EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
MCLAGAN PARTNERS, INC.
AS BUYER
MCLAGAN PARTNERS INCORPORATED
AS SELLER
AND
SELLER'S STOCKHOLDERS
DATED AS OF NOVEMBER 13, 1997
ASSET PURCHASE AGREEMENT
INDEX
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Page
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SECTION 1. PURCHASE AND SALE OF ASSETS......................................1
1.1 Sale of Assets.........................................................1
1.2 Excluded Assets........................................................2
1.3 Assumption of Liabilities..............................................3
1.4 Time and Place of Closing..............................................4
1.5 Purchase Price and Payment.............................................5
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND
STOCKHOLDERS.....................................................6
2.1 Making of Representations and Warranties...............................6
2.2 Organization and Qualifications of Seller..............................6
2.3 Subsidiaries...........................................................6
2.4 Capital Stock of Seller; Beneficial Ownership of Seller................6
2.5 Intentionally Omitted..................................................7
2.6 Intentionally Omitted..................................................7
2.7 Authority of the Seller and the Stockholders...........................7
2.8 Real and Personal Property.............................................8
2.9 Financial Statements..................................................10
2.10 Taxes.................................................................12
2.11 Absence of Certain Changes............................................13
2.12 Ordinary Course.......................................................14
2.13 Banking Relations.....................................................14
2.14 Intellectual Property.................................................14
2.15 Contracts.............................................................16
2.16 Litigation............................................................18
2.17 Compliance with Laws..................................................18
2.18 Insurance.............................................................18
2.19 Warranty or Other Claims..............................................18
2.20 Powers of Attorney....................................................18
2.21 Finder's Fee..........................................................18
2.22 Permits; Burdensome Agreements........................................19
2.23 Corporate Records; Copies of Documents................................19
2.24 Transactions with Related Parties.....................................19
2.25 Employee Benefit Programs.............................................19
2.26 Environmental Matters.................................................21
2.27 Directors and Officers................................................22
2.28 Backlog...............................................................22
2.29 Employees; Labor Matters..............................................23
(i)
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2.30 Customers and Suppliers...............................................23
2.31 Hart-Scott-Rodino Matters.............................................23
2.32 Disclosure............................................................24
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER.........................24
3.1 Making of Representations and Warranties..............................24
3.2 Organization of Buyer.................................................24
3.3 Authority of Buyer....................................................24
3.4 Litigation............................................................25
3.5 Finder's Fee..........................................................25
3.6 Hart-Scott-Rodino Matters.............................................25
3.7 Securities and Exchange Commission Filings............................25
SECTION 4. CONDITIONS......................................................26
4.1 Conditions to the Obligations of Buyer................................26
4.2 Conditions to Obligations of the Seller...............................28
SECTION 5. SURVIVAL OF WARRANTIES; RIGHTS, OBLIGATIONS AND ACTIONS
SUBSEQUENT TO CLOSING...........................................30
5.1 Survival of Warranties................................................30
5.2 Payment of Obligations................................................30
5.3 Tax Returns...........................................................30
5.4 Books and Records.....................................................30
5.5 Further Assurances....................................................31
5.6 Allocation of Purchase Price..........................................31
5.7 Hart-Scott-Rodino Filings.............................................31
5.8 Sellers' Employees....................................................31
5.9 Sellers' Benefit Plans................................................31
SECTION 6. INDEMNIFICATION.................................................32
6.1 Indemnification by the Seller and the Stockholders....................32
6.2 Limitations on Indemnification by the Seller and the Stockholders.....33
6.3 Indemnification by Buyer..............................................34
6.4 Limitations on Indemnification by Buyer...............................34
6.5 Notice; Defense of Claims.............................................35
6.6 Satisfaction of Seller and Stockholder Indemnification Obligations....36
SECTION 7. DEFINITIONS.....................................................36
SECTION 8. MISCELLANEOUS...................................................39
8.1 Bulk Sales Law........................................................39
(ii)
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8.2 Fees and Expenses.....................................................39
8.3 Governing Law.........................................................40
8.4 Notices...............................................................40
8.5 Entire Agreement......................................................41
8.6 Assignability; Binding Effect.........................................41
8.7 Captions and Gender...................................................41
8.8 Execution in Counterparts.............................................41
8.9 Amendments............................................................41
8.10 Dispute Resolution....................................................41
8.11 Consent to Jurisdiction...............................................42
8.12 Severability..........................................................42
8.13 No Third-Party Beneficiaries..........................................42
8.14 Publicity and Disclosures.............................................42
8.15 Attorneys' Fees.......................................................42
8.16 Intentionally Omitted.................................................43
8.17 Remedies..............................................................43
(iii)
SCHEDULES
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Schedule 1.1 Certain Subject Assets
Schedule 1.2(g) Excluded Personal Property
Schedule 1.3 Assumed Contracts
Schedule 1.5(d) Recipients of Deferred Consideration
Schedule 2.2 Foreign Qualifications
Schedule 2.4(b) Capitalization
Schedule 2.7(a) Liens
Schedule 2.8(b) Leased Real Property
Schedule 2.8(c) Personal Property
Schedule 2.9 Financial Statements
Schedule 2.10 Taxes
Schedule 2.11 Certain Changes
Schedule 2.13 Banking Relations
Schedule 2.14 Intellectual Property Rights
Schedule 2.15 Contracts
Schedule 2.16 Litigation
Schedule 2.17 Compliance with Laws
Schedule 2.18 Insurance
Schedule 2.19 Product Liability
Schedule 2.22 Permits
Schedule 2.24 Transactions with Related Parties
Schedule 2.25 Employee Benefit Programs
Schedule 2.26 Environmental Matters
Schedule 2.27 Directors and Officers
Schedule 2.28 Backlog
Schedule 2.29 Labor Matters
Schedule 2.30 Customers and Suppliers
Schedule 4.1(k) Employees Signing Employment and Non-Competition Agreements
Schedule 4.2(b) Seller Stock Issuances
Schedule 4.2(c) Participants in Incentive Compensation Plan
Schedule 4.2(d) Stock Option Grants
Schedule 5.8 Employees
Schedule 5.9 Maintained Insurance and 401(k) Plans
(iv)
EXHIBITS
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Exhibit A - Stockholders and Stockholdings
Exhibit B - Form of Promissory Note
Exhibit C - Form of Assignment and Assumption Agreement
Exhibit D - Form of Bill of Sale
Exhibit E - Form of Opinion of Cummings & Lockwood
Exhibit F - Form of Employment and Non-Competition Agreement
Exhibit G - Form of Investor Questionnaire
Exhibit H - Form of Incentive Compensation Plan
Exhibit I - Form of Opinion of Goodwin, Procter & Hoar LLP
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ASSET PURCHASE AGREEMENT
AGREEMENT entered into as of November 13, 1997 by and among McLagan
Partners, Inc., a Delaware corporation ("Buyer") and a wholly-owned subsidiary
of ASI Solutions Incorporated ("ASI"), McLagan Partners Incorporated, an
Illinois corporation ("Seller"), and the holders of all of the outstanding
capital stock of Seller, as set forth on Exhibit A hereto (each, a "Stockholder"
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and together, the "Stockholders").
W I T N E S S E T H
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WHEREAS, contemporaneously herewith certain affiliates of Buyer are
entering into separate asset purchase agreements with certain affiliates of the
Seller;
WHEREAS, subject to the terms and conditions hereof, the Seller desires to
sell substantially all of its assets to Buyer; and
WHEREAS, subject to the terms and conditions hereof, Buyer desires to
purchase said assets of the Seller for the consideration specified herein and
the assumption by Buyer of certain liabilities and obligations of the Seller.
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS.
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1.1 Sale of Assets. Subject to the provisions of this Agreement, the
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Seller agrees to sell and Buyer agrees to purchase, at the Closing (as defined
in Section 1.4 hereof), all of the properties, assets and businesses of the
Seller of every kind and description, tangible and intangible, real, personal or
mixed, and wherever located, including, without limitation, the following
assets:
(a) All assets (other than Current Assets) shown or reflected on the
Base Balance Sheets (as defined in Section 2.9);
(b) The goodwill of Seller;
(c) All rights under existing leases, contracts, licenses, permits,
sales and purchase agreements, and other agreements and business arrangements
which constitute Assumed Contracts (as defined in Section 1.3);
(d) The exclusive rights to use the name "McLagan Partners
Incorporated," and any translations or derivations thereof;
(e) Office furniture and furnishings;
(f) Inventory;
(g) Equipment and supplies;
(h) Patents and patent applications, trademarks and trademark
applications, trade names and all other Intellectual Property Rights (as defined
in Section 2.14);
(i) Sales records and customer and vendor lists;
(j) Marketing, advertising and promotional materials; and
(k) Tax returns of Seller and corporate records of Seller relating to
accounts payable, payroll and accounts receivable for periods prior to the
Closing; provided, however, that Seller shall, after the Closing, be afforded
reasonable access thereto.
The assets, properties and businesses of the Seller sold to and purchased
by Buyer under this Agreement are sometimes referred to as the "Subject Assets."
Schedule 1.1 hereto contains a list of the following Subject Assets: (a) those
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set forth in Section 1.1(a), (b) those set forth in Section 1.1 (e), (c) all
equipment of the Seller and (d) the Seller's customer lists and vendor lists.
1.2 Excluded Assets. Notwithstanding Section 1.1 above, nothing herein
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contained shall operate as a sale, transfer, conveyance or assignment to Buyer
of any of the following assets and property of Seller (the "Excluded Assets"):
(a) Assets and property disposed of since the date of the Base Balance
Sheet in the ordinary course of business and such other assets as have been or
are disposed of pursuant to this Agreement;
(b) Corporate franchise, stock record books, corporate record books
containing minutes of meetings of directors and stockholders and such other
records as have to do exclusively with Seller's organization or stock
capitalization (collectively, the "Corporate Records"); provided, however, that
Seller shall provide Buyer prior to the Closing with true, correct and complete
copies of each of the foregoing;
(c) All Current Assets of Seller as of the Closing Date and all
accounts receivable of Seller on or prior to the date of Closing regardless of
whether or not in accordance with generally accepted accounting principles;
(d) All rights under any loans or other evidence of indebtedness,
other than the Stockholder Loans (as defined below), between Seller, on the one
hand, and any affiliate of
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the Seller, on the other hand (the "Intercompany
Loans");
(e) Refunds for taxes paid by Seller before the Closing or for taxes
paid by Seller after the Closing in respect of the period before the Closing;
(f) Security deposits of the Seller, if any;
(g) those items of personal property of the Stockholders set forth on
Schedule 1.2(g);
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(h) Any rights which the Seller may have to enforce the obligations of
the Buyer pursuant to this Agreement and the other documents and agreements
contemplated herein; and
(i) Insurance policies and rights and claims thereunder, including
proceeds or cash surrender value; and
(j) Any rights under pension, severance or other plans maintained by
Seller in any country other than the United States.
1.3 Assumption of Liabilities. Upon the sale and purchase of the Subject
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Assets, Buyer shall assume and agree to pay or discharge when due in accordance
with their respective terms the following liabilities (the "Liabilities"): (a)
liabilities and obligations incurred by the Seller in connection with certain
loans (the "Stockholder Loans") made by certain Stockholders to the Seller in an
aggregate amount not to exceed One Million Dollars ($1,000,000), and (b) all
liabilities and obligations arising or to be performed after the Closing Date
(as defined in Section 1.4) under those contracts listed on Schedule 1.3 hereto
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(the "Assumed Contracts"); provided, however, that except for the Liabilities,
Buyer shall not assume and shall not pay any liability, cost or expense of
Seller, including, without limitation, the following liabilities:
(a) Any liability of Seller relating to, arising out of, or incurred
in connection with, the operation of the businesses of Seller on or prior to the
Closing Date;
(b) Liabilities incurred by the Seller in connection with this
Agreement and the transactions provided for herein, including, without
limitation, counsel and accountants' fees, and expenses pertaining to the
performance by the Seller of its obligations hereunder (except that Buyer shall
pay all fees and expenses of Coopers & Lybrand L.L.P. incurred in connection
with the transactions contemplated by this Agreement);
(c) Liabilities of the Seller pursuant to any Stockholder Loan, to the
extent that the aggregate value of all liabilities under all Stockholder Loans
exceeds One Million Dollars ($1,000,000);
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(d) Liabilities of the Seller pursuant to any Intercompany Loan;
(e) Current Liabilities of the Seller as of the Closing Date (other
than the current portion of any Stockholder Loan otherwise assumed hereunder);
(f) Taxes (as defined in Section 2.10 hereof) of the Seller (whether
relating to periods before or after the transactions contemplated in this
Agreement or incurred by the Seller in connection with this Agreement and the
transactions provided for herein or otherwise), including, without limitation,
any liability for (i) Taxes arising in connection with any built-in gain of
Seller or (ii) Taxes arising out of the inclusion of Seller in any group filing
consolidated, combined or unitary tax returns or arising out of any transferee
liability;
(g) Liabilities of Seller with respect to (i) any severance pay,
accrued vacation, accrued and unpaid wages, salaries, commissions, bonuses or
other direct compensation for any services performed for it prior to the Closing
Date or amounts required to be reimbursed to any employees with respect to any
period prior to the Closing Date, (ii) any sickness, disability and other group
insurance premiums or claims incurred by or relating to anyone who does not
become an employee of Buyer, or (iii) any such premiums or claims incurred on or
prior to the Closing by any individual who becomes an employee of Buyer as of
the Closing;
(h) Liabilities of Seller to its dissenting stockholders, if any,
under the Illinois Business Corporation Act;
(i) Liabilities of Seller with respect to any options, warrants,
agreements or convertible or other rights to acquire any shares of its capital
stock of any class;
(j) Liabilities in connection with or relating to all actions, suits,
claims, proceedings, demands, assessments and judgments against the Seller or
any of the Stockholders and all costs, losses, liabilities, damages,
deficiencies and expenses (whether or not arising out of third-party claims),
including, without limitation, interest, penalties, reasonable attorneys' and
accountants' fees and all amounts paid in investigation, defense or settlement
of any of the foregoing; and
(k) Liabilities under pension, severance and other plans maintained by
Seller, or any liabilities of Seller to any current or former employee of Seller
under applicable law, in any country other than the United States.
The liabilities which are not assumed by Buyer under this Agreement are
hereinafter sometimes referred to as the "Excluded Liabilities."
1.4 Time and Place of Closing. The closing of the purchase and sale
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provided for in this Agreement (herein called the "Closing") shall be held at
the offices of Goodwin, Procter &
4
Hoar LLP at 599 Lexington Avenue, New York, New York at 10:00 a.m. (local time)
on November 13, 1997, or at such other place, date or time as may be fixed by
mutual agreement of the parties hereto (the date of the Closing being referred
to herein as the "Closing Date").
1.5 Purchase Price and Payment. In consideration of the sale by the
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Seller to Buyer of the Subject Assets, subject to the satisfaction of all of the
conditions contained herein, Buyer agrees that it will ((a) - (e) below being
hereinafter sometimes referred to as the "Purchase Price"):
(a) At the Closing, deliver to Seller Fifteen Million, Two Hundred
Fifty Thousand Dollars ($15,250,000) in cash, to be paid by wire transfer of
immediately available funds;
(b) At the Closing, deliver to Seller a junior subordinated note of
ASI in a principal amount of Five Million Dollars ($5,000,000) (the "Note"),
substantially in the form attached hereto as Exhibit B, which Note shall be
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subject to the terms of this Agreement and shall expressly permit Buyer to set-
off the amount of any indemnification payable by Seller or any Stockholder to
Buyer under Section 6 hereof;
(c) At the Closing, discharge all liabilities of the Seller in respect
of the Stockholder Loans; provided that in no event shall the amount of such
liabilities exceed One Million Dollars ($1,000,000) in the aggregate;
(d) Upon satisfaction of the condition set forth in Section 4.1(m),
Buyer shall deliver to the Seller a total of 50,000 shares of Common Stock; and
(e) Subject to the terms and provisions of the Credit Agreement and
the Subordination Agreement, on April 30, 2000, deliver a payment in an
aggregate amount not to exceed One Million Dollars ($1,000,000), to those
individuals, and in those amounts, set forth on Schedule 1.5(e) to whom the
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Seller and the Stockholders have directed Buyer to make such payments; provided,
however, that no payment shall be made pursuant to this Section 1.5(e) to any
recipient named on said Schedule whose full-time employment with Buyer is
terminated prior to the date of such payment as a result of (i) the voluntary
termination of such employment by such recipient or (ii) termination by the
Buyer for "cause" (as defined in the Employment and Non-Competition Agreement
between such recipient and the Buyer or, in the event the recipient is not a
party to an Employment and Non-Competition Agreement, determined in accordance
with the Buyer's past practices) (it being understood that any payment forfeited
by an individual named on said Schedule as a result of such a termination shall
be cancelled in its entirety and shall not be paid to any other individual); and
provided, further, that all payments under this Section 1.5(e) shall be
subordinated to Buyer's indebtedness to The Chase Manhattan Bank or any other
bank or financial institution which is a creditor of the Company (the "Bank"),
and those individuals listed on Schedule 1.5(e) shall execute and deliver to the
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Bank and/or the Buyer a subordination agreement or other documentation
containing those terms and conditions
5
reasonably requested by the Bank or as may otherwise be necessary to subordinate
the obligations of the Buyer under this Section 1.5(e) to its senior debt. No
person shall be entitled to receive any payment under this Section 1.5(e), and
the Buyer shall not make any payment under such Section 1.5(e) to such person,
unless and until such person shall have executed a counterpart signature page to
the Subordination Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDERS.
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2.1 Making of Representations and Warranties. As a material inducement to
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Buyer to enter into this Agreement and consummate the transactions contemplated
hereby, the Seller hereby makes to Buyer the representations and warranties
contained in this Section 2 and the representations and warranties set forth in
Section 2.7(b) are also made severally by each Stockholder with respect to
himself, herself or itself.
2.2 Organization and Qualifications of Seller. The Seller is a
-----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois with full corporate power and authority to own or lease
its properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is currently conducted or
proposed to be conducted. The copies of Seller's Articles of Incorporation, as
amended to date, certified by the Secretary of State of the State of Illinois,
and of Seller's by-laws, as amended to date, certified by the Secretary of
Seller, and heretofore delivered to Buyer's counsel, are complete and correct,
and no amendments thereto are pending or contemplated. The Seller is not in
violation of any term of its Articles of Incorporation or by-laws. The Seller
is duly qualified to do business as a foreign corporation in each of the states
listed in Schedule 2.2, and the Seller is not required to be licensed or
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qualified to conduct its business or own its property in any other jurisdiction.
2.3 Subsidiaries. The Seller does not have any subsidiaries nor does the
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Seller own any securities issued by any other business organization or
governmental authority, except U.S. Government securities, bank certificates of
deposit and money market accounts acquired as short-term investments in the
ordinary course of its business. The Seller does not own or have any direct or
indirect interest in or control over any corporation, partnership, joint venture
or entity of any kind.
2.4 Capital Stock of Seller; Beneficial Ownership of Seller.
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(a) The authorized capital stock of Seller consists of 15,000 shares
of common stock, no par value ("Seller Common Stock"), of which 1,200 shares are
duly and validly issued, outstanding, fully paid and non-assessable and of which
13,800 shares are authorized but unissued. There are no outstanding options,
warrants, rights, commitments, preemptive rights or agreements of any kind for
the issuance or sale of, or outstanding securities convertible into or
exchangeable for, any additional shares of capital stock of any class of Seller.
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None of Seller's capital stock has been issued in violation of any federal or
state law. There are no voting agreements, trusts, proxies or other agreements,
instruments or undertakings with respect to the voting of Seller's capital stock
to which Seller or any stockholder of Seller is a party.
(b) Each of the stockholders of Seller owns beneficially and of record
the number of shares of Seller Common Stock set forth opposite such
Stockholder's name on Schedule 2.4(b) hereto.
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2.5 Intentionally Omitted.
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2.6 Intentionally Omitted.
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2.7 Authority of the Seller and the Stockholders.
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(a) The Seller has full right, authority and power to enter into this
Agreement and each agreement, document and instrument to be executed and
delivered by the Seller pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Seller of this Agreement and each such other agreement,
document and instrument have been duly authorized by all necessary action of the
Seller and its stockholders and no other action on the part of the Seller or any
of its stockholders is required in connection therewith. This Agreement and
each agreement, document and instrument executed and delivered by the Seller
pursuant to this Agreement constitutes, or when executed and delivered will
constitute, valid and binding obligations of the Seller enforceable in
accordance with their terms, except as their enforceability may be limited by
bankruptcy or other laws affecting creditors' rights generally or by principles
of equity. The execution, delivery and performance by the Seller of this
Agreement and each such agreement, document and instrument:
(i) does not and will not violate any provision of the Articles
of Incorporation or by-laws of the Seller;
(ii) does not and will not violate any laws of the United States
or any state or other jurisdiction applicable to the Seller or require the
Seller to obtain any approval, consent or waiver of, or make any filing
with, any person or entity (governmental or otherwise) that has not been
obtained or made; and
(iii) does not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a right of
termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which the Seller is a party or by which the property
7
of the Seller is bound or affected, or result in the creation or imposition
of any mortgage, pledge, lien, security interest or other charge or
encumbrance on any of the Subject Assets, except as specifically identified
on Schedule 2.7(a).
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(b) Each Stockholder has full right, authority, power and capacity to
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by or on his behalf pursuant to this Agreement and to
carry out the transactions contemplated hereby and thereby. This Agreement and
each agreement, document and instrument executed and delivered by any
Stockholder pursuant to this Agreement constitutes, or when executed and
delivered will constitute, valid and binding obligations of such Stockholder
enforceable in accordance with their respective terms, except as their
enforceability may be limited by bankruptcy or other laws affecting creditors'
rights generally or by principles of equity. The execution, delivery and
performance by each Stockholder of this Agreement and each such agreement,
document and instrument:
(i) does not and will not violate any laws of the United States
or any state or other jurisdiction applicable to such Stockholder or
require such Stockholder to obtain any approval, consent or waiver of, or
make any filing with, any person or entity (governmental or otherwise) that
has not been obtained or made; and
(ii) does not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a right of
termination of, any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which such Stockholder is a party or by which the
property of such Stockholder is bound or affected, or result in the
creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the Subject Assets.
2.8 Real and Personal Property.
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(a) Owned Real Property. The Seller hereby represents and warrants
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that it does not own any real property.
(b) Leased Real Property. All of the real property leased by the
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Seller as tenant or lessee is identified on Schedule 2.8(b) (collectively
---------------
referred to herein as the "Leased Real Property"). The Seller hereby makes the
following representations and warranties with respect to the Leased Real
Property:
(i) Leases. The copies of the leases of the Leased Real Property
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(collectively, the "Leases") delivered by Seller to Buyer and the
information with respect to each of the Leases set forth on Schedule 2.8(b)
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is complete, accurate, true and correct. With respect to each of the
Leases, except as set forth on Schedule 2.8(b):
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(A) each of the Leases is in full force and effect and
has not been modified, amended or altered, in writing or otherwise;
(B) to the knowledge of the Seller, all material
obligations of the landlord or lessor under the Leases which have
accrued have been performed, and to the knowledge of the Seller, no
landlord or lessor is in default under any Lease;
(C) all material obligations of the tenant or lessee under
the Leases which have accrued have been performed, the Seller is not
in default under any Lease, and no circumstance presently exists
which, with notice or the passage of time, or both, would give rise to
a default by the Seller; and
(D) the Seller has obtained the consent of each landlord or
lessor under any Leases whose consent is required to the assignment or
transfer of the Leased Real Property to Buyer, and such transfer will
not give any landlord or lessor under any Lease any remedy, including,
without limitation, any right to declare a default under any Lease.
(ii) Title and Description. The Seller holds a good, clear,
---------------------
marketable, valid and enforceable leasehold interest in the Leased Real
Property pursuant to the Leases, subject only to the right of reversion of
the landlord or lessor under the Leases, free and clear of all other prior
or subordinate interests, including, without limitation, mortgages, deeds
of trust, ground leases, leases, subleases, assessments, tenancies, claims,
covenants, conditions, restrictions, easements, judgments or other
encumbrances or matters affecting title, and free of encroachments onto or
off of the Leased Real Property, except for (x) easements, covenants,
restrictions and similar encumbrances that do not and could not interfere
with the use of the Leased Real Property as currently used and improved,
and (y) minor encroachments that do not and could not adversely affect the
value or use of the Leased Real Property as currently used and improved and
that could be removed without material cost ((x) and (y) are collectively
referred to as "Permitted Encumbrances"), and except for matters set forth
on Schedule 2.8(b).
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(iii) Condition. Except as set forth on Schedule 2.8(b), to the
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knowledge of the Seller, there are no material defects in the physical
condition of any improvements constituting a part of the Leased Real
Property, including, without limitation, structural elements, mechanical
systems, roofs or parking and loading areas, and all of such improvements
are in reasonable working condition and repair, have been maintained in
accordance with Seller's reasonable obligations under the Leases and are
free from infestation by rodents or insects. Except as set forth on
Schedule 2.8(b), to the knowledge of the Seller, none of the Leased Real
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Property located in the United States of America is subject to special
flood or mudslide hazards or within the 100 year flood plain. To the
knowledge of the Seller, all water, sewer, gas, electric, telephone,
9
drainage and other utilities required by law or necessary for the current
or planned operation of the Leased Real Property have been installed and
connected pursuant to valid permits, and are sufficient to service the
Leased Real Property.
(iv) Compliance with Law; Government Approvals. The Seller has
-----------------------------------------
not received notice from any governmental authority of any violation of any
law, ordinance, regulation, license, permit or authorization issued with
respect to any of the Leased Real Property that has not been corrected
heretofore, and, to the knowledge of the Seller, no such violation now
exists which could have an adverse effect on the operation or value of any
of the Leased Real Property. To the knowledge of the Seller, all
improvements constituting a part of the Leased Real Property are in
compliance in all respects with all applicable laws, ordinances,
regulations, licenses, permits and authorizations, and to the knowledge of
the Seller there are presently in effect all licenses, permits and
authorizations required by law, ordinance, or regulation. To the knowledge
of the Seller, there is at least the minimum access required by applicable
subdivision or similar law to the Leased Real Property. The Seller has not
received notice of any pending or threatened real estate tax deficiency or
reassessment or condemnation of all or any portion of any of the Leased
Real Property.
(c) Personal Property. A list of Seller's material machinery,
-----------------
equipment and other tangible personal property is contained on Schedule 2.8(c).
---------------
Except as specifically disclosed in Schedule 1.1 or in the Base Balance Sheet
------------
(as defined in Section 2.9), the Seller has good and marketable title to all of
its personal property. None of such personal property or assets is subject to
any mortgage, pledge, lien, conditional sale agreement, security agreement,
encumbrance or other charge except as specifically disclosed in said Schedule or
in the Base Balance Sheet. The Base Balance Sheet as submitted to the Buyer by
the Seller and restated by Coopers & Lybrand L.L.P., independent public
accountants ("C&L"), in accordance with generally accepted accounting principles
("GAAP") reflects all personal property of the Seller as of the dates thereof
required to be reflected thereon, and the Subject Assets are sufficient assets
for Buyer to continue the business of the Seller as presently conducted by the
Seller. Except as otherwise specified in Schedule 2.8(c), to the knowledge of
---------------
the Seller, all leasehold improvements, furnishings, machinery and equipment of
the Seller are in good repair (subject to ordinary wear and tear), have been
well maintained, and substantially comply with all applicable laws, ordinances
and regulations, and such machinery and equipment is in good working order.
Except as set forth on Schedule 2.8(c), the Seller does not know of any pending
---------------
or threatened change of any such laws, ordinances or regulations which could
adversely affect the Seller or its business.
2.9 Financial Statements.
--------------------
(a) The Seller has delivered to Buyer the following financial
statements, copies of which are attached hereto as Schedule 2.9:
------------
10
(i) Unaudited balance sheets of the Seller as of December
31, 1994, December 31, 1995, and December 31, 1996, and statements of
income, retained earnings and cash flows for the three fiscal years then
ended, certified by the Seller's chief financial officer or treasurer. The
unaudited balance sheet of the Seller as of December 31, 1996 is sometimes
referred to herein as the "Base Balance Sheet."
(ii) Summarized financial information of the Seller for its
fiscal years ending December 31, 1995, and December 31, 1996, audited and
certified by C&L.
(iii) Unaudited balance sheet of the Seller as of September
30, 1997 (the "Interim Balance Sheet") and statements of income, retained
earnings and cash flows for the period then ended, certified by the
Seller's chief financial officer or treasurer. The Base Balance Sheet and
the Interim Balance Sheet are sometimes referred to herein as the
"Financial Statements."
The Financial Statements (as submitted to the Buyer by the Seller and
restated by C&L in accordance with GAAP) are complete and correct in all
material respects, and present fairly in all material respects the
financial condition of the Seller at the dates of said Financial Statements
and the results of its operations and its cash flows for the periods
covered thereby (subject, in the case of unaudited financial statements, to
normal year-end adjustments).
(b) Except as disclosed on Schedule 2.9, as of the date of the Base
------------
Balance Sheet, the Seller did not have any liabilities of any nature, whether
accrued, absolute, contingent or otherwise, asserted or unasserted, known or
unknown (including without limitation liabilities as guarantor or otherwise with
respect to obligations of others, or liabilities for taxes due or then accrued
or to become due or contingent or potential liabilities relating to activities
of the Seller or the conduct of its businesses prior to the date of the Base
Balance Sheet regardless of whether claims in respect thereof had been asserted
as of such date), except liabilities stated or adequately reserved against on
the Base Balance Sheet or immaterial liabilities incurred in the ordinary course
of the Seller's business which are not required to be reflected in the Base
Balance Sheet (as submitted to the Buyer by the Seller and restated by C&L in
accordance with GAAP) or the notes thereto.
(c) Except as disclosed on Schedule 2.9, as of the date hereof, the
------------
Seller does not have any liabilities of any nature, whether accrued, absolute,
contingent or otherwise, asserted or unasserted, known or unknown (including
without limitation liabilities as guarantor or otherwise with respect to
obligations or others, or liabilities for taxes due or accrued or to become due
or contingent or potential liabilities relating to activities of the Seller or
the conduct of its business prior to the date hereof, regardless of whether
claims in respect thereof have been asserted as of the date hereof), except
liabilities (i) stated or adequately reserved against on the Base Balance Sheet
or the Interim Balance Sheet (as submitted to the Buyer by the Seller and
restated by C&L in accordance with GAAP), or (ii) disclosed herein or reflected
on Schedule
--------
11
2.9(c) hereto or (iii) incurred after September 30, 1997 in the ordinary
- ------
course of business by the Seller and consistent with the terms of this
Agreement.
2.10 Taxes.
-----
(a) The Seller has in accordance with applicable law filed all
federal, state, local and foreign tax returns required to be filed by it through
the date hereof, and all such returns correctly and accurately set forth the
amount of any taxes relating to the applicable period (the "Tax Returns"). A
list of all federal, state, local and foreign income tax returns filed with
respect to the Seller for taxable periods ended on or after December 31, 1994,
is set forth on Schedule 2.10 attached hereto, and said Schedule indicates those
-------------
returns that have been audited or currently are the subject of an audit. The
Seller has delivered to Buyer correct and complete copies of all Tax Returns
listed on said Schedule.
(b) All federal, state, local, foreign, and other taxes, including,
without limitation, income taxes, estimated taxes, alternative minimum taxes,
excise taxes, sales taxes, use taxes, value-added taxes, gross receipts taxes,
franchise taxes, capital stock taxes, employment and payroll-related taxes,
withholding taxes, stamp taxes, transfer taxes, windfall profit taxes,
environmental taxes and property taxes, whether or not measured in whole or in
part by net income, and all deficiencies, or other additions to tax, interest,
fines and penalties owed by it (collectively, "Taxes"), required to be paid by
it through the date hereof whether disputed or not have been paid.
(c) Neither the Internal Revenue Service ("IRS") nor any other
governmental authority is now asserting or, to the knowledge of the Seller,
threatening to assert against the Seller any deficiency or claim for additional
Taxes. No claim has ever been made by an authority in a jurisdiction where the
Seller does not file reports and returns that the Seller is or may be subject to
taxation by that jurisdiction. There are no security interests on any of the
assets of the Seller that arose in connection with any failure (or alleged
failure) to pay any Taxes. The Seller has never entered into a closing
agreement pursuant to Section 7121 of the Code.
(d) Except as set forth on Schedule 2.10, since December 31, 1994,
-------------
there has not been any audit of the tax return filed by Seller, no audit of any
tax return of the Seller is in progress, and the Seller has not been notified by
any tax authority that any such audit is contemplated or pending. Except as set
forth on Schedule 2.10, no extension of time with respect to any date on which a
-------------
tax return was or is to be filed by the Seller is in force, and no waiver or
agreement by the Seller is in force for the extension of time for the assessment
or payment of any Taxes.
(e) Except as disclosed on Schedule 2.10, the Seller has not ever been
-------------
(and the Seller has not ever had any liability for unpaid Taxes because it once
was) a member of an
12
"affiliated group" (as defined in Section 1504(a) of the Code). Except as set
forth on Schedule 2.10, the Seller has not ever filed, and the Seller has not
-------------
ever been required to file, a consolidated, combined or unitary tax return with
any other entity. The Seller does not own and the Seller has never owned a
direct or indirect interest in any trust, partnership, corporation or other
entity and therefore Buyer is not acquiring from the Seller an interest in any
such entity. Except as set forth in Schedule 2.10, the Seller is a party to any
-------------
tax sharing agreement.
(f) The Seller is not a "foreign person" within the meaning of Section
1445 of the Code and Treasury Regulations Section 1.1445-2.
(g) For purposes of this Agreement, all references to Sections of the
Code shall include any predecessor provisions to such Sections and any similar
provisions of federal, state, local or foreign law.
2.11 Absence of Certain Changes. Except as disclosed on Schedule 2.11,
-------------------------- -------------
since the date of the Base Balance Sheet there has not been:
(a) Any change in the financial condition, properties, assets,
liabilities, business or operations of the Seller which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has been materially adverse with respect to the Seller;
(b) Any contingent liability incurred by the Seller as guarantor or
otherwise with respect to the obligations of others or any cancellation of any
material debt or claim owing to, or waiver of any material right of, the Seller;
(c) Any mortgage, encumbrance or lien placed on any of the properties
of the Seller which remains in existence on the date hereof, except liens for
taxes not yet due and payable;
(d) Any obligation or liability of any nature incurred by the Seller,
whether accrued, absolute, contingent or otherwise, asserted or unasserted,
known or unknown (including without limitation liabilities for Taxes due or to
become due or contingent or potential liabilities relating to products or
services provided by the Seller or the conduct of the Seller's business since
the date of the Base Balance Sheet regardless of whether claims in respect
thereof have been asserted), other than obligations and liabilities incurred in
the ordinary course of business consistent with the terms of this Agreement (it
being understood that product or service liability claims shall not be deemed to
be incurred in the ordinary course of business);
(e) Any purchase, sale or other disposition, or any agreement or other
arrangement for the purchase, sale or other disposition, of any of the
properties or assets of the Seller other than in the ordinary course of
business;
13
(f) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or business
of the Seller;
(g) Any labor trouble or claim of unfair labor practices involving the
Seller; any change in the compensation payable or to become payable by the
Seller to any of its officers, employees, agents or independent contractors
other than normal merit increases in accordance with its usual practices, or,
except for bonuses or other arrangements to be paid by Seller from the proceeds
of this transaction, any bonus payment or arrangement made to or with any of
such officers, employees, agents or independent contractors;
(h) Any change with respect to the officers or management of the
Seller;
(i) Any payment or discharge of a material lien or liability of the
Seller except in the ordinary course of business;
(j) Any obligation or liability incurred by the Seller to any of its
officers, directors, stockholders or employees, or any loans or advances made by
the Seller to any of its officers, directors, stockholders or employees, except
normal compensation and expense allowances payable to officers or employees;
(k) Any change in accounting methods or practices, credit practices or
collection policies used by the Seller;
(l) Any other transaction entered into by the Seller other than
transactions in the ordinary course of business and transactions contemplated by
this Agreement; or
(m) Any agreement or understanding, whether in writing or otherwise,
for the Seller to take any of the actions specified in paragraphs (a) through
(l) above.
2.12 Ordinary Course. Since the date of the Base Balance Sheet, the Seller
---------------
has conducted its business only in the ordinary course and consistently with its
prior practices, except for transactions contemplated by this Agreement.
2.13 Banking Relations. All of the arrangements which the Seller has with
-----------------
any banking institution are completely and accurately described on Schedule
--------
2.13, indicating with respect to each of such arrangements the type of
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the person or persons authorized in respect thereof.
2.14 Intellectual Property.
---------------------
(a) Except as described on Schedule 2.14, the Seller has sufficient
-------------
ownership
14
of, or sufficient license to use, all Intellectual Property Rights including,
without limitation, patent, copyright, trade secret, trademark, or other
proprietary rights used or to be used in its business as presently conducted or
contemplated. The Seller's rights in all Intellectual Property Rights set forth
on Schedule 2.14 are freely transferable. There are no claims of conflict or
-------------
infringement of any other person pertaining to any of such Intellectual Property
Rights and no proceedings have been instituted, or are pending or threatened,
which challenge the rights of the Seller in respect thereof.
(b) All patents, patent applications, trademarks, trademark
applications and registrations and registered copyrights which are owned by or
licensed to the Seller or used or to be used by the Seller in its business as
presently conducted or contemplated, and all other Intellectual Property Rights
which are material to the business or operations of the Seller, are listed on
Schedule 2.14. All of such patents, patent applications, trademark
- -------------
registrations, trademark applications and registered copyrights have been duly
registered in, filed in or issued by the United States Patent and Trademark
Office, the United States Register of Copyrights, or the corresponding offices
of other jurisdictions as identified on said Schedule, and have been properly
maintained and renewed in accordance with all applicable provisions of law and
administrative regulations of the United States and each such jurisdiction.
(c) All licenses or other agreements under which the Seller is granted
Intellectual Property Rights are listed on Schedule 2.14. All of said licenses
-------------
or other agreements are in full force and effect, there is no material default
by any party thereto, and, except as set forth on Schedule 2.14, all of the
-------------
Seller's rights thereunder are freely assignable. To the knowledge of the
Seller, the licensors under said licenses and other agreements have and had all
requisite power and authority to grant the rights purported to be conferred
thereby. True and complete copies of all such licenses or other agreements, and
any amendments thereto, have been provided to Buyer.
(d) All licenses or other agreements under which the Seller has
granted to others any Intellectual Property Rights owned or licensed by the
Seller are listed on Schedule 2.14. All of said licenses or other agreements
-------------
are in full force and effect, there is no material default by any party thereto,
and, except as set forth on Schedule 2.14, all of the Seller's rights thereunder
-------------
are freely assignable. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been provided to Buyer.
(e) To the knowledge of the Seller, the Seller has not granted to any
third party any right to manufacture, reproduce, distribute, market or exploit
any of the Seller's products, services or Intellectual Property Rights or any
adaptations, translations, or derivative works based on the Seller's products,
services or Intellectual Property Rights or any portion thereof. To the
knowledge of the Seller, the Seller has at all times used commercially
reasonable efforts to protect its trade secrets or other Intellectual Property
Rights and has not disclosed or otherwise dealt with such items in such a manner
as to cause the loss of such trade secrets or other Intellectual Property Rights
by release thereof into the public domain. To the
15
knowledge of the Seller, the Seller has at all times used commercially
reasonable efforts to protect the confidentiality of all of its other
confidential and proprietary information and that of third parties which is or
has been in its possession.
(f) To the knowledge of the Seller, the present and contemplated
business, activities and products of the Seller do not infringe any Intellectual
Property Rights of any other person. No proceeding charging the Seller with
infringement of any adversely held Intellectual Property Rights has been filed
or has been threatened to be filed. To the Seller's knowledge, there exists no
unexpired patent or patent application which includes claims that would be
infringed by or otherwise adversely affect the products, activities or business
of the Seller. To the knowledge of the Seller, the Seller is not making
unauthorized use of any confidential information or trade secrets of any person,
including without limitation any former employer of any past or present employee
of the Seller. Except as set forth on Schedule 2.14, the Seller does not have
-------------
and, to the knowledge of the Seller, none of its employees have, any agreements
or arrangements with any persons other than the Seller related to confidential
information or trade secrets of such persons or restricting any such employee's
ability to engage in business activities of any nature. The activities of the
Seller's employees on behalf of the Seller do not violate any such agreements or
arrangements known to the Seller which any such employees have with other
persons.
As used herein, the term "Intellectual Property Rights" shall mean all
intellectual property rights, including, without limitation, all of the
registered rights set forth on Schedule 2.14 and all patents, patent
-------------
applications, patent rights, trademarks, trademark applications, trade names,
service marks, service mark applications, copyrights, copyright applications,
computer programs and other computer software, inventions, designs, samples,
specifications, schematics, know-how, trade secrets, proprietary processes and
formulae, including production technology and processes, all source and object
code, algorithms, promotional materials, customer lists, supplier and dealer
lists and marketing research, and all documentation and media constituting,
describing or relating to the foregoing, including without limitation, manuals,
memoranda and records. Schedule 2.14 contains a list and brief description of
-------------
all Intellectual Property Rights (other than with respect to "off the shelf"
software used by the Seller or any subsidiary of the Seller that is generally
commercially available) owned by or registered in the name of the Seller or any
subsidiary of the Seller or of which the Seller or any subsidiary of the Seller
is the licensor or a licensee of a material right or in which the Seller or any
subsidiary of the Seller has any material right and, in each case, a brief
description of the nature of the right.
2.15 Contracts. Except for contracts, commitments, plans, agreements and
---------
licenses described on Schedule 2.15 (true and complete copies of which have been
-------------
delivered to Buyer), the Seller is not a party to or subject to:
(a) any plan or contract providing for bonuses, pensions, options,
stock purchases, deferred compensation, retirement payments, profit sharing,
collective bargaining
16
or the like, or any contract or agreement with any labor union;
(b) any employment contract or contract for services which requires
the payment of more than $50,000 annually or which is not terminable within 30
days by the Seller without liability for any penalty or severance payment;
(c) any contract or agreement for the purchase of any commodity,
material or equipment except purchase orders in the ordinary course for less
than $5,000 each, such orders not exceeding $20,000 in the aggregate;
(d) any other contracts or agreements creating any obligations of the
Seller of $25,000 or more with respect to any such contract or agreement not
specifically disclosed elsewhere under this Agreement;
(e) any contract or agreement providing for the purchase of all or
substantially all of its requirements of a particular product from a supplier;
(f) any contract or agreement involving more than $25,000 which by its
terms does not terminate or is not terminable without penalty by the Seller or
any successor or assign within one year after the date hereof;
(g) any contract or agreement for the sale or lease of its products
not made in the ordinary course of business;
(h) any contract with any sales agent or distributor of products of
the Seller;
(i) any contract containing covenants limiting the freedom of the
Seller to compete in any line of business or with any person or entity;
(j) any contract or agreement for the purchase of any fixed asset for
a price in excess of $5,000 whether or not such purchase is in the ordinary
course of business;
(k) any license agreement (as licensor or licensee);
(l) any indenture, mortgage, promissory note, loan agreement, guaranty
or other agreement or commitment for the borrowing of money; or
(m) any contract or agreement with any officer, employee, director or
stockholder of the Seller or with any persons or organizations controlled by or
affiliated with any of them.
17
The Seller is not in default of any material provision under any such
contracts, commitments, plans, agreements or licenses described in said
Schedule, and Seller does not have knowledge of conditions or facts which with
notice or passage of time, or both, would constitute such a default.
2.16 Litigation. Schedule 2.16 hereto lists all currently pending
---------- -------------
litigation and governmental or administrative proceedings or investigations to
which the Seller is a party. Except for matters described on Schedule 2.16,
-------------
there is no litigation or governmental or administrative proceeding or
investigation pending or, to the knowledge of the Seller, threatened against the
Seller or any affiliate of the Seller which may have any adverse effect on the
Seller's properties, assets, prospects, financial condition or business or which
would prevent or hinder the consummation of the transactions contemplated by
this Agreement. With respect to each matter set forth therein, Schedule 2.16
-------------
sets forth a description of the matter, the forum (if any) in which it is being
conducted, the parties thereto and the type and amount of relief sought.
2.17 Compliance with Laws. Except as set forth on Schedule 2.17, to the
-------------------- -------------
knowledge of the Seller, the Seller is in compliance in all material respects
with all applicable statutes, ordinances, orders, judgments, decrees and rules
and regulations promulgated by any federal, state, municipal or other
governmental authority which apply to the Seller or to the conduct of its
business, and the Seller has not received any notice of a violation or alleged
violation of any such statute, ordinance, order, rule or regulation.
2.18 Insurance. The physical properties and assets of the Seller are
---------
insured to the extent disclosed on Schedule 2.18 and all insurance policies and
-------------
arrangements of the Seller are disclosed on said Schedule. To the knowledge of
the Seller, said insurance policies and arrangements are in full force and
effect, all premiums with respect thereto are currently paid, and the Seller is
in compliance in all material respects with the terms thereof. To the knowledge
of the Seller, said insurance is adequate and customary for the business engaged
in by the Seller and is sufficient for compliance by the Seller with all
requirements of law and all agreements and leases to which the Seller is a
party.
2.19 Warranty or Other Claims. Except as disclosed on Schedule 2.19, to
------------------------ -------------
the knowledge of the Seller, there are no existing or threatened product
liability, warranty or other similar claims, or any facts upon which a material
claim of such nature could be based, against the Seller for services which are
defective or fail to meet any service warranties. No claim has been asserted
against the Seller for renegotiation or price redetermination of any business
transaction, and there are no facts upon which any such claim could be based.
2.20 Powers of Attorney. Neither the Seller nor any Stockholder has
------------------
granted any powers of attorney which are presently outstanding.
2.21 Finder's Fee. Neither the Seller nor any Stockholder has incurred or
------------
become liable for any broker's commission or finder's fee relating to or in
connection with the
18
transactions contemplated by this Agreement.
2.22 Permits; Burdensome Agreements. Schedule 2.22 lists all permits,
------------------------------ -------------
registrations, licenses, franchises, certifications and other approvals
(collectively, the "Approvals") required from federal, state or local
authorities in order for the Seller to conduct its business. The Seller has
obtained all such Approvals, which are valid and in full force and effect, and
is operating in compliance therewith. Such Approvals include, but are not
limited to, those required under federal, state or local statutes, ordinances,
orders, requirements, rules, regulations, or laws pertaining to environmental
protection, public health and safety, worker health and safety, buildings,
highways or zoning. Except as disclosed on Schedule 2.22 or in any other
-------------
Schedule hereto, the Seller is not subject to or bound by any agreement,
arrangement, judgment, decree or order which may materially and adversely affect
its business or prospects, its condition, financial or otherwise, or any of its
assets or properties.
2.23 Corporate Records; Copies of Documents. The business records and the
--------------------------------------
corporate records of the Seller, as delivered to Buyer pursuant to Sections
1.1(l) and 1.2(b), respectively, are either the originals of such documents or
are true, correct and complete copies of the originals of such documents.
2.24 Transactions with Related Parties. Except as set forth on Schedule
--------------------------------- --------
2.24 hereto, neither the Seller nor any stockholder, officer, supervisory
- ----
employee or director of the Seller or, to the knowledge of the Seller, any of
their respective spouses or family members owns directly or indirectly on an
individual or joint basis any material interest in, or serves as an officer or
director or in another similar capacity of, any competitor or supplier of the
Seller or any organization which has a material contract or arrangement with the
Seller.
2.25 Employee Benefit Programs.
-------------------------
(a) Schedule 2.25 lists every Employee Program (as defined below) that
-------------
has been maintained (as defined below) by the Seller at any time during the
three-year period ending on the Closing Date.
(b) Each Employee Program which has ever been maintained by the Seller
and which has at any time been intended to qualify under Section 401(a) or
501(c)(9) of the Code has received a favorable determination or approval letter
from the IRS regarding its qualification under such section and has, in fact,
been continuously qualified under the applicable section of the Code since the
effective date of such Employee Program. No event or omission has occurred
which would cause any such Employee Program to lose its qualification under the
applicable Code section.
(c) The Seller does not know, and has no reason to know, of any
failure of any party to comply with any laws applicable to the Employee Programs
that have been maintained by the Seller. With respect to any Employee Program
ever maintained by the Seller,
19
there has occurred no "prohibited transaction," as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Section
4975 of the Code, or breach of any duty under ERISA or other applicable law
(including, without limitation, any health care continuation requirements or any
other tax law requirements, or conditions to favorable tax treatment, applicable
to such plan), which could result, directly or indirectly, in any taxes,
penalties or other liability to Buyer. No litigation, arbitration, or
governmental administrative proceeding (or investigation) or other proceeding
(other than those relating to routine claims for benefits) is pending or
threatened with respect to any such Employee Program.
(d) Neither the Seller nor any Affiliate (as defined below) (i) has
ever maintained any Employee Program which has been subject to Title IV of ERISA
(including, but not limited to, any Multi-employer Plan (as defined below)) or
(ii) has ever provided health care or any other non-pension benefits to any
employees after their employment is terminated (other than as required by Part 6
of Subtitle B of Title I of ERISA) or has ever promised to provide such post-
termination benefits.
(e) With respect to each Employee Program maintained by the Seller
within the three years preceding the Closing, complete and correct copies of the
following documents (if applicable to such Employee Program) have previously
been delivered to Buyer: (i) all documents embodying or governing such Employee
Program, and any funding medium for the Employee Program (including, without
limitation, trust agreements) as they may have been amended; (ii) the most
recent IRS determination or approval letter with respect to such Employee
Program under Code Section 401 or 501(c)(9), and any applications for
determination or approval subsequently filed with the IRS; (iii) the three most
recently filed IRS Forms 5500, with all applicable schedules and accountants'
opinions attached thereto; (iv) the summary plan description for such Employee
Program (or other descriptions of such Employee Program provided to employees)
and all modifications thereto; (v) any insurance policy (including any fiduciary
liability insurance policy) related to such Employee Program; (vi) any documents
evidencing any loan to an Employee Program that is a leveraged employee stock
ownership plan; and (vii) all other materials reasonably necessary for Buyer to
perform any of its responsibilities with respect to any Employee Program
subsequent to the Closing (including, without limitation, health care
continuation requirements).
(f) For purposes of this section:
(i) "Employee Program" means (A) all employee benefit plans
within the meaning of ERISA Section 3(3), including, but not limited to,
multiple employer welfare arrangements (within the meaning of ERISA Section
3(4)), plans to which more than one unaffiliated employer contributes and
employee benefit plans (such as foreign or excess benefit plans) which are
not subject to ERISA; and (B) all stock or cash option plans, restricted
stock plans, bonus or incentive award plans, severance pay policies or
agreements, deferred compensation agreements, supplemental income
arrangements,
20
vacation plans, and all other employee benefit plans, agreements, and
arrangements not described in (A) above. In the case of an Employee Program
funded through an organization described in Code Section 501(c)(9), each
reference to such Employee Program shall include a reference to such
organization.
(ii) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides (or has promised to provide) benefits
under such Employee Program, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under such Employee
Program, or if such Employee Program provides benefits to or otherwise
covers employees of such entity, or their spouses, dependents, or
beneficiaries.
(iii) An entity is an "Affiliate" of the Seller if it would have
ever been considered a single employer with such Seller under ERISA Section
4001(b) or part of the same "controlled group" as such Seller for purposes
of ERISA Section 302(d)(8)(C).
(iv) "Multi-employer Plan" means a (pension or non-pension)
employee benefit plan to which more than one employer contributes and which
is maintained pursuant to one or more collective bargaining agreements.
2.26 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 2.26, (i) the Seller has not ever
-------------
generated, transported, used, stored, treated, disposed of, or managed any
Hazardous Waste (as defined below); (ii) to the knowledge of the Seller, no
Hazardous Material (as defined below) has ever been or is threatened to be
spilled, released, or disposed of at any site presently or formerly owned,
operated, leased, or used by the Seller, or, to the knowledge of the Seller, has
ever been located in the soil or groundwater at any such site; (iii) to the
knowledge of the Seller, no Hazardous Material has ever been transported from
any site presently or formerly owned, operated, leased, or used by the Seller
for treatment, storage, or disposal at any other place; (iv) to the knowledge of
the Seller, the Seller does not presently own, operate, lease, or use, nor has
the Seller previously owned, operated, leased, or used any site on which
underground storage tanks are or were located; and (v) no lien has ever been
imposed by any governmental agency on any property, facility, machinery, or
equipment owned, operated, leased, or used by the Seller in connection with the
presence of any Hazardous Material.
(b) Except as set forth on Schedule 2.26, (i) the Seller does not have
-------------
any liability under, nor has the Seller ever violated, any Environmental Law (as
defined below); (ii) to the knowledge of the Seller, the Seller, any property
owned, operated, leased, or used by the Seller, and any facilities and
operations thereon are presently in compliance with all applicable Environmental
Laws; (iii) the Seller has not ever entered into or been subject to any
judgment, consent decree, compliance order, or administrative order with respect
to any environmental or
21
health and safety matter or received any request for information, notice, demand
letter, administrative inquiry, or formal or informal complaint or claim with
respect to any environmental or health and safety matter or the enforcement of
any Environmental Law; and (iv) the Seller does not have any knowledge or reason
to know that any of the items enumerated in clause (iii) of this subsection will
be forthcoming.
(c) Except as set forth on Schedule 2.26 hereto, to the knowledge of
-------------
the Sellers, no site owned, operated, leased, or used by the Seller contains any
asbestos or asbestos-containing material, any polychlorinated biphenyls (PCBs)
or equipment containing PCBs, or any urea formaldehyde foam insulation.
(d) The Seller has provided to Buyer copies of all documents, records,
and information known or available to the Seller concerning any environmental or
health and safety matter relevant to the Seller, whether generated by the Seller
or others, including, without limitation, environmental audits, environmental
risk assessments, site assessments, documentation regarding off-site disposal of
Hazardous Materials, spill control plans, and reports, correspondence, permits,
licenses, approvals, consents, and other authorizations related to environmental
or health and safety matters issued by any governmental agency.
(e) For purposes of this Section 2.26, (i) "Hazardous Material" shall
mean and include any hazardous waste, hazardous material, hazardous substance,
petroleum product, oil, toxic substance, pollutant, contaminant, or other
substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law; (ii) "Hazardous
Waste" shall mean and include any hazardous waste as defined or regulated under
any Environmental Law; (iii) "Environmental Law" shall mean any environmental or
health and safety-related law, regulation, rule, ordinance, or by-law at the
foreign, federal, state, or local level, whether existing as of the date hereof,
previously enforced, or subsequently enacted; and (iv) "Seller" shall mean and
include the Seller and all Affiliates of the Seller for whose conduct the Seller
is responsible under any Environmental Law.
2.27 Directors and Officers.
----------------------
(a) Schedule 2.27 contains a true and complete list of all current
-------------
directors and officers of the Seller. In addition, Schedule 2.27 contains a
-------------
list of all managers, employees and consultants of the Seller who, individually,
have received or are scheduled to receive compensation from the Seller for the
fiscal year ending December 31, 1997, in excess of $50,000. In each case such
Schedule includes the current job title and aggregate annual compensation of
each such individual.
2.28 Backlog. As of the date hereof, the Seller has a backlog of firm
-------
orders for the sale of products or services, for which revenues have not been
recognized by the Seller, as set forth in Schedule 2.28.
-------------
22
2.29 Employees; Labor Matters. The Seller employs a total of approximately
------------------------
45 full-time employees and 2 part-time employees and generally enjoy good
employer-employee relationships. The Seller is not delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed for it to the date hereof or
amounts required to be reimbursed to such employees. Upon termination of the
employment of any of said employees, neither the Seller nor Buyer will by reason
of the acquisition transaction or anything done prior to the Closing be liable
to any of said employees for so-called "severance pay" or any other payments,
except as set forth on Schedule 2.29. The Seller does not have any policy,
-------------
practice, plan or program of paying severance pay or any form of severance
compensation in connection with the termination of employment of its employees,
except as set forth in said Schedule. The Seller is in compliance in all
material respects with all applicable laws and regulations respecting labor,
employment, fair employment practices, work place safety and health, terms and
conditions of employment, and wages and hours. There are no charges of
employment discrimination or unfair labor practices, nor are there any strikes,
slowdowns, stoppages of work, or any other concerted interference with normal
operations existing, pending or, to the knowledge of the Seller, threatened
against or involving the Seller. No question concerning representation exists
respecting any group of employees of the Seller. There are no grievances,
complaints or charges that have been filed against any Seller under any dispute
resolution procedure (including, but not limited to, any proceedings under any
dispute resolution procedure under any collective bargaining agreement) that
might have an adverse effect on the Seller or the conduct of its business and no
arbitration or similar proceeding is pending and no claim therefor has been
asserted. No collective bargaining agreement is in effect or is currently being
or is about to be negotiated by the Seller. The Seller has not received any
information to indicate that any of its employment policies or practices is
currently being audited or investigated by any federal, state or local
government agency. To the knowledge of the Seller, the Seller is, and at all
times since November 6, 1986, has been, in compliance with the requirements of
the Immigration Reform Control Act of 1986.
2.30 Customers and Suppliers. Schedule 2.30 sets forth any customer who
----------------------- -------------
accounts for more than $100,000 of the consolidated sales of the Sellers for the
twelve months ended December 31, 1996, or the twelve months ended as of the date
of the Base Balance Sheet (collectively, the "Customers"). Schedule 2.30 also
-------------
contains a true and complete list of the suppliers of the Seller to whom during
the twelve months ended December 31, 1996, the Seller made payments aggregating
$25,000 or more showing, with respect to each, the name, address and dollar
volume involved (the "Suppliers"). The relationships of the Seller with its
Customers and Suppliers are good commercial working relationships. Except as
set forth on Schedule 2.30, no Customer or Supplier of the Seller has canceled,
-------------
materially modified, or otherwise terminated its relationship with the Seller,
or has during said period decreased materially its usage or purchase of the
services or products of the Seller or the services, supplies or materials
furnished to the Seller, nor does any Customer or Supplier have, to the
knowledge of the Seller, any plan or intention to do any of the foregoing.
2.31 Hart-Scott-Rodino Matters. Neither the Seller on a consolidated basis
-------------------------
with
23
McLagan Partners International Incorporated, an Illinois corporation, and
McLagan Partners Asia Incorporated, an Illinois corporation, nor the "ultimate
parent entities" (as such term is defined in the Hart-Scott-Rodino Anti-Trust
Improvement Act of 1976, as amended (the "HSR Act")) of the Seller, on a
consolidated basis, had annual net sales (as stated on the last regularly
prepared annual statement of income and expense for such persons or entities) or
total assets (as stated on the last regularly prepared balance sheet for such
persons or entities) of One Hundred Million Dollars ($100,000,000) or more, as
calculated in accordance with the HSR Act and the rules and regulations
promulgated thereunder.
2.32 Disclosure. The representations, warranties and statements contained
----------
in this Agreement and in the certificates, exhibits and schedules delivered to
Buyer by the Seller or Stockholder pursuant to this Agreement do not contain any
untrue statement of a material fact, and, when taken together, do not omit to
state a material fact required to be stated therein or necessary in order to
make such representations, warranties or statements not misleading in light of
the circumstances under which they were made.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
----------------------------------------------------
3.1 Making of Representations and Warranties. As a material inducement to
----------------------------------------
the Seller and the Stockholders to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer makes to the Seller and the Stockholders
the representations and warranties contained in this Section 3.
3.2 Organization of Buyer. Buyer is a corporation duly organized, validly
---------------------
existing and in good standing under the laws of the State of Delaware with full
corporate power to own or lease its properties and to conduct its business in
the manner and in the places where such properties are owned or leased or such
business is conducted by it. Buyer is duly qualified to do business as a
foreign corporation in each jurisdiction in which it is required to be so
qualified except to the extent that any failure to be so qualified would not
have a material adverse effect on the Buyer.
3.3 Authority of Buyer. Buyer has full right, authority and power to
------------------
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by Buyer pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Buyer of this Agreement and each such other agreement, document
and instrument have been, or as of the Closing shall have been, duly authorized
by all necessary corporate action of Buyer and no other action on the part of
Buyer is required in connection therewith. This Agreement and each other
agreement, document and instrument executed and delivered by Buyer pursuant to
this Agreement constitute, or when executed and delivered will constitute, valid
and binding obligations of Buyer enforceable in accordance with their terms.
Following the approval of Buyer's Board of Directors, the execution, delivery
and performance by Buyer of this Agreement and each such agreement, document and
instrument:
24
(a) does not and will not violate any provision of the Certificate of
Incorporation or by-laws of Buyer;
(b) does not and will not violate any laws of the United States or of
any state or any other jurisdiction applicable to Buyer or require Buyer to
obtain any approval, consent or waiver of, or make any filing with, any person
or entity (governmental or otherwise) which has not been obtained or made; and
(c) does not and will not result in a breach of, constitute a default
under, accelerate any obligation under, or give rise to a right of termination
of any indenture, loan or credit agreement, or any other agreement, mortgage,
lease, permit, order, judgment or decree to which Buyer is a party and which is
material to the business and financial condition of Buyer and its parent and
affiliated organizations on a consolidated basis.
3.4 Litigation. There is no litigation or governmental or administrative
----------
proceeding or investigation pending or, to its knowledge, threatened against
Buyer which would prevent or hinder the consummation of the transactions
contemplated by this Agreement.
3.5 Finder's Fee. Buyer has not incurred or become liable for any
------------
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
3.6 Hart-Scott-Rodino Matters. Neither the Buyer nor the "ultimate parent
-------------------------
entity" (as such term is defined in the HSR Act) of the Buyer had annual net
sales (as stated on the last regularly prepared annual statement of income and
expense for the Buyer or such ultimate parent entity) or total assets (as stated
on the last regularly prepared balance sheet for the Buyer or such ultimate
parent entity) of One Hundred Million Dollars ($100,000,000) or more, as
calculated in accordance with the HSR Act and the rules and regulations
promulgated thereunder.
3.7 Securities and Exchange Commission Filings. ASI has filed all
------------------------------------------
required forms, reports and documents with the Securities and Exchange
Commission since April 9, 1997 (each, a "Commission Report" and collectively,
the "Commission Reports"), all of which were prepared in accordance with the
applicable requirements of the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, as applicable, in all material
respects. Except to the extent, if any, as may have been appropriately
disclosed in a Commission Report filed subsequent thereto and prior to the date
hereof, as of their respective dates, the Commission Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
25
SECTION 4 CONDITIONS.
----------------------
4.1 Conditions to the Obligations of Buyer. The obligations of Buyer to
--------------------------------------
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) Satisfaction of Conditions. The representations and warranties of
--------------------------
the Seller and the Stockholders contained in this Agreement shall be true and
correct on and as of the Closing Date; each of the conditions specified in this
Section 4.1 shall have been satisfied or waived in writing by the Buyer; and on
the Closing Date a certificate to such effect executed on behalf of the Seller
and the Stockholders, as appropriate, shall be delivered to the Buyer.
(b) Transfer of Subject Assets. The Seller shall deliver or cause to
--------------------------
be delivered to Buyer (i) an Assignment and Assumption Agreement substantially
in the form of Exhibit C hereto and (ii) a Bill of Sale substantially in the
---------
form of Exhibit D hereto transferring to Buyer good and marketable title to all
---------
the Subject Assets.
(c) Delivery of Records and Contracts. Seller shall deliver or cause
---------------------------------
to be delivered to Buyer all of the Assumed Contracts, with such assignments
thereof and consents to assignments as are necessary to assure Buyer of the full
benefit of the same. Seller shall also deliver to Buyer at the Closing all of
its business records, tax returns, books and other data relating to their
respective assets, businesses and operations (except Corporate Records excluded
under Section 1.2(b) as to which only copies need be delivered in accordance
with such Section), and Seller shall take all requisite steps to put Buyer in
actual possession and operating control of the assets and businesses of Sellers.
(d) Approval of Buyer's Counsel. All actions, proceedings,
---------------------------
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this Agreement shall have been approved by Goodwin, Procter & Hoar LLP as
counsel for Buyer, and such counsel shall have received on behalf of Buyer such
other certificates, opinions, and documents in form satisfactory to such counsel
as Buyer may reasonably request from the Seller or the Stockholders to evidence
compliance with the terms and conditions hereof.
(e) Opinion of Counsel. Buyer shall have received from Cummings &
------------------
Lockwood, counsel for the Seller and Stockholders, an opinion, dated as of the
Closing Date, in the form attached hereto as Exhibit E.
---------
(f) No Litigation. There shall have been no determination by Buyer,
-------------
acting in good faith, that the consummation of the transactions contemplated by
this Agreement has become inadvisable or impracticable by reason of the
institution or threat by any person or any federal, state or other governmental
authority of litigation, proceedings or other action against Buyer, the Seller
or any Stockholder or any material adverse change in the laws or regulations
26
applicable to any Seller.
(g) Hart-Scott-Rodino. All required filings under the HSR Act ("HSR
-----------------
Filings") shall have been completed and all applicable time limitations under
such Act shall have expired without a request for further information by the
relevant federal authorities under such Act, or in the event of such a request
for further information, the expiration of all applicable time limitations under
the Act shall have occurred without the objection of such federal authorities.
(h) Due Diligence and Disclosure Schedules. Buyer, in its sole
--------------------------------------
discretion, shall be satisfied, with the results of its legal, accounting,
business and other due diligence review of the Seller and the Subject Assets.
Buyer, in its sole discretion, shall, be satisfied with the form and substance
of the Disclosure Schedules to this Agreement which shall have been delivered to
Buyer by the Seller on or before Closing.
(i) Financing. ASI and Buyer shall have secured senior financing from
---------
a bank or other financial institution satisfactory to ASI and Buyer on terms and
conditions satisfactory to ASI and Buyer in their sole discretion and in amounts
sufficient to provide all of the consideration for the acquisition transaction
contemplated hereby plus adequate working capital for the acquired businesses.
(j) Consents. The Seller shall have made all filings with and
--------
notifications of governmental authorities, regulatory agencies and other
entities required to be made by the Seller in connection with the execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of the Seller by Buyer
subsequent to the Closing; and Seller and Buyer shall have received all
authorizations, waivers, consents and permits, in form and substance reasonably
satisfactory to Buyer, from all third parties, including, without limitation,
applicable governmental authorities, regulatory agencies, lessors, lenders and
contract parties, required to permit the continuation of the businesses of the
Seller by Buyer and the consummation of the transactions contemplated by this
Agreement, and in connection with the transfer of the Subject Assets or the
Seller's contracts, permits, leases, licenses and franchises, to avoid a breach,
default, termination, acceleration or modification of any indenture, loan or
credit agreement or any other agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award as a result of, or in connection with, the
execution and performance of this Agreement.
(k) Employment/Non-Competition Agreements. Each of the individuals
-------------------------------------
named on Schedule 4.1(k) hereto shall have executed and delivered to Buyer an
---------------
Employment and Non-Competition Agreement in substantially the form of Exhibit F
---------
attached hereto.
(l) Subordination. The Seller, the Stockholders and each individual
-------------
named on Schedule 1.5(e) hereto shall have executed and delivered to the Bank
---------------
and/or the Buyer a
27
subordination agreement or other documentation containing those terms and
conditions reasonably requested by the Bank or as may otherwise be necessary to
subordinate the obligations of the Buyer pursuant to the Note and with respect
to any and all payments to be made by the Buyer pursuant to Section 1.5(e)
hereof to its senior debt.
(m) Investor Questionnaires. The Seller shall have executed and
-----------------------
delivered to Buyer a Prospective Investor Questionnaire in substantially the
form of Exhibit G attached hereto. It is hereby acknowledged and agreed by the
---------
parties that Buyer shall not deliver the Seller Shares (as defined below) until
Buyer has received such Investor Questionnaires from the Seller.
(n) Acquisition Audit. Buyer shall have received a satisfactory audit
-----------------
report from C&L with respect to the financial statements and financial condition
of the Seller which report shall indicate financial performance and financial
condition that is satisfactory to Buyer.
(o) Good Standing. At or prior to the Closing, Buyer shall have
-------------
received from the Seller a certificate of good standing from the appropriate
authority in the States of Illinois and Connecticut.
(p) Board of Directors Approval. The Board of Directors of the Buyer
---------------------------
shall have approved, ratified and affirmed the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
4.2 Conditions to Obligations of the Seller. The obligations of the
---------------------------------------
Seller to consummate this Agreement and the transactions contemplated hereby are
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) Satisfaction of Conditions. The representations and warranties of
--------------------------
the Buyer contained in this Agreement shall be true and correct on and as of the
Closing Date; each of the conditions specified in this Section 4.2 shall have
been satisfied or waived in writing by the Seller; and on the Closing Date a
certificate to such effect executed on behalf of the Buyer shall be delivered to
the Seller.
(b) Seller Shares. On the Closing Date, Buyer shall issue, 50,000
-------------
shares of Common Stock (the "Seller Shares") to the Seller. The parties hereto
hereby acknowledge that such Seller Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), or any other federal or state
securities law and that such Seller Shares may not be offered, sold,
transferred, hypothecated or otherwise assigned except pursuant to (i) a
registration statement with respect to such securities which is effective under
the Act or (ii) an available exemption from registration under such Act relating
to the disposition of securities (including, under certain circumstances, the
"safe harbor" provisions of Rule 144 promulgated by the Securities and Exchange
Commission pursuant to the Act). The parties hereto hereby
28
agree that the Seller distribute the Seller Shares to such persons and in such
denominations as may be mutually agreeable to Buyer and Seller; provided that
such Seller Shares may be so distributed without registration under applicable
federal and state securities law.
(c) Incentive Compensation Plan. On or before the Closing Date,
---------------------------
Buyer's Board of Directors shall have approved an Incentive Compensation Plan
for the benefit of the participants identified on Schedule 4.2(c) hereto
---------------
substantially in the form of Exhibit H hereto (the "Incentive Plan").
---------
(d) Stock Options. On the Closing Date, Buyer shall issue to the
-------------
individuals set forth on Schedule 4.2(d) hereto options to purchase the number
---------------
of shares of Common Stock set forth opposite the names of such individuals on
such Schedule (200,000 shares in the aggregate) and shall have granted to
Michael Curran options to purchase 100,000 shares of Common Stock. Such options
shall be granted with an exercise price per share equal to the closing price of
the Common Stock on the Nasdaq National Market on the Closing Date and shall be
subject to the terms and conditions of the ASI Solutions Incorporated 1996 Stock
Option and Grant Plan.
(e) Assignment and Assumption Agreement. At the Closing, Buyer shall
-----------------------------------
deliver or cause to be delivered to Seller an Assignment and Assumption
Agreement in substantially the form of Exhibit C hereto.
---------
(f) Approval of Seller's and Stockholders' Counsel. All actions,
----------------------------------------------
proceedings, instruments and documents required to carry out this Agreement and
the transactions contemplated hereby and all related legal matters contemplated
by this agreement shall have been approved by Cummings & Lockwood, as counsel
for the Seller and Stockholders, and such counsel shall have received on behalf
of the Seller and the Stockholders such other certificates, opinions and
documents in form satisfactory to such counsel as the Seller and Stockholders
may reasonably require from Buyer to evidence compliance with the terms and
conditions hereof.
(g) No Litigation. There shall have been no determination by the
-------------
Seller or Stockholders, acting in good faith, that the consummation of the
transactions contemplated by this Agreement has become inadvisable or
impracticable by reason of the institution or threat by any person or any
federal, state or other governmental authority of material litigation,
proceedings or other action against Buyer, the Seller or any Stockholder.
(h) Employment/Non-Competition Agreements. Buyer shall have executed
-------------------------------------
and delivered to each individual named on Schedule 4.1(h) hereto an Employment
---------------
and Non-Competition Agreement in substantially the form of Exhibit F attached
---------
hereto.
(i) Opinion of Counsel. The Seller and the Stockholders shall have
------------------
received from Goodwin, Procter & Hoar LLP, counsel for the Buyer, an opinion,
dated as of the Closing Date, in the form attached hereto as Exhibit I.
---------
29
(j) Consents. Buyer shall have made all filings with and
--------
notifications of governmental authorities, regulatory agencies and other
entities required to be made by Buyer in connection with the execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of the Seller by Buyer
subsequent to the Closing; and Buyer shall have received all authorizations,
waivers, consents and permits, in form and substance reasonably satisfactory to
Seller, from all third parties, including, without limitation, applicable
governmental authorities, regulatory agencies, lessors, lenders and contract
parties, required to permit the continuation of the businesses of the Seller by
Buyer and the consummation of the transactions contemplated by this Agreement.
(k) Payment of Purchase Price. Buyer shall have delivered to Seller
-------------------------
(i) Fifteen Million, Two Hundred Fifty Thousand Dollars ($15,250,000) in cash,
(ii) the Note, in a principal amount of Five Million Dollars ($5,000,000), and
(iii) Buyer shall have discharged all liabilities of the Seller in respect of
the Stockholder Loans (provided that such liabilities shall not exceed One
Million Dollars ($1,000,000) in the aggregate), all in accordance with Section
1.5 hereof.
(l) Exhibits. Buyer and Seller shall have mutually agreed to the
--------
form, term and provisions of each of the Exhibits referred to herein.
SECTION 5. SURVIVAL OF WARRANTIES; RIGHTS, OBLIGATIONS AND ACTIONS SUBSEQUENT TO
- --------------------------------------------------------------------------------
CLOSING.
-------
5.1 Survival of Warranties. Each of the representations, warranties,
----------------------
agreements, covenants and obligations herein or in any schedule, exhibit,
certificate or financial statement delivered by any party to the other party
incident to the transactions contemplated hereby are material, shall be deemed
to have been relied upon by the other party and shall survive the Closing
regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto; provided, however, that, as more fully set
forth in Section 6 hereof, such representations and warranties shall expire on
the same dates as and to the extent that the rights to indemnification with
respect thereto under Section 6 shall expire.
5.2 Payment of Obligations. Subsequent to the Closing, the Seller shall
----------------------
pay all of the Excluded Liabilities in the ordinary course of business as they
become due.
5.3 Tax Returns. After the Closing, the Seller, with the approval of
-----------
Buyer and in accordance with applicable law, shall (i) promptly prepare and file
on or before the due date or any extension thereof, all federal, state and local
tax returns required to be filed by it with respect to taxable periods of the
Seller that include any period ending on or before the Closing and (ii) pay all
Taxes of the Seller attributable to periods ending on or before the Closing
Date.
5.4 Books and Records. After the Closing, Buyer shall afford to Seller
-----------------
and Stockholders and their respective accountants and attorneys, for the purpose
of preparing such
30
tax returns of the Seller or Stockholders as may be required after the Closing,
reasonable access to the books and records of Seller delivered to Buyer under
Section 4.1(b) and shall permit the Seller or any Stockholder, at its or his
expense, to make extracts and copies therefrom.
5.5 Further Assurances. Seller from time to time after the Closing at the
------------------
request of Buyer and without further consideration shall execute and deliver
further instruments of transfer and assignment and take such other action as
Buyer may reasonably request to more effectively transfer and assign to, and
vest in, Buyer each of the Subject Assets. Seller shall cooperate with Buyer to
permit Buyer to enjoy their respective ratings and benefits under the workman's
compensation laws and unemployment compensation laws of applicable
jurisdictions, to the extent permitted by such laws. Nothing herein shall be
deemed a waiver by Buyer of its right to receive at the Closing an effective
assignment of each of the leases, contracts, commitments or rights of Seller as
otherwise set forth in this Agreement.
5.6 Allocation of Purchase Price. Within thirty (30) days of the Closing,
----------------------------
Buyer shall allocate the Purchase Price (and all other capitalized costs) among
the Subject Assets. Such allocation shall be binding upon Buyer, Seller and
each Stockholder for all purposes (including financial accounting purposes,
financial and regulatory reporting purposes and tax purposes) unless the Seller
shall notify Buyer, within thirty (30) days of their receipt of notice of
Buyer's allocation hereunder, that they disagree with such allocation by Buyer.
In the event of such a disagreement, the parties shall submit the allocation of
the Purchase Price (and all other capitalized costs) among the Subject Assets to
an accounting firm of nationally recognized standing mutually acceptable to
Buyer, on one hand, and the Seller on the other. Such firm shall deliver its
allocation of the Purchase Price (and all other capitalized costs) among the
Subject Assets to the parties as soon as practicable, and such allocation shall
be binding upon Buyer, the Seller and each Stockholder for all purposes
(including financial accounting purposes, financial and regulatory reporting
purposes and tax purposes). All Purchase Price allocations hereunder shall be
made in accordance with the provisions of Section 1060 of the Code. Buyer and
the Seller also each agree to file IRS Form 8594 consistently with the foregoing
and in accordance with Section 1060 of the Code.
5.7 Hart-Scott-Rodino Filings. Buyer shall cooperate with Seller and
-------------------------
Stockholders in connection with all required HSR Filings and shall furnish all
follow-up information required in connection therewith. Buyer shall have the
primary responsibility with respect to the preparation and filing of the HSR
Filings.
5.8 Sellers' Employees. After the Closing, Buyer will make offers of
------------------
employment to each of the employees of the Seller named on Schedule 5.8 hereto
------------
under terms and conditions comparable to those under which Sellers currently
employ such employees.
5.9 Sellers' Benefit Plans. At the Closing, to the extent permitted under
----------------------
Seller's medical, long-term disability and life insurance plans identified on
Schedule 5.9 (the "Seller
- ------------
31
Insurance Plans"), Buyer shall assume all such plans. To the extent Buyer is
unable to assume the Seller Insurance Plans in accordance with their terms,
Buyer shall, not more than forty-five (45) days after the Closing Date,
establish and maintain insurance plans which provide coverage and/or benefits
corresponding in all material respects to the Seller Insurance Plans. The
insurance plans so established by Buyer shall be for the benefit of the
Stockholders and the employees named on Schedule 5.8 and their respective
------------
spouses and dependent children and shall provide coverage with no pre-existing
condition exclusions and no waiting periods. At the time of the Closing, Buyer
shall establish a 401(k) plan corresponding in all material respects to the
Seller's 401(k) plan which shall be for the benefit of the Stockholders and the
employees named on Schedule 5.8 and shall allow participation without any
------------
waiting period. At any time after March 31, 2000, the Buyer may, in its sole
discretion, terminate any plan assumed or established pursuant to this Section
5.9.
5.10 Business Relations. During the period from the Closing Date until
------------------
the date which is ninety (90) days thereafter, the Buyer may conduct, in
coordination with the Seller, personal interviews with the Seller's Customers
and Suppliers in order to confirm that such Customers and Suppliers intend to
continue their respective current levels of business with Sellers.
SECTION 6. INDEMNIFICATION.
- --------------------------
6.1 Indemnification by the Seller and the Stockholders. The Seller and
--------------------------------------------------
each Stockholder jointly and severally agree subsequent to the Closing to
indemnify and hold Buyer and its respective subsidiaries and affiliates and
persons serving as officers, directors, partners or employees thereof
(individually a "Buyer Indemnified Party" and collectively the "Buyer
Indemnified Parties") harmless from and against any damages, liabilities,
losses, taxes, fines, penalties, costs, and expenses (including, without
limitation, reasonable fees of counsel and accountants) of any kind or nature
whatsoever (whether or not arising out of third-party claims and including all
amounts paid in investigation, defense or settlement of the foregoing) which may
be sustained or suffered by any of them arising out of or based upon any of the
following matters:
(a) fraud, intentional misrepresentation or a deliberate or wilful
breach by the Seller or any Stockholder of any representation, warranty or
covenant under this Agreement or in any certificate, schedule or exhibit
delivered as part of or pursuant to this Agreement;
(b) any other breach of any representation or warranty made by the
Seller or any Stockholder in this Agreement, or in any certificate, schedule or
exhibit delivered by or on behalf of the Seller or any Stockholder as part of or
pursuant to this Agreement, or any third-party claim, action or proceeding
asserted or instituted or arising out of any matter or thing covered by such
representations or warranties (collectively, "Buyer Warranty Claims");
(c) any breach of any covenant or agreement made by or on behalf of
the
32
Seller or any Stockholder in this Agreement, or in any certificate, schedule or
exhibit delivered by or on behalf of the Seller or any Stockholder as part of or
pursuant to this Agreement; and
(d) all claims, liabilities and obligations in connection with,
arising out of or otherwise relating to any of the Excluded Liabilities.
The rights of Buyer Indemnified Parties to recover indemnification in
respect of any occurrence referred to in clauses (c) or (d) of this Section 6.1
shall not be limited by the fact that such occurrence may not constitute an
inaccuracy in or breach of any representation, warranty or agreement referred to
in clauses (a) or (b) of this Section 6.1.
6.2 Limitations on Indemnification by the Seller and the Stockholders.
-----------------------------------------------------------------
The right of Buyer Indemnified Parties to indemnification under Section 6.1
shall be subject to the following provisions:
(a) No indemnification shall be payable to any Buyer Indemnified Party
in respect of Buyer Warranty Claims (other than any such claim relating to title
to the Subject Assets), unless the total of all claims for indemnification
pursuant to Section 6.1, when aggregated with all claims made under Section 6.1
of (i) that certain asset purchase agreement, dated as of November 13, 1997 by
and between McLagan Partners International, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Buyer and McLagan Partners International
Incorporated, an Illinois corporation, and certain other parties named therein
and (ii) that certain asset purchase agreement, dated November 13, 1997, by and
between McLagan Partners Asia, Inc., a Delaware corporation and a wholly-owned
subsidiary of the Buyer, and McLagan Partners Asia Incorporated, an Illinois
corporation, and certain other parties named therein (the asset purchase
agreements referred to in clauses (i) and (ii) are sometimes referred to herein
as the "Affiliate Agreements"), shall exceed $50,000 in the aggregate, whereupon
the full amount of such claims shall be recoverable in accordance with the terms
hereof;
(b) The indemnification obligations of the Seller with respect to
Buyer Warranty Claims (other than any such claim relating to Excluded
Liabilities or title to the Subject Assets), and of the Stockholders with
respect to all claims, shall be limited to Buyer's right to set off and apply
the amount of such claims against any and all amounts outstanding under the Note
whether or not then due and payable.
(c) Indemnification with respect to Buyer Warranty Claims shall expire
on April 30, 2000 (the "Indemnification Cut-Off Date"); provided, however, that
the limitation of this Section 6.2(c) shall not apply to Buyer Warranty Claims
involving fraud, intentional misrepresentation or title to the Subject Assets,
for which the period for making such claims shall expire on the date on which
the applicable statute of limitations relating thereto terminates; provided,
--------
further, however, that with respect only to DeMinimis Claims the Indemnification
- ------- -------
Cut-Off Date shall be the date which is ninety (90) days after the Closing Date.
If prior to the relevant date of expiration a specific state of facts shall have
become known which may
33
constitute or give rise to any Buyer Warranty Claim as to which indemnity may be
payable and a Buyer Indemnified Party shall have given notice of such facts to
the Seller or any Stockholder, then the right to indemnification with respect
thereto shall remain in effect without regard to when such matter shall have
been finally determined and disposed of, according to the date on which notice
of the applicable claim is given; and
(d) The limitations set forth herein with respect to Buyer Warranty
Claims shall not limit the rights of any Buyer Indemnified Party with respect to
any other claims arising under the provisions of Section 6.1.
6.3 Indemnification by Buyer. Buyer agrees to indemnify and hold the
------------------------
Seller and their respective affiliates and persons serving as officers,
directors or employees thereof and the Stockholders (individually a "Seller
Indemnified Party" and collectively the "Seller Indemnified Parties") harmless
from and against any damages, liabilities, losses, taxes, fines, penalties,
costs, and expenses (including, without limitation, reasonable fees of counsel
and accountants) of any kind or nature whatsoever (whether or not arising out of
third-party claims and including all amounts paid in investigation, defense or
settlement of the foregoing) which may be sustained or suffered by any of them
arising out of or based upon any of the following matters:
(a) fraud, intentional misrepresentation or a deliberate or wilful
breach by Buyer of any representation, warranty or covenant under this Agreement
or in any certificate, schedule or exhibit delivered as part of or pursuant to
this Agreement;
(b) any other breach of any representation or warranty made by Buyer
in this Agreement or in any certificate, schedule or exhibit delivered pursuant
hereto, or any Warranty Claim;
(c) any breach of any covenant or agreement made by or on behalf of
Buyer in this Agreement, or in any certificate, schedule or exhibit delivered by
or on behalf of Buyer as part of or pursuant to this Agreement; or
(d) any failure by Buyer to perform and discharge any of the Assumed
Liabilities as set forth in this Agreement.
The rights of Seller Indemnified Parties to recover indemnification in
respect of any occurrence referred to in clauses (c) or (d) of this Section 6.3
shall not be limited by the fact that such occurrence may not constitute an
inaccuracy in or breach of any representation, warranty or agreement referred to
in clauses (a) or (b) of this Section 6.3.
6.4 Limitations on Indemnification by Buyer. The right of Seller
---------------------------------------
Indemnified Parties to indemnification under Section 6.3 shall be subject to the
following provisions:
(a) No indemnification shall be payable to any Seller Indemnified
Party in
34
respect of any breach of any representation or warranty made by Buyer in this
Agreement, or in any certificate, schedule or exhibit delivered by or on behalf
of Buyer as part of or pursuant to this Agreement, or any third-party claim,
action or proceeding asserted or instituted or arising out of any matter or
thing covered by such representations or warranties (collectively, "Seller
Warranty Claims"), unless the total of all claims for indemnification pursuant
to Section 6.3 when aggregated with all claims made under Section 6.3 of the
Affiliate Agreements shall exceed $50,000 in the aggregate, whereupon the full
amount of such claims shall be recoverable in accordance with the terms hereof;
(b) Indemnification with respect to Seller Warranty Claims shall
expire on the Indemnification Cut-Off Date; provided, however, that the
limitation of this clause (i) shall not apply to Seller Warranty Claims
involving fraud or intentional misrepresentation, for which the period for
making such claims shall expire on the date on which the applicable statute of
limitations relating thereto terminates. If prior to the relevant date of
expiration a specific state of facts shall have become known which may
constitute or give rise to any Seller Warranty Claim as to which indemnity may
be payable and a Seller Indemnified Party shall have given notice of such facts
to Buyer, then the right to indemnification with respect thereto shall remain in
effect without regard to when such matter shall have been finally determined and
disposed of, according to the date on which notice of the applicable claim is
given; and
(c) The limitations herein with respect to Seller Warranty Claims
shall not limit the rights of any Seller Indemnified Party with respect to any
other claims arising under provisions of Section 6.3.
6.5 Notice; Defense of Claims. An indemnified party may make claims for
-------------------------
indemnification hereunder by giving written notice thereof to the indemnifying
party within the period in which indemnification claims may be made hereunder.
If indemnification is sought for a claim or liability asserted by a third party,
the indemnified party shall give written notice thereof to the indemnifying
party promptly after it receives notice of the claim or liability being
asserted, but the failure to do so shall not relieve the indemnifying party from
any liability except to the extent that it is prejudiced by the failure or delay
in giving such notice. Such notice shall summarize the bases for the claim for
indemnification and any claim or liability being asserted by a third party.
Within twenty (20) days after receiving such notice the indemnifying party shall
give written notice to the indemnified party stating whether it disputes the
claim for indemnification and whether it will defend against any third party
claim or liability at its own cost and expense. If the indemnifying party fails
to give notice that it disputes an indemnification claim within twenty (20) days
after receipt of notice thereof, it shall be deemed to have accepted and agreed
to the claim, which shall become immediately due and payable. The indemnifying
party shall be entitled to direct the defense against a third party claim or
liability with counsel selected by it (subject to the consent of the indemnified
party, which consent shall not be unreasonably withheld) as long as the
indemnifying party conducts a good faith and diligent defense. The indemnified
party shall at all times have the right to fully participate in the defense of a
third party claim or liability at its own expense directly or through
35
counsel; provided, however, that if the named parties to the action or
proceeding include both the indemnifying party and the indemnified party and the
indemnified party is advised that representation of both parties by the same
counsel would be inappropriate under applicable standards of professional
conduct, the indemnified party may engage separate counsel at the expense of the
indemnifying party. If no such notice of intent to dispute and defend a third
party claim or liability is given by the indemnifying party, or if such good
faith and diligent defense is not being or ceases to be conducted by the
indemnifying party, the indemnified party shall have the right, at the expense
of the indemnifying party, to undertake the defense of such claim or liability
(with counsel selected by the indemnified party), and to compromise or settle
it, exercising reasonable business judgment. If the third party claim or
liability is one that by its nature cannot be defended solely by the
indemnifying party, then the indemnified party shall make available such
information and assistance as the indemnifying party may reasonably request and
shall cooperate with the indemnifying party in such defense, at the expense of
the indemnifying party.
6.6 Satisfaction of Seller and Stockholder Indemnification Obligations.
------------------------------------------------------------------
In order to satisfy the indemnification obligations of the Seller and the
Stockholders pursuant to Section 6.1 above, a Buyer Indemnified Party shall have
the right to set off and apply the amount of such indemnification claims against
any and all amounts then outstanding under the Note (whether or not then due and
payable).
SECTION 7. DEFINITIONS.
- ----------------------
As used in this Agreement, unless the context otherwise explicitly
requires, the following terms shall have the meanings set forth below:
"Advisor" shall have the meaning set forth in Section 8.10.
"Affiliate" shall have the meaning set forth in Section 2.25.
"Approvals" shall have the meaning set forth in Section 2.22.
"Assumed Contracts" shall have the meaning set forth in Section 1.3.
"Bank" shall have the meaning set forth in Section 1.5.
"Base Balance Sheets" shall have the meaning set forth in Section 2.9(a).
"Buyer" shall have the meaning set forth in the preamble.
"Buyer Indemnified Party" or "Buyer Indemnified Parties" shall have the
respective meanings set forth in Section 6.1.
36
"Buyer Warranty Claims" shall have the meaning set forth in Section 6.1(b).
"CPR Rules" shall have the meaning set forth in Section 8.10.
"Closing" shall have the meaning set forth in Section 1.4.
"Closing Date" shall have the meaning set forth in Section 1.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission Report" and "Commission Reports" shall have the respective
meanings set forth in Section 3.7.
"Common Stock" shall mean the common stock, par value $.01 per share, of
ASI.
"Corporate Records" shall have the meaning set forth in Section 1.2(b).
"Credit Agreement" shall mean that certain Credit Agreement, dated as of
November 13, 1997, by and among, ASI, the Buyer, The Chase Manhattan Bank and
certain other parties named therein.
"Current Assets" as of any date shall mean the consolidated current assets
of the Seller as of such date determined in accordance with generally accepted
accounting principles, consistently applied.
"Current Liabilities" as of any date shall mean the consolidated current
liabilities of the Seller as of such date determined in accordance with
generally accepted accounting principles, consistently applied.
"Customers" shall have the meaning set forth in Section 2.30.
"DeMinimis Claims" shall mean Buyer Warranty Claims (other than any such
claim relating to title to the Subject Assets) which are each in an amount not
in excess of $1,000 and which, in the aggregate, are in an amount not in excess
of $5,000.
"ERISA" shall have the meaning set forth in Section 2.25(c).
"Employee Program" shall have the meaning set forth in Section 2.25.
"Environmental Law" shall have the meaning set forth in Section 2.26.
"Excluded Assets" shall have the meaning set forth in Section 1.2.
37
"Excluded Liabilities" shall have the meaning set forth in Section 1.3.
"Financial Statements" shall have the meaning set forth in Section 2.9(a).
"HSR Act" shall have the meaning set forth in Section 2.31.
"HSR Filings" shall have the meaning set forth in Section 4.1(f).
"Hazardous Material" shall have the meaning set forth in Section 2.26.
"Hazardous Waste" shall have the meaning set forth in Section 2.26.
"IRS" shall have the meaning set forth in Section 2.10.
"Incentive Plan" shall have the meaning set forth in Section 4.2(b).
"Indemnification Cut-Off Date" shall have the meaning set forth in Section
6.2(c).
"Intellectual Property Rights" shall have the meaning set forth in Section
2.14.
"Intercompany Loans" shall have the meaning set forth in Section 1.2(d).
"Interim Balance Sheets" shall have the meaning set forth in Section
2.9(a).
"Leases" shall have the meaning set forth in Section 2.8(b).
"Leased Real Property" shall have the meaning set forth in Section 2.8(b).
"Liabilities" shall have the meaning set forth in Section 1.3.
"Multi-employer Plan" shall have the meaning set forth in Section 2.25.
"Notes" shall have the meaning set forth in Section 1.5(c).
"PCBs" shall have the meaning set forth in Section 2.26(c).
"Permitted Encumbrances" shall have the meaning set forth in Section
2.8(b).
"Person" shall mean any natural person or any corporation, partnership,
association, trust, unincorporated organization or governmental agency or
bureau.
"Purchase Price" shall have the meaning set forth in Section 1.5.
38
"Seller Shares" shall have the meaning set forth in Section 4.2(b).
"Seller" shall have the meaning set forth in the preamble.
"Seller Common Stock" shall have the meaning set forth in Section 2.4(a).
"Seller Indemnified Party" and "Seller Indemnified Parties" shall have the
respective meanings set forth in Section 6.3.
"Seller Warranty Claims" shall have the meaning set forth in Section
6.4(a).
"Stockholder" and "Stockholders" shall have the respective meanings set
forth in the preamble.
"Subject Assets" shall have the meaning set forth in Section 1.1.
"Subordination Agreement" shall mean that certain Intercreditor and
Subordination Agreement, dated November 13, 1997, by and among ASI, Buyer, The
Chase Manhattan Bank and certain other parties named therein.
"Suppliers" shall have the meaning set forth in Section 2.30.
"Taxes" shall have the meaning set forth in Section 2.10.
"Tax Returns" shall have the meaning set forth in Section 2.10.
SECTION 8. MISCELLANEOUS.
- ------------------------
8.1 Bulk Sales Law. Buyer waives compliance by the Seller with the
--------------
provisions of any applicable bulk sales, fraudulent conveyance or other law for
the protection of creditors in connection with the transfer of the Subject
Assets under this Agreement.
8.2 Fees and Expenses.
-----------------
(a) Each of the parties will bear its own expenses in connection with
the negotiation and the consummation of the transactions contemplated by this
Agreement, and no expenses of the Seller or any Stockholder relating in any way
to the purchase and sale of the Subject Assets hereunder and the transactions
contemplated hereby, including without limitation legal, accounting or other
professional expenses, shall be charged to or paid by Buyer or included in any
of the Liabilities.
(b) Seller will pay all costs incurred, whether at or subsequent to
the Closing,
39
in connection with the transfer of the Subject Assets to Buyer as contemplated
by this Agreement, including without limitation, all sales, use, excise, real
property and other transfer taxes and charges applicable to such transfer; all
recording charges and fees applicable to the recordation of deeds and mortgages
and other instruments of transfer; and all costs of obtaining or transferring
permits, registrations, applications and other tangible and intangible
properties. Buyer will pay all premiums, charges and costs of obtaining and
providing surveys, appraisals, UCC and title searches and title insurance for
the benefit of Buyer with respect to the Subject Assets.
(c) In the event that the parties are required to make HSR Filings,
the Buyer, on one hand, and the Seller, on the other, shall share the filing
fees relating thereto equally.
8.3 Governing Law. This Agreement shall be construed under and governed
-------------
by the internal laws of the State of Connecticut without regard to its conflict
of laws provisions.
8.4 Notices. Any notice, request, demand or other communication required
-------
or permitted hereunder shall be in writing and shall be deemed to have been
given if delivered or sent by facsimile transmission, upon receipt, or if sent
by registered or certified mail, upon the sooner of the date on which receipt is
acknowledged or the expiration of three days after deposit in United States post
office facilities properly addressed with postage prepaid. All notices to a
party will be sent to the addresses set forth below or to such other address or
person as such party may designate by notice to each other party hereunder:
TO BUYER: ASI Solutions Incorporated
- -------- 780 Third Avenue
New York, NY 10017
Attn: Bernard F. Reynolds
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: David F. Dietz, P.C.
TO SELLER AND McLagan Partners Incorporated
- ------------- 4 Stamford Plaza
STOCKHOLDERS: Suite 400
- ------------ 107 Elm Street
Stamford, CT 06901
Attn: President
40
With a copy to: Cummings & Lockwood
Four Stamford Plaza
P.O. Box 120
107 Elm Street
Stamford, CT 06904-0120
Attn: Thomas J. Freed, Esq.
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
8.5 Entire Agreement. This Agreement, including the schedules and
----------------
exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such schedules and exhibits or in such
other writings; and all inducements to the making of this Agreement relied upon
by either party hereto have been expressed herein or in such schedules or
exhibits or in such other writings.
8.6 Assignability; Binding Effect. After the Closing, Buyer's rights and
-----------------------------
obligations hereunder shall be freely assignable including, without limitation,
pursuant to the grant of a security interest herein to the Buyer's rights
hereunder to The Chase Manhattan Bank, as the administrative agent for certain
senior lenders to ASI and the Buyer. This Agreement may not be assigned by the
Seller or any Stockholder without the prior written consent of Buyer. This
Agreement shall be binding upon and enforceable by, and shall inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.
8.7 Captions and Gender. The captions in this Agreement are for
-------------------
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
8.8 Execution in Counterparts. For the convenience of the parties and to
-------------------------
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
8.9 Amendments. This Agreement may not be amended or modified, nor may
----------
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by each party hereto, or in the case of a
waiver, the party waiving compliance.
8.10 Dispute Resolution. Any dispute arising out of or relating to this
------------------
Agreement or the breach, termination or validity hereof shall be finally settled
by arbitration conducted
41
expeditiously in accordance with the Center for Public Resources Rules for
Nonadministered Arbitration of Business Disputes (the "CPR Rules"). The Center
for Public Resources shall appoint a neutral advisor from its National CPR Panel
having appropriate experience in the matters that are the subject of the dispute
(the "Advisor"). The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. (S)(S)1-16, and judgment upon the award rendered by
the Advisor may be entered by any court having jurisdiction thereof. The place
of arbitration shall be New York, New York.
Such proceedings shall be administered by the Advisor in accordance with
the CPR Rules as he/she deems appropriate, however, such proceedings shall be
guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be accomplished
within forty-five (45) days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the Advisor which shall consist of a summary
presentation by each side of not more than three hours; such hearings to take
place on one or two days at a maximum; and
(d) decision to be rendered not more than ten (10) days following
such hearings.
8.11 Consent to Jurisdiction. Solely for the purpose of allowing a party
-----------------------
to enforce its rights pursuant to Section 8.10, each of the parties hereby
consents to personal jurisdiction, service of process and venue in the federal
or state courts of New York.
8.12 Severability. The parties hereto agree that, in the event that any
------------
provision of this Agreement or the application of any such provision to any
party is held by a court of competent jurisdiction to by contrary to law, the
provision in question shall be construed so as to be lawful and the remaining
provisions of this Agreement shall remain in full force and effect.
8.13 No Third-Party Beneficiaries. This Agreement is intended solely for
----------------------------
the benefit of the parties hereto. Neither this Agreement nor any of the
transactions contemplated hereby shall be deemed to create or enlarge any rights
in any Person not a party hereto.
8.14 Publicity and Disclosures. Neither the Seller nor any Stockholder
-------------------------
shall make any press release or other public announcement (written, oral or
otherwise) in respect of this Agreement or the transactions contemplated herein
without the prior written consent of Buyer.
8.15 Attorneys' Fees. In the event of any dispute hereunder between the
---------------
parties hereto, the prevailing party in any litigation or arbitration instituted
hereunder shall be entitled
42
to recover from the other its costs and expenses thereof, including,
specifically, its reasonable attorneys' fees.
8.16 Intentionally Omitted.
---------------------
8.17 Remedies. Each of the parties to this Agreement acknowledges and
--------
agrees that remedies at law may be inadequate with respect to any breach of any
provision of this Agreement. The provisions of Section 8.10 notwithstanding,
each of the parties hereto shall be entitled to enforce the terms and provisions
of this Agreement by a decree of specific performance or injunctive relief
requiring the fulfillment of obligations under this Agreement in addition to all
other remedies provided hereunder or available to the parties at law or in
equity.
8.18 ASI Guaranty. Subject to the provisions of that certain Intercreditor
------------
and Subordination Agreement, dated as of November 13, 1997 (the "Subordination
Agreement"), by and between ASI, The Chase Manhattan Bank and certain other
parties named therein, ASI by its signature below, hereby unconditionally
guarantees the payment or fulfillment when due of all obligations of the Buyer
now or hereafter existing under this Agreement and each Exhibit to this
Agreement to which the Buyer is or becomes a party (the "Obligations"). The
obligations of the undersigned under this guaranty are independent of the
Obligations, and a separate action or actions may be brought and prosecuted
against the undersigned to enforce this guaranty, irrespective of whether any
action is brought against Buyer or whether Buyer is joined in such action. This
guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Obligations is rescinded or must otherwise
be returned by a recipient upon the insolvency, bankruptcy or reorganization of
Buyer or for any other reason, all as though such payment had not been made.
43
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
BUYER:
-----
McLAGAN PARTNERS, INC.
By: /s/ Bernard F. Reynolds
------------------------------------------
Name: Bernard F. Reynolds
Title: President
SELLER:
------
McLAGAN PARTNERS INCORPORATED
By: /s/ Albertus W. van den Broek
------------------------------------------
Name: Albertus W. van den Broek
Title: Executive Vice President
STOCKHOLDERS:
------------
/s/ C. Bruce McLagan
----------------------------------------------
C. Bruce McLagan
/s/ F. Samuel Smith
----------------------------------------------
F. Samuel Smith
/s/ Albertus W. van den Broek
----------------------------------------------
Albertus W. van den Broek
/s/ Donald B. Shackelford
----------------------------------------------
Donald B. Shackelford
/s/ Byram E. Dickes
----------------------------------------------
Byram E. Dickes
For the purposes of Section 8.18 only
ASI SOLUTIONS INCORPORATED
By: /s/ Bernard F. Reynolds
------------------------------------------
Name: Bernard F. Reynolds
Title: Chief Executive Officer