Closing Access to Records........................................47
ARTICLE XI DEFINITIONS.....................................................................47
EXHIBITS
EXHIBIT A Company Stockholders
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of May 31, 2000 (this "Purchase
Agreement"), is entered into by and among The Titan Corporation, a corporation
organized under the laws of the State of Delaware ("Acquiror"), Sencom Corp., a
corporation organized under the laws of the Commonwealth of Massachusetts
("Company") and the stockholders of the Company identified on EXHIBIT A attached
hereto (the "Company Stockholders", and together with "Acquiror," and "Company"
individually hereinafter referred to as "Party" and collectively hereinafter
referred to as the "Parties");
WHEREAS, Acquiror desires to acquire Company;
WHEREAS, the Company Stockholders own all of the issued and outstanding
shares of common stock, $0.10 par value, of Company ("Company Common Stock");
and
WHEREAS, the Company Stockholders desire to sell and Acquiror desires
to purchase all of the issued and outstanding shares of Company Common Stock at
a price and upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this Purchase
Agreement, and intending to be legally bound hereby, the Parties agree as
follows.
ARTICLE I
SALE AND PURCHASE OF STOCK
SECTION 1.01 SALE AND PURCHASE OF STOCK
On the basis of the representations, warranties, covenants and agreements
contained herein, and subject to the terms and conditions of this Purchase
Agreement, each Company Stockholder severally agrees to sell to Acquiror, and
Acquiror agrees to purchase from each Company Stockholder, the number of shares
of issued and outstanding Company Common Stock set forth opposite the name and
address of such Company Stockholder on EXHIBIT A (which shares, collectively,
constitute all of the outstanding capital stock of Company), for the
consideration specified in Section 1.02.
SECTION 1.02 PURCHASE PRICE
For and in consideration of the conveyances described herein, Acquiror agrees to
pay in aggregate to the Company Stockholders, and the Company Stockholders agree
to accept from Acquiror, as
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consideration for all of the Company Common Stock, the sum of Thirty Five
Million Dollars ($35,000,000), subject to any adjustments pursuant to Section
1.04 (the "Purchase Price"):
SECTION 1.03 DELIVERY OF PURCHASE PRICE
The Purchase Price shall be delivered by Acquiror as follows: (i) an aggregate
of Twenty Eight Million Seven Hundred Thousand Dollars ($28,700,000) shall be
payable at the Closing (as defined in Section 7.01 of this Purchase Agreement)
to the Company Stockholders by wire transfer of immediately available funds
payable to each Company Stockholder in the proportion of each such Company
Stockholder's ownership of the Company Common Stock identified in EXHIBIT A and
to such accounts that are identified by the Company Stockholders not less than
two (2) business days prior to the Closing Date (as defined in Section 7.01 of
this Purchase Agreement) (the "Cash Consideration"); (ii) an aggregate of Three
Million Dollars ($3,000,000) (as adjusted pursuant to SECTION 1.04) shall be
payable within ten (10) days after completion of the calculation of the
adjustments in accordance with SECTION 1.04 hereof ("Holdback Consideration");
(iii) an aggregate of One Million Three Hundred Thousand Dollars ($1,300,000)
shall be payable as bonuses to certain employees of the Company pursuant to
SECTION 1.05 hereof ("Retention Bonus Pool"), and (iv) an aggregate of Two
Million Dollars ($2,000,000) shall be payable to the Company Stockholders
eighteen (18) months after the date of Closing, subject to reduction for any
indemnification claims of the Acquiror pursuant to SECTION 9.02, such sum to
accrue interest at a rate of seven percent (7%) per annum from the date of
Closing until the amount due to the Company Stockholders is paid (the
"Indemnification Holdback"). The amount of all debt of the Company as of
Closing, including, without limitation all bank debt, related party debt,
intercompany debt and accrued bonuses shall be deducted from the Cash
Consideration and funded by Acquiror to the Company and paid by the Company
directly at Closing, and in the case of accrued bonuses within ten (10) days
thereafter. Debt of the Company shall not be deemed to include (i) normal trade
payables or accrued expenses not past due in accordance with the usual payment
practices of the Company or (ii) future commitments not then past due under
leases or other contracts of the Company.
SECTION 1.04 HOLDBACK CONSIDERATION; DETERMINATION OF CLOSING ADJUSTMENT
(a) HOLDBACK CONSIDERATION. Within ten (10) business days after the
final determination of the Closing Adjustment, the Accounts Payable Adjustment
and the Tax Adjustment pursuant to Section 1.04(b), Acquiror shall pay to the
Company Stockholders, the Holdback Consideration plus or minus, as the case may
be, the Closing Adjustment, if any, and minus the Accounts Payable Adjustment
and the Tax Adjustment, if any.
(b) DETERMINATION OF ADJUSTMENTS. The "Closing Adjustment" shall equal
the amount by which the cash and cash equivalents of the Company on the Closing
Date is greater or less than zero. The "Accounts Payable Adjustment" shall equal
the sum of Accounts Payable on the Closing Date that have not been paid in
accordance with customary trade terms and are then past due. The "Tax
Adjustment" shall equal the total amount due and owing by Company under the
September 2000 Company Tax Returns, calculated as set forth in Section 2.04. The
Company will use its best efforts to close its books and records for the period
ending on the Closing Date
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within thirty (30) days after the Closing Date and shall deliver to the Acquiror
or, at the request of the Acquiror, to Acquiror and Arthur Andersen LLP, such
books and records as shall be requested by Acquiror or Arthur Andersen LLP to
enable Arthur Andersen LLP to perform an audit of the consolidated financial
statements of the Company as of the Closing Date and to determine the amount of
the Closing Adjustment and the Accounts Payable Adjustment based thereon. Upon
receipt of such books and records, the Acquiror shall use its best efforts to
cause Arthur Andersen LLP to complete an audit of the consolidated financial
statements of the Company and to calculate the amount of the Closing Adjustment
and the Accounts Payable Adjustment within thirty (30) days following receipt of
the books and records of the Company. Acquiror shall deliver to the
Stockholders' Representative a copy of such audited financial statements and the
calculation of the amount of the Closing Adjustment and the Accounts Payable
Adjustment promptly upon receipt of such items from Arthur Andersen LLP. The
Stockholders' Representative shall have the right to review and copy the
computations and workpapers used in connection with the preparation of the
audited financial statements and the computation of the Closing Adjustment and
the Accounts Payable Adjustment. If the Stockholders' Representative disagrees
with the Closing Adjustment or the Accounts Payable Adjustment, the
Stockholders' Representative shall so notify the Acquiror in writing within ten
(10) days after the date of receipt of the audited financial statements and the
computation of the Closing Adjustment and the Accounts Payable Adjustment,
specifying in detail any point of disagreement; PROVIDED, HOWEVER, if the
Stockholders' Representative fails to notify the Acquiror in writing of the
Stockholders' Representative's disagreement within such ten (10) day period, the
determination of the Closing Adjustment and the Accounts Payable Adjustment
shall be final, conclusive and binding on the Parties for purposes of
determining the amount of the Holdback Consideration to be paid Company
Stockholders pursuant to Section 1.04(a) with respect to the Closing Adjustment
and the Accounts Payable Adjustment, but shall not limit Acquiror's other rights
pursuant to this Purchase Agreement or any other document delivered in
connection with this Purchase Agreement. The Acquiror and the Stockholders'
Representative shall negotiate in good faith to resolve any such disagreement
relating to the Closing Adjustment and the Accounts Payable Adjustment. If any
such disagreement cannot be resolved by the Acquiror and the Stockholders'
Representative within fifteen (15) days after a party has received notice from
the other in accordance with the preceding two sentences of the existence of
such disagreement, the Acquiror and the Stockholders' Representative shall
jointly select the Boston office of a nationally recognized independent public
accounting firm (which has not performed any service since January 1, 1996 for
either the Company or the Acquiror or any of their respective Affiliates (the
"Accounting Firm")), to act as an arbitrator to resolve as expeditiously as
possible all points of disagreement with respect to the Closing Adjustment and
the Accounts Payable Adjustment (or, in the event they are unable to agree,
either may request the Boston, Massachusetts office of the American Arbitration
Association to make such selection, which shall be final and binding on the
Parties). All determinations made by the Accounting Firm with respect to the
Closing Adjustment and the Accounts Payable Adjustment shall be final,
conclusive and binding on the Parties hereto for purposes of determining the
amount of the Holdback Consideration to be paid to the Company Stockholders, but
shall not limit Acquiror's other rights pursuant to this Purchase Agreement or
any other document delivered in connection with this Purchase Agreement. The
fees and expenses of the Accounting Firm shall be borne by the non-prevailing
Party. The Holdback Consideration shall be distributed to the respective Parties
in accordance with the
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terms hereof not later than ninety (90) days following the Closing, PROVIDED,
HOWEVER, that any specific amount then in dispute in good faith between the
Parties may remain undistributed until such dispute has been settled or a final
determination has been made, and PROVIDED FURTHER, that the Company Stockholders
shall have filed the September 2000 Company Tax Returns (as defined in Section
2.04 hereof) prior to release of the Holdback Consideration.
(c) APPOINTMENT OF STOCKHOLDERS' REPRESENTATIVE. Each Company
Stockholder hereby appoints Fredrick Yeatts to be the appointed attorney-in-fact
and authorized and empowered to act, for and on behalf of any or all of the
Company Stockholders (with full power of substitution in the premises), in
connection with the provisions of this Section 1.04 as they relate to the
Company and the Company Stockholders generally, and such other matters as are
reasonably necessary for the consummation of the transactions contemplated
hereby including, without limitation, (i) to review all determinations of the
Closing Adjustment and the Accounts Payable Adjustment and, to the extent deemed
appropriate, dispute, question the accuracy of, compromise, settle or otherwise
resolve any and all such determinations, (ii) to compromise on their behalf with
Acquiror any claims asserted thereunder, (iii) to authorize payments to be made
with respect to the Closing Adjustment and the Accounts Payable Adjustment, (iv)
to execute and deliver on behalf of the Company Stockholders any documents or
agreement contemplated by or necessary or desirable in connection with this
Purchase Agreement and (v) to take such further actions including coordinating
and administering post-closing matters related to the rights and obligations of
the Company Stockholders as are authorized in this Purchase Agreement (the above
named representative, as well as any subsequent representative of the Company
Stockholders appointed by the Company Stockholders being referred to herein as
the "Stockholders' Representative"). The Stockholders' Representative shall not
be liable to any Company Stockholder, Acquiror, the Company or their respective
Affiliates or any other Person with respect to any action taken or omitted to be
taken by the Stockholders' Representative in his role as Stockholders'
Representative under or in connection with this Purchase Agreement unless such
action or omission results from or arises out of fraud, gross negligence,
willful misconduct or bad faith on the part of the Stockholders' Representative.
Acquiror shall be entitled to rely on such appointment and treat such
Stockholders' Representative as the duly appointed attorney-in-fact of each
Company Stockholder.
(d) RECORD RETENTION. Acquiror, the Company and the Company
Stockholders agree that following the Closing through the date of the final
determination of the Closing Adjustment and the Accounts Payable Adjustment that
they will not destroy any records pertaining to the final determination of the
Closing Adjustment or the Accounts Payable Adjustment.
SECTION 1.05 RETENTION BONUS POOL
The Retention Bonus Pool shall be retained by Acquiror for the purpose of paying
bonuses to certain employees of the Company. Prior to Closing, Company shall
provide Acquiror with a list of not more than thirty (30) employees of the
Company and the amount of the bonus to be paid to each (which shall not exceed
the Retention Bonus Pool in the aggregate), with such bonuses to be paid (i)
following the expiration of one (1) year from the date of Closing, provided such
individual has been employed by Company or another affiliate of Acquiror for the
full year
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following Closing or (ii) at such earlier time, if such individual's employment
has been terminated by Company or Acquiror for a reason other than good cause
prior to such date, such list to be set forth at Section 1.05 of the Company
Disclosure Letter. The balance of the Retention Bonus Pool not paid to the
employees under this Section 1.05 shall be promptly paid to the Company
Stockholders pro rata in accordance with their respective holdings of Company
Common Stock as set forth on EXHIBIT A.
ARTICLE II
ADDITIONAL UNDERTAKINGS AND COVENANTS
Acquiror, on the one hand, Company and Company Stockholders jointly and
severally, on the other hand, hereby covenant and agree with each other as
follows:
SECTION 2.01 CONDUCT OF BUSINESS OF COMPANY UNTIL CLOSING
The Company hereby covenants and agrees that, from the date of this Purchase
Agreement until the Closing, Company, unless otherwise expressly contemplated by
this Purchase Agreement or consented to in writing by Acquiror, will carry on
its business only in the Ordinary Course of Business, use its best efforts to
preserve intact its business organization and Assets, maintain its rights and
franchises, retain the services of its officers and employees and maintain its
relationships with customers, suppliers, licensors, licensees and others having
business dealings with it, and use its best efforts to keep in full force and
effect liability insurance and bonds comparable in amount and scope of coverage
to that currently maintained. Without limiting the generality of the foregoing,
and except as set forth in SCHEDULE 2.01 of the Company Disclosure Letter,
Company will not:
(a) (i) increase in any manner the compensation or fringe benefits of,
or pay any bonus to, any director, officer or employee; (ii) grant any severance
or termination pay (other than pursuant to the normal severance practices or
existing agreements of the Company in effect on the date of this Purchase
Agreement) to, or enter into any severance agreement with, any director, officer
or employee, or enter into any employment agreement with any director, officer
or employee or otherwise without the prior written consent of Acquiror; (iii)
establish, adopt, enter into or amend any Company Benefit Plan or other
arrangement, except as may be required to comply with applicable Law; (iv) pay
any benefit not provided for under any Company Benefit Plan or other
arrangement; (v) grant any awards under any bonus, incentive, performance or
other compensation plan or arrangement or Company Benefit Plan or other
arrangement (including the grant of stock options, stock appreciation rights,
stock-based or stock-related awards, performance units or restricted stock, or
the removal of existing restrictions in any Company Benefit Plan or other
arrangement or agreement or awards made thereunder), (vi) take any action to
fund or in any other way secure the payment of compensation or benefits under
any agreement or (vii) promote or fire any director, officer or employee;
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(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock, except as may
be necessary to cover required tax payments or estimated tax payments in respect
of Company earnings;
(c) (i) redeem, purchase or otherwise acquire any shares of capital
stock of the Company or any securities or obligations convertible into or
exchangeable for any shares of capital stock of the Company, or any options,
warrants or conversion or other rights to acquire any shares of capital stock of
the Company or any such securities or obligations, or any other securities
thereof; (ii) effect any reorganization, recapitalization, merger or share
exchange; or (iii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock;
(d) issue, deliver, award, grant or sell, or authorize the issuance,
delivery, award, grant or sale (including the grant of any limitations in voting
rights or other Encumbrances) of, any shares of any class of its capital stock
(including shares held in treasury but excluding shares issuable upon the
exercise of options outstanding on the date hereof in accordance with their
terms as of the date hereof), any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options to acquire,
any such shares, or amend or otherwise modify the terms of any such rights,
warrants or options the effect of which shall be to make such terms more
favorable to the holders thereof;
(e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the Assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any Assets of any other person (other than the purchase of assets from
suppliers or vendors in the ordinary course of business);
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise
subject to any Encumbrance or dispose of, or agree to sell, lease, exchange,
mortgage, pledge, transfer or otherwise subject to any Encumbrance or dispose
of, any of its Assets, except for sales, dispositions or transfers in the
Ordinary Course of Business;
(g) propose or adopt any amendments to its articles of incorporation,
bylaws or other comparable charter or organizational documents;
(h) make or rescind any express or deemed election relating to Taxes,
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes which would
reasonably be expected to result in a Company Material Adverse Effect, or change
any of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of the federal income tax
returns;
(i) make or agree to make any new capital expenditures which are not
included in the Company's 2000 capital budget, a copy of which was furnished to
Acquiror, to the extent that such new capital expenditures exceed in the
aggregate $100,000;
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(j) (i) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company, guarantee any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
agreement having the economic effect of any of the foregoing, except for
borrowings incurred in the ordinary course of business, or (ii) make any loans,
advances or capital contributions to, or investments in, any other person other
than travel and payroll advances made to employees in the ordinary course of
business;
(k) pay, discharge, settle or satisfy any claims, liabilities or
obligations (whether absolute or contingent, matured or unmatured, known or
unknown), other than the payments, discharges or satisfactions, in the Ordinary
Course of Business which are materially in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated by, the Company
Financial Statement or waive any material benefits of, or agree to modify in any
material respect, any confidentiality, standstill or similar agreements to which
the Company is a party;
(l) waive, release or assign any rights or claims, or modify, amend or
terminate any agreement to which the Company is a party;
(m) make any change in any method of accounting or accounting practice
or policy other than those required by generally accepted accounting principles
or a Government Entity;
(n) take any action or fail to take any action that would have a
Company Material Adverse Effect prior to or after the Closing Date or a material
adverse effect after the Closing Date, or that would adversely affect the
ability of the Company prior to the Closing Date, or Acquiror or any of its
Subsidiaries after the Closing Date, to obtain consents of third parties or
approvals of Government Entities required to consummate the transactions
contemplated in this Agreement; or
(o) authorize, or commit or agree to do any of the foregoing.
SECTION 2.02 REASONABLE BEST EFFORTS TO SATISFY CONDITIONS
The Parties shall use their respective reasonable best efforts to cause all
conditions to the obligations of the Parties set forth in Article VI of this
Purchase Agreement to be satisfied on or before the Closing Date.
SECTION 2.03 OTHER ACTIONS
The Parties shall not, and shall not permit any of their respective Affiliates
to, take any action that would, or that could reasonably be expected to, result
in (a) any of the representations and warranties of such Party set forth in this
Purchase Agreement becoming untrue, or (b) any of the conditions to the Closing
set forth in Article VI of this Purchase Agreement not being satisfied.
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SECTION 2.04 CERTAIN TAX MATTERS
From the date hereof until the Closing Date, Company (a) will prepare and timely
file with the relevant Taxing authority all Company Tax Returns required to be
filed during such period ("Post-Signing Returns"), which Post-Signing Returns
shall be accurate in all material respects, or permitted extensions with respect
thereto, (b) will timely pay all Taxes due and payable with respect to such
Post-Signing Returns, (c) will pay or otherwise make adequate provision for all
Taxes payable by Company for which no Post-Signing Return is due prior to the
Closing Date, and (d) will promptly notify Acquiror of any action, suit,
proceeding, claim or audit pending against or with respect to Company in respect
of any Taxes.
The final S Corporation federal and state Tax Returns for the period ending as
of the Closing Date shall be filed with respect to the Company on or before
September 15, 2000, including (a) a federal Tax Return, (b) a Massachussets Tax
Return and (c) any and all other state tax returns required to be filed by
Company (the "September 2000 Company Tax Returns"). Acquiror shall be entitled
to withhold from the Holdback Consideration an amount sufficient to pay the Tax
due under the September 2000 Company Tax Returns and use the same as security
for the Company Stockholder's payment of such tax due under the September 2000
Company Tax Returns, less any amount payable by Acquiror to the Company
Stockholders under the following paragraph.
The Company Stockholders and their certified public accountant shall prepare the
September 2000 Company Tax Returns prior to September 1, 2000, which shall be
reviewed and approved by Acquiror and its certified public accountants prior to
filing. The September 2000 Company Tax Returns shall be filed no later than
September 15, 2000. Upon filing of the September 2000 Company Tax Returns,
Acquiror shall pay to the Company Stockholders an amount equal to the lesser of
(i) $250,000, if the total federal and state taxes due (a) pursuant to Section
1374, and (b) on the gain from the sale of assets related to the Section
338(h)(10) election under the September 2000 Company Tax Returns, is equal to or
exceeds $500,000, or (ii) one half the total tax due under the September 2000
Company Tax Returns, if the total federal and state taxes due (a) pursuant to
Section 1374, and (b) on the gain from the sale of assets related to the Section
338(h)(10) election thereunder, is less than $500,000. Upon receipt of evidence
reasonably satisfactory to Acquiror that all Taxes due with respect to the
September 2000 Company Tax Returns have been paid in full, Acquiror shall
release to the Company Stockholders the portion of the Holdback Consideration
withheld pursuant to the immediately preceding paragraph.
In the event that any Taxing authority asserts a Tax deficiency against the
Company for any Taxes due with respect to the September 2000 Company Tax Returns
prior to the release to the Company Stockholders of the portion of the Holdback
Consideration withheld pursuant to the immediately preceding paragraph, the
Company may use such withheld portion to pay such asserted deficiency as the
Company and Acquiror may elect, and the Company and Acquiror shall have no
obligation to challenge such deficiency. The Company and the Acquiror shall not
take any action which would compromise the ability of the Company Stockholders
to challenge such claimed deficiency following payment thereof, and expressly
acknowledge the Company Stockholders' right to challenge any claimed deficiency
on behalf of the Company following payment thereof. Any amounts reimbursed by
any Taxing authorities with respect to such deficiency shall be paid to the
Company Stockholders.
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SECTION 2.05 ACCESS AND INFORMATION
For so long as this Purchase Agreement is in effect, and subject to applicable
Laws, Company shall (a) afford to Acquiror and its officers, employees,
accountants, consultants, legal counsel and other representatives reasonable
access during normal business hours, subject to reasonable advance notice, to
all of its properties, Agreements, books, records and personnel and (b) furnish
promptly to Acquiror (i) a copy of each Agreement, document, certificate or
other instrument filed with, or received from any Governmental Entity and (ii)
all other information concerning its businesses, operations, prospects,
conditions (financial or otherwise), Assets, liabilities and personnel as
Acquiror may reasonably request.
SECTION 2.06 NOTIFICATION FILING REQUIRED UNDER HSR ACT
If required, Acquiror, the Company Stockholders and Company shall make good
faith efforts to complete and file without delay, and in any event within thirty
(30) days after the date of this Purchase Agreement, any notification filing
required under the HSR Act with respect to the transactions contemplated by this
Purchase Agreement. Acquiror and Company shall in good faith take (or fully
cooperate in the taking of) all actions, and provide any additional information
that may be, required or reasonably requested in order to comply with the
requirements of the HSR Act. If a notification filing is required under the HSR
Act, Acquiror, on the one hand, and the Company Stockholders, on the other hand,
shall each pay one-half of the filings fees in connection therewith.
SECTION 2.07 ACCESS TO COMPANY INFORMATION
From the date hereof and through the Closing Date, Company shall, and shall
cause its accountants, counsel, investment bankers, financial advisors,
consultants and other representatives, to provide Acquiror and Acquiror's
accountants, counsel, investment bankers, financial advisors, consultants and
other representatives, upon reasonable notice, access to, and make available,
all books, contracts, records, reports, properties and commitments of Company,
including, without limitation, Company's tax returns and financial statements,
for Acquiror's use in connection with Acquiror's financing.
SECTION 2.08 EXON-FLORIO NOTICE; MITIGATION OF FOCI
(a) Acquiror promptly shall use reasonable, best efforts to obtain
confirmation from the staff of the Committee on Foreign Investment in the United
States ("CFIUS") that the transactions contemplated hereunder do not fall within
the scope of transactions for review under the "Exon-Florio" Amendment to the
Defense Production Act, and, if such confirmation is not obtained in a timely
manner, Acquiror shall use its reasonable, best efforts to prepare and file with
CFIUS a notice under such Amendment with respect to the transactions
contemplated hereunder (the "Exon-Florio Notice") by June 15, 2000.
(b) If requested by any Governmental Entity in connection with its
consideration of the transactions contemplated by this Purchase Agreement,
Acquiror shall agree to, and shall
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cause to be executed and delivered, reasonable Agreements or restrictions
designed to mitigate Foreign Ownership, Control, or Influence ("FOCI") on
Acquiror.
(c) Acquiror and Company shall use their respective reasonable, best
efforts, to obtain as soon as possible, and in any event prior to June 15, 2000,
confirmation from the "Cognizant Agencies" (as such term is defined herein) that
they will not recommend that the Company's security clearances be revoked,
suspended or downgraded as a result of the transactions contemplated hereunder.
(d) For purposes of this Purchase Agreement, the "Cognizant Agencies"
are those agencies or offices set forth on Section 2.08 of the Disclosure
Letter.
SECTION 2.09 APPROPRIATE ACTION; CONSENTS; FILINGS
(a) Upon the terms and subject to the conditions set forth in this
Purchase Agreement, the Parties shall use their reasonable best efforts to take,
or cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the transactions contemplated by this Purchase
Agreement as promptly as practicable, including without limitation (i) executing
and delivering any additional instruments necessary, proper or advisable to
consummate the transactions contemplated by, and to carry out fully the purposes
of, this Purchase Agreement, (ii) obtaining from any Governmental Entities any
material Licenses required to be obtained or made by Acquiror, or any of its
Subsidiaries, or Company, in connection with the authorization, execution and
delivery of this Purchase Agreement and the consummation of the transactions
contemplated herein, including, without limitation, the transactions
contemplated hereunder, and (iii) making all necessary filings, and thereafter
making any other required submissions, with respect to this Purchase Agreement
and the transactions contemplated hereunder required under (A) the HSR Act, (B)
the Exon-Florio Amendment to the Defense Production Act (if this transaction is
determined by Acquiror to be subject thereto) and the FOCI regulations of the
National Industrial Security Program Operating Manual ("NISPOM"), and (C) any
other applicable Law; PROVIDED that Acquiror and Company shall cooperate with
each other in connection with the making of all such filings, including
providing copies of all such documents to the non-filing Party and its advisors
prior to filing and discussing all reasonable additions, deletions or changes
suggested in connection therewith. Company and Acquiror shall furnish to each
other all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable Law in connection with
the transactions contemplated by this Purchase Agreement.
(b) (i) Except as the Parties may otherwise agree, Company, each
Company Stockholder and Acquiror shall give (and, in the case of Acquiror, shall
cause its Subsidiaries to give) any notices to third parties, and use (and, in
the case of Acquiror, shall cause its Subsidiaries to use) their reasonable best
efforts to obtain any third-party consents, approvals or waivers (A) necessary,
proper or advisable to consummate the transactions contemplated in this Purchase
Agreement, (B) disclosed or required to be disclosed in the Company Disclosure
Letter or the Acquiror Disclosure Letter, as the case may be, or (C) required to
prevent a Company Material Adverse Effect or an Acquiror Material Adverse
Effect.
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(ii) In the event that any of Company, Company Stockholder or
Acquiror shall fail to obtain any third-party consent, approval or waiver
described in Section 2.09(b)(i) of this Purchase Agreement, such Party shall use
its reasonable best efforts, and shall take any such actions reasonably
requested by the other Parties, to minimize any adverse effect upon Company and
Acquiror or its Subsidiaries and their respective businesses resulting, or which
could reasonably be expected to result after the Closing Date, from the failure
to obtain such consent, approval or waiver.
(c) From the date of this Purchase Agreement until the Closing Date,
Company, each Company Stockholder and Acquiror shall promptly notify each other
in writing of any pending or, to the knowledge of Company or Acquiror or any one
of its Subsidiaries, threatened action, proceeding or investigation by any
Governmental Entity or any other Person (i) challenging or seeking damages in
connection with the transactions contemplated hereunder or (ii) seeking to
restrain or prohibit the consummation of the transactions contemplated hereunder
or otherwise limit the right of Acquiror or its Subsidiaries to own or operate
all or any portion of the businesses or Assets of Company. The Parties shall
cooperate with each other in defending any such action, proceeding or
investigation, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed.
SECTION 2.10 DISCLOSURE
Prior to the Closing Date, each Party shall notify the other Parties by
written update to its respective Disclosure Letter of (i) any representation or
warranty made by it in connection with this Purchase Agreement becoming untrue
or inaccurate, (ii) the occurrence or non-occurrence of any event, the
occurrence or non-occurrence of which would be likely to cause any condition to
the obligations of any Party to effect the transactions contemplated hereunder
and the other transactions contemplated by this Purchase Agreement not to be
satisfied or (iii) the failure of any Party to comply with or satisfy any
covenant, condition or Agreement to be complied with or satisfied by it pursuant
to this Purchase Agreement which would be likely to result in any condition to
the obligations of any Party to effect the transactions contemplated hereunder
and the other transactions contemplated by this Purchase Agreement not to be
satisfied; PROVIDED, HOWEVER, the delivery of any notice pursuant to this
Section 2.10 shall not cure any breach of any representation or warranty
requiring disclosure of such matter as of the date of this Purchase Agreement or
otherwise limit or affect the rights and remedies available hereunder to the
Party receiving such notice.
SECTION 2.11 PUBLIC ANNOUNCEMENTS
Acquiror, Company and each Company Stockholder shall obtain the consent of the
other parties before issuing or making, and shall give each other the
opportunity to review and comment upon, any press release or other public
statement with respect to the transactions contemplated in this Purchase
Agreement, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by Law or any
applicable listing agreements.
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SECTION 2.12 TRANSACTION EXPENSES
Except as set forth in Section 2.06 of this Purchase Agreement (relating to the
payment of filing fees in connection with any notification filings under the HSR
Act), each Party to this Purchase Agreement shall bear its own expenses in
connection herewith, including, without limitation, the fees of each Party's
respective legal counsel, financial advisors, accountants, brokers, finders or
investment bankers. In the event any such expenses of Company are paid by
Acquiror after the Closing Date, Acquiror shall be entitled to offset any such
expenses against the amounts due under SECTION 1.03(iv) hereof in the same
manner as set forth in Article IX of this Purchase Agreement.
SECTION 2.13 SECTION 338(h)(10) ELECTION
At Acquiror's option, Company and the Stockholders will join with Acquiror in
making an election under Section 338(h)(10) of the Code (and any corresponding
elections under state, local, or foreign tax law) (collectively a "Section
338(h)(10) Election") with respect to the purchase and sale of Company Common
Stock hereunder. The Section 338(h)(10) Election will be prepared prior to the
Closing Date, including all allocations of the purchase price and liabilities,
and will be executed immediately following the Closing under this Purchase
Agreement. Subject only to the provisions of this Section 2.13, the Company
Stockholders will pay when due any federal and state corporate and individual
taxes attributable to the making of the Section 338(h)(10) Election and will
indemnify the Acquiror and Company against any adverse consequences arising out
of any failure to timely pay such tax. The Company Stockholders' obligations
pursuant to this Section 2.13 are expressly conditioned upon a reasonable
allocation of the Purchase Price and liabilities of the Company to the assets of
the Company, including its goodwill. The Company Stockholders shall have the
right to review and object to any unreasonable allocations made by the Acquiror
or its representatives. By way of expansion, and not in limitation of the
foregoing sentence, the Parties agree that any value allocated to ongoing
contracts of the Company with its customers shall be treated as goodwill, and
that any additional tax liability to the Company or the Company Stockholders
resulting from any different treatment thereof in connection with the Section
338(h)(10) Election shall be the responsibility of the Acquiror. Any dispute
between the Parties concerning such allocation shall be settled in a manner
consistent with that set forth in Section 1.04(b) with respect to the Closing
Adjustment and the Accounts Payable Adjustment.
SECTION 2.14 WAIVER OF RIGHT OF FIRST REFUSAL
Company hereby waives, with respect to any transfer of the Company Common Stock,
including without limitation the transfer contemplated by this Agreement, any
right possessed by the Company to purchase such Company Common Stock.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE COMPANY STOCKHOLDERS
Except as specifically set forth in the Disclosure Letter delivered by Company
to Acquiror prior to the execution and delivery of this Purchase Agreement (the
"Company Disclosure Letter"), Company and each of the Company Stockholders
jointly and severally hereby represent, warrant to and agrees with Acquiror as
follows, in each case as of the date of this Purchase Agreement and as of the
Closing Date:
SECTION 3.01 ORGANIZATION AND QUALIFICATION
Company is a corporation duly organized, validly existing and in good standing
under Massachusetts law, and has the full and unrestricted corporate power and
authority to own, operate and lease its Assets, to carry on its business as
currently conducted, to execute and deliver this Purchase Agreement and to carry
out the transactions contemplated hereby. Company is duly qualified to conduct
business as a foreign corporation and is in good standing in the states,
countries and territories listed in the Company Disclosure Letter and in each
jurisdiction where the nature of its business or the ownership, operation or
leasing of its Assets makes such qualification necessary, except where failure
to be so qualified would not have a Material Adverse Effect.
SECTION 3.02 SUBSIDIARIES
There are not now, nor have there ever been, any Subsidiaries of the Company.
SECTION 3.03 CERTIFICATE OF INCORPORATION AND BYLAWS
Company has furnished to Acquiror a true and complete copy of the certificate or
articles of organization of Company, as currently in effect on the date of this
Purchase Agreement, and a true and correct copy of Company's bylaws, as
currently in effect on the date of this Purchase Agreement, certified by the
corporate secretary of the Company. The Company is not in violation of any of
the provisions of its articles of organization or bylaws.
SECTION 3.04 CAPITALIZATION
The authorized capital stock of Company consists of 200,000 shares of common
stock, $0.10 par value per share, of which 100 shares of common stock (the
"Company Common Stock") are issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable. Section 3.04 of the
Company Disclosure Letter sets forth the names and addresses of all holders of
record of Company Common Stock and the number and class of shares held by each
such stockholder. No other shares of Company Common Stock have been reserved for
any purpose. There are no outstanding securities convertible into or
exchangeable for Company Common Stock, or any other securities of any Company,
and no outstanding options, rights (preemptive or otherwise), or warrants to
purchase or to subscribe for any shares of such stock or other securities of
Company. There are no outstanding Agreements affecting or
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relating to the voting, issuance, purchase, redemption, registration, repurchase
or transfer of Company Common Stock, or any other securities of Company, except
as contemplated hereunder. Each of the outstanding shares of Company Common
Stock was issued in compliance with all applicable federal and state Laws
concerning the issuance of securities. There are no obligations, contingent or
otherwise, of Company to provide funds to, make any investment (in the form of a
loan, capital contribution or otherwise) in, or provide any guarantee with
respect to, any Person other than Company. There are no Agreements pursuant to
which any Person (other than Company) is or may be entitled to receive any of
the revenues or earnings, or any payment based thereon or calculated in
accordance therewith, of Company. The Company has waived any right to purchase
which it has with respect to the sale of Company Common Stock.
SECTION 3.05 AUTHORITY; BINDING OBLIGATION
The execution and delivery by Company of this Purchase Agreement, the execution
and delivery by Company of all other Agreements, documents, certificates or
other instruments contemplated hereby, and the consummation by Company of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Company are necessary to authorize this Purchase Agreement and the other
Agreements, documents, certificates or other instruments contemplated hereby, or
to consummate the transactions contemplated hereby and thereby. This Purchase
Agreement has been duly executed and delivered by Company and constitutes a
legal, valid and binding obligation of Company, enforceable in accordance with
its terms, except as such enforceability may be subject to the effects of any
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar Laws affecting creditors' rights generally and subject to
the effects of general equitable principles (whether considered in a proceeding
in equity or at law).
SECTION 3.06 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) The execution, delivery and performance by Company of this Purchase
Agreement and all other Agreements, documents, certificates or other instruments
contemplated hereby, the fulfillment of and compliance with the respective terms
and provisions hereof and thereof, and the consummation by Company of the
transactions contemplated hereby and thereby, do not and will not: (i) conflict
with, or violate any provision of, the articles of organization or bylaws of
Company; (ii) subject to obtaining the consents, approvals, authorizations and
permits of, and making filings with or notifications to, the applicable
Governmental Entity pursuant to the applicable requirements, if any, of the HSR
Act, conflict with or violate any Law applicable to Company, or any of its
Assets; (iii) conflict with, result in any breach of, or constitute a default
(or an event that with notice or lapse of time or both would become a default)
or result in the termination or acceleration, or create in another Person, a put
right, purchase obligation or similar right under any Agreement to which Company
is a party or by which Company, or any of its Assets, may be bound; or (iv)
result in or require the creation or imposition of, or result in the
acceleration of, any indebtedness or any Encumbrance of any nature upon, or with
respect to, Company or any of the Assets now owned or hereafter acquired by
Company; except for any such conflict or violation described in clause (ii)
above, any such conflict, breach or default
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described in clause (iii) above, or any such creation, imposition or
acceleration described in clause (iv) above that would not have a Company
Material Adverse Effect.
(b) The execution, delivery and performance by Company of this Purchase
Agreement and all other Agreements, documents, certificates or other instruments
contemplated hereby, the fulfillment of and compliance with the respective terms
and provisions hereof and thereof, and the consummation by Company of the
transactions contemplated hereby and thereby, do not and will not: (i) require
any consent, approval, authorization or permit of, or filing with or
notification to, any Person not party to this Purchase Agreement, except (A)
pursuant to the applicable requirements, if any, of the HSR Act and Laws of
other Governmental Entities, and (B) where the failure to obtain any consent,
approval, authorization or permit or to make any filing or notification
otherwise required to be disclosed hereunder would not have a Company Material
Adverse Effect; or (ii) result in or give rise to any penalty, forfeiture,
Agreement termination, right of termination, amendment or cancellation, or
restriction on business operations of Company that would have a Company Material
Adverse Effect.
(c) All returns, reports, statements and other documents required to be
filed by the Company with any Governmental Entity have been filed in a timely
manner and complied with and are true, correct and complete in all material
respects (and any related fees required to be paid have been paid in full). All
material records of every type and nature relating to the business, operations
or Assets of the Company have been maintained in all material respects in
accordance with good business practices and the rules of any Governmental Entity
and are maintained at the Company.
(d) No Governmental Entity or any other Person has notified Company
that such Governmental Entity or other Person intends to object to the
transactions contemplated hereunder which shall include for this purpose any
objection to the operations of the business of Company as part of Acquiror. The
Company is not aware of any fact or circumstance related to it that would
reasonably be expected to (i) cause the filing of any objection to any
application for any Governmental consent required hereunder, (ii) lead to any
delay in processing such application or (iii) require any waiver of any
Governmental rule, policy or other applicable law.
SECTION 3.07 INTELLECTUAL PROPERTY
(a) Section 3.07 of the Company Disclosure Letter identifies each item
of Intellectual Property (i) owned by Company, (ii) owned by any third party and
used by Company pursuant to license, sublicense or other Agreement or (iii)
otherwise used by Company and not otherwise generally used by Persons similarly
situated (including, in each case, specification of whether each such item is
owned, licensed or used by Company). In addition, Company has not licensed (as
licensor), sublicensed (as sublicensor) or entered into any other agreement with
respect to the use of any Intellectual Property except: (A) in the course of
distributing software products of Company; or (B) to the U.S. Government
pursuant to a government contract or to a subcontract under a government
contract.
(b) The Company either owns or has adequate rights to use all of the
Intellectual Property that is necessary to, and currently used for, its business
as now conducted or currently
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proposed to be conducted, and such Intellectual Property is free and clear of
Encumbrances. The Company has previously furnished to Acquiror evidence of
either ownership by the Company of or license rights to use its Intellectual
Property.
(c) There are no pending or, to Company's knowledge, threatened claims
against Company alleging that the conduct of its business infringes any
Intellectual Property rights of others that would have a Company Material
Adverse Effect. The Intellectual Property of Company is not subject to any
mortgage, lien, pledge, encumbrance, security interest, deed of trust, option,
order, decree or judgment. The business of Company as now conducted or proposed
to be conducted does not infringe any third-party Intellectual Property rights.
(d) To the Company's knowledge, no third party is infringing upon any
of the Company's Intellectual Property, and the Company has not notified any
third party that it believes such third party is interfering with, infringing,
or misappropriating any of the Company's Intellectual Property or engaging in
any act of unfair competition. The Company has the right to bring an action for
the infringement of all of its Intellectual Property that is owned by the
Company.
(e) Company has taken all steps that are required to protect Company's
rights in confidential information and trade secrets of Company or provided by
any other Person to Company. Without limiting the foregoing, Company has and
enforces a policy requiring each employee, director, consultant and contractor
to execute a confidentiality and non-disclosure agreement substantially in the
form previously provided to Acquiror, and each present and former employee,
director, consultant and contractor has executed such an agreement.
(f) The operation of the business of the Company as it currently is
conducted or as currently proposed to be conducted by the Company does not and
will not and will not when conducted by the Acquiror or the Company in
substantially the same manner following the Closing, infringe or misappropriate
any Intellectual Property right of any person, violate any right of any person
(including any right to privacy or publicity), or constitute unfair competition
or trade practices under the laws of any jurisdiction.
(g) Neither this Purchase Agreement nor the transactions contemplated
by this Purchase Agreement, will result in (i) either Acquiror or the Company
granting to any third party any right to or with respect to any Intellectual
Property right owned by, or licensed to, either of them, (ii) either Acquiror's
or the Company's being bound by, or subject to, any non-compete or other
restriction on the operation or scope of their respective businesses, or (iii)
either Acquiror's or the Company's being obligated to pay any royalties or other
amounts to any third party in excess of those payable by Acquiror's or the
Company's, respectively, prior to the Closing.
SECTION 3.08 FINANCIAL STATEMENTS AND CONDITION
(a) Company has prepared the reviewed balance sheets of Company as of
the end of the fiscal year ending in each of 1997, 1998, and 1999 and for the
three month period ending March 31, 2000 (collectively, the "Company Reviewed
Balance Sheet") and the reviewed statements of income, Seller's equity and
changes in financial position for each of such fiscal
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years (the Company Reviewed Balance Sheet and such reviewed statements of
income, Company's equity and changes in financial position are hereinafter
referred to collectively as the "Company Financial Statement"), in each case
reviewed by Spillane Chandonnet, the Company's independent public accountants. A
true and complete copy of the Company Financial Statement has been delivered to
Acquiror and is attached as an exhibit to, and constitutes an integral part of,
the Company Disclosure Letter.
(b) The Company Financial Statement, including, without limitation, the
notes thereto, (i) has been prepared in accordance with the books and records of
Company and (ii) presents fairly the consolidated financial position of Company
and its results of operations and cash flows in accordance with GAAP applied on
a basis consistent with prior accounting periods.
(c) Company does not expect any material year-end review adjustments
for the current fiscal year ending December 31, 2000. To the knowledge of
Company, there are no anticipated material charges or write-offs of a
non-recurring nature for the fiscal year ending December 31, 2000.
SECTION 3.09 ABSENCE OF CERTAIN DEVELOPMENTS
Since March 31, 2000:
(a) the business of Company has been conducted in all material respects
only in the Ordinary Course of Business;
(b) Company has not become liable in respect of any guarantee or has
incurred or otherwise become liable in respect of any debt, except for
borrowings, letters of credit and bankers' acceptances in the Ordinary Course of
Business under credit facilities in existence on December 31, 1999;
(c) Company has not mortgaged, pledged or subjected to any lien any of
its property, business or assets, except for purchase money or similar security
interests granted in connection with the purchase of equipment or supplies in
the Ordinary Course of Business in an amount not exceeding $10,000 in the
aggregate;
(d) Company has not made any declaration, setting aside or payment of
any dividend or other distribution with respect to, or repurchase of, any of its
capital stock or other equity interests;
(e) Company has not (i) acquired or leased from any other Person any
material assets, or sold or leased to any other Person or otherwise disposed of
any material assets (in each case except for assets acquired or sold in the
Ordinary Course of Business in connection with goods and services provided to
customers); (ii) entered into any contractual obligation relating to (A) the
purchase or sale of any capital stock, partnership interest or other equity
interest in any Person, (B) the purchase of assets constituting a business or
(C) any merger, consolidation or other business combination; (iii) entered into
or amended any lease of real property or material
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personal property (whether as lessor or lessee); (iv) canceled or compromised
any debt or claim other than accounts receivable in the Ordinary Course of
Business; (v) sold, transferred, licensed or otherwise disposed of any material
intangible assets other than in the Ordinary Course of Business; (vi) waived or
released any right of substantial value; (vii) instituted, settled or agreed to
settle any material action; or (viii) entered into or consummated any
transaction with any Affiliate;
(f) there has been no loss, destruction or damage to any material item
of property of Company, whether or not insured, which has had or could
reasonably be expected to have a Company Material Adverse Effect;
(g) other than in the Ordinary Course of Business and consistent with
past practices, Company has not made any changes in the rate of compensation
payable or paid, or agreed or orally promised to pay, conditionally or
otherwise, any extra compensation, or severance or vacation pay, to any
director, officer, employee, consultant or agent of Company;
(h) there has been no material labor trouble (including any work
slowdown, stoppage or strike) involving Company or any material change in any of
its personnel or the terms and conditions of the employment of such personnel;
(i) Company has not made any change in (x) its methods of accounting or
accounting practices, except as required by GAAP, or (y) its pricing policies or
payment or credit practices or failed to pay any creditor any amount owed to
such creditor when due or granted any extensions or credit other than in the
Ordinary Course of Business;
(j) Company has not terminated or closed any material facility,
business or operation;
(k) Company has not made any loan, advance or capital contributions to,
or any other investment in, any Person;
(l) Company has not adopted or increased any benefits under any Plan in
any material manner;
(m) Company has not written up or written down any of its material
assets;
(n) Company has not terminated or amended, or failed in any material
respect to perform obligations or suffered the occurrence of any default under
any material contractual obligation; and
(o) Company has not entered into any contractual obligation to do any
of the things referred to elsewhere in this Section 3.09.
SECTION 3.10 ABSENCE OF UNDISCLOSED LIABILITIES
To the knowledge of Company, there are no material liabilities or obligations
(whether absolute or contingent, matured or unmatured, known or unknown) of
Company, including but not limited to liabilities for Taxes and that are not
reflected, or reserved against, in the Company Financial
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Statement, except for those that may have been incurred after March 31, 2000 in
the Ordinary Course of Business or that are not material in amount either
individually or collectively. Since March 31, 2000, Company has not incurred any
material liabilities or obligations (whether absolute or contingent, matured or
unmatured, known or unknown) other than in the Ordinary Course of Business.
Additionally, all bonuses and incentive compensation (including, without
limitation, all compensation-related expenses) have been accrued on the Company
Financial Statement based on GAAP and consistent with past practices.
SECTION 3.11 LITIGATION; DISPUTES
(a) Company has not received notice of, and there is not pending, or,
to the knowledge of Company, threatened, any action, suit, claim, arbitration,
proceeding or investigation against, affecting or involving Company or its
businesses or Assets, or the transactions contemplated by this Purchase
Agreement, at law or in equity, or before or by any domestic or foreign court,
arbitrator or Governmental Entity that, alone or in the aggregate, if decided
adversely to Company would have a Company Material Adverse Effect. Company is
not (i) operating under or subject to any order, award, writ, injunction, decree
or judgment of any court, arbitrator or Governmental Entity or (ii) in default
with respect to any order, award, writ, injunction, decree or judgment of any
court, arbitrator or Governmental Entity.
(b) Company has complied and is in compliance in all material respects
with all laws, ordinances, regulations, awards, orders, judgments, decrees and
injunctions applicable to Company and its businesses or Assets, including all
federal, state and local laws, ordinances, regulations and orders pertaining to
employment or labor, safety, health, zoning and other matters, except where such
failure to comply would not have a Company Material Adverse Effect. Company has
obtained and holds all permits, licenses and approvals (none of which has been
materially modified or rescinded and all of which are in full force and effect)
from all government authorities necessary in order to own, use and maintain its
Assets and to conduct its business as presently conducted, except where such
failure to obtain and hold such permits, licenses and approvals would not have a
Company Material Adverse Effect.
SECTION 3.12 REAL PROPERTY LEASES
Section 3.12 of the Company Disclosure Letter lists each real property lease
under which Company is the lessee or lessor. Company is the owner and holder of
the leasehold estates purported to be granted to it by the leases listed in
Section 3.12 of the Company Disclosure Letter. Each such lease is in full force
and effect and, to the knowledge of Company, constitutes a legal, valid and
binding obligation of, and is legally enforceable in all material respects
against, the respective parties thereto. Company has in all material respects
performed all material obligations thereunder required to be performed by it to
date. To the knowledge of Company, no party is in default in any material
respect under any of the foregoing, and there has not occurred any event which
(whether with or without notice, lapse of time or the happening or occurrence of
any other event) would constitute such a material default. Company does not own
or hold interests in any Real Property.
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SECTION 3.13 OTHER AGREEMENTS; NO DEFAULT
Sections 3.12 and 3.13 of the Company Disclosure Letter list each Agreement to
which Company is a party or by which Company, or any of its Assets, is bound,
and which (i) involves expenditures or receipts by Company (other than
contracts, commitments or Agreements which do not require payments or yield
receipts of more than $25,000 in any twelve (12) month period or more than
$50,000 in the aggregate); or (ii) contain covenants that limit the freedom of
Company to engage in a line of business or to compete with any third party
(Agreements listed pursuant to clauses (i) and (ii) above, collectively the
"Company Contracts"). Each Company Contract is in full force and effect,
constitutes a valid and binding obligation of and is legally enforceable in
accordance with its terms against Company and, to the knowledge of Company, the
Company Contracts are valid, binding and enforceable obligations of the other
parties thereto, except as such enforceability may be subject to the effects of
any applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar Laws affecting creditors' rights generally or subject to
the effects of general equitable principles (whether considered in a proceeding
in equity or at law). Company has materially complied with all of the material
provisions of such Company Contracts and is not in default thereunder, and there
has not occurred any event which (whether with or without notice, lapse of time,
or the happening or occurrence of any other event) would constitute such a
default, and the execution of this Purchase Agreement by Company and its
performance hereunder will not cause, or result in, a breach or default under
any Company Contract. There has not been (A) any failure by Company or, to the
knowledge of Company, any other party to any such Company Contract to comply
with all material provisions thereof, (B) any default by Company or, to the
knowledge of Company, any other party thereunder, or (C) to the knowledge of
Company (X) any threatened cancellation thereof or (Y) any outstanding dispute
thereunder. Company is not a guarantor or otherwise liable for any liability or
obligation (including indebtedness) of any other Person.
SECTION 3.14 LABOR RELATIONS
There are no collective bargaining or other labor union Agreements to which
Company is a party. There are, and for the past two (2) years have been, no
strikes, work stoppages, union organization efforts or lawsuits (other than
grievance proceedings) pending or, to the knowledge of Company, threatened or
reasonably anticipated between Company and (a) any current or former employees
of Company or (b) any union or other collective bargaining unit representing
such employees. Company has complied and is in compliance with all Laws relating
to employment or the workplace, including, without limitation, Laws relating to
wages, hours, collective bargaining, safety and health, work authorization,
equal employment opportunity, immigration, withholding, unemployment
compensation, worker's compensation, employee privacy and right to know, except
where the failure so to comply would not have a Company Material Adverse Effect.
SECTION 3.15 PENSION AND BENEFIT PLANS
(a) Company has delivered to Acquiror prior to the execution of this
Purchase Agreement true and complete copies (or written descriptions, where no
written plan exists) (and,
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where applicable, the most recent actuarial, valuation or annual (Form 5500 with
attachments) reports with respect thereto) of all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plans, employment or change in
control agreements, medical, vision, dental or other health plans, life
insurance plans and other employee benefit plans or fringe benefit plans,
programs, arrangements or Agreements, including, without limitation, all Company
Benefit Plans. No Company Benefit Plan is or has been a multiemployer plan
within the meaning of Section 4001(a)(3) of ERISA or could subject Company to
liability under Sections 4063 or 4064 of ERISA. Company has set forth in the
Company Disclosure Letter (i) a list of all of the Company Benefit Plans, (ii) a
list of the Company Benefit Plans that are Company Pension Plans, (iii) a list
of the Company Benefit Plans that are Company Stock Plans, and (iv) a list of
the number of shares covered by, exercise prices for, and holders of, all stock
options granted and available for grant under the Company Stock Plans.
(b) From their inception, all Company Benefit Plans have been and are
in material compliance (in form and in operation) with the applicable terms of
ERISA and the Code and any other applicable Laws, including the terms of such
plans.
(c) All liabilities (contingent or otherwise) under any Company Benefit
Plan are fully accrued or reserved against in the Company Financial Statement in
accordance with GAAP. Each Company Pension Plan that is subject to Title IV of
ERISA or Section 412 of the Code satisfies the minimum funding standards
(without regard to any waiver) provided for in Section 412 of the Code.
(d) Company has no obligations for retiree health or other welfare
benefits under any Company Benefit Plan or otherwise, and there are no
restrictions on the rights of Company to unilaterally amend or terminate any
such Company Benefit Plan at any time without incurring any material liability
thereunder.
(e) Neither the execution and delivery of this Purchase Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, golden parachute or
otherwise) becoming due to any person under any Company Benefit Plan or
otherwise, (ii) increase any benefits otherwise payable under any Company
Benefit Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits.
(f) Each Company Benefit Plan which is intended to be qualified under
Section 401(a) or 401(k) of the Code or qualified as a voluntary employees'
beneficiary association under Sections 501(a) and 501(c)(9) of the Code has
received a favorable determination letter from the IRS that it is so qualified
and so exempt or is within a remedial amendment period to obtain such a letter,
and no fact or event has occurred that could adversely affect such qualified or
exempt status.
(g) Company has not incurred any liability under, and have complied in
all respects with, the Worker Adjustment Retraining Notification Act and the
regulations promulgated
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thereunder and does not reasonably expect to incur any such liability as a
result of actions taken or not taken prior to the consummation of the
transactions contemplated hereunder.
(h) With respect to each Company Benefit Plan that is a Multiemployer
Plan, (i) Company has not incurred any Withdrawal Liability that has not been
satisfied in full; (ii) if Company were to experience a withdrawal or partial
withdrawal from such plan, no material Withdrawal Liability would be incurred;
(iii) Company has not received any notification, nor has any reason to believe,
that any such plan is in reorganization, has been terminated, or may reasonably
be expected to be in reorganization or to be terminated, and (iv) Company is not
liable and has not been advised that it is liable for any funding Taxes under
sections 413(b)(6) or 4971 of the Code on account of any accumulated funding
deficiency of any Multiemployer Plan to which Company has contributed or is
required to contribute.
(i) Company is not now and has never been a "substantial employer" as
defined in Section 4001(a)(2) of ERISA.
SECTION 3.16 TAXES AND TAX MATTERS
(a) The Company has paid all Taxes due and payable by it for or with
respect to all periods up to and including the date hereof (without regard to
whether or not such Taxes are or were disputed), whether or not shown on any Tax
Return.
(b) The Company has filed on a timely basis all Company Tax Returns
that it was required to file. All such Company Tax Returns were accurate and
complete in all material respects. Company is not the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where Company does not file Company Tax
Returns that it is or may be subject to taxation by that jurisdiction. Company
has not given any currently effective waiver of any statute of limitations in
respect of Taxes or agreed to any currently effective extension of time with
respect to a Tax assessment or deficiency. There are no security interests on
any of the assets of Company that arose in connection with any failure (or
alleged failure) to pay any Tax.
(c) Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party.
(d) Company has no knowledge of any facts or circumstances which could
give rise to a reasonable expectation that any authority may assess any
additional Taxes for any period for which Company Tax Returns have been filed.
There is no dispute or claim concerning any liability for taxes of Company
either (i) claimed or raised by any authority in writing or (ii) as to which
Company has knowledge based upon personal contact with any agent of such
authority. Company has delivered to the Acquiror copies of, and Section 3.16 of
the Company Disclosure Letter sets forth a complete and accurate list of,
Company Tax Returns filed with respect to the taxable periods of Company ended
on or after December 31, 1995; indicates those Company Tax Returns that have
been audited; and indicates those Company Tax Returns that currently are the
subject of an audit.
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(e) The unpaid Taxes of Company (i) did not, as of the date of any
financial statements of Company furnished to Acquiror pursuant to Section 3.08
of this Purchase Agreement, exceed the reserve for any Tax Liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the such financial
statements (rather than in any notes thereto) and (ii) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of Company in filing its Company
Tax Returns.
(f) Company has not filed a consent under Section 341(f) of the Code,
concerning collapsible corporations. The Company has not made any payments, is
not obligated to make any payments and is not a party to any Agreement that
under certain circumstances could obligate it to make any payments that will not
be deductible under Section 280G of the Code. Company has not been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code. The Company has disclosed on its federal income Company Tax Returns
all positions taken therein that could reasonably be expected to give rise to a
substantial understatement of federal income Tax within the meaning of Section
6662 of the Code. Company is not a party to any Tax allocation or sharing
agreement. Company (A) has not been a member of an "affiliated group," as
defined in Section 1504(a) of the Code, filing a consolidated federal income Tax
Return (other than a group the common parent of which was Company) and (B) has
no Liability for the Taxes of any Person (other than any of Company) under
Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract or otherwise.
(g) Section 3.16 of the Company Disclosure Letter sets forth the
following information with respect to Company as of the date hereof: (i) the tax
basis of Company in its assets; (ii) the amount of any net operating loss, net
capital loss, unused investment, foreign tax or other credit, or excess
charitable contribution allocable to Company; and (iii) the amount of any
deferred gain or loss allocable to Company arising out of any "deferred
intercompany transaction" as defined in Treas. Reg. Section 1.1502-13(a)(2).
(h) Company (and any predecessor of Company) has been a validly
electing S corporation within the meaning of Code Sections 1361 and 1362 at all
times during its existence and Company will be an S corporation up to and
including the Closing Date. With respect to all states which for state Tax
purposes allow a corporation to be treated as an S corporation or similar entity
entitled to special Tax treatment, all elections for such treatment have been
properly and validly maintained at all times with all applicable qualifications
and filing procedures for such treatment.
(i) Except as set forth in Section 3.16 of the Company Disclosure
Letter, Company will not be liable for any Tax under Section 1374 of the Code
with respect to the transactions contemplated by this Agreement. Except as set
forth on Section 3.16 of the Company Disclosure Letter, Company has never (i)
acquired assets from another Person in a transaction in which the Company's Tax
basis for the acquired assets was determined in whole or in part by reference to
the Tax basis of the acquired assets (or any other property) in the hands of the
transferor or (ii) acquired the stock of any other corporation that is a
qualified subchapter S subsidiary.
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SECTION 3.17 INSURANCE
Section 3.17 of the Company Disclosure Letter lists all policies of title,
asset, fire, hazard, casualty, liability, life, worker's compensation and other
forms of insurance of any kind owned or held by Company. All such policies: (a)
are with insurance companies reasonably believed by Company to be financially
sound and reputable; (b) are in full force and effect; (c) are sufficient for
compliance by Company with all requirements of Law and of all Agreements to
which Company is a party; (d) are valid and outstanding policies enforceable
against the insurer; (e) insure against risks of the kind customarily insured
against and in amounts customarily carried by companies similarly situated and
by companies engaged in similar businesses and owning similar Assets; and (f)
have the policy expiration dates set forth in Section 3.17 of the Company
Disclosure Letter.
SECTION 3.18 ARRANGEMENTS WITH RELATED PARTIES
No present or former officer, director, stockholder or Person known by the
Company to be an Affiliate of the Company, nor any Person known by the Company
to be an Affiliate of such Person, is currently a party to any transaction or
agreement with the Company, including any agreement providing for any loans,
advances, the employment of, furnishing of services by, rental of its Assets
from or to, or otherwise requiring payments to, any such officer, director,
stockholder or affiliate.
SECTION 3.19 BOOKS AND RECORDS
The books of account, stock records, minute books and other corporate and
financial records of Company are complete and correct and have been maintained
in accordance with reasonable business practices for companies similar to
Company, and Company will have prior to Closing prepared and made available to
Acquiror the minutes for all meetings of the Board of Directors and/or
stockholders of the Company held as of the date hereof (or written consents in
lieu of such meetings).
SECTION 3.20 ASSETS
Company has good, valid and marketable title to all Assets owned by it,
including, without limitation, all material Assets reflected in the Company
Financial Statement and all Assets acquired by Company since March 31, 2000
(except for Assets reflected in the Company Financial Statement or acquired
since such date which have been sold or otherwise disposed of in the Ordinary
Course of Business), free and clear of all Encumbrances other than Permitted
Encumbrances. All personal property of Company is in good operating condition
and repair and is suitable and adequate for the uses for which it is intended or
is being used.
SECTION 3.21 DIRECTORS AND OFFICERS
Section 3.21 of the Company Disclosure Letter lists all current directors and
officers of Company, showing each such person's name, positions, and annual
remuneration, bonuses and
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fringe benefits paid by Company for the current fiscal year and the most
recently completed fiscal year.
SECTION 3.22 ENVIRONMENTAL MATTERS
Company is in material compliance with all Environmental Laws. Company has no
material liability under any Environmental Law, nor the Company responsible for
any liability of any other person under any Environmental Law. There are no
pending or, to the knowledge of the Company, threatened actions, suits, claims,
legal proceedings or other proceedings based on, and the Company has not
directly or indirectly received any notice of any complaint, order, directive,
citation, notice of responsibility, notice of potential responsibility, or
information request from any Government Entity or any other person arising out
of or attributable to: (i) the current or past presence at any part of the real
property owned or leased by the Company (the "Real Property") of Hazardous
Materials (as defined below) or any substances that pose a hazard to human
health or an impediment to working conditions; (ii) the current or past release
or threatened release into the environment from the Real Property (including,
without limitation, into any storm drain, sewer, septic system or publicly owned
treatment works) of any Hazardous Materials or any substances that pose a hazard
to human health or an impediment to working conditions; (iii) the off-site
disposal of Hazardous Materials originating on or from the Real Property; or
(iv) any violation of Environmental Laws at any part of the Real Property or
otherwise arising from the Company's activities involving Hazardous Materials.
SECTION 3.23 Y2K COMPLIANCE
All of the Company's Information Technology (as defined below) will
record, store, process, calculate and present calendar dates falling on and
after (and if applicable, spans of time including) January 1, 2000, and will
calculate any information dependent on or relating to such dates in the same
manner, and with the same functionality, data integrity and performance, as the
products record, store, process, calculate and present calendar dates on or
before December 31, 1999, or calculate any information dependent on or relating
to such dates, and will not cause an interruption in the ongoing operations of
the Company's business on or after January 1, 2000. For purposes of the
foregoing, the term "Information Technology" shall mean and include all
software, hardware, firmware, telecommunications systems, network systems,
embedded systems and other systems, components and/or services (other than
general utility services including gas, electric, telephone and postal) that are
owned or used by the Company in the conduct of its business, or purchased by the
Company from third party suppliers.
SECTION 3.24 GOVERNMENT CONTRACTS AND OTHER COMMITMENTS
(a) With respect to any contracts with Governmental Entities and
subcontracts (at any tier) under prime contracts with Governmental Entities to
which Company is a party (collectively, "Government Contracts"): (A) such
Government Contracts constitute valid and binding obligations of Company, and
the other party or parties thereto, enforceable in accordance with their terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization
or similar laws or equitable principles relating to creditors' rights generally;
(B) Company is in
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compliance in all material respects with the terms of all Government Contracts
to which it is a party and all laws, regulations and contract provisions
applicable to the obtaining, formation, pricing, performance, billing,
administration and other aspects of its Government Contracts, including without
limitation the False Claims Act, False Statements Act, and Truth in Negotiations
Act, except for such non-compliance that does not have a Company Material
Adverse Effect; (C) none of Company or to the knowledge of Company, any other
party has terminated, canceled or waived any material term or condition of any
such Government Contract; (D) the cost accounting, pricing, estimating, property
and procurement systems relating to Company's Government Contracts are in
compliance in all material respects with applicable laws regulations and
contract provisions, including without limitation procurement integrity laws and
regulations, cost principles and cost accounting standards; and (E) Company is
in compliance in all material respects with all national security obligations,
including, without limitation, those specified in the National Industrial
Security Program Manual.
(b) With respect to the Government Contracts to which Company is a
party, except as is reserved for on the Company Financial Statement: (A) each
billed account receivable represents a bona fide claim against the government
for sales, services performed or other charges arising on or prior to the date
hereof, and all the products delivered and services performed which gave rise to
such accounts were delivered or performed in accordance with the applicable
Government Contracts; (B) to the best of Company's knowledge, each such billed
account receivable is subject to no defense, counterclaim or right to setoff and
is fully collectable in the Ordinary Course of Business consistent with past
practices without cost in collection efforts therefor; and (C) all unbilled or
unreserved amounts included in accounts receivable will, in the Ordinary Course
of Business as currently conducted consistent with past practices, mature into
and become billed accounts receivable in the same or greater amount and such
receivables, when billed, will be fully collectable in the Ordinary Course of
Business consistent with past practices.
(c) With respect to the Government Contracts to which Company is a
party, none of such Government Contracts has incurred or currently projects cost
overruns in an amount exceeding $50,000.
(d) With respect to the Government Contracts to which Company is a
party, Company has not assigned or otherwise conveyed or transferred, or agreed
to assign, to any Person, any Government Contracts to which it is a party, or
any account receivable relating thereto, whether as a security interest or
otherwise.
(e) With respect to any Government Property provided to or acquired by
the Company pursuant to the Government Contracts: (A) the approximate value of
such Government Property as of the date hereof is $69,600; and (B) there exists
no material deviation between the Government Property as provided to or acquired
by the Company and the Government Property as currently possessed by the
Company.
(f) Company has not received any formal notice or other written
communication from the federal government within the last three (3) years
regarding its actual or threatened disqualification, suspension or debarment
from contracting with the federal government and, to
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the knowledge of Company, no action for which Company has received such notice
prior to the last three (3) years is pending.
(g) To the knowledge of Company, there is no: (A) pending or threatened
investigation for fraud or other misconduct relating to Government Contracts to
which Company is a party; (B) existing or threatened claim, cost disallowance,
pricing adjustment, or adverse audit finding relating to any Government Contract
to which Company is a party; or (C) termination notice, cure notice or show
cause notice currently in effect, relating to any Government Contract to which
Company is a party.
SECTION 3.25 RELATIONS WITH GOVERNMENTS
Neither the Company nor, to the knowledge of the Company, any of the Company's
officers, directors, employees or agents (or stockholders, distributors,
representatives or other persons acting on the express, implied or apparent
authority of the Company) have paid, given or received or have offered or
promised to pay, give or receive, any bribe or other unlawful payment of money
or other thing of value, any unlawful discount, or any other unlawful
inducement, to or from any person or Government Entity in the United States or
elsewhere in connection with or in furtherance of the business of the Company
(including, without limitation, any offer, payment or promise to pay money or
other thing of value (a) to any foreign official, political party (or official
thereof) or candidate for political office for the purposes of influencing any
act, decision or omission in order to assist the Company in obtaining business
for or with, or directing business to, any person, or (b) to any person, while
knowing that all or a portion of such money or other thing of value will be
offered, given or promised to any such official or party for such purposes). The
business of the Company is not in any manner dependent upon the making or
receipt of such payments, discounts or other inducements. The Company has not
otherwise taken any action that would cause the Company to be in violation of
the Foreign Corrupt Practices Act of 1977, as amended, or any applicable Laws of
similar effect.
SECTION 3.26 BROKER'S FEES
The Company has no liability or obligation to pay any fees or commissions to any
broker, finder, or similar agent with respect to the transactions contemplated
by this Purchase Agreement.
SECTION 3.27 SECURITY CLEARANCES
Section 3.27 of the Company Disclosure Letter sets forth a list of all employees
holding United States security clearances, and sets forth the type(s) of
security clearances held by each such employee. All security clearances listed
in Section 3.27 of the Company Disclosure Letter shall be in full force and
effect on the Closing Date.
SECTION 3.28 DISCLOSURE
All facts of importance to the business, operations, prospects, condition
(financial or otherwise), assets or liabilities of Company have been truthfully
and completely disclosed to Acquiror in this
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Purchase Agreement. No representation or warranty by Company or any Company
Stockholder in this Purchase Agreement, and no document furnished or to be
furnished to Acquiror pursuant to this Purchase Agreement, or in connection
herewith or with the transactions contemplated hereby, contains or will contain
any knowingly untrue or misleading statement or omits or will omit any fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which made, not misleading (provided that, the knowledge
qualifier contained in this sentence shall not be deemed to modify the other
representations and warranties of Company and Company Stockholder contained in
this Purchase Agreement in any respect).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH COMPANY STOCKHOLDER
Each Company Stockholder severally hereby represents, warrants to and agrees
with Acquiror as follows, in each case as of the date of this Purchase Agreement
and as of the Closing Date:
SECTION 4.01 TITLE TO COMMON STOCK
Such Company Stockholder is, and on the Closing Date will be, the lawful owner
of the number of shares of Company Common Stock set forth opposite the name of
such Company Stockholder in EXHIBIT A. Since the date of the issuance or sale of
such shares of Company Common Stock to such Company Stockholder, there has been
no event, or action taken (or failure to take action) by or against such Company
Stockholder, which has resulted or might result in the creation of any
Encumbrance on such shares. Such Company Stockholder has, and on the Closing
Date such Stockholder will have, good, valid and marketable title, free and
clear of all Encumbrances, to the number of shares of Common Stock so set forth
in EXHIBIT A, with full right and lawful authority to sell and transfer the
shares to Acquiror pursuant to this Purchase Agreement.
SECTION 4.02 AUTHORITY AND CAPACITY
Such Company Stockholder has full legal right, capacity, power and authority
(corporate or otherwise) to execute this Purchase Agreement and to consummate
the transactions contemplated hereby.
SECTION 4.03 ABSENCE OF VIOLATION
The execution, delivery and performance by such Company Stockholder of this
Purchase Agreement and all other Documents contemplated hereby, the fulfillment
of and the compliance with the respective terms and provisions hereof and
thereof, and the consummation of the transactions contemplated hereby and
thereby, do not and will not (a) conflict with, or violate any provision of, any
Law having applicability to Company or such Company Stockholder; or (b) conflict
with, or result in any breach of, or constitute a default under, any Agreement
to which Company or such Company Stockholder is a party.
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SECTION 4.04 RESTRICTIONS AND CONSENTS
There are no Agreements, Laws or other restrictions of any kind to which such
Company Stockholder is party or subject that would prevent or restrict the
execution, delivery or performance of this Purchase Agreement or result in any
penalty, forfeiture, Agreement termination, or restriction on business
operations of Buyer or Company as a result of the execution, delivery or
performance of this Agreement. The Company Disclosure Letter lists all such
Agreements and Laws that reasonably could be interpreted or expected to require
the consent or acquiescence of any person or entity not party to this Purchase
Agreement with respect to any aspect of the execution, delivery or performance
of this Purchase Agreement by Company.
SECTION 4.05 BINDING OBLIGATION
This Purchase Agreement constitutes a valid and binding obligation of such
Company Stockholder, enforceable in accordance with its terms. Each document to
be executed by such Company Stockholder pursuant hereto, when executed and
delivered in accordance with the provisions hereof, will be a valid and binding
obligation of such Company Stockholder, enforceable in accordance with its
terms.
SECTION 4.06 TRANSFER OF TITLE
Upon payment for the shares of Company Common Stock to be purchased from such
Company Stockholder pursuant to the terms of this Purchase Agreement, Acquiror
will acquire good, valid and marketable title thereto, free and clear of all
Encumbrances.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR
Except as specifically set forth in the Disclosure Letter delivered by Acquiror
to Company prior to the execution and delivery of this Purchase Agreement (the
"Acquiror Disclosure Letter") and referenced in the Acquiror Disclosure Letter
to the Section(s) of this Article V to which such disclosure applies, Acquiror
hereby represents, warrants to and agrees with Company and each Company
Stockholder as follows, in each case as of the date of this Purchase Agreement
and as of the Closing Date:
SECTION 5.01 ORGANIZATION AND QUALIFICATION
Acquiror is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware, and has the full and unrestricted
corporate power and authority to own, operate and lease its Assets, to carry on
its business as currently conducted, to execute and deliver this Purchase
Agreement and to carry out the transactions contemplated hereby. Acquiror is
duly qualified to conduct business as a foreign corporation and is in good
standing in the
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states, countries and territories in which the nature of the business conducted
by it or the character of the Assets owned, leased or otherwise held by it makes
such qualification necessary, except where the failure to be so qualified would
not have an Acquiror Material Adverse Effect.
SECTION 5.02 CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS
Acquiror has furnished to Company a true and complete copy of the certificate of
incorporation of Acquiror, as currently in effect, certified as of a recent date
by the Secretary of State of Delaware and a true and complete copy of the bylaws
of Acquiror, as currently in effect, which shall be certified at Closing by its
corporate secretary.
SECTION 5.03 AUTHORITY; BINDING OBLIGATION
Acquiror has the full and unrestricted corporate power and authority to execute
and deliver this Purchase Agreement and to carry out the transactions
contemplated hereby. The execution and delivery by Acquiror of this Purchase
Agreement and all other Agreements, documents, certificates or other instruments
contemplated hereby, and the consummation by Acquiror of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate action, and no other corporate proceedings on the part of Acquiror are
necessary to authorize this Purchase Agreement and the other Agreements,
documents, certificates or other instruments contemplated hereby, or to
consummate the transactions contemplated hereby and thereby. This Purchase
Agreement has been duly executed and delivered by Acquiror and constitutes a
legal, valid and binding obligation of Acquiror, enforceable in accordance with
its terms, except as such enforceability may be subject to the effect of any
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar Laws affecting creditors' rights generally and subject to
the effect of general equitable principles (whether considered in a proceeding
in equity or at law).
SECTION 5.04 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) The execution, delivery and performance by Acquiror of this
Purchase Agreement and all other Agreements, documents, certificates or other
instruments contemplated hereby, the fulfillment of and compliance with the
respective terms and provisions hereof and thereof, and the consummation by
Acquiror of the transactions contemplated hereby and thereby, do not and will
not: (i) conflict with, or violate any provision of, the certificate of
incorporation or the bylaws of Acquiror; (ii) subject to obtaining the consents,
approvals, authorizations and permits of, and making filings with or
notifications to, the applicable Governmental Entity pursuant to the applicable
requirements, if any, of the HSR Act, conflict with or violate any Law
applicable to Acquiror or any of its Assets; (iii) conflict with, result in any
breach of, constitute a default (or an event that with notice or lapse of time
or both would become a default) under any Agreement to which Acquiror is a party
or by which Acquiror or any of its Assets may be bound; or (iv) result in or
require the creation or imposition of, or result in the acceleration of, any
indebtedness or any Encumbrance of any nature upon, or with respect to,
Acquiror; except for any such conflict or violation described in clause (ii)
above, any such conflict, breach or default described in clause (iii) above, or
any such creation, imposition or acceleration described in
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clause (iv) above that would not have an Acquiror Material Adverse Effect and
that would not prevent Acquiror from consummating the transactions contemplated
hereunder on a timely basis.
(b) The execution, delivery and performance by Acquiror of this
Purchase Agreement and all other Agreements, documents, certificates or other
instruments contemplated hereby, the fulfillment of and compliance with the
respective terms and provisions hereof and thereof, and the consummation by
Acquiror of the transactions contemplated hereby and thereby, do not and will
not: (i) require any consent, approval, authorization or permit of, or filing
with or notification to, any Person not party to this Purchase Agreement, except
(A) pursuant to the applicable requirements, if any, of the HSR Act, and (B)
where the failure to obtain any consent, approval, authorization or permit or to
make any filing or notification otherwise required to be disclosed hereunder
would not have an Acquiror Material Adverse Effect; or (ii) result in or give
rise to any penalty, forfeiture, Agreement termination, right of termination,
amendment or cancellation, or restriction on business operations of Acquiror
that would have an Acquiror Material Adverse Effect.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01 CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS PURCHASE
AGREEMENT
The respective obligations of each Party to effect the Closing and the other
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Closing of the following conditions, any or all of which may be
waived by agreement of Acquiror, on the one hand, and Company and the Company
Stockholders, on the other hand, in whole or in part, to the extent permitted by
applicable Law:
(a) NO ORDER. No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, judgment,
injunction or other order (whether temporary, preliminary or permanent), in any
case which is in effect and which prevents or prohibits consummation of the
transactions contemplated hereunder; PROVIDED, HOWEVER, that the Parties shall
use their reasonable best efforts to cause any such decree, judgment, injunction
or other order to be vacated or lifted; PROVIDED, FURTHER, that the failure to
obtain a required consent or approval of a Governmental Entity (other than that
specified in Section 6.01(b)) of this Purchase Agreement shall not form the
basis for an assertion that this condition is not satisfied.
(b) HSR ACT. The applicable waiting period with respect to the
transactions contemplated hereby, together with any extensions thereof, under
the HSR Act shall have expired or been terminated.
(c) COMPANY SECURITIES. Except as set forth in the Company Disclosure
Letter, there shall be no other securities of Company outstanding that are
securities convertible into or exchangeable for Company Common Stock or any
other equity securities of Company and no
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outstanding options, rights (preemptive or otherwise), or warrants to purchase
or to subscribe for any shares of such stock or other equity securities of
Company.
(d) EXON-FLORIO; COGNIZANT AGENCY CONFIRMATION. (i) If an Exon-Florio
Notice shall have been filed as provided in Section 2.08(a), the thirty (30) day
notice period shall have expired or been earlier terminated without a
recommendation by CFIUS that a formal investigation of the transactions
contemplated hereunder be commenced; or (ii) if an Exon-Florio Notice shall not
have been filed as provided in Section 2.08(a), confirmation shall have been
obtained from the Cognizant Agencies that they will not recommend that the
Company's security clearances be revoked, suspended or downgraded as a result of
the transactions contemplated hereunder, PROVIDED that if all such confirmations
are not obtained by June 15, 2000, Acquiror shall consider, in good faith,
whether to waive this condition with respect to agencies with which the Company
has contracts or subcontracts that Acquiror does not consider to be material to
the business of the Company.
SECTION 6.02 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACQUIROR
The obligations of Acquiror to effect the Closing and the other transactions
contemplated in this Purchase Agreement are also subject to the satisfaction at
or prior to the Closing Date of the following conditions, any or all of which
may be waived by Acquiror, in whole or in part, to the extent permitted by
applicable Law:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company and each Company Stockholder contained in this
Purchase Agreement shall be true and correct as of the date of this Purchase
Agreement and shall be true and correct (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects giving effect to such
standard) as of the Closing Date as though made as of the Closing Date, except
for (i) representations and warranties which address matters only as of a
particular date, which representations and warranties shall be true and correct
in all material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall be
true and correct in all respects giving effect to such standard) as of such date
and (ii) changes permitted by or consistent with this Purchase Agreement.
Acquiror shall have received a certificate of the chief executive officer or
chief financial officer of Company and each of the Company Stockholders to the
foregoing effect.
(b) AGREEMENTS AND COVENANTS. Company and each Company Stockholder
shall have performed or complied in all respects with all Agreements and
covenants required by this Purchase Agreement to be performed or complied with
by Company or the Company Stockholder, as the case may be, on or prior to the
Closing Date. Acquiror shall have received a certificate of the chief executive
officer or chief financial officer of Company (as to Company) and of each
Company Stockholder to that effect.
(c) OPINION OF COUNSEL. Acquiror shall have received from Nixon
Peabody, LLP, counsel to Company, an opinion dated the Closing Date, which is
reasonable and customary for transactions of the type contemplated by this
Purchase Agreement.
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(d) NO CHALLENGE. There shall not be pending any enforcement action or
similar proceeding by any state or federal Governmental Entity that is likely to
have a Company Material Adverse Effect or, if such action arises in connection
with the transactions contemplated hereby, an Acquiror Material Adverse Effect.
Acquiror shall have received a certificate of the chief executive officer or
chief financial officer of Company (as to Company) and of each Company
Stockholder to that effect.
(e) COMPANY MATERIAL ADVERSE EFFECT. Since March 31, 2000, there shall
not have occurred a Company Material Adverse Effect (or any development that,
insofar as reasonably can be foreseen, is reasonably likely to result in any
Company Material Adverse Effect) not disclosed in the Company Disclosure Letter
as of the date hereof. Acquiror shall have received a certificate of the chief
executive officer or chief financial officer of Company (as to Company) and of
each Company Stockholder to that effect.
(f) CONSENTS. Company and the Company Stockholders shall have procured
all consents of third-parties and Governmental Entities specified in Section
3.06 of the Company Disclosure Letter. Acquiror shall have received a
certificate of the chief executive officer or chief financial officer of Company
(as to Company) and of each Company Stockholder to that effect.
(g) RESIGNATIONS OF DIRECTORS. Acquiror shall have received the written
resignations of all of the members of the Board of Directors of the Company
(effective as of the Closing).
SECTION 6.03 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY AND THE COMPANY
STOCKHOLDERS
The obligations of Company and the Company Stockholders to effect the Closing
and the other transactions contemplated by this Purchase Agreement are also
subject to the satisfaction at or prior to the Closing Date of the following
conditions, any or all of which may be waived by Company and the Company
Stockholders, in whole or in part, to the extent permitted by applicable Law:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Acquiror contained in this Purchase Agreement shall be true and
correct as of the date of this Purchase Agreement and shall be true and correct
(except that where any statement in a representation or warranty expressly
includes a standard of materiality, such statement shall be true and correct in
all respects giving effect to such standard) as of the Closing Date as though
made as of the Closing Date, except for (i) representations and warranties which
address matters only as of a particular date, which representations and
warranties shall be true and correct in all material respects (except that where
any statement in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects giving
effect to such standard) as of such date and (ii) changes permitted by or
consistent with this Purchase Agreement. Company shall have received a
certificate of the chief executive officer or chief financial officer of
Acquiror to the foregoing effect.
(b) AGREEMENTS AND COVENANTS. Acquiror shall have performed or complied
in all respects with all Agreements and covenants required by this Purchase
Agreement to be
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performed or complied with by them on or prior to the Closing Date except for
such noncompliance that does not have an Acquiror Material Adverse Effect.
Company shall have received a certificate of the chief executive officer or
chief financial officer of Acquiror to that effect.
(c) RELEASE OF GUARANTEES. The Company Stockholders shall be released
from personal guarantees of credit facilities of the Company as such have been
disclosed in the Disclosure Letter.
(d) CONSENT OF LESSOR. The consent of Bethesda Management Company (as
landlord, under the Science Park I Office Building Lease in Colorado Springs,
CO) to the contemplated transaction shall be obtained, or otherwise waived by
Acquiror.
ARTICLE VII
CLOSING
SECTION 7.01 CLOSING OF SALE AND PURCHASE
Subject to the terms and conditions of this Purchase Agreement, the closing of
this Purchase Agreement (the "Closing") will take place after the satisfaction
of the latest to occur or, if permissible, waiver of the conditions set forth in
Article VI of this Purchase Agreement. The closing date will take place as soon
as practicable (but, in any event, no later than the first business day
following the tenth (10th) day) after the satisfaction of the latest to occur
or, if permissible, waiver, of the conditions set forth in Article VI of this
Purchase Agreement (the "Closing Date"), at the offices of Hogan & Hartson
L.L.P., 8300 Greensboro Drive, Suite 1100, McLean, Virginia 22102, unless
another date or place is agreed to in writing by the Parties. The Parties
anticipate that the Closing Date shall be on or about June 30, 2000.
SECTION 7.02 DELIVERIES BY THE COMPANY STOCKHOLDERS
At the Closing, the Company Stockholders shall deliver to the Acquiror the
following:
(a) certificates representing the shares of Company Common Stock being
sold to Acquiror pursuant to Section 1.01, duly endorsed in blank or with duly
executed stock powers attached;
(b) the certificates required by Sections 6.02(a), 6.02(b), 6.02(d),
6.02(e) and 6.02(f); and
(c) such other documents as Acquiror may reasonably request.
SECTION 7.03 DELIVERIES BY COMPANY
At the Closing, Company shall deliver to Acquiror the following:
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(a) a certified copy of the resolutions adopted by the Board of
Directors of Company authorizing the transactions contemplated by this Purchase
Agreement;
(b) the written resignations of all of the current members of the Board
of Directors of Company (effective as of the Closing Date), as required by
Section 6.02(h);
(c) the certificates required by Sections 6.02(a), 6.02(b), 6.02(d),
6.02(e) and 6.02(f);
(d) the opinion of Nixon Peabody, LLP, counsel for Company, dated as of
the Closing Date, as required by Section 6.02(c);
(e) certificates of incumbency and specimen signatures of the signatory
officers of Company;
(f) good standing certificates as of a date not more than five days
prior to the Closing Date issued by the Secretary of State of the state of
incorporation of Company, and of each state in which Company is qualified to do
business;
(g) the articles of incorporation, bylaws, minute books and stock books
of Company and all other books and records reasonably requested by Acquiror; and
(h) such other Documents as Acquiror may reasonably request.
SECTION 7.04 DELIVERIES BY ACQUIROR
At the Closing, Acquiror shall deliver the following:
(a) by wire transfer to the Company Stockholders the Cash
Consideration;
(b) the certificates required by Sections 6.03(a) and 6.03(b); and
(c) such other Documents as Company or the Stockholder Representative
may reasonably request.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 TERMINATION
This Purchase Agreement may be terminated at any time (except where otherwise
indicated) prior to the Closing Date:
(a) by mutual written consent of Acquiror, Company and Company
Stockholder;
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(b) (i) by Acquiror, if immediately prior to the anticipated Closing
Date any of the conditions provided in Section 6.02 have not been met and such
failure has not been cured within twenty (20) business days following receipt by
Company of written notice of such failure describing the extent and nature
thereof in reasonable detail, or to the extent permitted by applicable law, such
conditions have not been waived in writing by Acquiror;
(ii) by Company and the Company Stockholders, if immediately
prior to the anticipated Closing Date, any of the conditions provided in Section
6.03 have not been met and such failure has not been cured within twenty (20)
business days following receipt by Acquiror of written notice of such failure
describing the extent and nature thereof in reasonable detail, or, to the extent
permitted by applicable law, such conditions have not been waived in writing by
Company and the Company Stockholder.
(c) by either Acquiror or Company if any decree, permanent injunction,
judgment, order or other action by any court of competent jurisdiction or any
other federal or state (but not county or municipal) Governmental Entity
preventing or prohibiting consummation of the transactions contemplated
hereunder shall have been filed or in effect;
(d) by either Acquiror, or Company and the Company Stockholders, if the
Closing Date shall not have been consummated by July 31, 2000; PROVIDED HOWEVER,
that the right to terminate this Purchase Agreement under this Section 8.01(d)
shall not be available to (i) Acquiror, where Acquiror's failure to fulfill any
obligation under this Purchase Agreement has been the cause of, or resulted in,
the failure of the Closing Date to occur on or before such date, or (ii) Company
or any Company Stockholder, where Company's or any Company Stockholder's failure
to fulfill any obligation under this Purchase Agreement has been the cause of,
or resulted in, the failure of the Closing Date to occur on or before such date;
(e) by either Acquiror, or Company and the Company Stockholders on or
after July 31, 2000, if any of the conditions provided in Section 6.01 have not
been met, or to the extent permitted by applicable Law, have not been waived by
all Parties.
SECTION 8.02 EFFECT OF TERMINATION
In the event of termination of this Purchase Agreement as provided in Section
8.01 of this Purchase Agreement, this Purchase Agreement shall forthwith become
void and there shall be no liability or obligation on the part of the Company
Stockholder, Acquiror, Company or any of their respective directors or officers
except (i) nothing herein shall relieve any Party from liability for any breach
hereof, (ii) each Party shall be entitled to any remedies at law and in equity
for such breach and (iii) Sections 2.12 and 8.02 and Article IX of this Purchase
Agreement shall remain in full force and effect and survive any termination of
this Purchase Agreement.
SECTION 8.03 AMENDMENT
This Purchase Agreement may be amended by the Parties at any time. This Purchase
Agreement may not be amended except by an instrument in writing signed by all of
the Parties.
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SECTION 8.04 EXTENSION; WAIVER
At any time, the Parties may (a) extend the time for the performance of any of
the obligations or other acts of the other Parties, (b) waive any inaccuracies
in the representations and warranties contained herein or in any Agreements,
documents, certificates or other instruments delivered pursuant hereto and (c)
waive compliance with any of the Agreements or conditions contained in this
Purchase Agreement. Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the Party or Parties to be bound thereby. The
failure of any Party to assert any of its rights under this Purchase Agreement
or otherwise shall not constitute a waiver of such rights.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; REMEDIES
SECTION 9.01 SURVIVAL OF REPRESENTATIONS
All representations, warranties, covenants, indemnities and other agreements
made by any Party to this Purchase Agreement herein, shall be deemed made on and
as of the Closing Date as though such representations, warranties, covenants,
indemnities and other agreements were made on and as of such date, and all such
representations, warranties, covenants, indemnities and other agreements shall
survive for a period of eighteen (18) months after the Closing Date; PROVIDED,
HOWEVER, that the representations set forth in Section 3.01 (Organization and
Qualification), Section 3.04 (Capitalization), Section 3.05 (Authority; Binding
Obligation), Section 3.15 (Pension and Benefit Plans), Section 3.16 (Taxes and
Tax Matters) and Section 3.22 (Environmental Matters) shall survive until the
expiration of the applicable statute of limitations. Notwithstanding anything
herein to the contrary, any representation, warranty, covenant, agreement or
indemnity which is the subject of a claim which is asserted in writing prior to
the expiration of the applicable period set forth above shall survive solely
with respect to such claim until the final resolution thereof.
SECTION 9.02 INDEMNIFICATION BY COMPANY STOCKHOLDERS; RIGHT TO OFFSET
(a) Anything in this Purchase Agreement to the contrary
notwithstanding, the Company Stockholders hereby agree to jointly and severally
indemnify, defend and hold Acquiror, the Company and their respective officers
and directors, and each person, if any, who controls or may control Acquiror or
the Company within the meaning of the Securities Act (all such persons
hereinafter are referred to individually as an "Acquiror Indemnified Person" and
collectively as "Acquiror Indemnified Persons," but in no event shall any
stockholder of the Company prior to the Closing Date be such an Acquiror
Indemnified Person) harmless against all Losses resulting from, imposed upon or
incurred by any Acquiror Indemnified Person, directly or indirectly, as a result
of any of the following:
(i) any inaccuracy or breach of a representation or warranty
of the Company or the Company Stockholders given or made by the Company or the
Company Stockholders in this
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Purchase Agreement, or in the Company Disclosure Letter or in any certificate,
document or agreement delivered by or on behalf of the Company or any Company
Stockholder pursuant hereto; and
(ii) any failure by the Company or the Company Stockholders to
perform or comply with any covenant or agreement contained in this Purchase
Agreement, or in the Company Disclosure Letter or in any certificate, document
or agreement delivered by or on behalf of the Company and the Company
Stockholders pursuant hereto.
(b) In the event, from time to time, any Acquiror Indemnified Person
determines that it has suffered a Loss for which indemnification is available
pursuant to this Article IX, the following procedure shall be followed:
(i) Acquiror Indemnified Person shall give written notice of
any such claim (a "Loss Notice") to the Stockholder Representative specifying in
reasonable detail the amount of the claimed Loss (the "Loss Amount") and the
basis for such Loss and that the Acquiror intends to offset against the
Indemnification Holdback.
(ii) Within thirty (30) days after delivery of a Loss Notice,
the Stockholder Representative shall provide to Acquiror and the Acquiror
Indemnified Person (if not the same Person), a written response (a "Response
Notice") in which the Stockholder Representative will (i) agree that an offset
in the full Loss Amount may be made against the Indemnification Holdback, (ii)
agree that an offset in an amount equal to part, but not all, of the Loss Amount
(the "Agreed Amount") may be made against the Indemnification Holdback or (iii)
contest making any offset against the Indemnification Holdback. The Stockholder
Representative may contest an offset against the Indemnification Holdback upon a
good faith belief that all or such portion of such offset does not constitute a
Loss for which the Acquiror Indemnified Person is entitled to indemnification
under this Article IX. If no Response Notice is delivered by the Stockholder
Representative within such thirty (30) day period, the Company Stockholders
shall be deemed to have agreed that an offset in the full Loss Amount may be
made against the Indemnification Holdback.
(iii) If the Stockholder Representative in the Response Notice
agrees (or is deemed to have agreed) that an offset may be made against the
Indemnification Holdback in an amount equal to the Loss Amount, the Acquiror
may, promptly following the earlier of the required delivery date of the
Response Notice or the delivery of the Response Notice, cause an offset in the
amount of the Loss Amount to be made to the Indemnification Holdback.
(iv) If the Stockholder Representative in the Response Notice
agrees that an offset in an amount equal to part, but not all, of the Loss
Amount (the "Agreed Amount") may be made against the Indemnification Holdback,
the Acquiror may, promptly following the earlier of the required delivery date
of the Response Notice or the delivery of the Response Notice, cause an offset
in the amount of the Agreed Amount to be made to the Indemnification Holdback.
(v) If the Stockholder Representative in the Response Notice
contests an offset against the Indemnification Holdback equal to all or any part
of the Loss Amount (the
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"Contested Amount"), the Acquiror Indemnified Person and the Stockholder
Representative shall negotiate in good faith to resolve any such dispute. If any
such dispute involving claims of less than $1,000,000 cannot be resolved within
forty-five (45) days after the receipt by the Acquiror of the Response Notice,
the Acquiror Indemnified Person and the Stockholder Representative shall submit
the matter to the Boston, MA office of the American Arbitration Association
("AAA") for binding arbitration to be conducted in accordance with the AAA
commercial arbitration rules in effect at the time such matter is submitted. If
any such matter is submitted to the AAA as provided herein, (A) each of the
Acquiror Indemnified Person and the Stockholder Representative will furnish to
AAA such workpapers and other documents and information as AAA may request and
will be afforded the opportunity to present to AAA any material relevant to the
matter, (B) the determination by AAA, as set forth in a notice delivered to the
Acquiror Indemnified Person and the Stockholder Representative by AAA, will be
binding and conclusive on such parties.
(vi) In connection with any such commercial arbitration, the
following rules shall also apply: (A) any Party shall have the right to have
counsel represent such Party at the arbitration hearing and in pre-arbitration
proceedings; (B) all Parties shall be permitted to conduct discovery in
accordance with the Federal Rules of Civil Procedure; (C) the arbitrator(s)
shall have the authority to resolve any discovery disputes and to invoke an
action to cease further discovery; (D) each Party to any arbitration proceeding
shall have the right to a written transcript made of the arbitration
proceedings; (E) each Party shall have the right to file post-arbitration
briefs, which shall be considered by the arbitrator(s); and (F) each Party shall
bear its own costs and expenses and attorney's fees in connection with such
arbitration.
(vii) In the event of any disputes involving claims of
$1,000,000 or more, any Party shall have the right to bring such action in any
state or federal court of competent jurisdiction.
(c) The indemnity obligations of the Company Stockholders under this
Article IX shall first be satisfied through the exercise by the Acquiror of the
right of offset against the aggregate outstanding amount of the Indemnification
Holdback. The Indemnification Holdback shall in no way be deemed to be a
limitation on the recourse available to any Acquiror Indemnified Person for the
indemnification obligations of the Company Stockholders hereunder. Following its
exhaustion of its offset rights as set forth above, Acquiror shall have the
right to enforce the indemnity obligations of the Company Stockholders under
this Article IX through an action in a court of competent jurisdiction.
(d) The exercise of such right of offset by Acquiror in good faith,
whether or not ultimately determined to be justified, will not constitute a
breach of this Purchase Agreement. Neither the exercise of nor the failure to
exercise such right of offset will constitute an election of remedies or limit
Acquiror in any manner in the enforcement of any other remedies available to
Acquiror.
(e) Notwithstanding the foregoing provisions of this Section 9.02 to
the contrary, the following limitations with respect to the indemnification
obligations of the Company Stockholders under Article IX shall apply:
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(i) The Company Stockholders shall not be liable for any
amounts under this Section 9.02 unless and until the aggregate of Losses
suffered by the Acquiror Indemnified Party(ies) from all claims for
indemnification exceed $100,000, in which case the Company Stockholder shall be
liable for the full amount of Losses suffered by the Acquiror Indemnified
Party(ies), including the first $100,000;
(ii) No claim for any Loss related to any matter which is
otherwise adjusted pursuant to the Closing Adjustment or the Accounts Payable
Adjustment in accordance with Section 1.04 hereof shall be made;
(iii) No claim for any Loss shall be made by the Acquiror
Indemnified Party unless such claim (or all similar claims arising out of the
same circumstances) exceeds in each instance $10,000; and
(iv) In no event shall the Company Stockholders be liable to
the Acquiror Indemnified Party(ies) for amounts under this Article IX
aggregating in excess of (i) between the date of this Purchase Agreement through
and including the first anniversary thereof, the Purchase Price, and (ii) with
respect to the claims submitted in writing to the Company Stockholders the day
following the first anniversary of this Purchase Agreement through the
eighteenth (18th) month after the date of this Purchase Agreement, the sum of
$15,000,000; PROVIDED, HOWEVER, that the limitations set forth in this clause
(iv) shall not apply with respect to any Loss which is the result of fraud or
intentional misrepresentation on the part of the Company or the Company
Stockholders, or to any Loss which is the result of a breach of any
representation or warranty set forth in Sections 3.04, 3.15, 3.16, 3.22, 4.01 or
4.06.
SECTION 9.03 INDEMNIFICATION BY ACQUIROR
(a) Anything in this Purchase Agreement to the contrary
notwithstanding, the Acquiror hereby agrees to indemnify, defend and hold the
Company Stockholders harmless against all Losses resulting from, imposed upon or
incurred by any Company Stockholder, directly or indirectly, as a result of any
of the following:
(i) any inaccuracy or breach of any representation or warranty
of the Acquiror given or made by the Acquiror in this Purchase Agreement or in
any certificate document or agreement delivered by or on behalf of the Acquiror
pursuant hereto;
(ii) any failure by the Acquiror to perform or comply with any
covenant or agreement contained in this Purchase Agreement or in any
certificate, document or agreement delivered by or on behalf of the Acquiror
pursuant hereto; and
(iii) the conduct and operation of the business of the Company
from and after the Closing Date.
(b) In the event, from time to time, Company Stockholder determines
that it has suffered a Loss for which indemnification is available pursuant to
this Article IX, the following procedure shall be followed:
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(i) Stockholder Representative shall give written notice of
any such claim (a "Stockholder Loss Notice") to Acquiror specifying in
reasonable detail the amount of the claimed Loss (the "Stockholder Loss Amount")
and the basis for such Loss.
(ii) Within thirty (30) days after delivery of a Stockholder
Loss Notice, Acquiror shall provide to Stockholder Representative a written
response (a "Acquiror Response Notice") in which the Acquiror will (i) agree
that indemnification of the full Stockholder Loss Amount is appropriate, (ii)
agree that indemnification in an amount equal to part, but not all, of the
Stockholder Loss Amount (the "Stockholder Agreed Amount") may be made or (iii)
contest making any indemnification hereunder. Acquiror may contest the
Stockholder Loss Notice upon a good faith belief that all or such portion of the
claims thereunder does not constitute a Loss for which the Company Stockholder
is entitled to indemnification under this Article IX. If no Acquiror Response
Notice is delivered by Acquiror within such thirty (30) day period, Acquiror
shall be deemed to have agreed that indemnification in the full Stockholder Loss
Amount is warranted.
(iii) If Acquiror in the Acquiror Response Notice contests an
amount of the indemnification equal to all or any part of the Stockholder Loss
Amount (the "Acquiror Contested Amount"), the Acquiror and the Stockholder
Representative shall negotiate in good faith to resolve any such dispute. If any
such dispute involving claims of less than $1,000,000 cannot be resolved within
forty-five (45) days after the receipt by the Acquiror of the Acquiror Response
Notice, the Acquiror Indemnified Person and the Stockholder Representative shall
submit the matter to the Boston, MA office of the American Arbitration
Association ("AAA") for binding arbitration to be conducted in accordance with
the AAA commercial arbitration rules in effect at the time such matter is
submitted. If any such matter is submitted to the AAA as provided herein, (A)
each of the Acquiror and the Stockholder Representative will furnish to AAA such
workpapers and other documents and information as AAA may request and will be
afforded the opportunity to present to AAA any material relevant to the matter,
(B) the determination by AAA, as set forth in a notice delivered to the Acquiror
and the Stockholder Representative by AAA, will be binding and conclusive on
such parties.
(vi) In connection with any such commercial arbitration, the
following rules shall also apply: (A) any Party shall have the right to have
counsel represent such Party at the arbitration hearing and in pre-arbitration
proceedings; (B) all Parties shall be permitted to conduct discovery in
accordance with the Federal Rules of Civil Procedure; (C) the arbitrator(s)
shall have the authority to resolve any discovery disputes and to invoke an
action to cease further discovery; (D) each Party to any arbitration proceeding
shall have the right to a written transcript made of the arbitration
proceedings; (E) each Party shall have the right to file post-arbitration
briefs, which shall be considered by the arbitrator(s); and (F) each Party shall
bear its own costs and expenses and attorney's fees in connection with such
arbitration.
(vii) In the event of any disputes involving claims of
$1,000,000 or more, any Party shall have the right to bring such action in any
state or federal court of competent jurisdiction.
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(c) The exercise of the right to indemnification by Company
Stockholders in good faith, whether or not ultimately determined to be
justified, will not constitute a breach of this Purchase Agreement. Neither the
exercise of nor the failure to exercise such right of offset will constitute an
election of remedies or limit Company Stockholders in any manner in the
enforcement of any other remedies available to Company Stockholders.
(d) Notwithstanding the foregoing provisions of this Section 9.03 to
the contrary, the following limitations with respect to the indemnification
obligations of Acquiror under clauses (i) and (ii) of Section 9.03(a) shall
apply:
(i) Acquiror shall not be liable for any amounts under this
Section 9.03 unless and until the aggregate of Losses suffered by the Company
Stockholders from all claims for indemnification exceed $100,000, in which case
the Acquiror shall be liable for the full amount of Losses suffered by the
Company Stockholders, including the first $100,000;
(ii) No claim for any Loss shall be made by the Company
Stockholders unless such claim (or all similar claims arising out of the same
circumstances) exceeds in each instance $10,000; and
(iii) In no event shall the Acquiror be liable to the Company
Stockholders for amounts under this Article IX aggregating in excess of (i)
between the date of this Purchase Agreement through and including the first
anniversary thereof, the Purchase Price, and (ii) with respect to the claims
submitted in writing to Acquiror the day following the first anniversary of this
Purchase Agreement through the eighteenth (18th) month after the date of this
Purchase Agreement, the sum of $15,000,000.
SECTION 9.04 THIRD PARTY CLAIMS.
The obligations and liabilities of the Company Stockholders and Acquiror with
respect to their respective indemnities pursuant to this Article IX, resulting
from any Third Party Claim shall be subject to the following terms and
conditions:
(a) The party seeking indemnification (the "Indemnified Party") must
give the party obligated to indemnify (the "Indemnifying Party"), notice of any
Third Party Claim which is asserted against, resulting to, imposed upon or
incurred by the Indemnified Party and which may give rise to liability of the
Indemnifying Party pursuant to this Article IX, stating (to the extent known or
reasonably anticipated) the nature and basis of such Third Party Claim and the
amount thereof; PROVIDED that the failure to give such notice shall not affect
the rights of the Indemnified Party hereunder except to the extent (i) that the
Indemnifying Party shall have suffered actual damage by reason of such failure,
or (ii) such failure or delay materially adversely affects the ability of the
Indemnifying Party to defend, settle or compromise such Third Party Claim.
(b) Subject to Section 9.04(c) below, if the Indemnifying Party assumes
responsibility for Losses arising out of such Third Party Claim, then the
Indemnifying Party shall have the right to undertake, by counsel or other
representatives of its own choosing, the defense of such Third Party Claim at
the Indemnifying Party's risk and expense.
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(c) In the event that (i) the Indemnifying Party shall elect not to
undertake such defense, (ii) within a reasonable time after notice from the
Indemnified Party of any such Third Party Claim, the Indemnifying Party shall
fail to undertake to defend such Third Party Claim, or (iii) there is a
reasonable probability that such Third Party Claim may materially and adversely
affect the Indemnified Party other than as a result of money damages or other
money payments, then the Indemnified Party (upon further written notice to the
Indemnifying Party) shall have the right to undertake the defense, compromise or
settlement of such Third Party Claim, by counsel or other representatives of its
own choosing, on behalf of and for the account and risk of the Indemnifying
Party. In the event that the Indemnified Party undertakes the defense of a Third
Party Claim under this Section 9.04, the Indemnifying Party shall pay to the
Indemnified Party, in addition to the other sums required to be paid hereunder,
the reasonable costs and expenses incurred by the Indemnified Party in
connection with such defense, compromise or settlement as and when such costs
and expenses are so incurred.
(d) Anything in this Section 9.04 to the contrary notwithstanding,
neither the Indemnified Party nor the Indemnifying Party shall, without the
other party's written consent (which consent shall not be unreasonably withheld
or delayed), settle or compromise such Third Party Claim or consent to entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such Third Party Claim in form and substance
satisfactory to the Indemnified Party. In all cases where such release is
granted, if a firm written offer is made to settle any Third Party Claim, and
the Indemnifying Party proposes to accept such settlement and the Indemnified
Party refuses to consent to such settlement then (A) the Indemnifying Party
shall be excused from and the Indemnified Party shall be solely responsible for
all further defense of such Third Party Claim; (B) the maximum liability of the
Indemnifying Party relating to such Third Party Claim shall be the amount of the
proposed settlement if the amount thereafter recovered from the Indemnified
Party on such Third Party Claim is greater than the amount of the proposed
settlement; and (C) the Indemnified Party shall pay all attorney's fees and
legal costs and expenses incurred after rejection of such settlement by the
Indemnified Party, but if the amount thereafter recovered by such Third Party
from the Indemnified Party is less than the amount of the proposed settlement,
the Indemnified Party shall be reimbursed by the Indemnifying Party for such
attorney's fees and legal costs and expenses up to the maximum amount equal to
the difference between the amount recovered by such Third Party and the amount
of the proposed settlement.
SECTION 9.05 NO RECOURSE AGAINST THE COMPANY
The Company Stockholders each hereby irrevocably waive any and all right to
recourse against the Company with respect to any misrepresentation or breach of
any representation, warranty or indemnity, or noncompliance with any conditions
or covenants, given or made by the Company in this Purchase Agreement or any
other agreements and documents executed or to be executed by the Parties hereto
in order to consummate the transactions contemplated by this Purchase Agreement.
No Company Stockholder shall be entitled to contribution from, subrogation to or
recovery against the Company with respect to any liability of any Company
Stockholder that may arise under or pursuant to this Purchase Agreement or any
of the other agreements and
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documents executed or to be executed by the Parties hereto in order to
consummate the transactions contemplated by this Purchase Agreement or such
other agreements and documents contemplated hereby.
SECTION 9.06 REMEDIES CUMULATIVE
Subject to the limitations and qualifications set forth in this Article IX, the
remedies provided herein shall be cumulative and shall not preclude the
assertion by the parties hereto of any other rights or the seeking of any other
remedies against the other parties, or their respective successors or assigns.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 NOTICES
All notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the date
delivered, mailed or transmitted if delivered personally, mailed by registered
or certified mail (postage prepaid, return receipt requested) or sent by
overnight courier (providing proof of delivery) to the Parties at the following
addresses or sent by electronic transmission to the following facsimile numbers
(or at such other address or facsimile number for a Party as shall be specified
by like notice):
(a) If to Acquiror:
The Titan Corporation
3033 Science Park Road
San Diego, California 92121
Facsimile: (619) 552-9759
Attention: Nicholas J. Costanza, Esq.,
General Counsel
With a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
8300 Greensboro Drive
Suite 1100
McLean, Virginia 22102
Facsimile: (703) 610-6200
Attention: Richard K.A. Becker, Esq.
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(b) If to the Company Stockholder or Company:
Dr. Fredrick Yeatts
9 Wilson Road
Bedford, Massachusetts 01730
Facsimile: (781) 271-9827
With a copy (which shall not constitute notice) to:
Nixon Peabody, LLP
101 Federal Street
Boston, Massachusetts 02110
Facsimile: (617) 345-1300
Attention: David R. Gluck, Esq.
SECTION 10.02 HEADINGS
The headings contained in this Purchase Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Purchase Agreement.
SECTION 10.03 SEVERABILITY
If any term or other provision of this Purchase Agreement is invalid, illegal or
incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Purchase Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any Party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties shall negotiate
in good faith to modify this Purchase Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 10.04 ENTIRE AGREEMENT
This Purchase Agreement (together with the Exhibits, Schedules, the Company
Disclosure Letter and the Acquiror Disclosure Letter and the other documents
delivered pursuant hereto) constitutes the entire agreement of the Parties and
supersedes all prior agreements and undertakings, both written and oral, among
the Parties, or any of them, with respect to the subject matter hereof and,
except as otherwise expressly provided herein, is not intended to confer upon
any other Person any rights or remedies hereunder.
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SECTION 10.05 ASSIGNMENT
Neither this Purchase Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the Parties hereto (whether by operation
of Law or otherwise) without the prior written consent of the other Parties;
PROVIDED, HOWEVER, that Acquiror shall have the right to assign this Purchase
Agreement without the prior written consent of the other Parties to a direct or
indirect Subsidiary of the Acquiror, including but not limited to Titan Systems
Corporation, but no such assignment shall relieve Acquiror of its obligations
hereunder. Subject to the preceding sentence, this Purchase Agreement shall be
binding upon, inure to the benefit of and be enforceable by the Parties and
their respective successors and assigns.
SECTION 10.06 NO BROKERS
Each party hereto represents to the other parties that such party has not
engaged any broker, finder or agent in connection with the transactions
contemplated hereunder that will result in any unpaid liability to any broker,
finder or other agent for brokerage fees, finder's fees or commissions.
SECTION 10.07 PARTIES IN INTEREST
This Purchase Agreement shall be binding upon and inure solely to the benefit of
each Party, and nothing in this Purchase Agreement, express or implied, other
than the rights of the Acquiror Indemnified Persons pursuant to Article IX, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Purchase Agreement.
SECTION 10.08 MUTUAL DRAFTING
Each Party has participated in the drafting of this Purchase Agreement, which
each Party acknowledges is the result of extensive negotiations between the
Parties. Consequently, this Purchase Agreement shall be interpreted without
reference to any rule or precept of law that states that any ambiguity in a
document be construed against the drafter.
SECTION 10.09 GOVERNING LAW
This Purchase Agreement shall be governed by, and construed in accordance with,
the Laws of the State of Delaware, regardless of the Laws that might otherwise
govern under applicable principles of conflicts of law.
SECTION 10.10 COUNTERPARTS
This Purchase Agreement may be executed and delivered in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed and delivered shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
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SECTION 10.11 SINGULAR AND PLURAL
Any reference in this Purchase Agreement to the singular includes a reference to
the plural and VICE VERSA.
SECTION 10.11 POST-CLOSING ACCESS TO RECORDS
After the Closing Date, the Company Stockholders shall be granted reasonable
access to the books and records of the Company in order to defend
indemnification claims, file tax returns, and take other similar actions.
Acquiror shall maintain the records of the Company from the Closing Date through
the tolling of all applicable statutes of limitation periods relating to
taxation, indemnification and litigation matters.
ARTICLE XI
DEFINITIONS
For purposes of this Purchase Agreement, the following terms, and the
singular and plural thereof, shall have the meanings set forth below:
"Accounts Payable Adjustment" is defined in Section 1.04(b) of this
Purchase Agreement.
"Acquiror" is defined in the Preamble to this Purchase Agreement.
"Acquiror Audited Balance Sheet" is defined in Section 4.07(a) of this
Purchase Agreement.
"Acquiror Contested Amount" is defined in Section 9.03 of this Purchase
Agreement.
"Acquiror Disclosure Letter" is defined in Article V of this Purchase
Agreement.
"Acquiror Material Adverse Effect" means any event, change or effect
that, individually or when taken together with any related events, is or is
reasonably likely to be materially adverse to the business, operations,
condition (financial or otherwise), Assets or liabilities of Acquiror and its
Subsidiaries, taken as a whole, except to the extent that any such event, change
or effect is directly caused by: (a) the announcement, pendency or process of
effectuating the transactions contemplated by this Purchase Agreement; or (b) a
change in the market price or trading volume of the securities of Acquiror.
"Acquiror Response Notice" is defined in Section 9.03 of this Purchase
Agreement.
"Affiliate" means: (a) with respect to an individual, any member of
such individual's family; (b) with respect to an entity, any officer, director,
stockholder, partner or investor of or in such entity or of or in any Affiliate
of such entity; and (c) with respect to a Person, any Person
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which directly or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such Person or entity.
"Agreed Amount" is defined in Section 9.02(b) of this Purchase
Agreement.
"Agreement" means any agreement between or among two or more Persons
with respect to their relative rights and/or obligations or with respect to a
thing done or to be done, including, without limitation, agreements denominated
as contracts, leases, promissory notes, covenants, easements, rights of way,
commitments, arrangements and understandings.
"Assets" means assets of every kind and everything that is or may be
available for the payment of liabilities (whether inchoate, tangible or
intangible), including, without limitation, real and personal property.
"business day" means a day other than a Saturday, a Sunday or any other
day on which commercial banks in the State of California are authorized or
obligated to be closed.
"Cash Consideration" is defined in Section 1.03 of this Purchase
Agreement.
"Closing Adjustment" is defined in Section 1.04(b) of this Purchase
Agreement.
"Closing Date" is defined in Section 7.01 of this Purchase Agreement.
"Code" means the United States Internal Revenue Code of 1986, as
amended. "Cognizant Agencies" is defined in Section 2.08(d) of this Purchase
Agreement.
"Company" is defined in the Preamble to this Purchase Agreement.
"Company Reviewed Balance Sheet" is defined in Section 3.08(a) of this
Purchase Agreement.
"Company Benefit Plans" means all "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, whether or not terminated, and trust
agreements and insurance contracts under or with respect to which Company has or
could have any liability, contingent, secondary or otherwise.
"Company Common Stock" is defined in Section 3.04 of this Purchase
Agreement.
"Company Contracts" is defined in Section 3.12 of this Purchase
Agreement.
"Company Disclosure Letter" is defined in Article III of this Purchase
Agreement.
"Company Financial Statement" is defined in Section 3.08(a) of this
Purchase Agreement.
"Company Material Adverse Effect" means any event, change or effect
that, individually or when taken together with any related events, is or is
reasonably likely to be materially adverse
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to the business, operations, condition (financial or otherwise), Assets or
liabilities of the Company.
"Company Pension Plan" means any Company Benefit Plans that is an
"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA.
"Company Stockholders" is defined in the Preamble to this Purchase
Agreement.
"Company Stock Plan" means any Company Benefit Plan pursuant to which
Company is or may become obligated to, or obligated to cause another Person to,
issue, deliver or sell shares of capital stock of Company, or grant, extend or
enter into any option, warrant, call, right, commitment or agreement to issue,
deliver or sell shares, or any other interest in respect of capital stock of
Company.
"Company Tax Returns" means all Tax Returns required to be filed by
Company (without regard to extensions of time permitted by law or otherwise).
"Contested Amount" is defined in Section 9.02(b) of this Purchase
Agreement.
"Control" (including the terms "Controlled by" and "under common
Control with") means, as used with respect to any Person, possession of power
(directly or indirectly or as a trustee or executor) to direct or cause the
direction of management or policies of such Person (whether through ownership of
voting securities, as trustee or executor, by Agreement or otherwise).
"Encumbrance" means any mortgage, lien, pledge, encumbrance, security
interest, deed of trust, option, encroachment, reservation, order, decree,
judgment, condition, restriction, charge, Agreement, claim or equity of any
kind.
"Environmental Laws" means any federal, state or local Law relating to
public health or safety, worker health or safety, or pollution, damage to or
protection of the environment including, without limitation, Laws relating to
emissions, discharges, releases or threatened release of Hazardous Materials
into the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, generation,
disposal, transport or handling of any Hazardous Material.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all Laws promulgated pursuant thereto or in connection therewith.
"Exon-Florio Notice" is defined in Section 2.08(a) of this Purchase
Agreement.
"GAAP" means United States generally accepted accounting principles.
"Government Property" means property or equipment in the possession of
or directly acquired by a Governmental Entity and subsequently made available to
the Company or any
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other property or equipment otherwise acquired by the Company to which a
Governmental Entity has title.
"Governmental Entities" (including the term "Governmental") means any
governmental, quasi-governmental or regulatory authority, whether domestic or
foreign.
"Hazardous Material" means (i) any "hazardous substance" as now defined
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601(14); (ii) any "pollutant or contaminant" as defined
in 42 U.S.C. Section 9601(33); (iii) any material now defined as "hazardous
waste" pursuant to 40 C.F.R. Part 261; (iv) any petroleum, including crude oil
and any fraction thereof; (v) natural synthetic gas usable for fuel; (vi) any
"hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910; and (vii) any
asbestos, polychlorinated biphenyl ("PCB"), radium, or isomer of dioxin, or any
material or thing containing or composed of such substance or substances.
"Holdback Consideration" is defined in Section 1.03 of this Purchase
Agreement.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and all Laws promulgated pursuant thereto or in connection
therewith.
"Indemnification Holdback" is defined in Section 1.03 of this Purchase
Agreement.
"Indemnified Party" is defined in Section 9.04 of this Purchase
Agreement.
"Indemnifying Party" is defined in Section 9.04 of this Purchase
Agreement.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
all patent disclosures, industrial designs, utility models and all patents and
patent applications, together with all reissuances, continuations,
continuations-in-part, divisions, revisions, extensions, renewals and
reexaminations thereof, (b) all trademarks, service marks, trade dress, domain
names, web site addresses, logos, trade names, and corporate names, together
with all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all registered and
unregistered copyrights, all rights to database information, and all
applications, registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in connection therewith,
(e) all trade secrets and confidential business information (including research
and development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, software, databases, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f) all rights,
including rights of privacy and publicity, to use the names, likenesses and
other personal characteristics of any individual, and (g) other proprietary
rights and (h) all copies and tangible embodiments thereof (in whatever form or
medium) existing in any part of the world (including all computer software and
related data and documentation).
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"Inventory" means all new materials, work in progress, finished goods
and inventorable supplies.
"knowledge" will be deemed to be present with respect to Company when
the matter in question is known, or upon reasonable investigation, should have
been known, to the Company.
"Laws" means all foreign, federal, state and local statutes, laws,
ordinances, regulations, rules, resolutions, orders, tariffs, determinations,
writs, injunctions, awards (including, without limitation, awards of any
arbitrator), judgments and decrees applicable to the specified Person and to the
businesses and Assets thereof (including, without limitation, Laws relating to
the protection of classified information; the sale, leasing, ownership or
management of real property; employment practices, terms and conditions, and
wages and hours; building standards, land use and zoning; safety, health and
fire prevention; and environmental protection, including Environmental Laws).
"License" means any franchise, grant, authorization, license, tariff,
permit, easement, variance, exemption, consent, certificate, approval or order
of any Governmental Entity.
"Loss Amount" is defined in Section 9.02(b) of this Purchase Agreement.
"Loss Notice" is defined in Section 9.02(b) of this Purchase Agreement.
"Losses" means all demands, losses, claims, actions or causes of
action, assessments, damages, liabilities, costs and expenses, including,
without limitation, interest, penalties and reasonable attorneys' fees and
disbursements.
"Massachusetts Law" means the Massachusetts Business Corporation Law,
as amended.
"Multiemployer Plan" means any "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA to which Company contribute, have an obligation
to contribute, or have at any time since September 2, 1974, contributed or been
obligated to contribute.
"Ordinary Course of Business" means ordinary course of business
consistent with past practices and reasonable business operations.
"Party" and "Parties" are defined in the Preamble to this Purchase
Agreement.
"Permitted Encumbrance" means (i) easements, rights of way, minor
irregularities of title, and liens for taxes not yet due and payable, (ii)
landlord, warehouse and materialmen's liens and (ii) other Encumbrances similar
to clauses (i) and (ii); provided, however, that any or all of the foregoing do
not materially affect the utility or value of the Assets or other matters to
which they relate.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or other
entity, or a Governmental Entity.
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"Plan" means any plan, program or arrangement, whether or not written,
that is or was an "employee benefit plan" as such term is defined in Section
3(3) of ERISA and (a) which was or is established or maintained by Company; (b)
to which Company contributed or was obligated to contribute or to fund or
provide benefits; or (c) which provides or promises benefits to any person who
performs or who has performed services for Company and because of those services
is or has been (i) a participant therein or (ii) entitled to benefits
thereunder.
"Post-Signing Returns" is defined in Section 2.04 of this Purchase
Agreement.
"Purchase Price" is defined in Section 1.02 of this Purchase Agreement.
"Response Notice" is defined in Section 9.02(b) of this Purchase
Agreement.
"Retention Bonus Pool" is defined in Section 1.03 of this Purchase
Agreement.
"Section 338(h)(10) Election" is defined in Section 2.13 of this
Purchase Agreement.
"Securities Act" is defined as the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"September 2000 Company Tax Returns" is defined in Section 2.04 of this
Purchase Agreement.
"Stockholder Agreed Amount" is defined in Section 9.03 of this Purchase
Agreement.
"Stockholder Loss Amount" is defined in Section 9.03 of this Purchase
Agreement.
"Stockholder Loss Notice" is defined in Section 9.03 of this Purchase
Agreement.
"Stockholders' Representative" is defined in Section 1.04(c) of this
Purchase Agreement.
"Subsidiary" means a corporation, partnership, joint venture or other
entity of which any Person owns, directly or indirectly, at least fifty percent
(50%) of the outstanding securities or other interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body or otherwise exercise control of such entity.
"Tax Adjustment" is defined as the total amount determined to be due
and owing by Company under the September 2000 Company Tax Returns, as set forth
in Section 2.04.
"Taxes" (including the terms "Tax" and "Taxing") means all federal,
state, local and foreign taxes (including, without limitation, income, profit,
franchise, sales, use, real property, personal property, AD VALOREM, excise,
employment, social security and wage withholding taxes) and installments of
estimated taxes, assessments, deficiencies, levies, imports, duties, license
fees, registration fees, withholdings, or other similar charges of every kind,
character or description imposed by any Governmental Entity, and any interest,
penalties or additions to tax imposed thereon or in connection therewith.
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"Tax Liabilities" means any action, suit, proceeding, audit,
investigation or claim pending or threatened in respect of any Taxes for which
Company is or may become liable, or any deficiency or claim for any such Taxes
that has been to Company's knowledge proposed, asserted or threatened.
"Tax Returns" means all federal, state, local, foreign and other
applicable returns, declarations, reports and information statements with
respect to Taxes required to be filed with the United States Internal Revenue
Service, and its successors, or any other Governmental Entity or Tax authority
or agency, including, without limitation, consolidated, combined and unitary tax
returns.
"Third Party Claim" means any claim or other assertion of liability by
any third party.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Year 2000 Compliant" is defined in Section 3.23(a) of this Purchase
Agreement.
[Remainder of Page Intentionally Left Blank; Signature Page Follows.]
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IN WITNESS WHEREOF, the undersigned have executed and delivered, or have caused
this Purchase Agreement to be duly executed and delivered, as of the date first
set forth hereinabove.
THE TITAN CORPORATION
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
SENCOM CORP.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
COMPANY STOCKHOLDER
----------------------------------------------
Dr. Fredrick Yeatts
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EXHIBIT A
COMPANY STOCKHOLDERS
<CAPTION>
---------------------------------------------- ---------------------------------------- ------------------------------
SHARES OF COMPANY PERCENTAGE INTEREST OF
NAME AND ADDRESS COMMON STOCK COMPANY
---------------------------------------------- ---------------------------------------- ------------------------------
Dr. Fredrick Yeatts 100 shares 100%
9 Wilson Road
Bedford, Massachusetts 01730
---------------------------------------------- ---------------------------------------- ------------------------------