1
EXHIBIT 2
EXECUTION
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STOCK PURCHASE AGREEMENT
BY AND AMONG
MITS HOLDING, INC.
METAMOR INFORMATION TECHNOLOGY SERVICES, INC.
AND
METAMOR WORLDWIDE, INC.
DATED AS OF SEPTEMBER 3, 1999
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STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I
STOCK PURCHASE; CLOSING..............................................1
1.1 Stock Purchase..............................................1
1.2 Earn Out....................................................2
1.3 Cash Price Adjustments......................................3
1.4 Closing Transactions........................................4
ARTICLE II
CONDITIONS TO CLOSING................................................5
2.1 Conditions to the Purchaser's Obligations...................5
2.2 Conditions to the Company's and Stockholder's Obligation....8
ARTICLE III
COVENANTS PRIOR TO CLOSING...........................................9
3.1 Affirmative Covenants of the Company........................9
3.2 Negative Covenants of the Company..........................11
3.3 Covenants of the Purchaser.................................12
ARTICLE IV
[INTENTIONALLY OMITTED].............................................12
ARTICLE V
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY...............13
5.1 Organization and Corporate Power...........................13
5.2 Authorization of Transactions..............................13
5.3 Capitalization.............................................13
5.4 Subsidiaries; Investments..................................14
5.5 Absence of Conflicts.......................................14
5.6 Financial Statements and Related Matters...................15
5.7 Absence of Undisclosed Liabilities.........................16
5.8 Absence of Certain Developments............................16
5.9 Assets.....................................................18
5.10 Title to Properties........................................18
5.11 Taxes......................................................19
5.12 Contracts and Commitments..................................21
5.13 Proprietary Rights.........................................23
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5.14 Litigation; Proceedings....................................25
5.15 Brokerage..................................................25
5.16 Governmental Licenses and Permits..........................25
5.17 Employees and Contractors..................................26
5.18 Employee Benefit Matters...................................26
5.19 Insurance..................................................28
5.20 Officers and Directors; Bank Accounts......................28
5.21 Affiliate Transactions.....................................28
5.22 Compliance with Laws.......................................28
5.23 Environmental Matters......................................29
5.24 Powers of Attorney; Guarantees.............................30
5.25 Names and Locations........................................30
5.26 Closing Date...............................................30
ARTICLE VI
REPRESENTATIONS AND WARRANTIES CONCERNING THE STOCKHOLDER...........31
6.1 Authorization of Transactions..............................31
6.2 Absence of Conflicts.......................................31
6.3 Litigation.................................................31
6.4 Shares.....................................................32
6.5 Taxes......................................................32
6.6 Closing Date...............................................32
ARTICLE VII
REPRESENTATIONS AND WARRANTIES CONCERNING THE PURCHASER.............32
7.1 Organization and Corporate Power...........................32
7.2 Authorization of Transaction...............................32
7.3 Governmental Authorities and Consents......................33
7.4 Absence of Conflicts.......................................33
7.5 Litigation.................................................33
7.6 Brokerage..................................................33
7.7 Investment Representations.................................33
7.8 Closing Date...............................................34
7.9 No Additional Representations..............................34
ARTICLE VIII
TERMINATION.........................................................34
8.1 Termination................................................34
8.2 Effect of Termination......................................35
ARTICLE IX
ADDITIONAL AGREEMENTS...............................................35
9.1 Survival...................................................35
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9.2 Continuing Assistance......................................35
9.3 Tax Matters................................................35
9.4 Press Releases and Announcements...........................37
9.5 Further Transfers..........................................38
9.6 Expenses...................................................38
9.7 Exclusivity................................................38
9.8 Books and Records..........................................38
9.9 Nonsolicitation and Confidentiality........................39
9.10 Continuing Relationship....................................40
9.11 Financial Information......................................40
9.12 Use of Metamor Name........................................40
9.13 Certain Employee Benefit Matters...........................41
9.14 Transition Services........................................41
9.15 Uncollected Receivables; Disputed Payments.................42
9.16 Certain Leases.............................................43
9.17 Certain Legal Matters......................................44
ARTICLE X
DEFINITIONS.........................................................45
10.1 Definitions................................................45
ARTICLE XI
MISCELLANEOUS.......................................................50
11.1 Amendment and Waiver.......................................50
11.2 Notices....................................................50
11.3 Binding Agreement; Assignment..............................51
11.4 Severability...............................................52
11.5 No Strict Construction.....................................52
11.6 Captions...................................................52
11.7 Entire Agreement...........................................52
11.8 Counterparts...............................................52
11.9 Governing Law..............................................52
11.10 Parties in Interest........................................52
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LIST OF EXHIBITS
Exhibit A - Commitment Letters
Exhibit B - EDS Claim Letter
INDEX OF SCHEDULES
Acquisition Agreement Schedule
Organization Schedule
Capitalization Schedule
Subsidiaries Schedule
Conflicts Schedule
Financial Statements Schedule
Receivables Schedule
Undisclosed Liabilities Schedule
Developments Schedule
Assets Schedule
Real Property Schedule
Leases Schedule
Taxes Schedule
Contracts Schedule
Proprietary Rights Schedule
Litigation Schedule
Permits Schedule
Employees and Contractors Schedule
Benefit Plans Schedule
Insurance Schedule
Officers, Directors and Bank Accounts Schedule
Affiliated Transactions Schedule
Environmental Schedule
Names and Locations Schedule
Stockholder Conflicts Schedule
Stockholder Capitalization Schedule
Nonsolicitation Schedule
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of September 3, 1999, by and among Metamor Information Technology Services,
Inc., a Delaware corporation (the "Company"), Metamor Worldwide, Inc., a
Delaware corporation (the "Stockholder") and MITS Holding, Inc., a Delaware
corporation (the "Purchaser"). The Company, the Stockholder and the Purchaser
are referred to herein collectively as the "Parties" and individually as a
"Party." Certain capitalized terms used herein are defined in Article X hereof.
WHEREAS, the authorized capital stock of the Company consists
of 5 million shares of common stock, par value $.01 per share (the "Common
Stock"), of which 2,115,500 shares are issued and outstanding (the "Company
Stock"), and ;
WHEREAS, the Stockholder owns beneficially and of record 100%
of the issued and outstanding shares of the Company Stock; and
WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement, the Purchaser desires to acquire from the Company, and
the Company desires to sell to the Purchaser, all of the Company Stock.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties,
intending to be legally bound, hereby agree as follows:
ARTICLE I
STOCK PURCHASE; CLOSING
1.1 STOCK PURCHASE. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth herein, at the Closing, the Stockholder shall sell
to the Purchaser, and the Purchaser shall purchase from the Stockholder all of
the issued and outstanding Company Stock for a purchase price described below:
(a) a cash amount of $305 million (the "Cash Price") payable
at the Closing (as hereinafter defined), as adjusted pursuant to Section 1.3;
and
(b) as determined pursuant to Section 1.2, an additional
amount, if any, equal to the product of three multiplied by the amount, if any,
by which the Adjusted EBITDA (as hereinafter defined) of the Company for the
twelve month period ended December 31, 2000 (the "Earn-Out Period") exceeds
$45.5 million (the "Earn-Out Payment"); provided, however that the Earn-Out
Payment shall not exceed $20 million.
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1.2 EARN OUT.
(a) The calculation of Adjusted EBITDA for the Earn-Out
Period will be calculated based upon the Company's audited financial statements
for the year ending December 31, 2000. Adjusted EBITDA, with respect to the
period for which it is to be computed, shall mean earnings before interest,
taxes, depreciation and amortization (prepared in accordance with generally
accepted accounting principles ("GAAP")) ("EBITDA"), plus adjustments and add
backs as follows: the exclusion of expenses related to or associated with (a)
any management fees paid to the Purchaser or its Affiliates, (b) all
depreciation and amortization associated with, or as a result of, the
acquisition of the Company contemplated herein, (c) the acquisition of the
Company contemplated herein and new ventures, (d) the Purchaser's additional
general corporate overhead and administrative expenses, (e) the Company's
general corporate overhead and administrative expenses that are in excess of
the Company's historical expense levels for the corresponding period, (f)
extraordinary gain or loss on the sale or disposition of assets, and (g) any
profit sharing, incentive compensation or retirement plans implemented after
the Closing Date.
(b) During the Earn-Out Period, the Purchaser shall operate
the Company in a manner necessary to maximize Adjusted EBITDA for the Earn-Out
Period and shall not operate the Company in a manner that promotes the long
term growth of the business of the Company at the expense of the Company's
EBITDA for the Earn-Out Period. During the Earn-Out Period, the Purchaser
agrees that they will not, without the consent of the Stockholder, unreasonably
require that the business of the Company be operated substantially differently
than it was operated in the past, unreasonably change the prices charged, the
level of compensation of full-time employees and the level of general and
administrative expenses. During the Earn-Out Period, the Purchaser shall not
take any of the following actions with respect to the Company, without first
obtaining the consent of the Stockholder or appropriately segregating the
accounting for the business of the Company as then in existence: (i) sell any
significant portion of the Company's assets (other than sales of assets in the
ordinary course of business consistent with past practice); (ii) merge,
consolidate, or reorganize the Company with another party; (iii) cause the
Company to acquire all or substantially all, or any significant portion of, the
assets of a third party; (iv) cause the Company to enter into a material joint
venture, partnership, strategic alliance, or other similar business arrangement
with one or more third parties; or (v) cause the Company to enter into any
material transaction, however designated, not in the ordinary course of
business consistent with past practice, in each case the consummation of which
has or can reasonably be expected to have, a material impact upon the Company's
EBITDA earned during the Earn-Out Period. During the Earn-Out Period, the
Purchaser shall, through the use of credit facilities in existence as of the
Closing, make reasonable levels of working capital available to the Company, in
amounts and at times, sufficient to maximize the Company's EBITDA during the
Earn-Out Period.
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1.3 CASH PRICE ADJUSTMENTS.
(a) Closing Date Adjustment. Not more than five (5) Business
Days, but in no event less than two (2) Business Days, before the Closing Date,
the Stockholder and the Purchaser will, in good faith and in accordance with
GAAP, jointly estimate the amount necessary to discharge fully the then
outstanding obligations relating to Indebtedness of the Company and its
Subsidiaries (including, without limitation, any accrued interest related
thereto and all prepayment penalties and premiums) as of the Closing Date on a
reasonable basis using the Company's then available financial information (the
"Indebtedness Amount"); provided, however, that if the Stockholder and the
Purchaser cannot agree on an estimate of the Indebtedness Amount, such estimate
will be deemed to be equal to the average of the Stockholder's and the
Purchaser's good faith determinations thereof. The Indebtedness Amount as
finally estimated pursuant to this Section 1.3(a)(ii) is referred to herein as
the "Estimated Indebtedness Amount." At the Closing, the Cash Price will be
decreased dollar-for-dollar by an amount equal to the Estimated Indebtedness
Amount.
(b) Post-Closing Determination. Within sixty (60) days after
the Closing Date the Company and its auditors will prepare, and deliver to the
Stockholder, an audited balance sheet of the Company (the "Closing Balance
Sheet") as of the Closing Date which will reflect the Company's determination
of the Working Capital as of the Closing Date and the Indebtedness Amount as of
the Closing Date (the "Draft Computation"). The Company and its auditors will
make available to the Stockholder and its auditors all records and work papers
necessary to accurately compute the Working Capital and Indebtedness as of the
Closing Date, including without limitation all records and work papers used in
preparing the Closing Balance Sheet and the Draft Computation. If the
Stockholder disagrees with the computation of the Working Capital or the
Indebtedness Amount reflected on the Draft Computation, the Stockholder may,
within sixty (60) days after receipt of the Draft Computation, deliver a notice
(an "Objection Notice") to the Company setting forth the Stockholder's
calculation of the Working Capital as of the Closing Date and the Indebtedness
Amount as of the Closing Date. If the Stockholder does not deliver an Objection
Notice within sixty (60) days after receipt of the Draft Computation, then the
Draft Computation shall be conclusive and binding upon the Parties. If the
Stockholder has delivered to the Company an Objection Notice, the Company and
the Stockholder will use reasonable commercial efforts to resolve any
disagreements as to the computation of the Working Capital and the Indebtedness
Amount, but if they do not obtain a final resolution within sixty (60) days
after the Company has received the Objection Notice, the Company and the
Stockholder will jointly retain an independent accounting firm of recognized
national standing (the "Firm") to resolve any remaining disagreements. If the
Company and the Stockholder are unable to agree on the choice of the Firm, the
Firm will be a "big-five" accounting firm selected by lot (after excluding one
firm designated by each of the Company and the Stockholder). The Company and
the Stockholder will direct the Firm to render a determination within thirty
(30) days of its retention and the Company, the Stockholder and their
respective agents will cooperate with the Firm during its engagement. The
Firm's determination will be based solely on the definitions of Working Capital
and Indebtedness Amount included herein. The determination of the Firm will be
conclusive and binding upon the Parties. The
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Company and the Stockholder shall bear the costs and expenses of the Firm
based on the percentage which the portion of the contested amount not awarded
to each Party bears to the amount actually contested by such Party. The amount
of the Working Capital, as finally determined pursuant to this Section 1.3(b),
is referred to herein as the "Actual Working Capital," and the Indebtedness
Amount, as finally determined pursuant to this Section 1.3(b), is referred to
herein as the "Actual Indebtedness Amount."
(c) Post-Closing Adjustment.
(i) Payments by the Company. If the Actual Working Capital is
greater than the Target Working Capital, the Company will, within five
(5) Business Days after the determination thereof, pay to the
Stockholder an amount equal to the Actual Working Capital minus the
Target Working Capital. If the Actual Indebtedness Amount is less than
the Estimated Indebtedness Amount, the Company will, within five (5)
Business Days after the determination thereof, pay to the Stockholder
an amount equal to the Estimated Indebtedness Amount minus the Actual
Indebtedness Amount.
(ii) Payment by the Stockholder. If the Actual Working
Capital is less than the Target Working Capital, the Stockholder will,
within five (5) Business Days after the determination thereof, pay to
the Company an amount equal to the Target Working Capital minus the
Actual Working Capital. If the Actual Indebtedness Amount is greater
than the Estimated Indebtedness Amount, the Stockholder will, within
five (5) Business Days after the determination thereof, pay to the
Company an amount equal to the Actual Indebtedness Amount minus the
Estimated Indebtedness Amount.
(iii) Dispute. If, pursuant to Section 1.3(b) above, there is
a dispute as to the final determination of the Working Capital or the
Indebtedness Amount, the Company and the Stockholder shall promptly
pay to the other, as appropriate, such amounts as are not in dispute,
pending final determination of such dispute pursuant to Section
1.3(b).
All amounts payable pursuant to this Section 1.3(c) shall be added together or
netted against one another, as applicable, such that only one payment will be
made from one Party to another Party and shall be payable by a cashier's or
certified check, or by wire transfer of immediately available funds to the
accounts designated by the payee.
1.4 CLOSING TRANSACTIONS.
(a) Closing. The closing of transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Kirkland & Ellis,
200 East Randolph Drive, Chicago, Illinois 60601, commencing at 9:00 a.m. on
the second business day after all conditions to the obligations of the Parties
to consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the Closing itself) are
satisfied or waived,
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or at such other place or on such other date as may be mutually agreeable to
the Parties. The date and time of the Closing are herein referred to as the
"Closing Date."
(b) Closing Transactions. Subject to the conditions set forth
in this Agreement, the Parties shall consummate the following transactions (the
"Closing Transactions") on the Closing Date:
(i) the Stockholder shall deliver to the Purchaser the stock
certificates evidencing the Company Stock, duly endorsed for transfer
or accompanied by duly executed stock powers;
(ii) the Purchaser shall deliver to the Stockholder by wire
transfer of immediately available funds to an account designated by
the Stockholder the Cash Price;
(iii) the Stockholder shall deliver to the Purchaser all
appropriate payoff letters (in form and substance satisfactory to the
Purchaser) from holders of any Indebtedness of the Company and its
Subsidiaries as are requested by the Purchaser and shall make
arrangements reasonably satisfactory to the Purchaser for such holders
to deliver lien releases and canceled notes at the Closing; and
(iv) the Company, the Stockholder and the Purchaser, as
applicable, shall deliver the opinions, certificates and other
documents and instruments required to be delivered by or on behalf of
such Party under Article II.
ARTICLE II
CONDITIONS TO CLOSING
2.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The obligation
of the Purchaser to purchase and pay for the Company Stock is subject to the
satisfaction of the following conditions as of the Closing Date:
(a) the representations and warranties set forth in Article V
and Article VI hereof shall be true and correct in all material respects at and
as of the date of this Agreement (without (i) regard to any references to
"material" or "Material Adverse Effect" in such representations and warranties
and (ii) taking into account any disclosures made by the Company or the
Stockholder to the Purchaser pursuant to Sections 3.1(g) or 5.26 hereof or any
updates to the Disclosure Schedules delivered pursuant to Section 5.26), except
to the extent such representations and warranties relate to an earlier date (in
which case such representations and warranties shall be true and correct on and
as of such earlier date);
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(b) the Company and the Stockholder shall have performed and
complied with in all material respects all of the material covenants and
agreements required to be performed by each of them under this Agreement on or
prior to the Closing;
(c) all consents by third parties that are required for the
consummation of the transactions contemplated hereby or that are required in
order to prevent a breach of, a material default under, a termination or
modification of, or any acceleration of, any obligations under any contract to
which the Company or any of its Subsidiaries is a party and which is identified
with an asterisk (*) on the Contracts Schedule, the Conflicts Schedule or the
Stockholder Conflicts Schedule shall have been obtained, all on terms
reasonably satisfactory to the Purchaser;
(d) all governmental filings, authorizations and approvals
that are required for the consummation of the transactions contemplated hereby
shall have been duly made and obtained on terms reasonably satisfactory to the
Purchaser;
(e) the purchase by the Purchaser of the Company Stock
hereunder shall not be prohibited by any applicable law or governmental
regulation, shall not subject the Purchaser to any penalty, liability or other
onerous condition under or pursuant to any applicable law or governmental
regulation, and shall be permitted by laws and regulations of the jurisdictions
to which the Purchaser is subject;
(f) the Stockholder shall have simultaneously delivered to
the Purchaser the Company Stock and shall have received the Cash Price in
exchange therefor in full;
(g) the applicable waiting periods, if any, under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR Act")
shall have expired or been terminated;
(h) except as otherwise specified by the Purchaser, all of
the Company's and each of its Subsidiaries' directors and officers shall have
resigned and such resignations shall be effective as of the Closing Date;
(i) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable judgment, decree, injunction, order or ruling would prevent the
performance of this Agreement or any of the transactions contemplated hereby,
declare unlawful the transactions contemplated by this Agreement or cause such
transactions to be rescinded, and no judgment, decree, injunction, order or
ruling shall have been entered which has any of the foregoing effects;
(j) payoff letters as requested by the Purchaser with respect
to certain of the Company's and its Subsidiaries' Indebtedness outstanding as
of the Closing and releases of any and all Liens (other than Permitted
Encumbrances) related to such specified payoff letters, including
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appropriate UCC termination statements, held by third parties against the
property of the Company or any of its Subsidiaries shall have been obtained for
release upon payment, all on terms reasonably satisfactory to the Purchaser;
(k) the Purchaser shall have received an opinion, dated the
Closing Date, of Vinson & Elkins L.L.P., counsel to the Company and the
Stockholder, in form and substance satisfactory to the Purchaser;
(l) on or prior to the Closing Date, the Company and the
Stockholder shall have delivered to the Purchaser all of the following:
(i) a certificate from an officer of the Company and
the Stockholder in a form reasonably satisfactory to the Purchaser,
dated the Closing Date, stating that the preconditions specified in
Sections 2.1(a)-(d), (g) and (h) have been satisfied;
(ii) copies of all necessary material third party
and governmental consents, approvals, filings, releases and
terminations required in connection with the consummation of the
transactions contemplated herein;
(iii) copies of the resignations described in
Section 2.1(h);
(iv) certified copies of the resolutions duly
adopted by the Company's board of directors and Stockholder
authorizing the execution, delivery and performance of this Agreement
and each of the transactions contemplated hereby; and
(v) certificates of the Secretary of State of any
state where the Company or any of its Subsidiaries is qualified to do
business providing that the Company or such Subsidiary is in good
standing in such state;
(m) all debt financing necessary to consummate the
transactions contemplated herein and to satisfy the Company's ongoing working
capital requirements shall have been obtained in amounts and on terms no less
favorable to the Company than those set forth in the term sheet attached to the
Commitment Letters attached hereto as Exhibit A; and
(n) Michael T. Willis or other senior managers selected by
the Purchaser will have entered into employment agreements with the Purchaser
in form and substance satisfactory to the Purchaser.
Any condition specified in this Section 2.1 may be waived by the Purchaser;
provided that no such waiver shall be effective against the Purchaser unless it
is set forth in a writing executed by the Purchaser.
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2.2 CONDITIONS TO THE COMPANY'S AND STOCKHOLDER'S OBLIGATION.
The obligation of the Company and the Stockholder to consummate the
transactions contemplated by this Agreement is subject to the satisfaction of
the following conditions as of the Closing Date:
(a) the representations and warranties set forth in Article
VII shall be true and correct in all material respects at and as of the Closing
Date as though then made and as though the Closing Date were substituted for
the date of this Agreement throughout such representations and warranties
(without taking into account any disclosures made by the Purchaser to the
Company and the Stockholder pursuant to Sections 3.3(a) and 7.7 hereof);
(b) the Purchaser shall have performed and complied with in
all material respects all of the covenants and agreements required to be
performed by it under this Agreement on or prior to the Closing;
(c) all governmental filings, authorizations and approvals
that are required for the consummation of the transactions contemplated hereby
shall have been duly made and obtained on terms reasonably satisfactory to the
Stockholder;
(d) no action, suit, or proceeding shall be pending before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
judgment, decree, injunction, order or ruling would prevent the performance of
this Agreement or any of the transactions contemplated hereby, declare unlawful
the transactions contemplated by this Agreement or cause such transactions to
be rescinded, and no judgment, decree, injunction, order or ruling shall have
been entered which has any of the foregoing effects;
(e) the sale of the Company Stock to the Purchaser shall not
be prohibited by any applicable law or governmental regulation, shall not
subject the Stockholder to any penalty, liability or other onerous condition
under or pursuant to any applicable law or governmental regulation, and shall
be permitted by laws and regulations of the jurisdictions to which the Company
and the Stockholder are subject; and
(f) the applicable waiting periods, if any, under the HSR Act
shall have expired or been terminated.
Any condition specified in this Section 2.2 may be waived by the Stockholder;
provided that no such waiver shall be effective unless it is set forth in a
writing executed by the Stockholder.
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ARTICLE III
COVENANTS PRIOR TO CLOSING
3.1 AFFIRMATIVE COVENANTS OF THE COMPANY. Prior to the
Closing, unless the Purchaser otherwise agrees in writing or except as
expressly contemplated by this Agreement, the Company and each of its
Subsidiaries shall, and in the case of Sections 3.1(f), (g), (h), (l) and (n)
through (u) the Stockholder also shall:
(a) conduct its business and operations, including, without
limitation, its cash management customs and practices (including, without
limitation, the collection of receivables, payment of payables and incurrence
of capital expenditures) only in the usual and ordinary course of business
consistent with past custom and practice;
(b) keep in full force and effect its corporate existence and
all rights, franchises and intellectual property relating or pertaining to its
business and use its reasonable commercial efforts to cause its current
insurance (or reinsurance) policies not to be canceled or terminated or any of
the coverage thereunder to lapse;
(c) use its reasonable commercial efforts to carry on the
business of the Company and of each of its Subsidiaries in the same manner as
presently conducted and to keep the Company's and each of its Subsidiaries'
business organization and properties intact, including its present business
operations, physical facilities, working conditions and employees and its
present relationships with lessors, licensors, suppliers and customers and
others having business relations with it;
(d) maintain the material assets of the Company and each of
its Subsidiaries in good repair, order and condition (normal wear and tear
excepted) consistent with current needs, replace in accordance with prudent
practices its inoperable, worn out or obsolete assets with assets of good
quality consistent with prudent practices and current needs and, in the event
of a casualty, loss or damage to any of such assets or properties prior to the
Closing Date, either repair or replace such damaged property or use the
proceeds of such insurance in such other manner as mutually agreed upon by the
Stockholder and the Purchaser;
(e) encourage key employees to continue their employment with
the Company and its Subsidiaries after the Closing;
(f) maintain the books, accounts and records of the Company
and each of its Subsidiaries in accordance with past custom and practice as
used in the preparation of the Financial Statements;
(g) inform (once the Company or the Stockholder obtains
knowledge thereof) the Purchaser in writing of any material variances from the
representations and warranties contained in
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Article V or Article VI hereof or any breach of any covenant hereunder by the
Company or the Stockholder;
(h) cooperate with the Purchaser and use reasonable
commercial efforts to cause the conditions to the Purchaser's obligation to
close to be satisfied (including, without limitation, the execution and
delivery of all agreements contemplated hereunder to be so executed and
delivered and the making and obtaining of all material third party and
governmental notices, filings, authorizations, approvals, consents, releases
and terminations);
(i) maintain the existence of and use reasonable commercial
efforts to protect all Proprietary Rights used in the business of the Company
and each of its Subsidiaries;
(j) maintain the existence of and use reasonable commercial
efforts to protect all of the governmental permits, licenses, approvals and
other authorizations of the business of the Company and each of its
Subsidiaries;
(k) comply with all applicable laws, ordinances, and
regulations in the operation of the business of the Company and each of its
Subsidiaries;
(l) cooperate with the Purchaser in the Purchaser's
investigation of the business and properties of the Company and each of its
Subsidiaries, and permit the Purchaser and their employees, agents, accounting,
legal and other authorized representatives to (i) have full access to the
premises, books and records of the Company and each of its Subsidiaries at
reasonable hours, (ii) prepare audited consolidated and consolidating balance
sheets and statements of income of the Company for the Company's last three
fiscal years, (iii) visit and inspect any of the properties of the Company and
each of its Subsidiaries, and (iv) discuss the affairs, finances and accounts
of the Company and each of its Subsidiaries with the directors, officers,
partners, key employees, key customers, key sales representatives, key
suppliers and independent accountants of the Company and each of its
Subsidiaries; in each case after reasonable arrangements for same have been
made through the Stockholder's General Counsel or Chief Financial Officer;
(m) use its reasonable commercial efforts to obtain landlord
consents, landlord lien waivers and estoppel certificates from the Company's
and any of its Subsidiaries' landlords in form and substance satisfactory to
GTCR and to obtain other consents required in connection with the transactions
contemplated in this Agreement;
(n) have caused the Company to adopt and maintain the Metamor
Information Technology Services, Inc. 401(k) Plan ("Company's 401(k) Plan"), a
defined contribution plan intended to be qualified under Section 401(a) of the
Code, and, in accordance with the applicable provisions of Section 414(l) of
the Code, the Stockholder shall have caused the assets and liabilities of the
Metamor Worldwide 401(k) Plan attributable to the accounts (whether or not
vested) of each participant who is an employee or former employee of the
Company or any Subsidiary of the
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16
Company to be transferred by the trustee of the Metamor Worldwide 401(k) plan
to the trustee of the Company's 401(k) Plan. Such transfer of assets shall be
in cash (but shall include any promissory notes or other evidences of
indebtedness with respect to outstanding loans);
(o) have caused the Company to adopt and maintain a
nonqualified deferred compensation plan and associated rabbi trust (the
"Company's Nonqualified Plan") and shall have caused the assets and liabilities
held in the COREStaff, Inc. Executive Retirement Savings Plan Rabbi Trust (the
"ERSP") attributable to the accounts of each employee of the Company to be
transferred in cash by the trustee of the ERSP to the trustee of the Company's
Nonqualified Plan;
(p) have caused the Company to adopt and maintain the
employee benefit plans listed on Schedule 5.18 and shall have caused each such
plan to receive a spin-off of the assets and liabilities of the corresponding
Stockholder plan attributable to the participation of the employees of the
Company and each Subsidiary of the Company;
(q) have delivered to Purchaser for Purchaser's review and
approval the employee benefit plans referred to in Sections 3.1(n), (o) and (p)
above;
(r) have caused a transfer of sponsorship from the Company to
the Stockholder and an assumption of all assets and liabilities thereunder of
the Datronics Management, Inc. Profit Sharing Plan and Trust and the Knauer
Consulting Money Purchase Pension Plan;
(s) execute any and all documents and instruments required to
assign, convey and transfer to the Company all the Stockholder's right, title
and interest in and to any Proprietary Rights registered or held in the
Stockholder's name but used or relied on in the Company's business, including,
without limitation, the following: the U.S. trademark registrations and
applications for COMSYS, Reg. No. 1,269,487, COMSYS and design, Reg. No.
1,269,486 and DATRONICS, Reg. No. 1,835,823;
(t) execute and file with the Patent and Trademark Office and
the Copyright Office all documents and instruments required to record the
assignments, conveyances and transfers set forth in Section 3.1(r) above and
all documents and instruments required to clear up any title breaks in the
chain of ownership of any of the trademarks or copyrights assigned, conveyed or
transferred under Section 3.1(r) above; and
(u) execute any and all documents and instruments reasonably
required to assign, convey and transfer to the Company all of the Stockholder's
rights under and interests in all of the acquisition agreements set forth on
the attached Acquisition Agreement Schedule.
3.2 NEGATIVE COVENANTS OF THE COMPANY. Prior to the Closing,
unless the Purchaser otherwise agrees in writing or except as expressly
contemplated by this Agreement, the Company and each of its Subsidiaries shall
not:
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17
(a) take any action that would require disclosure under
Section 5.8 (other than Sections 5.8(a), (i) or (p));
(b) other than as contemplated herein, amend the Company's
Certificate of Incorporation or by-laws;
(c) except as specifically contemplated by this Agreement,
enter into any contract, agreement or transaction, other than in the ordinary
course of business consistent with past practice and at arm's length with
unaffiliated Persons or terminate or modify any contract required to be
disclosed on the Contracts Schedule or any Government License, permit or other
authorization;
(d) amend, terminate or renew any leases for any of its
Leased Real Property (as defined in Section 5.10 below); or
(e) change in any material respect any accounting practices,
including those relating to the timing of transactions (e.g., the acceleration
of delivery of products or services or the recognition of revenue or expenses).
3.3 COVENANTS OF THE PURCHASER. Prior to the Closing, the
Purchaser shall:
(a) promptly (once it obtains knowledge thereof) inform the
Stockholder in writing of any variances from the representations and warranties
contained in Article VII or any breach of any covenant hereunder by the
Purchaser; and
(b) cooperate with Stockholder and use its reasonable
commercial efforts to cause the conditions to the Stockholder's obligation to
close to be satisfied (including, without limitation, the execution and
delivery of all agreements contemplated hereunder to be so executed and
delivered and the making and obtaining of all third party and governmental
filings, authorizations, approvals, consents, releases and terminations).
ARTICLE IV
[INTENTIONALLY OMITTED]
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ARTICLE V
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
As a material inducement to the Purchaser to enter into this
Agreement, the Company and the Stockholder hereby represent and warrant that
the statements contained in this Article V are true and correct as of the date
of this Agreement, except to the extent such representations and warranties
relate to an earlier date (in which case such representations and warranties
shall be true and correct, on and as of such earlier date). In addition, the
inclusion of any item on the Disclosure Schedules shall not be a representation
by the Company or the Stockholder that such item is material. All of the
Disclosure Schedules are as of the date of this Agreement. The Disclosure
Schedules may be supplemented one or more times prior to the date which is two
(2) days prior to the Closing Date.
5.1 ORGANIZATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is qualified to do business in every
jurisdiction in which it is required to be qualified, except where the failure
to be so qualified would not have a Material Adverse Effect. All jurisdictions
in which the Company is qualified to do business are set forth on the
"Organization Schedule" attached hereto. The Company has full power and
authority and all licenses, permits and authorizations necessary to own and
operate its properties and to carry on its business as now conducted. Correct
and complete copies of the Company's and each of its Subsidiaries' certificate
of incorporation and by-laws have been furnished to the Purchaser, which
documents reflect all amendments made thereto at any time prior to the date of
this Agreement. Correct and complete copies of the minute books containing the
records of meetings of the stockholders and board of directors, the stock
certificate books and the stock record books of the Company and each of its
Subsidiaries have been furnished to the Purchaser. Neither the Company nor any
of its Subsidiaries is in default under or in violation of any provision of its
certificate of incorporation or by-laws.
5.2 AUTHORIZATION OF TRANSACTIONS. The Company has full power
and authority to execute and deliver the Transaction Documents to which it is a
party and to consummate the transactions contemplated hereby and thereby. The
board of directors of the Company has duly approved the Transaction Documents
to which the Company is a party and has duly authorized the execution and
delivery of such Transaction Documents and the consummation of the transactions
contemplated thereby. No other corporate proceedings on the part of the Company
are necessary to approve and authorize the execution and delivery of the
Transaction Documents to which the Company is a party and the consummation of
the transactions contemplated thereby. All Transaction Documents to which the
Company is a party have been duly executed and delivered by the Company and
constitute the valid and binding agreements of the Company, enforceable against
the Company in accordance with their terms.
5.3 CAPITALIZATION. As of the date hereof and as of the
Closing Date, before giving effect to the transactions contemplated herein, the
authorized, issued and outstanding stock of the Company consists of 5 million
shares of Common Stock, of which 2,115,500 shares are issued
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19
and outstanding. All of the issued and outstanding shares of Company Stock have
been duly authorized, are validly issued, fully paid, and nonassessable and are
not subject to, nor were they issued in violation of, any preemptive rights or
rights of first refusal, and are owned of record and beneficially by the
Stockholder free and clear of all Encumbrances (except for such Encumbrances as
shall be released at Closing). Except as disclosed on the "Capitalization
Schedule," there are no outstanding or authorized options, warrants, rights,
contracts, calls, puts, rights to subscribe, conversion rights or other
agreements or commitments to which the Company is a party or which are binding
upon the Company providing for the issuance, disposition or acquisition of any
of its capital stock (other than this Agreement). Except as disclosed on the
Capitalization Schedule, there are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to the Company or
any of its Subsidiaries or any stock or securities convertible or exchangeable
for any shares of the Company's or any of its Subsidiaries' capital stock.
There are no voting trusts, proxies or any other agreements or understandings
with respect to the voting of the capital stock of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock. There are no statutory or contractual
preemptive rights, rights of first refusal or similar rights with respect to
the issuance or redemption of capital stock of the Company hereunder. The
Company has not violated any applicable federal of state securities laws in
connection with the offer, sale or issuance of any of its capital stock.
5.4 SUBSIDIARIES; INVESTMENTS. The attached "Subsidiaries
Schedule" correctly sets forth the name of each of the Company's direct or
indirect Subsidiaries, the jurisdiction of its organization, the number of
authorized, issued and outstanding shares of capital stock or equity interests
of such Subsidiary and the Persons owning the outstanding capital stock or
equity interests of such Subsidiary. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, possesses all requisite power and authority and all material
licenses, permits and authorizations necessary to own its properties and to
carry on its businesses as now being conducted and is qualified to do business
in every jurisdiction in which its ownership of property or the conduct of
business requires it to qualify, except where the failure to so qualify would
not have a Material Adverse Effect. All of the outstanding shares of capital
stock or equity interests of each Subsidiary are validly issued, fully paid and
nonassessable, and all such shares or interests are owned by the Company or
another Subsidiary free and clear of any Lien and not subject to any option or
right to purchase any such shares or interests. Except as set forth on the
Subsidiaries Schedule, neither the Company nor any of its Subsidiaries owns or
holds the right to acquire any shares of stock, equity interest or any other
security or interest in any other Person.
5.5 ABSENCE OF CONFLICTS. Except as set forth on the
"Conflicts Schedule" attached hereto, the execution, delivery and performance
of the Transaction Documents by the Company and the Stockholder and the
consummation of the transactions contemplated thereby do not and shall not (a)
conflict with or result in any breach of any of the terms, conditions or
provisions of, (b) constitute a default under, (c) result in a violation of,
(d) give any third party the right to modify, terminate or accelerate any
obligation under, (e) result in the creation of any Lien upon the
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20
Common Stock or the assets of the Company of any of its Subsidiaries or (f)
require any authorization, consent, approval, exemption or other action by or
notice or declaration to, or filing with, any court or administrative or other
governmental body or agency, under the provisions of the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries or any
indenture, mortgage, lease, loan agreement or other agreement or instrument to
which the Company or any of its Subsidiaries is bound or affected, or any law,
statute, rule or regulation to which the Company or any of its Subsidiaries is
subject or any judgment, order or decree to which the Company or any of its
Subsidiaries is subject, other than under the HSR Act. Except as set forth on
the Conflicts Schedule, no permit, consent, approval or authorization of,
declaration to or filing with, or notice to, any governmental authority or any
third party is required in connection with the execution, delivery or
performance by the Company of this Agreement or the other agreements
contemplated hereby, or the consummation by the Company or any other
transactions contemplated hereby or thereby.
5.6 FINANCIAL STATEMENTS AND RELATED MATTERS.
(a) Financial Statements. Attached hereto as the "Financial
Statements Schedule" are copies of the Company's and its Subsidiaries' (i)
unaudited consolidated and consolidating balance sheet as of June 30, 1999 (the
"Latest Balance Sheet") and the related statement of income for the six-month
period then ended and (ii) unaudited consolidated and consolidating balance
sheets and statements of income for the fiscal years ended December 31, 1998
and 1997. Each of the foregoing financial statements (including in all cases
the notes thereto, if any) (the "Financial Statements") is accurate and
complete, is consistent with the Company's and its Subsidiaries' books and
records (which, in turn, are accurate and complete), presents fairly the
Company's and its Subsidiaries' financial condition and results of operations
as of the times and for the periods referred to therein, and has been prepared
in accordance with GAAP, subject in the case of unaudited financial statements
to changes resulting from normal year-end adjustments for recurring accruals
(which shall not be material individually or in the aggregate) and to the
absence of footnote disclosure.
(b) Receivables.
(i) Except as set forth on the "Receivables Schedule"
attached hereto, all of the Accounts Receivable reflected on the
Latest Balance Sheet, and all of the Accounts Receivable to be
reflected on the Closing Balance Sheet (i) are properly reflected on
the Company's and its Subsidiaries' books and records in accordance
with GAAP and (ii) are bona fide Accounts Receivable incurred in the
ordinary course of business. Except as set forth on the Receivables
Schedule, the Company does not have individual Accounts Receivable
which are over ninety (90) days past due.
(ii) As of the date hereof, except as set forth on the
Receivables Schedule, no Person has, and as of the Closing Date, no
Person will have, any Lien on any Accounts Receivable or any part
thereof, and no agreement for deduction, free services or goods,
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21
discount or other deferred price or quantity adjustment will have been
made with respect to any such Accounts Receivables, except for such
agreements made between Company and its lenders with respect to the
financing of the transactions contemplated hereby.
5.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth
on the Undisclosed Liabilities Schedule, neither the Company nor any of its
Subsidiaries has any material obligations or liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise, whether or not known, whether
due or to become due and regardless of when asserted) arising out of
transactions entered into at or prior to the Closing, or any action or inaction
at or prior to the Closing, or any state of facts existing at or prior to the
Closing, except (i) liabilities and obligations under executory contracts or
commitments described on the Contracts Schedule and the Leases Schedule
attached hereto or under executory contracts and commitments which are not
required to be disclosed thereon (but not liabilities for breaches thereof),
(ii) liabilities and obligations reflected on the liabilities side of the
Latest Balance Sheet (none of which is a liability for breach of contract,
breach of warranty, violation or law, tort or infringement or a claim or
lawsuit or an environmental liability) and (iii) liabilities and obligations
which have arisen after the date of the Latest Balance Sheet in the ordinary
course of business consistent with past practice or otherwise in accordance
with the terms and conditions of this Agreement (none of which is a liability
for breach of contract, breach of warranty, violation of law, tort or
infringement or a claim or lawsuit or an environmental liability).
5.8 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth on
the "Developments Schedule" attached hereto or except as expressly contemplated
by this Agreement, since the Latest Balance Sheet, neither the Company nor any
of its Subsidiaries has:
(a) suffered any change that has had or could reasonably be
expected to have a Material Adverse Effect or suffered any theft, damage,
destruction or casualty loss in excess of $200,000, to its assets, whether or
not covered by insurance or suffered any substantial destruction of its books
and records;
(b) redeemed or repurchased, directly or indirectly, any
shares of capital stock or other equity security or declared, set aside or paid
any dividends or made any other distributions (whether in cash or in kind) with
respect to any shares of its capital stock or other equity security;
(c) issued, sold or transferred any equity securities, any
securities convertible, exchangeable or exercisable into shares of its capital
stock or other equity securities, or warrants, options or other rights to
acquire shares of its capital stock or other of its equity securities;
(d) discharged or satisfied any material Lien or encumbrance
or paid any material obligation or liability, other than current liabilities
paid in the ordinary course of business consistent with past custom and
practice, or canceled, compromised, waived or released any right or claim;
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(e) incurred or become subject to any liabilities, except
liabilities incurred in the ordinary course of business consistent with past
practice;
(f) subjected any portion of its properties or assets to any
Lien (other than Permitted Encumbrances)
(g) sold, leased, assigned or transferred (including, without
limitation, transfers to the Stockholder or any Insider) a portion of its
tangible assets, except for sales of inventory in the ordinary course of
business consistent with past practice, or canceled without fair consideration
any material debts or claims owing to or held by it;
(h) sold, assigned, licensed or transferred (including,
without limitation, transfers to the Stockholder or any Insider) any
Proprietary Rights owned by, issued to or licensed to it or disclosed any
confidential information (other than pursuant to agreements requiring the
disclosure to maintain the confidentiality of and preserving all its rights in
such confidential information) or received any confidential information of any
third party in violation of any obligation of confidentiality;
(i) entered into, amended or terminated any material lease,
contract, agreement or commitment, or taken any other action or entered into
any other transaction other than in the ordinary course of business consistent
with past practice;
(j) entered into any other material transaction not in the
ordinary course of business, or materially changed any business practice;
(k) made or granted any bonus or any wage, salary or
compensation increase to any director, officer, key employee or group of key
employees or made or granted any increase in any employee benefit plan or
arrangement, or amended or terminated any existing employee benefit plan or
arrangement or adopted any new employee benefit plan or arrangement, except as
any such action is reflected in a Plan listed on the Benefit Plans Schedule or
in any immaterial employee benefit plan, arrangement or program;
(l) made any other change in employment terms for any of its
directors, officers, and key employees outside the ordinary course of business
consistent with past practice;
(m) conducted its cash management customs and practices other
than in the ordinary course of business consistent with past practice
(including, without limitation, with respect to collection of accounts
receivable, purchases of inventory and supplies, repairs and maintenance,
payment of accounts payable and accrued expenses, levels of capital
expenditures and operation of cash management practices generally);
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(n) made any capital expenditures or commitments therefor
such that the aggregate outstanding amount of unpaid obligations and
commitments with respect thereto shall equal in excess of $200,000 on the
Closing Date;
(o) received notification that any of the Company's or its
Subsidiaries' 10 largest customers (based on net revenues for the six months
ending June 30, 1999) will stop or decrease in any material respect the rate of
business done with the Company or its Subsidiaries;
(p) made any investment in excess of $100,000 in, any loan or
advance in excess of $100,000 to, any guarantee of an amount in excess of
$100,000 for the benefit of, or any acquisition of the securities or assets of
any other Person or taken any steps to incorporate any Subsidiary, other than
intercompany transactions in the ordinary course of business;
(q) changed (or authorized any change) in its certificate of
incorporation or by-laws;
(r) made charitable contributions, pledges, association fees
or dues in excess of $100,000; or
(s) committed to do any of the foregoing.
5.9 ASSETS. Except as set forth on the attached "Assets
Schedule," the Company and each of its Subsidiaries have good and valid title
to, or a valid leasehold interest in, the properties and assets used by them,
located on their premises or shown on the Latest Balance Sheet or acquired
thereafter, free and clear of all Liens, except for Permitted Encumbrances and
except for properties and assets disposed of in the ordinary course of business
since the date of the Latest Balance Sheet. Except as described on the Assets
Schedule, the Company's and each of its Subsidiaries' buildings, equipment and
other tangible assets are in satisfactory operating condition and are fit for
use in the ordinary course of business. Each of the Company and each of its
Subsidiaries owns or leases all buildings, machinery, equipment, and other
tangible assets necessary for the conduct of its business as presently
conducted.
5.10 TITLE TO PROPERTIES.
(a) Owned Properties. Neither the Company nor any of its
Subsidiaries owns any real property and neither the Company nor any of its
Subsidiaries is a party to any agreement to purchase any real property.
(b) Leased Properties. The "Leases Schedule" sets forth a
list of all of the leases, subleases, licenses or other agreements
(collectively, the "Leases") for each parcel of real property in which the
Company or any of its Subsidiaries has a leasehold or subleasehold interest or
otherwise uses or occupies (the "Leased Real Property"). The Company has
delivered to the Purchaser true,
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correct, complete and accurate copies of each of the Leases described in the
Leases Schedule. With respect to each Lease listed on the Leases Schedule: (i)
the Lease is legal, valid, binding, enforceable and in full force and effect;
(ii) the Lease will continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms following the Closing, other than as
set forth on the Leases Schedule; (iii) neither the Company (or its applicable
Subsidiary) nor, to the Knowledge of the Company or the Stockholder, any other
party to the Lease is in breach or default, and no event has occurred which,
with notice or lapse of time, would constitute such a breach or default or
permit termination, modification or acceleration under the Lease; (iv) no party
to the Lease has repudiated any provision thereof; (v) there are no disputes,
oral agreements, or forbearance programs in effect as to the Lease; (vi) the
Lease has not been modified in any respect, except to the extent that such
modifications are disclosed by the documents delivered to the Purchaser; and
(vii) neither the Company nor any of its Subsidiaries has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in
the Lease.
(c) Real Property Disclosure. Except as disclosed on the
Leases Schedule, the Leased Real Property constitutes all of the real property
leased, used or occupied by the Company and its Subsidiaries and necessary for
the conduct of the Company's and its Subsidiaries' businesses as currently
conducted.
(d) Current Use and Condition and Operation of Improvements.
To the Knowledge of the Company or the Stockholder, no current use by the
Company or its Subsidiary of the Leased Real Properties is dependent on a
nonconforming use or other approval from a governmental authority, the absence
of which would significantly limit the use of any of the properties or assets
in the operation of the business of the Company or any of its Subsidiaries. To
the Knowledge of the Company or the Stockholder, all buildings and all
components of all buildings, structures and other improvements included within
the Leased Real Property (the "Improvements"), including, without limitation,
the roofs and structural elements thereof and the heating, ventilation, air
conditioning, air pollution emission capture and abatement, plumbing,
electrical, mechanical, sewer, waste water and paving and parking equipment
systems and facilities included therein, are in good condition and repair and
adequate and safe to operate such facilities as currently used and there are no
facts or conditions affecting any of the Improvements which would, individually
or in the aggregate, interfere in any significant respect with the use,
occupancy or operation thereof as currently used, occupied or operated or
intended to be used, occupied or operated.
5.11 TAXES. Except as set forth on the attached "Taxes
Schedule," and except for items which are not material:
(a) the Company and each of its Subsidiaries has timely filed
all Tax Returns which are required to be filed, and all such Tax Returns are
true, complete and accurate in all respects and have been prepared in
compliance with applicable law;
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(b) all Taxes due and payable by the Company and each of its
Subsidiaries, whether or not shown on a Tax Return, have been paid by the
Company or each such Subsidiary and no Taxes are delinquent;
(c) the amount accrued as a current liability for Taxes
(excluding any amount recorded which is attributable solely to timing
differences between book and Tax income) on the Latest Balance Sheet shall be
sufficient to pay in full all Taxes for taxable periods (or portions thereof)
ending on or before the date of the Latest Balance Sheet, whether or not such
Taxes are due on or before such date and, since the date of the Latest Balance
Sheet, neither the Company nor any of its Subsidiaries have incurred any
liability for Taxes other than in the ordinary course of business;
(d) no deficiency for any amount of Tax which has not been
resolved has been asserted or assessed in writing by a taxing authority against
the Company or any of its Subsidiaries, and neither the Company nor the
Stockholder has Knowledge that any such assessment or asserted Tax liability
shall be made;
(e) there is no action, suit, taxing authority proceeding or
audit now in progress, pending or, to the Knowledge of the Company or the
Stockholder, threatened against or with respect to the Company or any of its
Subsidiaries;
(f) there are no liens for Taxes (other than for current
Taxes not yet due and payable) upon any of the assets of the Company or any of
its Subsidiaries;
(g) neither the Company nor any of its Subsidiaries has (A)
waived any statute of limitations, (B) agreed to any extension of the period
for assessment or collection or (C) executed or filed any power of attorney, in
each case with respect to any Taxes which waiver, agreement or power of
attorney is currently in force;
(h) neither the Company nor any of its Subsidiaries is a
member of an Affiliated Group (other than the Affiliated Group as to which the
Stockholder is the common parent), or any similar group defined under local,
state or foreign Tax law (other than a group that includes one or more members
of the Stockholder's Affiliated Group);
(i) neither the Company nor any of its Subsidiaries will be a
party to or bound by any Tax allocation, sharing or similar agreement or
arrangement with any Person after the Closing, and neither the Company nor any
of its Subsidiaries has a contractual obligation to indemnify any other Person
with respect to Taxes;
(j) no claim has ever been made in writing by a taxing
authority in a jurisdiction where the Company or any of its Subsidiaries does
not pay Taxes or file Tax Returns that the Company or any such Subsidiary is or
may be subject to Taxes assessed by such jurisdiction;
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(k) the Company and each of its Subsidiaries have withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor, independent contractor or
other third party;
(l) the Taxes Schedule contains a list of states, territories
and jurisdictions (whether foreign or domestic) in which the Company and each
of its Subsidiaries files Tax Returns relating to their respective businesses;
(m) neither the Company nor any of its Subsidiaries will be
required to include any amount in taxable income for any taxable period (or
portion thereof) ending after the Closing Date that is attributable to any
taxable period (or portion thereof) ending on or before the Closing Date as a
result of (i) any change in method of accounting for a taxable period ending on
or prior to the Closing Date, (ii) any "closing agreement," as described in
Section 7121 of the Code (or any corresponding provision of state, local or
foreign income Tax law), entered into on or before the Closing Date, (iii) any
installment sale made on or before the Closing Date, or (iv) any deferred
intercompany gain described in Treasury Regulation Section 1.1502-13 or any
excess loss account described in Treasury Regulation Section 1.1502-19 and
1.1502-32 (or any corresponding or similar provision or administrative rule of
federal, state, local or foreign income tax law) arising on or before the
Closing Date; and
(n) neither the Company nor any of its Subsidiaries has made
or has the obligation to make (including, without limitation, with respect to
the transactions contemplated hereunder) any payment that could be
nondeductible under Section 280G of the Code (or any corresponding provision of
state, local or foreign income Tax law).
5.12 CONTRACTS AND COMMITMENTS.
(a) Except as specifically contemplated by this Agreement or
except as set forth on the Contracts Schedule or the Benefit Plans Schedule
attached hereto, neither the Company nor any of its Subsidiaries is a party to
or bound by, whether written or oral, any:
(i) collective bargaining agreement or contract with any
labor union;
(ii) contract for the employment of any officer or key
employee or any severance agreements requiring payment of more than
three (3) months salary;
(iii) agreement or indenture relating to the borrowing of
money or to mortgaging, pledging or otherwise placing a Lien on any of
its assets;
(iv) contract under which the Company or any of its
Subsidiaries has advanced or loaned any other Person amounts in the
aggregate exceeding $100,000;
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(v) agreements with respect to the lending or investing of
funds;
(vi) agreement under which the Company or any of its
Subsidiaries has granted any Person any registration rights
(including, without limitation, demand and piggyback registration
rights);
(vii) guaranty of any obligation in excess of $100,000, other
than endorsements made for collection;
(viii) management, consulting, advertising, marketing,
promotion, technical services, advisory or other contract or other
similar arrangement relating to the design, marketing, promotion,
management or operation of the Business requiring payments in excess
of $100,000;
(ix) outstanding powers of attorney executed on behalf of the
Company;
(x) lease or agreement under which it is lessee of, or holds
or operates, any personal property owned by any other party calling
for payments in excess of $100,000 annually;
(xi) lease or agreement under which it is lessor of or
permits any third party to hold or operate any property, real or
personal, owned or controlled by it;
(xii) contract or group of related contracts with any of the
Company's or its Subsidiaries' 10 largest customers (based on net
revenues for the six months ending June 30, 1999) (the "Top Customer
Contracts");
(xiii) confidentiality agreement or similar arrangement,
other than those with employees and customers entered into in the
ordinary course of business;
(xiv) contract relating to the supply, sale or distribution
of the Company's or its Subsidiaries' products or services by a third
party;
(xv) contract which prohibits it from freely engaging in
business anywhere in the world other than customer contracts entered
into in the ordinary course of business;
(xvi) other agreement material to it whether or not entered
into in the ordinary course of business consistent with past practice.
(b) Except as disclosed on the Contracts Schedule, (i) no
contract or commitment required to be disclosed on the Contracts Schedule has
been breached or canceled by the other party and neither the Company nor the
Stockholder has Knowledge of any anticipated breach by any other
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party to any contract set forth on the Contracts Schedule, (ii) no customer or
supplier has indicated in writing or orally to the Company, any of its
Subsidiaries or the Stockholder that it shall stop or materially decrease the
rate of business done with the Company or any of its Subsidiaries or that it
desires to renegotiate its contract or current arrangement with the Company or
any of its Subsidiaries, (iii) the Company and each of its Subsidiaries have
performed all the material obligations required to be performed by them in
connection with the contracts or commitments required to be disclosed on the
Contracts Schedule and are not in material default under or in material breach
of any contract or commitment required to be disclosed on the Contracts
Schedule, and no event has occurred which with the passage of time or the
giving of notice or both would result in a material default or material breach
thereunder, (iv) neither the Company nor any of its Subsidiaries has any
present expectation or intention of not fully performing any obligation
pursuant to any contract set forth on the Contracts Schedule, and (v) each
agreement is legal, valid, binding, enforceable and in full force and effect
and will continue as such following the consummation of the transactions
contemplated hereby.
(c) The Company has provided the Purchaser with a true and
correct copy of all written contracts which are required to be disclosed on the
Contracts Schedule, in each case together with all amendments, waivers or other
material changes thereto (all of which are disclosed on the Contracts
Schedule). The Contracts Schedule contains an accurate and complete description
of all material terms of all oral contracts referred to therein. The Company is
not a party to any materially adverse or illegal contract or commitment. The
revenues received by the Company and its Subsidiaries in the six months ending
June 30, 1999 with respect to the Top Customer Contracts represents at least
45% of the Company's and its Subsidiaries' net revenues for such period.
5.13 PROPRIETARY RIGHTS.
(a) The attached "Proprietary Rights Schedule" contains a
complete and accurate list of all (i) patented or registered Proprietary Rights
currently used by the Company or any of its Subsidiaries, (ii) pending patent
applications and applications for registrations of other Proprietary Rights
filed by the Company or any of its Subsidiaries, (iii) unregistered trade
names, Internet domain names and corporate names currently used by the Company
or any of its Subsidiaries and (iv) unregistered trademarks, service marks,
material copyrights and computer software currently used by the Company or any
of its Subsidiaries. The Proprietary Rights Schedule also contains a complete
and accurate list of all material licenses and other rights granted by the
Company or any of its Subsidiaries to any third party with respect to any
Proprietary Rights and all material licenses and other rights granted by any
third party to the Company or any of its Subsidiaries with respect to any
Proprietary Rights, in each case identifying the subject Proprietary Rights.
Except as set forth on the Proprietary Rights Schedule, the Company and each of
its Subsidiaries own, free of all Liens (except Permitted Encumbrances), all
right, title and interest to, or have the right to use pursuant to a valid
written license, all of the items on the Proprietary Rights Schedule and all
other Proprietary Rights necessary for the operation of their businesses as
presently conducted (collectively, the "Company Proprietary Rights"), and such
rights will be owned or made available for use by the Company and each of its
Subsidiaries after the Closing on terms and conditions substantially
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identical to those under which they owned or used such rights immediately prior
to the Closing. Except as set forth on the Proprietary Rights Schedule, the
loss or expiration of any Company Proprietary Rights or related group of
Proprietary Rights owned or used by the Company or any of its Subsidiaries has
not had a Material Adverse Effect on the conduct of their businesses and is not
pending or, to the Knowledge of the Company or the Stockholder, threatened. The
Company and its Subsidiaries have taken all reasonably necessary actions to
maintain and protect the Company Proprietary Rights. To the Knowledge of the
Company and the Stockholder, the owners of any Proprietary Rights licensed to
the Company or any of its Subsidiaries have taken all reasonably necessary
actions to maintain and protect the Proprietary Rights which are subject to
such licenses.
(b) Except as set forth on the Proprietary Rights Schedule,
(i) there have been no claims made against the Company asserting the
invalidity, misuse or unenforceability of any of such Company Proprietary
Rights, and, to the Knowledge of the Company and Stockholder, there are no
valid grounds for the same; (ii) to the Knowledge of the Company and the
Stockholder, no Person has infringed, misappropriated or otherwise conflicted
with any of the Company Proprietary Rights and neither the Company nor any of
its Subsidiaries has received any notices of, and neither the Company nor the
Stockholder is aware of any facts which indicate a likelihood of, any of the
foregoing; (iii) neither the Company nor any of its Subsidiaries has infringed,
misappropriated or conflicted with and the conduct of its business does not
infringe, misappropriate or conflict with any Proprietary Rights of other
Persons in any material respect; and (iv) the Company Proprietary Rights have
not been infringed, misappropriated or conflicted by other Persons. Except as
set forth in the Proprietary Rights Schedule, the transactions contemplated by
this Agreement shall have no Material Adverse Effect on the Company's right,
title and interest in and to the Proprietary Rights listed on the Proprietary
Rights Schedule. The Company and each of its Subsidiaries has taken reasonable
actions to maintain and protect their Proprietary Rights and shall continue to
maintain and protect those rights prior to the Closing so as to not adversely
affect the validity or enforcement of such Company Proprietary Rights.
(c) None of the computer software, computer firmware,
computer hardware (whether general or special purpose), and other similar or
related items of automated, computerized, and/or software system(s) that are
owned or licensed by the Company or by any of its Subsidiaries or that are
designed, developed, implemented or managed by the Company or any of its
Subsidiaries in the conduct of their respective businesses will malfunction,
will cease to function, will generate incorrect data or will produce incorrect
results in any material respects when processing, providing, and/or receiving
(i) date-related data from, into and between the twentieth and twenty-first
centuries or (ii) date-related data in connection with any valid date in the
twentieth and twenty-first centuries.
(d) Except as disclosed on the Proprietary Rights Schedule,
neither the Company nor any of its Subsidiaries have made any representations
or warranties regarding the ability of any computer software, computer
firmware, computer hardware (whether general or special purpose), and other
similar or related items of automated, computerized, and/or software system(s)
that are owned, leased or licensed by the Company or any of its Subsidiaries or
that are designed, developed,
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implemented, managed, marketed, sold, licensed or leased by the Company or any
of its Subsidiaries in the conduct of their respective businesses to process,
provide, and/or receive (i) date-related data from, into and between the
twentieth and twenty-first centuries or (ii) date-related data in connection
with any valid date in the twentieth or twenty-first centuries.
5.14 LITIGATION; PROCEEDINGS. Except as set forth on the
attached "Litigation Schedule," there are no actions, suits, complaints,
charges, proceedings, orders, investigations or claims pending or, to the
Knowledge of the Company or the Stockholder, threatened against or affecting
the Company, any of its Subsidiaries or the Leased Real Property (or to the
Knowledge of the Company or the Stockholder, pending or threatened against or
affecting any of the officers, directors or key employees of the Company or any
of its Subsidiaries with respect to its businesses or proposed business
activities) at law or in equity, or before or by any governmental department,
commission, board, bureau, agency or instrumentality (including, without
limitation, any actions, suits, complaints, charges, proceedings or
investigations with respect to the transactions contemplated by this
Agreement); and neither the Company nor any of its Subsidiaries is subject to
any grievance arbitration proceedings under collective bargaining agreements or
otherwise or, to the Knowledge of the Company or the Stockholder, any
governmental investigations or inquiries. There exists no writ, injunction,
decree, order or judgment outstanding relating to the Company, any of its
Subsidiaries or the Leased Real Property.
5.15 BROKERAGE. Except with respect to amounts for fees and
expenses owed to Morgan Stanley & Co. Incorporated by the Stockholder and the
Company (which fees and expenses shall be paid by the Stockholder), there are
no claims for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Company, any of its
Subsidiaries or the Stockholder.
5.16 GOVERNMENTAL LICENSES AND PERMITS. Except as indicated
on the "Permits Schedule," the Company and each of its Subsidiaries own or
possess all right, title and interest in and to all of the material permits,
certificates of occupancy, franchises, licenses, certificates, registrations,
variances, approvals and other authorizations of any governmental entity or
subdivision thereof (collectively, the "Licenses") that are necessary to
conduct their businesses as presently conducted, including, without limitation,
all Licenses required under any federal, state or local law relating to public
health and safety, employee health and safety, pollution or protection of the
environment. The Company and each of its Subsidiaries are in compliance in all
material respects with the terms and conditions of such Licenses and have
received no notices that they are in violation of any of the terms or
conditions of such Licenses. The Company and each of its Subsidiaries have
taken all necessary action to maintain such Licenses. To the Knowledge of the
Company and the Stockholder, no loss or expiration of any such License is
threatened or pending other than expiration in accordance with the terms
thereof. Except as indicated on the Permits Schedule, all of the Licenses shall
survive the transactions contemplated hereby.
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5.17 EMPLOYEES AND CONTRACTORS. Neither the Company nor the
Stockholder is aware that any executive employee or key contractor of the
Company or any of its Subsidiaries or any group of key employees or key
contractors of the Company or any of its Subsidiaries has any plans to
terminate employment or contracting with the Company or any of its
Subsidiaries, except for those technical services employees and contractors
providing services to customers of the Company or its Subsidiaries and for
which the Company has listed on the attached Employees and Contractors Schedule
the names, customers for whom they work and projected termination dates of
those employees and contractors whose services are reasonably expected to
terminate within the six (6) month period following the Closing. Except as set
forth on the attached Employees and Contractors Schedule, the Company and its
Subsidiaries have complied in all material respects with all laws relating to
the employment of labor (including, without limitation, provisions thereof
relating to wages, hours, equal opportunity, fair employment laws, safety laws,
worker compensation statutes, unemployment laws, immigration/visa regulations
(e.g., H-1B), collective bargaining, and the payments of non-wage expense
reimbursement), and neither the Company nor any of its Subsidiaries is aware of
or has experienced any material labor relations problems (including, without
limitation, any union organization activities, threatened or actual strikes or
work stoppages or material grievances). To the Knowledge of the Company or the
Stockholder, none of the Company's or its Subsidiaries' employees is subject to
any noncompete, nondisclosure, confidentiality, employment, consulting or
similar agreements relating to, affecting or in conflict with the present
business activities of the Company or any of its Subsidiaries, except for
agreements between the Company or its Subsidiaries and agreements with
customers of the Company or its Subsidiaries.
5.18 EMPLOYEE BENEFIT MATTERS.
(a) Notwithstanding any other provision in this Agreement to
the contrary, this Section 5.18 alone shall govern the representations and
warranties with respect to employee benefit matters; provided, however, that
the representations and warranties in Sections 5.8(k), 5.8(l), 5.11 (n),
5.12(a)(ii) and 5.17 which relate to employee benefit matters shall be given
full force and effect. The attached "Benefit Plans Schedule" sets forth an
accurate and complete list of each "employee benefit plan" (as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and each other material employee benefit plan, program or
arrangement which as of the Closing Date either (i) is maintained, sponsored,
or contributed to by the Company or any of its Subsidiaries, or (ii) with
respect to which the Company or any of its Subsidiaries has any material
liability. Each such item which is identified in clause (i) of the preceding
sentence and listed on the attached "Benefit Plans Schedule" is referred to
herein as a "Plan" and collectively as the "Plans."
(b) Neither the Company nor any of its Subsidiaries
maintains, contributes to, or has any liability or, to the Knowledge of the
Stockholder, the Company or any of the Company's Subsidiaries, potential
liability under (or with respect to) any "defined benefit plan" (as defined in
Section 3(35) of ERISA), or any "multiemployer plan" (as defined in Section
3(37) of ERISA). No asset of the Company or any of its Subsidiaries is subject
to any lien under ERISA or the Code.
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Except as disclosed on the attached Benefit Plans Schedule, there are no
pending or, to the Knowledge of the Company, threatened actions, suits,
investigations or claims with respect to any Plan (other than routine claims
for benefits) which could result in material liability to the Company or any of
its Subsidiaries.
(c) Except to the extent that such Plan is within the
remedial amendment period for obtaining such determination, each Plan that is
intended to be qualified under Section 401(a) of the Code has received a
determination (or in the case of a prototype plan, an opinion letter) from the
Internal Revenue Service that such Plan is so qualified, and, to the Knowledge
of the Stockholder, nothing has occurred since the date of such determination
that could materially adversely affect the qualified status of such Plan.
(d) Each of the Plans and all related trusts have been
maintained, funded and administered in substantial compliance with their terms
and in material compliance with the applicable provisions of ERISA, the Code,
and any other applicable laws. Except as disclosed on the attached Benefit
Plans Schedule, with respect to each Plan, all required payments, premiums,
contributions, distributions, or reimbursements for all periods ending prior to
or as of the Closing Date have been made or properly accrued.
(e) None of the Company, its Subsidiaries, or, to the
Knowledge of the Company, any other "disqualified person" (within the meaning
of Section 4975 of the Code) or any "party in interest" (within the meaning of
Section 3(14) of ERISA) has engaged in any "prohibited transaction" (within the
meaning of Section 4975 of the Code or Section 406 of ERISA) with respect to
any of the Plans which could subject the Company or any of its Subsidiaries to
a penalty or tax under Section 502(i) of ERISA or Section 4975 of the Code.
(f) Each Plan which is subject to the health care
continuation requirements of Part 6 of Subtitle B of Title I of ERISA or
Section 4980B of the Code ("COBRA") has been administered in substantial
compliance with such requirements. Except as disclosed on the attached Benefit
Plans Schedule, no Plan provides medical or life or other welfare benefits to
any retired or terminated employee (or any dependent thereof) of the Company or
any of its Subsidiaries other than as required pursuant to COBRA.
(g) With respect to each Plan, the Stockholder has provided
the Purchaser with true, complete and correct copies of (to the extent
applicable and in the possession of the Stock holder, the Company or any of its
Subsidiaries and requested by Purchaser): (i) all documents pursuant to which
the Plan is maintained, funded and administered (including the plan and trust
documents, any amendments thereto, the summary plan descriptions, and any
insurance contracts or service provider agreements); (ii) the most recent
annual report (Form 5500 series) filed with the Internal Revenue Service (with
applicable attachments); and (iii) the most recent determination letter
received from the Internal Revenue Service.
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(h) Neither the Company nor any of its Subsidiaries has any
material liability with respect to any "employee benefit plan" (as defined in
Section 3(3) of ERISA and other than a Plan) solely by reason of being treated
as a single employer under Section 414 of the Code with any trade, business or
entity other than the Company and its Subsidiaries. For purposes of this
subsection (h), the term "liability" refers only to (i) any lien under the
ERISA or the Code, (ii) any liability under Title IV of ERISA or to the Pension
Benefit Guaranty Corporation, (iii) any withdrawal liability under Title IV of
ERISA with respect to any "multiemployer plan" (as such term is defined in
Section 3(37) of ERISA), and (iv) any liability under COBRA.
5.19 INSURANCE. The "Insurance Schedule" attached hereto
lists and briefly describes each insurance policy maintained by the Company and
each of its Subsidiaries with respect to its properties, assets and business,
together with a claims history for the past year. All of such insurance
policies are in full force and effect, and neither the Company nor any of its
Subsidiaries is in default with respect to its obligations under any such
insurance policies and neither the Company nor any of its Subsidiaries has been
denied insurance coverage. Except as set forth on the Insurance Schedule,
neither the Company nor any of its Subsidiaries has any self-insurance or
coinsurance programs, and the reserves set forth on the Latest Balance Sheet are
adequate to cover all liabilities required to be set forth thereon under GAAP
with respect to self-insurance or coinsurance programs, and the reserves set
forth on the Latest Balance Sheet are adequate to cover all anticipated
liabilities with respect to self-insurance or coinsurance programs.
5.20 OFFICERS AND DIRECTORS; BANK ACCOUNTS. The "Officers,
Directors and Bank Accounts Schedule" attached hereto lists all officers and
directors of the Company and each of its Subsidiaries, and all bank accounts,
safety deposit boxes and lock boxes (designating each authorized signatory with
respect thereto) for the Company and each of its Subsidiaries.
5.21 AFFILIATE TRANSACTIONS. Except as disclosed on the
"Affiliated Transactions Schedule" attached hereto, no Affiliate is a party to
any agreement, contract, commitment or transaction with the Company or any of
its Subsidiaries or which is pertaining to the business of the Company or any
of its Subsidiaries or has any interest in any property, real or personal or
mixed, tangible or intangible, used in or pertaining to the business of the
Company or any of its Subsidiaries.
5.22 COMPLIANCE WITH LAWS.
(a) The Company and each of its Subsidiaries have complied
with and are in compliance in all material respects with all applicable laws,
regulations and ordinances (collectively, "Laws") of foreign, federal, state
and local governments and all agencies thereof which are applicable to the
business, business practices (including, but not limited to, the Company's and
its Subsidiaries' marketing and sales of its products and services) or Leased
Real Property of the Company or any of its Subsidiaries and to which the
Company or any of its Subsidiaries may be subject, and no claims have been
filed against the Company or any of its Subsidiaries alleging a violation of
any such Laws,
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and neither the Company nor any of its Subsidiaries has received notice of any
such violations, except as set forth on the Disclosure Schedules.
(b) Neither the Company nor any of its Subsidiaries has at
any time made any payments for political contributions or made any bribes,
kickback payments or other illegal payments of cash or other consideration,
including, without limitation, payments to customers or employees of customers
for purposes of doing business with such customers.
5.23 ENVIRONMENTAL MATTERS. Except as set forth on the
"Environmental Schedule" attached hereto:
(a) To the knowledge of the Company and the Stockholder, the
Company and each of its Subsidiaries have complied with and are currently in
compliance with all Environmental and Safety Requirements, and neither the
Company nor any of its Subsidiaries has received any oral or written notice,
report or information regarding any liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) or any corrective, investigatory or
remedial obligations arising under Environmental and Safety Requirements which
relate to the Company or any of its Subsidiaries or any of its properties or
facilities.
(b) Without limiting the generality of the foregoing, the
Company and each of its Subsidiaries have obtained and complied in all material
respects with, and are currently in compliance in all material respects with,
all permits, licenses and other authorizations that may be required pursuant to
any Environmental and Safety Requirements for the occupancy of their properties
or facilities or the operation of their business.
(c) To the knowledge of the Company and the Stockholder,
neither this Agreement or the other Transaction Documents nor the consummation
of the transactions contemplated hereby and thereby shall impose any
obligations on the Company or its Subsidiaries or otherwise for site
investigation or cleanup, or notification to or consent of any government
agencies or third parties under any Environmental and Safety Requirements
(including, without limitation, any so called "transaction-triggered" or
"responsible property transfer" laws and regulations).
(d) To the knowledge of the Company and the Stockholder, none
of the following exists at any property or facility owned, occupied or operated
by the Company or any of its Subsidiaries: (i) underground storage tanks or
surface impoundments; (ii) asbestos-containing material in any form or
condition; (iii) materials or equipment containing polychlorinated biphenyls;
or (iv) landfills.
(e) To the knowledge of the Company and the Stockholder,
neither the Company nor any of its Subsidiaries has treated, stored, disposed
of, arranged for or permitted the disposal of, transported, handled or Released
any substance (including, without limitation, any hazardous
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substance) or owned, occupied or operated any facility or property, so as to
give rise to liabilities of the Company or any of its Subsidiaries for response
costs, natural resource damages or attorneys' fees pursuant to CERCLA or any
other Environmental and Safety Requirements.
(f) Without limiting the generality of the foregoing, no
facts, events or conditions relating to the past or present properties,
facilities or operations of the Company or any of its Subsidiaries shall
prevent, hinder or limit continued compliance with Environmental and Safety
Requirements, give rise to any corrective, investigatory or remedial
obligations pursuant to Environmental and Safety Requirements or give rise to
any other liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental and Safety Requirements, including,
without limitation, those liabilities relating to onsite or offsite Releases or
threatened Releases of hazardous materials, substances or wastes, personal
injury, property damage or natural resources damage.
(g) To the knowledge of the Company and the Stockholder,
neither the Company nor any of its Subsidiaries has, either expressly or by
operation of law, assumed or undertaken any liability or corrective
investigatory or remedial obligation of any other Person relating to any
Environmental and Safety Requirements.
(h) To the knowledge of the Company and the Stockholder, no
Environmental Lien has attached to any property owned, leased or operated by
the Company or any of its Subsidiaries.
5.24 POWERS OF ATTORNEY; GUARANTEES. There are no outstanding
powers of attorney executed on behalf of the Company or any of its
Subsidiaries. Neither the Company nor or any of its Subsidiaries has provided a
Guaranty with respect to or is otherwise liable for any Indebtedness of any
other Person.
5.25 NAMES AND LOCATIONS. Except as set forth on the Names
and Locations Schedule attached hereto, during the five-year period prior to
the execution and delivery of this Agreement, neither the Company nor its
Subsidiaries has used any name or names under which it has invoiced account
debtors, maintained records concerning its assets or otherwise conducted
business. Substantially all of the tangible assets and properties of the
Company are located at the locations set forth on the Names and Locations
Schedule (which shall include, but not be limited to, any consignment
locations).
5.26 CLOSING DATE. All of the representations and warranties
contained in this Article V and elsewhere in this Agreement and all information
delivered in any schedule, attachment or Exhibit hereto or in any writing
delivered to the Purchaser are true and correct on the date of this Agreement
and shall be true and correct in all material respects on the Closing Date,
except to the extent that the Company or the Stockholder has advised the
Purchaser otherwise in writing prior to the Closing.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES CONCERNING THE STOCKHOLDER
As a material inducement to the Purchaser to enter into this
Agreement, the Stockholder represents and warrants to the Purchaser that the
statements contained in this Article VI are true and correct as of the date of
this Agreement and as of the time of the Closing as though made as of such
time, except to the extent such representations and warranties relate to an
earlier date (in which case such representations and warranties shall be true
and correct, on and as of such earlier date).
6.1 AUTHORIZATION OF TRANSACTIONS. The Stockholder has full
power, authority and legal capacity to enter into this Agreement and the other
documents contemplated hereby to which the Stockholder is a party and to
perform its obligations hereunder and thereunder. This Agreement and the other
documents contemplated hereby to which the Stockholder is a party have been
duly approved, executed and delivered by the Stockholder and constitute the
valid and binding agreements of the Stockholder, enforceable in accordance with
their respective terms.
6.2 ABSENCE OF CONFLICTS. Except as set forth on the attached
Stockholder Conflicts Schedule, neither the execution and the delivery of this
Agreement and the other documents contemplated hereby to which the Stockholder
is a party, nor the consummation of the transactions contemplated hereby and
thereby, shall (a) conflict with, result in a breach of any of the provisions
of, (b) constitute a default under, (c) result in the violation of, (d) give
any third party the right to terminate or to accelerate any obligation under,
(e) result in the creation of any Lien upon the Company's capital stock owned
by the Stockholder, or (f) require any authorization, consent, approval,
execution or other action by or notice to any court or other governmental body,
under the provisions of any indenture, mortgage, lease, loan agreement or other
agreement or instrument to which the Stockholder is bound or affected, or any
statute, regulation, rule, judgment, order, decree or other restriction of any
government, governmental agency or court to which the Stockholder is subject,
other than under the HSR Act. No notice to, filing with or authorization,
consent or approval of any government or governmental agency by the Stockholder
is necessary for the consummation of the transactions contemplated by this
Agreement and the other documents contemplated hereby to which the Stockholder
is a party.
6.3 LITIGATION. There are no actions, suits, proceedings,
orders or investigations pending or, to the best of the Stockholder's
Knowledge, threatened against or affecting the Stockholder, at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which would adversely affect the Stockholder's performance under this
Agreement, the other agreements contemplated hereby to which the Stockholder is
a party or the consummation of the transactions contemplated hereby or thereby.
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6.4 SHARES. Except as set forth on the attached Stockholder
Capitalization Schedule, the Stockholder holds of record and owns beneficially
100% of the issued and outstanding shares of Common Stock, free and clear of
any Encumbrances. The Stockholder is not a party to any option, warrant, right,
contract, call, put or other agreement or commitment providing for the
disposition or acquisition of any capital stock of the Company (other than this
Agreement). Except as set forth on the attached Stockholder Capitalization
Schedule, the Stockholder is not a party to any voting trust, proxy or other
agreement or understanding with respect to the voting of any capital stock of
the Company.
6.5 TAXES. The Stockholder's Affiliated Group has timely
filed all income Tax Returns which it is required to file for all Tax periods
in which the Company or any of its Subsidiaries was a member of such Affiliated
Group and all such Tax Returns are true, complete and accurate in all material
respects and have been prepared in compliance with applicable law. All income
Taxes due and payable by the Stockholder's Affiliated Group have been paid for
all Tax periods (or portions thereof) in which the Company or any of its
Subsidiaries was a member of such Affiliated Group.
6.6 CLOSING DATE. All of the representations and warranties
concerning the Stockholder contained in this Article VI and elsewhere in this
Agreement and all information delivered in any schedule, attachment or Exhibit
hereto or in any writing delivered to the Purchaser are true and correct on the
date of this Agreement and shall be true and correct in all material respects
on the Closing Date except to the extent that the Stockholder has advised the
Purchaser otherwise in writing prior to the Closing.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES CONCERNING THE PURCHASER
As a material inducement to the Stockholder and the Company
to enter into this Agreement, the Purchaser hereby represents and warrants
that:
7.1 ORGANIZATION AND CORPORATE POWER. The Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, with requisite power and authority to enter into
this Agreement and the other agreements contemplated hereby to which the
Purchaser is a party and perform its obligations hereunder and thereunder.
7.2 AUTHORIZATION OF TRANSACTION. The Purchaser has full
power, authority and legal capacity to enter into this Agreement and the other
documents contemplated hereby to which the Purchaser is a party and to perform
its obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and the other agreements contemplated hereby to
which the Purchaser is a party have been duly and validly authorized by the
Purchaser, and no other proceedings on its part are necessary to authorize the
execution, delivery or performance of this Agreement. This Agreement
constitutes, and each of the other agreements contemplated hereby to
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which the Purchaser is a party shall when executed constitute, a valid and
binding obligation of the Purchaser, enforceable in accordance with their
terms.
7.3 GOVERNMENTAL AUTHORITIES AND CONSENTS. Except with
respect to the HSR Act, (a) the Purchaser is not required to submit any notice,
report or other filing with any governmental authority in connection with the
execution or delivery by it of this Agreement and the other agreements
contemplated hereby to which the Purchaser is a party or the consummation of
the transactions contemplated hereby or thereby and (b) no consent, approval or
authorization of any governmental or regulatory authority or any other party or
person is required to be obtained by the Purchaser in connection with its
execution, delivery and performance of this Agreement and the other agreements
contemplated hereby to which the Purchaser is a party or the transactions
contemplated hereby or thereby.
7.4 ABSENCE OF CONFLICTS. Neither the execution and the
delivery of this Agreement and the other documents contemplated hereby to which
the Purchaser is a party, nor the consummation of the transactions contemplated
hereby and thereby, shall (a) conflict with, result in a breach of any of the
provisions of, (b) constitute a default under, (c) result in the violation of,
(d) give any third party the right to terminate or to accelerate any obligation
under, or (e) require any authorization, consent, approval, execution or other
action by or notice to any court or other governmental body, under the
provisions of any indenture, mortgage, lease, loan agreement or other agreement
or instrument to which the Purchaser is bound or affected, or any statute,
regulation, rule, judgment, order, decree or other restriction of any
government, governmental agency or court to which the Purchaser is subject.
7.5 LITIGATION. There are no actions, suits, proceedings,
orders or investigations pending or, to the Purchaser's Knowledge, threatened
against or affecting the Purchaser at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which would adversely
affect the Purchaser's performance under this Agreement and the other
agreements contemplated hereby to which the Purchaser is a party or the
consummation of the transactions contemplated hereby or thereby.
7.6 BROKERAGE. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Purchaser.
7.7 INVESTMENT REPRESENTATIONS. The Purchaser hereby
represents that it is acquiring the Company Stock for its own account with the
present intention of holding such securities for purposes of investment, and
that it has no intention of selling such securities in a public distribution in
violation of the federal securities laws or any applicable state securities
laws.
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7.8 CLOSING DATE. All of the representations and warranties
of the Purchaser contained in this Article VII and elsewhere in this Agreement
and all information delivered by the Purchaser in any schedule, attachment or
Exhibit hereto or in any writing delivered to the Stockholder are true and
correct on the date of this Agreement and shall be true and correct on the
Closing Date, except to the extent that the Purchaser has advised the
Stockholder otherwise in writing prior to the Closing.
7.9 NO ADDITIONAL REPRESENTATIONS. The Purchaser acknowledges
that it and its representatives have been permitted access to the books and
records, facilities, equipment, tax returns, contracts, insurance policies (or
summaries thereof) and other properties and assets of the Company which it and
its representatives have desired or requested to see and/or review, and that it
and its representatives have had opportunity to meet with certain officers and
employees of the Company to discuss the businesses and assets of the Company.
The Purchaser acknowledges that none of Stockholder or the Company or any other
person has made any representation or warranty, express or implied, as to the
accuracy or completeness of any information regarding the Company furnished or
made available to Purchaser and its representatives, except as expressly set
forth in this Agreement or the Disclosure Schedules thereto.
ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of the Stockholder and the
Company;
(b) by the Stockholder or the Company if there has been a
material misrepresentation or breach on the part of the other Party of the
representations, warranties or covenants set forth in this Agreement, or if
events have occurred which have made it impossible to satisfy a condition
precedent to the terminating Party's obligations to consummate the transactions
contemplated hereby unless such terminating Party's breach of this Agreement
has caused the condition to be unsatisfied; or
(c) by the Stockholder or the Company if the Closing has not
occurred on or prior to September 30, 1999; provided, however, that such date
shall be extended at the option of either the Stockholder or the Purchaser to a
date not later than October 15, 1999 solely for the purpose of obtaining
approval under the HSR Act; and further provided, however, that neither the
Company nor the Stockholder shall be entitled to terminate this Agreement
pursuant to this Section 8.1(c) if the Purchaser's, on the one hand, or the
Company's or the Stockholder's, on the other hand, breach of this Agreement has
prevented the consummation of the transactions contemplated hereby at or prior
to such time.
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8.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Stockholder or the Company as provided in Section
8.1, this Agreement shall forthwith become void and there shall be no liability
on the part of any Party to any other Party under this Agreement, except that
the provisions of Section 9.8 and Article XI shall continue in full force and
effect and except that nothing herein shall relieve any Party from liability
for any breach of this Agreement prior to such termination.
ARTICLE IX
ADDITIONAL AGREEMENTS
9.1 SURVIVAL. The representations and warranties contained in
Articles V, VI and VII hereof shall not survive the Closing Date; provided that
the representations and warranties contained in Section 5.1 (Organization and
Corporate Power), Section 5.2 (Authorization of Transactions), Section 5.3
(Capitalization), the first sentence of Section 5.4 (Subsidiaries;
Investments), Section 6.1 (Authorization of Transactions), Section 6.4 (Shares)
and Section 7.1 (Authorization) hereof shall survive the Closing Date and the
consummation of the transactions contemplated hereby until the day following
the expiration of the applicable statute of limitations; provided further that,
such survival shall not be affected by any examination made for or on behalf of
any Party, the knowledge of any of such Party's officers, directors,
stockholders, employees or agents, or the acceptance of any certificate or
opinion.
9.2 CONTINUING ASSISTANCE. The Purchaser, the Company and the
Stockholder agree that they will mutually cooperate in the expeditious filing
of all notices, reports and other filings with any governmental authority
required to be submitted jointly by the Company and the Stockholder. Subsequent
to the Closing, the Stockholder and the Company (at their own cost) shall
assist each other (including making records available) in the preparation of
their respective Tax Returns and the filing and execution of Tax elections, if
required, as well as any audits or litigation that ensue as a result of the
filing thereof, to the extent that such assistance is reasonably requested. The
Company and the Stockholder will, upon request from the other, use their
reasonable commercial efforts to obtain any certificate or other document from
any governmental authority or any other Person that may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
9.3 TAX MATTERS.
(a) Notwithstanding anything to the contrary set forth in
this Agreement, the Stockholder shall indemnify and hold harmless the Company
and its Subsidiaries from any Taxes determined on a consolidated, combined or
unitary basis of any Affiliated Group of which the Company or any of its
Subsidiaries is a member at any time prior to the Closing Date (including any
Tax attributable to the Company and its Subsidiaries). The Stockholder shall
cause the Company and its Subsidiaries to be included in any consolidated,
combined or unitary Tax Returns of the Stockholder and its affiliates in
accordance with past practice. Taxable income and credits and other
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tax items of the Company and its Subsidiaries shall be allocated for this
purpose based on a closing of the books as of the end of the Closing Date.
(b) The Stockholder shall give notice to the Company within
thirty (30) days after receipt by the Stockholder's consolidated group of any
written notice of proposed adjustment issued by a taxing authority ("NOPA") if
the Tax liability of the Company would be materially increased for a period
after the Closing should the position set forth in the NOPA be sustained in a
final determination.
(c) Without the prior written consent (which shall not be
unreasonably withheld) of the Company, the Stockholder shall not make or change
any election, change an annual accounting period or file any amended Tax Return
(unless the Tax Return to be amended contains an error or is otherwise required
to be amended under applicable law) for a period prior to Closing, if such
election, change or amendment will cause the Tax liability of the Company to be
materially increased for any period after the Closing.
(d) The Company shall prepare or cause to be prepared and
file or cause to be filed all Tax Returns for the Company and its Subsidiaries
for all periods ending on or prior to the Closing Date which are filed after
the Closing Date (other than income Tax Returns with respect to periods for
which the consolidated, unitary and combined income Tax Returns of the
Stockholder will include the operations of the Company).
(e) The Stockholder shall prepare or cause to be prepared and
file or cause to be filed all income Tax Returns with respect to periods for
which the consolidated, unitary and combined income Tax Returns of the
Stockholder will include the operations of the Company and its Subsidiaries.
The Stockholder shall permit the Company to review and comment on each separate
Company pro forma Tax Return which relates to the Company or its Subsidiaries
(a " Pro Forma Tax Return") at least sixty (60) days prior to filing the
consolidated, combined or unitary Tax Return to which such Pro Forma Tax Return
relates. At least forty-five (45) days prior to filing the Company shall notify
the Stockholder of any changes it wishes to make in such Pro Forma Tax Return.
If the Stockholder objects to such changes proposed by the Company, the dispute
shall be referred to a big-five accounting firm that is not the regular auditor
or tax advisor to either the Stockholder or the Company for resolution and such
Tax Return shall be filed in accordance with the decision of such accounting
firm (the fees and expenses of which shall be shared equally by the Stockholder
and the Company). The Tax Returns prepared by the Stockholder pursuant to this
Section 9.3(e) shall be prepared in a manner consistent with past returns and in
compliance with applicable law.
(f) Any Tax refunds (or amounts credited against Tax) that
are received by the Company or the Stockholder's Affiliated Group as a result
of the carryback of a post-Closing loss or credit of the Company and its
Subsidiaries shall be for the account of the Company and shall be promptly paid
to the Company. The Stockholder shall use reasonable commercial efforts to
claim any such Tax refund or credit.
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(g) The Purchaser, the Company and the Stockholder shall
cooperate fully, as and to the extent reasonably requested by the other party,
(A) in connection with the filing of Tax Returns pursuant to this Section 9.3
and any audit, litigation or other proceeding with respect to Taxes and (B) in
connection with respect to any Tax planning of the Company. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Company and the Stockholder agree (A) to
retain all books and records in their possession with respect to Tax matters
pertinent to the Company relating to any taxable period beginning before the
Closing Date until the expiration of the statute of limitations (and, to the
extent notified by the Company, any extensions thereof) of such taxable period,
and to abide by all record retention agreements entered into with any taxing
authority, (B) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other party so requests, the Company or the Stockholder, as the case may be,
shall allow the other party to take possession of such books and records, (C)
to use their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby), and (D) to provide
the other party with all information that either party may be required to
report pursuant to Code Section 6043 and all Treasury Department Regulations
promulgated thereunder.
(h) The Stockholder shall cause all tax-sharing agreements or
similar agreements with respect to or involving the Company and its
Subsidiaries to be terminated as of the Closing Date in order that, after the
Closing Date, the Company and its Subsidiaries shall not be bound thereby or
have any liability thereunder.
(i) All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by the
Party on which such Taxes are imposed, and such Party will, at its own expense,
file all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and
fees. Any Party required to withhold Taxes described in this paragraph (i)
shall be entitled to withhold such amounts as are required under applicable
law.
9.4 PRESS RELEASES AND ANNOUNCEMENTS. Prior to the Closing
Date, no press releases related to this Agreement and the transactions
contemplated herein, or other announcements to the employees, customers or
suppliers of the Company shall be issued without the mutual approval of all
Parties, except for any public disclosure which any Party in good faith
believes is required by law or regulation (in which case the disclosure shall
be subject to the approval by the other Party, which shall not unreasonably be
withheld). After the Closing Date, (i) no press releases related to this
Agreement and the transactions contemplated herein shall be issued without the
consent of the Purchaser and the Stockholder (which shall not be unreasonably
withheld) and (ii) no
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announcements to the employees, customers or suppliers of the Company shall be
issued without the Purchaser's consent (which shall not be unreasonably
withheld).
9.5 FURTHER TRANSFERS. The Stockholder and the Company shall
execute and deliver such further instruments of conveyance and transfer and
take such additional action as the Purchaser may reasonably request to effect,
consummate, confirm or evidence the purchase of the Company Stock and any other
transactions contemplated hereby.
9.6 EXPENSES. The Stockholder agrees to pay and hold the
Company harmless against liability for (i) all fees and expenses of the
Stockholder and the Company and their counsel and other representatives and
consultants arising in connection with the negotiation and execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement and (ii) all fees and expenses owed to Morgan Stanley Dean Witter or
Morgan Stanley & Co. Incorporated by the Stockholder or the Company as a result
of the consummation of the transactions contemplated hereby.
9.7 EXCLUSIVITY. Until this Agreement is terminated by its
terms, neither the Company nor the Stockholder shall (and neither the Company
nor the Stockholder shall cause or permit any Affiliate or agent or any other
Person acting on behalf of the Stockholder, the Company, or its Affiliates to),
(a) solicit, initiate or encourage the submission of any proposal or offer from
any Person (including any of them) relating to any (i) liquidation, dissolution
or recapitalization of, (ii) merger or consolidation with or into, (iii)
acquisition or purchase of assets of or any equity interest in or (iv) similar
transaction or business combination involving the Company or (b) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any other Person to do or seek any of the foregoing. The Company and
the Stockholder agree that they will discontinue immediately any negotiations
or discussion with respect to any of the foregoing. Until this Agreement is
terminated by its terms, the Company and the Stockholder shall notify the
Purchaser immediately if any Person makes any proposal, offer, inquiry or
contact with respect to any of the foregoing.
9.8 BOOKS AND RECORDS. Unless otherwise consented to in
writing by the Stockholder or the Company (as the case may be), the Company and
the Stockholder will not, for a period of seven (7) years following the date
hereof, destroy, alter or otherwise dispose of any of the books and records of
the Company in its possession without first offering to surrender to the
Stockholder or the Company, as the case may be, such books and records or any
portion thereof of which the Stockholder or the Company may intend to destroy,
alter or dispose. The Company and the Stockholder will allow the other party's
representatives, attorneys and accountants access to such books and records,
upon reasonable request during such party's normal business hours, for the
purpose of examining and copying the same in connection with any matter whether
or not related to or arising out of this Agreement or the transactions
contemplated hereby.
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9.9 NONSOLICITATION AND CONFIDENTIALITY. In consideration of
the mutual covenants provided for herein to the Stockholder at the Closing, the
Stockholder agrees that:
(a) Nonsolicitation. During the period beginning on the
Closing Date and ending on the second anniversary of the Closing Date, in the
case of clauses (i) through (iii) below, and the first anniversary of the
Closing, in the case of clause (iv) below (the "Nonsolicitation Period"), the
Stockholder shall not directly or indirectly through another Person (i) induce
or attempt to induce any employee of the Company or any of its Subsidiaries to
leave the employ of the Company or any of its Subsidiaries, or in any way
interfere with the relationship between the Company or any of its Subsidiaries
and any employee thereof, (ii) hire any person who is listed on Part A of the
Nonsolicitation Schedule, (iii) induce or attempt to induce any customer,
supplier, licensee, licensor, franchisee or other business relation of the
Company or any of its Subsidiaries to cease doing business with the Company or
any of its Subsidiaries, or in any way interfere with the relationship between
any such customer, supplier, licensee or business relation and the Company or
any of its Subsidiaries; provided, however that nothing in this clause (iii)
shall prohibit or in any way limit the Stockholder's ability to offer and/or
perform services or products to any such parties in the ordinary course of
business or (iv) acquire or attempt to acquire an interest in any business
listed in Part B of the Nonsolicitation Schedule; provided that nothing stated
herein shall prohibit the Stockholder from general solicitations of employees
and customers over any medium not specifically targeted toward the Company,
including without limitation newspaper, television, radio, Internet, and
similar forms of mass media.
(b) Confidentiality. The Stockholder shall treat and hold as
confidential any information concerning the business and affairs of the Company
and its Subsidiaries that is not already generally available to the public (the
"Confidential Information"), refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Company or destroy, at the request and option of the Company, all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession or under its control. In the event that the Stockholder is requested
or required (by oral question or request for information or documents in any
legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, the Stockholder shall
notify the Company promptly of the request or requirement so that the Company
may seek an appropriate protective order or waive compliance with the provisions
of this Section 9.9(b). If, in the absence of a protective order or the receipt
of a waiver hereunder, the Stockholder is, on the advice of counsel, compelled
to disclose any Confidential Information to any tribunal or else stand liable
for contempt, the Stockholder may disclose the Confidential Information to the
tribunal; provided that such disclosing Stockholder shall use his or its
reasonable commercial efforts to obtain, at the request of the Company, an order
or other assurance that confidential treatment shall be accorded to such portion
of the Confidential Information required to be disclosed as the Company shall
designate.
(c) Remedy for Breach. The Stockholder acknowledges and
agrees that in the event of a breach by the Stockholder of any of the
provisions of this Section 9.9, monetary damages
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shall not constitute a sufficient remedy. Consequently, in the event of any
such breach, the Company, the Purchaser and/or their respective successors or
assigns may, in addition to other rights and remedies existing in their favor,
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce or prevent
any violations of the provisions hereof, in each case without the requirement
of posting a bond or proving actual damages.
(d) Company Nonsolicitation. In consideration of the mutual
covenants provided herein to the Company at the Closing, during the period
commencing on the date hereof and ending on the second anniversary of the
Closing, the Company shall not hire any key employees of Stockholder listed on
Part B of the Nonsolicitation Schedule.
9.10 CONTINUING RELATIONSHIP. The Stockholder agrees to, and
agrees to cause its Subsidiaries to, operate in good faith in respect of
existing contracts between the Company and/or its Subsidiaries, on the one
hand, and the Stockholder and/or its Subsidiaries, on the other hand.
9.11 FINANCIAL INFORMATION. In the event that the Company
undertakes to consummate a public debt or equity offering, the Stockholder
agrees to cooperate with the Company, and cause the Stockholder's auditors to
cooperate with the Company, in preparing such financial statements, selected
financial data and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" descriptions that the Company requires with respect
to periods prior to the Closing Date to comply with the requirements of
Regulation S-X of the Securities Act of 1933, as amended (and any successor
regulation(s) thereto) ("Regulation S-X"), and the requirements of Regulation
S-K of the Securities Act of 1933, as amended (and any successor regulation(s)
thereto). The Company shall be responsible for, or reimburse the Stockholder
for, the payment of any reasonable fees and expenses incurred by the
Stockholder in adjusting the Financial Statements to conform with the
requirements of Regulation S-X and providing any other assistance to the
Company pursuant to the preceding sentence.
9.12 USE OF METAMOR NAME. The Parties expressly agree that
following the Closing Date, the Company shall not retain any right, title or
interest in the name "Metamor Information Technology Services" and the Internet
domain names "metamor-its.com" and "metamor-test.com" (the "Trademarks") or the
name Metamor. The Stockholder hereby grants, and the Company and its
Subsidiaries hereby accept, a royalty-free, irrevocable, non-exclusive license
(with the right to grant sublicenses to Affiliates) to continue using the
Trademarks for a period of six (6) months following the Closing Date in a
reasonable manner consistent with the Company and its Subsidiaries' usage of
the Trademarks prior to the Closing Date (the "Field of Use"). The Stockholder
covenants and agrees not to use or allow any third party to use the Trademarks
in the Field of Use during such six (6) month period. Such license shall
include the right of the Company and its Subsidiaries to use the Trademarks
either alone or in combination of or with other names, trade names, trademarks,
service marks or logos. Such other names, trade names, trademarks, service
marks or logos (other than the Trademarks) shall be collectively referred to as
the "Other
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Trademarks." The Company and its Subsidiaries shall own all right, title or
interest in the Other Trademarks and shall have the right to continue using the
Other Trademarks in their respective businesses at the end of such six (6)
month period. At the end of such six (6) month period, the Company and its
Subsidiaries shall cease using and will not retain any rights in the Trademarks
or any other confusingly similar name, trade name, trademark, service mark or
logo in connection with any and all aspects of the businesses of the Company
and its Subsidiaries, including, without limitation, advertising, marketing,
letterheads, invoices, packaging or entity, business or divisional names. After
the Closing, the Company will not hold itself out as a "Metamor Worldwide
Company;" provided that the Company may continue to use, for a period of
forty-five (45) days after the date hereof, the "Metamor Worldwide" name and
logo in the Field of Use on its web site, advertising, marketing, letterheads,
invoices, packaging and similar materials. For so long as the Company is using
the Trademarks, each press release issued by the Company shall affirmatively
state that the Company is not affiliated with the Stockholder. Notwithstanding
anything to the contrary above, the Company shall not use the name "Metamor" or
any other confusingly similar name, trade name, trademark, service mark or logo
in connection with any offering or sale of securities.
9.13 CERTAIN EMPLOYEE BENEFIT MATTERS. On and after the
Closing Date, (i) the Company shall be responsible for all liabilities,
obligations and commitments relating to employee benefit plans, programs and
arrangements sponsored by the Company, if incurred or accrued on and after the
Closing Date and as otherwise assumed under Sections 3.1 (n), (o) and
(p)(provided that for the purposes of Section 3.1(p) the Company shall not be
obligated by virtue of such assumption for the payment of any employee benefits
agreed to be paid by the Stockholder in clause (ii) below, including, but not
limited to, the payment of any employee benefits due to former employees), and
(ii) except to the extent assumed by the Company under Sections 3.1(n) and (o)
or as to which cash has been transferred to the Company or a third party
administrator or current liabilities have been accrued on the Closing Balance
Sheet, the Stockholder shall be responsible for the payment of all employee
benefits incurred under any current or former employee benefit plans sponsored
by Stockholder with respect to any person who is a current or former employee
of the Company or any of its Subsidiaries as of the Closing Date. Each Company
employee benefit plan shall recognize each current (and, if rehired, former)
Company employee's prior service that is recognized under each Stockholder
employee benefit plan for purposes of eligibility to participate, vesting, and
waiting periods and as otherwise required by law.
9.14 TRANSITION SERVICES. In the event the Purchaser or the
Stockholder requires administrative services from the other party hereto for
the conduct of its business during the twelve (12) month period following the
Closing (the "Transition Period"), such other Party agrees to provide such
services at mutually agreed market rates (the rate such other party would
charge an unaffiliated third party for comparable services). For purposes of
this Section 8(h), "administrative services" mean financial, treasury,
accounting, tax, audit, management information services and other related
services; human resources services; corporate office lease services; and other
similar administrative services currently provided to the Company by the
Stockholder, in the case of the Purchaser, or provided by the Company to the
Stockholder, in the case of the Stockholder. Notwithstanding the
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foregoing, in no event shall either Party provide professional services or
advice to any other Party without the receiving Party providing a mutually
agreed to indemnity to the delivering Party for any such services.
9.15 UNCOLLECTED RECEIVABLES; DISPUTED PAYMENTS.
(a) The Purchaser shall collect the accounts receivable of
the Company relating to Litton Applied Technology in an amount equal to a
maximum of $1,427,999.67 and to EDS (the "EDS Receivable") in an amount equal
to a maximum of $ 1,504,156.67, in each case as set forth on the balance sheet
of the Company as of June 30, 1999 (the "Receivables") using the same efforts
and the same care as it uses to collect its own accounts receivable. Amounts
collected by the Purchaser from each of the Receivables shall be applied first
to the oldest outstanding Receivables of such customer unless such customer
specifically identifies a specific invoice to which a payment is to be applied.
Stockholder agrees to purchase from the Company, promptly following a written
request from the Purchaser, any of the Receivables that have not been collected
by Purchaser or the Company within 120 days following the Closing Date at the
aggregate gross recorded amount thereof less reserves with respect thereto set
forth on the Company financial statements as of June 30, 1999 (the "Receivables
Purchase Amount"). The Receivables Purchase Amount shall be paid to the Company
in cash within 30 days after the date of such request and upon the transfer and
assignment of the Receivables that have not been collected by the Company or
Purchaser to Stockholder. The Stockholder shall have reasonable access during
normal business hours to the Company's and Purchaser's records relating to the
Receivables. Neither the Company nor the Purchaser shall compromise, settle or
release claims with respect to any Receivables transferred and assigned to
Stockholder during such 90 day period without the prior written consent of the
Stockholder. Any Receivables transferred and assigned to Stockholder may be
collected by Stockholder in accordance with commercially reasonable collection
efforts.
(b) The Stockholder agrees to indemnify and hold harmless
from and against and pay on behalf of or reimburse the Company and its
Subsidiaries for two-thirds of any amounts paid, up to a maximum amount of
$600,000, in rebates to EDS arising out of any claims set forth in or other
matters addressed in that certain letter from Enterprise Services Company, on
behalf of EDS to the Company dated August 17, 1999 which is attached hereto as
Exhibit B (the "EDS Matters"); provided that to the extent the EDS Receivable
is set off in satisfaction of the all or any portion of the EDS Matters,
payment by the Stockholder under Section 9.16(a) for the EDS Receivable shall
be considered payment in satisfaction of the obligations of the Stockholder
under this Section 9.16(b) to the extent of such satisfaction of the EDS
Matters. The Company agrees to assume and shall control any resolution of the
EDS Matters. The Company shall not be responsible or liable to the Stockholder
for any expenses incurred by the Stockholder in connection with the resolution
of the EDS Matters. The Stockholder shall have the right to participate in the
resolution of the EDS Matters, it being understood that the Company shall
ultimately control such resolution. The Company and the Stockholder shall
cooperate with one another in connection with the resolution of the EDS
Matters. Such cooperation shall include the retention and the provision to the
other party
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of records and information which are reasonably relevant to the EDS Matters,
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material relevant to the EDS
Matters.
(c) The Stockholder agrees to indemnify and hold harmless
from and against and pay on behalf of or reimburse the Company and its
Subsidiaries for payment of rebates paid to and requested by AT&T on revenues
derived by the Company or its Subsidiaries from AT&T for the period beginning
January 1, 1999 to September 30, 1999 (the "AT&T Matters"); provided that the
Company shall use its reasonable commercial efforts to resist payment of and
otherwise minimize any rebate amounts relating to the AT&T Matters; provided
further, that such efforts shall not include any action by the Company and its
subsidiaries that could be materially detrimental or injurious to the Company
and its subsidiaries' continuing relationship with AT&T. The Company agrees to
confer with and seek the prior approval of the Stockholder (which the
Stockholder shall not unreasonably withhold) in any resolution of the AT&T
Matters. The Company and the Stockholder shall cooperate with one another in
connection with the resolution of the AT&T Matters.
9.16 CERTAIN LEASES.
(a) The Stockholder agrees to assume all of the Company's
obligations, and the Company agrees to assign to the Stockholder all of the
Company's rights, under the leases set forth on Schedule 9.16(a) (the
"Stockholder Assumed Leases") prior to the Closing Date. The Parties hereto
agree to cooperate and shall execute such instruments of conveyance and
transfer and take such additional action as reasonably necessary to effect the
transfer of the Stockholder Assumed Leases. The Stockholder agrees to indemnify
and hold harmless from and against and pay on behalf of or reimburse the
Company and its Subsidiaries for the entirety of the amount of any Loss
incurred by the Company with respect to either of the Stockholder Assumed
Leases or the real property demised by such leases arising prior to or
following the Closing Date.
(b) The Stockholder agrees to cause Metamor Enterprise
Solutions, Inc., a wholly owned subsidiary of the Stockholder ("MES"), to
assume all of the Company's obligations, and the Company agrees to assign to
MES all of the Company's rights, under the leases set forth on Schedule 9.16(b)
(the "MES Assumed Leases") prior to the Closing Date. The Parties hereto agree
to, and the Stockholder agrees to cause MES to agree to, cooperate and to
execute such instruments of conveyance and transfer and to take such additional
action as reasonably necessary to effect the transfer of the MES Assumed
Leases. The Stockholder agrees to cause MES to indemnify and hold harmless from
and against and pay on behalf of or reimburse the Company and its Subsidiaries
for the entirety of the amount of any Loss incurred by the Company with respect
to any of the MES Assumed Leases or the real property demised by such leases
arising prior to or following the Closing Date.
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(c) The Stockholder agrees to cause Metamor Industry
Solutions, Inc., a wholly owned subsidiary of the Stockholder ("MIS"), to
assume all of the Company's obligations, and the Company agrees to assign to
MIS all of the Company's rights, under the leases set forth on Schedule 9.16(c)
(the "MIS Assumed Leases") prior to the Closing Date. The Parties hereto agree
to, and the Stockholder agrees to cause MIS to agree to, cooperate and to
execute such instruments of conveyance and transfer and to take such additional
action as reasonably necessary to effect the transfer of the MIS Assumed
Leases. The Stockholder agrees to cause MIS to indemnify and hold harmless from
and against and pay on behalf of or reimburse the Company and its Subsidiaries
for the entirety of the amount of any Loss incurred by the Company with respect
to any of the MIS Assumed Leases or the real property demised by such leases
arising prior to or following the Closing Date.
9.17 CERTAIN LEGAL MATTERS. The Stockholder agrees to
indemnify and hold harmless from and against and pay on behalf of or reimburse
the Company and its Subsidiaries for the entirety of the amount of any Loss the
Company or its Subsidiaries may suffer, sustain or become subject to resulting
from, arising out of, relating to or caused by (a) any dispute, suit, claim or
cause of action involving the Company and Virco Mfg. Corp. or Hewlett-Packard
Company based on events occurring prior to the Closing Date, including, without
limitation, any Losses arising out of Virco Mfg. Corp. V. Hewlett Packard
Company and Does One Through Twenty, and (b) any dispute, suit, claim or cause
of action involving the Company and First Health, including, without
limitation, any Losses arising out of First Health v. Metamor Worldwide. The
Stockholder agrees to assume and shall control the defense for all matters for
which the indemnity set forth in this Section 9.17 shall apply with counsel
selected by the Stockholder. The Stockholder shall not be responsible or liable
to the Company for legal expenses subsequently incurred by the Company after
the Stockholder shall have assumed such defense. The Company shall have the
right to participate in the defense thereof and to employ counsel at its own
expense, separate from the counsel employed by the Stockholder, it being
understood that the Stockholder shall control such defense. The Stockholder
shall be liable for the fees and expenses of counsel employed by the Company
for any period during which the Stockholder has failed to assume the defense
thereof (other than during the period prior to the time the Company shall have
given notice of a claim pursuant to this Section 9.17). The Company and the
Stockholder shall cooperate with one another in the defense or prosecution
thereof. Such cooperation shall include the retention and the provision to the
other party of records and information which are reasonably relevant to such
claim pursuant to this Section 9.17, and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Company shall not admit any liability with
respect to, or settle, compromise or discharge, such claim pursuant to this
Section 9.17 without the Stockholder's prior written consent (which consent
shall not be unreasonably withheld). The Company shall agree to any monetary
settlement, compromise or discharge of such claim pursuant to this Section 9.17
which the Stockholder may recommend and which by its terms obligates the
Stockholder to pay the full amount of the liability in connection with such
claim and which releases the Company completely in connection with such claim.
Notwithstanding anything contained herein, the Company shall, in its sole
discretion, have the right to reasonably object to any settlement,
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50
compromise or discharge which seeks to impose non-monetary relief against the
Company or its Subsidiaries.
ARTICLE X
DEFINITIONS
10.1 DEFINITIONS. For purposes hereof, the following terms,
when used herein with initial capital letters, shall have the respective
meanings set forth herein:
"Accounts Receivable" shall mean all accounts and commissions
receivable, including without limitation, all trade accounts receivable, notes
receivable from customers, vendor credits and accounts receivable from
employees and all other obligations from customers with respect to sales of
goods or services, whether evidenced or not evidenced by a note.
"Affiliate" of any Person means any other Person controlling,
controlled by or under common control with such first Person, where "control"
means the possession, directly or indirectly, of the power to direct the
management and policies of a Person whether through the ownership of voting
securities or otherwise.
"Affiliated Group" means an affiliated group as defined in
Section 1504 of the Code (or any similar combined, consolidated or unitary
group defined under state, local or foreign income Tax law).
"Agreement" means this Stock Purchase Agreement, including
all Exhibits and Schedules hereto, as it may be amended from time to time in
accordance with its terms.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks are authorized or required to close under
the laws of the United States.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Code" means the United States Internal Revenue Code of 1986,
as amended.
"Encumbrances" means any Lien, voting agreement, voting
trust, proxy, option, right of purchase, right of first refusal, right of first
offer, restriction on transfer or any other similar arrangement or restriction
of any kind whatsoever.
"Environmental Affiliates" of any Person means, with respect
to any particular matter, all other Persons whose liabilities or obligations
with respect to that particular matter have been assumed by, or are otherwise
deemed by law to be those of, such first Person.
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51
"Environmental and Safety Requirements" means all federal,
state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
concerning public health and safety, worker health and safety and pollution or
protection of the environment, including all such standards of conduct and
bases of obligations relating to the presence, use, production, generation,
handling, transport, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or
cleanup of any hazardous materials, substances or wastes, chemical substances
or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or by-products, asbestos, polychlorinated biphenyls (or PCBs), noise
or radiation.
"Environmental Lien" means any Lien, whether recorded or
unrecorded, in favor of any governmental entity or any department, agency or
political subdivision thereof relating to any liability of the Company, any
Subsidiary or the Stockholder or any Environmental Affiliate of the Company,
any Subsidiary or the Stockholder arising under any Environmental and Safety
Requirement.
"ERISA" shall have the meaning provided in Section 5.18.
"GAAP" means United States generally accepted accounting
principles.
"Guaranty" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon the debt, obligation or other liability of any other Person (other
than by endorsements of instruments in the ordinary course of collection), or
guarantees of the payment of dividends or other distributions upon the shares
of any other Person.
"Indebtedness" means at a particular time, without
duplication, (i) any indebtedness for borrowed money or issued in substitution
for or exchange of indebtedness for borrowed money, (ii) any indebtedness
evidenced by any note, bond, debenture or other debt security, (iii) any
indebtedness for the deferred purchase price of property or services with
respect to which a Person is liable, contingently or otherwise, as obligor or
otherwise (other than trade payables and other current liabilities incurred in
the ordinary course of business which are not more than ninety (90) days past
due), (iv) any commitment by which a Person assures a creditor against loss
(including, without limitation, contingent reimbursement obligations with
respect to letters of credit), (v) any indebtedness guaranteed in any manner by
a Person (including, without limitation, guarantees in the form of an agreement
to repurchase or reimburse), (vi) any obligations under capitalized leases with
respect to which a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or with respect to which obligations a Person assures a
creditor against loss, (vii) any indebtedness secured by a Lien on a Person's
assets, (viii) any intercompany debt or payables owed by the Company to the
Stockholder or any of the Stockholder's Affiliates or Subsidiaries and (ix) any
accrued interest on any of the foregoing.
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52
"Insider" means, any officer, director, stockholder, partner
or Affiliate, as applicable, of the Company or any individual related by
marriage or adoption to any such individual or any entity in which any such
Person owns any beneficial interest.
"Investment" as applied to any Person means (i) any direct or
indirect purchase or other acquisition by such Person of any notes,
obligations, instruments, stock, securities or ownership interest (including
partnership interests and joint venture interests) of any other Person and (ii)
any capital contribution by such Person to any other Person.
"Knowledge" means, with respect to a Person, the actual
knowledge of such Person (which includes the actual knowledge of all officers
and directors of such Person).
"Liens" means any mortgage, pledge, security interest, claim,
encumbrance, lien or charge of any kind (including, without limitation, any
option, conditional sale or other title retention agreement or lease in the
nature thereof), any sale of receivables with recourse against the Company or
any Affiliate, any filing or agreement to file a financing statement as debtor
under the Uniform Commercial Code or any similar statute other than to reflect
ownership by a third party of property leased to the Stockholder or any of its
Subsidiaries under a lease which is not in the nature of a conditional sale or
title retention agreement, or any subordination arrangement in favor of another
Person (other than any subordination arising in the ordinary course of
business).
"Loss" means, with respect to any Person, any damage,
payment, liability, demand, claim, action, cause of action, cost, damage,
deficiency, Tax, penalty, fine or other loss or expense, including all
interest, penalties, reasonable attorneys' fees and expenses and all amounts
paid or incurred in connection with any action, demand, proceeding,
investigation or claim by any third party (including any governmental entity or
any department, agency or political subdivision thereof) against or affecting
such Person or which, if determined adversely to such Person, would give rise
to, evidence the existence of, or relate to, any other Loss and the
investigation, defense or settlement of any of the foregoing.
"Material Adverse Effect" means any material adverse effect
on the business, condition (financial or otherwise), operations, results of
operations, employee relations, customer or supplier relations, assets,
liabilities or future prospects of the Company and its Subsidiaries, taken as a
whole.
"Permitted Encumbrances" means (A) statutory liens for
current Taxes or other governmental charges with respect to the Leased Real
Property not yet due and payable; (B) mechanics, carriers, workers, repairers
and similar statutory liens arising or incurred in the ordinary course of
business for amounts which are not delinquent and which could not, individually
or in the aggregate, have a Material Adverse Effect on the Company or any of
its Subsidiaries; (C) zoning, entitlement, building and other land use
regulations imposed by governmental agencies having jurisdiction over the
Leased Real Property which are not violated by the current use and
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operation of the Leased Real Property; and (D) covenants, conditions,
restrictions, easements and other matters of record affecting title to the
Leased Real Property which do not unreasonably interfere with the current use,
occupancy, or value, or the marketability of title, of the Leased Real
Property.
"Person" means an individual, a partnership, a corporation,
an association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof and any other entity.
"Plan" has the meaning set forth in Section 5.18(a).
"Proprietary Rights" means all of the following, and any and
all corresponding rights that, now or hereafter, may be secured throughout the
world: (i) patents, patent applications, patent disclosures and inventions,
(ii) trademarks, service marks, trade dress, trade names, logos, Internet
domain names and web sites and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration
thereof, (iv) mask works and registrations and applications for registration
thereof, and (v) trade secrets and other confidential information (including,
without limitation, ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial and marketing plans and customer and
supplier lists and information).
"reasonable commercial efforts" means the reasonable efforts
that a prudent Person would make in completing a business transaction of the
type contemplated by this Agreement, but shall not require any significant
expenditure or the payment of cash for procurement of any consent or waiver.
"Release" has the meaning set forth in CERCLA.
"Securities Act" means the Securities Act of 1933, as
amended, or any similar federal law then in force.
"Subsidiary" means, with respect to any Person, any
corporation a majority of the total voting power of shares of stock of which is
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or any partnership,
limited liability company, association or other business entity a majority of
the partnership or other similar ownership interest of which is at the time
owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof.
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54
"Substantial Authority" shall have the meaning described in
Section 6662 of the Code, provided that if state, local or foreign Tax law is
at issue, Substantial Authority shall continue to have the same meaning, but
whether Substantial Authority exists shall be determined in light of relevant
state, local or foreign precedent.
"Target Working Capital" means the product of (x) 51 divided
by 365 multiplied by (y) the Company's and its Subsidiaries aggregate revenues
for the 365 days immediately preceding the Closing Date.
"Tax Returns" means returns, declarations, reports, claims
for refund, information returns or other documents (including any related or
supporting schedules, statements or information) filed or required to be filed
in connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated or other
tax, fee, assessment or charge of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not, and including any
transferee or secondary liability in respect of any tax (whether imposed by
law, contractual agreement or otherwise) and liability in respect of any tax as
a result of being (or ceasing to be) a member of any affiliated, consolidated,
combined, unitary or similar group, but shall not include any such Tax related
to any employee benefit plan, program or arrangement.
"Transaction Documents" means this Agreement, and all other
agreements, instruments, certificates and other documents to be entered into or
delivered by any Party in connection with the transactions contemplated to be
consummated pursuant to this Agreement.
"Treasury Regulations" means the United States Treasury
Regulations promulgated pursuant to the Code.
"Working Capital" means (i) the aggregate current assets of
the Company (excluding cash and cash equivalents) minus (ii) the aggregate
current liabilities of the Company (other than accrued interest, the current
portion of Indebtedness, Taxes and any other current liabilities that the
Stockholder shall assume from, or with respect to which the Stockholder shall
provide indemnification to, the Company pursuant to this Agreement), in each
case as of the Closing Date. Working Capital shall be determined in accordance
with GAAP applied in a manner consistent with those used in preparing the
appropriate UCC termination statements, held by third parties against the
property of the Company or any of its Subsidiaries shall have been obtained for
release upon payment, all on terms reasonably satisfactory to the Purchaser;
Company's December 31, 1998 unaudited balance sheet (the "Year-End Balance
Sheet"). If any item on (or which should be reflected on) the Year-End Balance
Sheet is not reflected in accordance with GAAP in effect as of the Closing Date
(based upon authoritative
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accounting pronouncements and literature), Working Capital will nonetheless be
computed in accordance with GAAP in effect as of the Closing Date. In computing
Working Capital, all accounting entries (including all liabilities and
accruals) will be taken into account regardless of their amount and all errors
and omissions will be corrected and all proper adjustments will be made. For
purposes of the calculation of Working Capital, all inter-company receivables
and payables related to transactions (a) between the Company, on the one hand,
and the Stockholder and its Subsidiaries (excluding the Company and its
Subsidiaries), on the other hand, and (b) between the Company, on the one hand,
and its Subsidiaries, on the other hand, shall be identified and eliminated and
canceled without payment.
Any reference to any particular Code section or any other law or regulation
will be interpreted to include any revision of or successor to that section
regardless of how it is numbered or classified.
ARTICLE XI
MISCELLANEOUS
11.1 AMENDMENT AND WAIVER. Prior to Closing, this Agreement
may only be amended upon the written consent of each of the Parties hereto.
Following the Closing, this Agreement may be amended upon the written consent
thereto by the Company and the Purchaser. Any provision of this Agreement may
be waived; provided that, unless otherwise set forth herein, any such waiver
shall be binding upon a Party only if such waiver is set forth in a writing
executed by such Party. No course of dealing between or among any persons
having any interest in this Agreement shall be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations of
any Party under or by reason of this Agreement.
11.2 NOTICES. All notices, demands and other communications
given or delivered under this Agreement shall be in writing and shall be deemed
to have been given when personally delivered, mailed by first class mail,
return receipt requested, or delivered by express courier service or telecopied
(with hard copy to follow). Notices, demands and communications to the Parties
shall, unless another address is specified in writing, be sent to the address
or telecopy number indicated below:
Notices to the Stockholder and, prior to the Closing,
the Company:
c/o Metamor Worldwide, Inc.
4400 Post Oak Parkway, Suite 1100
Houston, Texas 77027
Attention: General Counsel
Facsimile No.: (713) 627-1059
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with a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin
Houston, Texas 77002-6760
Attention: Robert Hatcher
Facsimile No.: (713) 758-2346
Notices to the Purchaser and to the Company (post
Closing):
MITS Holding, Inc.
c/o GTCR Fund VI, L.P.
6100 Sears Tower
Chicago, Illinois 60606
Attention: Donald Edwards
and David I. Trujillo
Facsimile No.: (312) 382-2201
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Kevin R. Evanich, P.C.
and Stephen L. Ritchie
Facsimile No.: (312) 861-2200
11.3 BINDING AGREEMENT; ASSIGNMENT. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
Parties and their respective successors and permitted assigns; provided that
neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any Party without the prior written consent of the
other Parties (except as otherwise provided in this Agreement); provided
further that:
(a) the Purchaser may at any time prior to the Closing, at
its sole discretion, assign, in whole or in part, its rights and obligations
pursuant to this Agreement to one or more of its Affiliates;
(b) the Company may assign its rights under this Agreement
for collateral security purposes to any lender providing financing to the
Company or any of its Affiliates and any such lender may exercise all of the
rights and remedies of the Company hereunder; and
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57
(c) the Company may assign its rights under this Agreement,
in whole or in part, to any subsequent purchaser of the Company or any material
portion of its assets (whether such sale is structured as a sale of stock, a
sale of assets, a merger or otherwise);
provided further, however, that no assignment shall limit assignor's
obligations hereunder.
11.4 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
11.5 NO STRICT CONSTRUCTION. The language used in this
Agreement shall be deemed to be the language chosen by the Parties to express
their mutual intent, and no rule of strict construction shall be applied
against any person.
11.6 CAPTIONS. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement
and shall not be deemed to limit, characterize or in any way affect any
provision of this Agreement, and all provisions of this Agreement shall be
enforced and construed as if no caption had been used in this Agreement.
11.7 ENTIRE AGREEMENT. This Agreement, the Schedules and the
other documents referred to herein contain the entire agreement between the
Parties and supersede any prior understandings, agreements or representations
by or between the Parties, written or oral, which may have related to the
subject matter hereof in any way.
11.8 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.
11.9 GOVERNING LAW. All questions concerning the
construction, validity and interpretation of this Agreement shall be governed
by and construed in accordance with the domestic laws of the State of Texas,
without giving effect to any choice of law or conflict of law provision
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
11.10 PARTIES IN INTEREST. Nothing in this Agreement, express
or implied, is intended to confer on any person other than the Parties and
their respective successors and assigns any rights or remedies under or by
virtue of this Agreement.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this
Stock Purchase Agreement on the date first written above.
METAMOR INFORMATION
TECHNOLOGY SERVICES, INC.
By: /s/ PETER T. DAMERIS
-------------------------------
Name: Peter T. Dameris
Its: Executive Vice President
METAMOR WORLDWIDE, INC.
By: /s/ PETER T. DAMERIS
-------------------------------
Name: Peter T. Dameris
Its: Executive Vice President
MITS HOLDING, INC.
By: /s/ DONALD J. EDWARDS
-------------------------------
Name: Donald J. Edwards
Its: President
GUARANTY
GTCR Fund IV, L.P. ("GTCR") and First Union Capital Partners,
Inc. ("FUCP") hereby severally guarantee the performance of the Purchaser
pursuant to this Agreement, with GTCR being liable for 60% of any claims and
FUCP being liable for 40% of any claims. The obligations of GTCR and FUCP
hereunder shall be subject to satisfaction of the Purchaser's closing
conditions in Section 2.1 and shall terminate on closing of the transactions
contemplated by this Agreement.
GTCR FUND VI, L.P. FIRST UNION CAPITAL PARTNERS,
By: GTCR Partners VI, L.P., INC.
its general partner
By: GTCR Golder Rauner, L.L.C., By: /s/ L. WATTS HAMRICK, III
its general partner -------------------------------
Name: L. Watts Hamrick, III
-----------------------------
Title: Senior Vice President
----------------------------
By: /s/ DONALD J. EDWARDS
--------------------------------
Its: Principal