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EXHIBIT 10.18
EXECUTION COPY
PURCHASE AGREEMENT
BY AND AMONG
GETRONICSWANG CO. LLC,
GETRONICS GOVERNMENT SOLUTIONS, L.L.C.,
DIGITALNET HOLDINGS, INC.
AND
DIGITALNET, INC.
DATED AS OF
SEPTEMBER 27, 2002
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TABLE OF CONTENTS
<Table>
ARTICLE I DEFINITIONS.........................................................................................1
1.1 DEFINITIONS..........................................................................................1
ARTICLE II PURCHASE AND SALE OF MEMBERSHIP INTERESTS.........................................................11
2.1 PURCHASE AND SALE OF MEMBERSHIP INTERESTS...........................................................11
2.2 PURCHASE PRICE; OBLIGATIONS RETAINED PAYMENT........................................................11
2.3 CLOSING.............................................................................................12
2.4 CLOSING OBLIGATIONS.................................................................................12
2.5 ADJUSTMENT OF THE PURCHASE PRICE....................................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT.........................................................15
3.1 ORGANIZATION, QUALIFICATION AND POWER AND AUTHORITY.................................................15
3.2 MEMBERSHIP INTERESTS................................................................................16
3.3 SUBSIDIARIES........................................................................................16
3.4 GOVERNMENTAL CONSENTS; NO VIOLATIONS................................................................17
3.5 FINANCIAL STATEMENTS................................................................................17
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS................................................................18
3.7 NO UNDISCLOSED LIABILITIES..........................................................................18
3.8 LITIGATION..........................................................................................18
3.9 TAXES...............................................................................................18
3.10 EMPLOYEE BENEFIT PLANS AND AGREEMENTS..............................................................20
3.11 LABOR AND EMPLOYEE MATTERS.........................................................................21
3.12 ENVIRONMENTAL LAWS.................................................................................21
3.13 COMPLIANCE WITH LAWS...............................................................................22
3.14 PROPERTIES.........................................................................................22
3.15 CUSTOMER CONTRACTS; GOVERNMENT CONTRACTS AND BIDS; SUSPENSION......................................23
3.16 OTHER CONTRACTS....................................................................................26
3.17 INTELLECTUAL PROPERTY..............................................................................27
3.18 BROKERS AND FINDERS................................................................................28
3.19 SUPPLIERS..........................................................................................28
3.20 BANK ACCOUNTS; OFFICERS AND DIRECTORS..............................................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND PURCHASER..........................................29
4.1 ORGANIZATION, QUALIFICATION AND POWER AND AUTHORITY.................................................29
4.2 CAPITAL STOCK.......................................................................................29
4.3 GOVERNMENTAL CONSENTS; NO VIOLATIONS................................................................30
4.4 FINANCING...........................................................................................31
4.5 HOLDINGS' AND PURCHASER'S OPERATIONS AND LIABILITIES................................................31
4.6 LITIGATION..........................................................................................32
4.7 COMPLIANCE WITH LAWS................................................................................32
</Table>
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<Table>
4.8 BROKERS AND FINDERS.................................................................................32
ARTICLE V COVENANTS..........................................................................................32
5.1 CONDUCT OF BUSINESS OF THE COMPANY..................................................................32
5.2 ACCESS TO INFORMATION...............................................................................34
5.3 HSR ACT FILING......................................................................................34
5.4 REASONABLE EFFORTS; CONSENTS........................................................................35
5.5 FURTHER ASSURANCES; COOPERATION.....................................................................35
5.6 PUBLICITY...........................................................................................35
5.7 EMPLOYEE MATTERS....................................................................................35
5.8 INDEMNIFICATION.....................................................................................39
5.9 INDEBTEDNESS........................................................................................39
5.10 INTERCOMPANY ACCOUNTS..............................................................................39
5.11 ALLOCATION OF PURCHASE PRICE.......................................................................39
5.12 TRANSFER TAXES.....................................................................................40
5.13 NAME CHANGE........................................................................................40
5.14 CSOC CUSTOMER CONTRACT.............................................................................40
5.15 EXCLUSIVITY........................................................................................49
5.16 ASSIGNMENT OF NONDISCLOSURE AGREEMENTS.............................................................49
5.17 NON-COMPETITION AND NON-SOLICITATION...............................................................50
5.18 TAX MATTERS........................................................................................51
ARTICLE VI CONDITIONS TO CONSUMMATION OF THE TRANSACTION.....................................................53
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO CONSUMMATE THE TRANSACTION................................53
6.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF HOLDINGS AND PURCHASER..................................53
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATION OF PARENT...................................................54
ARTICLE VII TERMINATION......................................................................................54
7.1 TERMINATION BY MUTUAL CONSENT.......................................................................54
7.2 TERMINATION BY HOLDINGS AND PURCHASER...............................................................54
7.3 TERMINATION BY PARENT...............................................................................55
7.4 TERMINATION BY EITHER PARTY.........................................................................55
7.5 EFFECT OF TERMINATION...............................................................................55
ARTICLE VIII SURVIVAL AND INDEMNIFICATION....................................................................56
8.1 SURVIVAL............................................................................................56
8.2 INDEMNIFICATION BY PARENT...........................................................................56
8.3 INDEMNIFICATION BY HOLDINGS AND PURCHASER...........................................................56
8.4 LIMITATION OF LIABILITY.............................................................................57
8.5 NOTICE OF CLAIM.....................................................................................58
8.6 DIRECT CLAIMS.......................................................................................59
8.7 THIRD PARTY CLAIMS..................................................................................59
8.8 MANNER OF PAYMENT...................................................................................60
8.9 DETERMINATION OF LOSSES.............................................................................60
8.10 TAX TREATMENT OF INDEMNIFICATION AND CSOC PAYMENTS.................................................61
ARTICLE IX MISCELLANEOUS AND GENERAL.........................................................................61
</Table>
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<Table>
9.1 INTERPRETATION......................................................................................61
9.2 PAYMENT OF EXPENSES AND OTHER PAYMENTS..............................................................62
9.3 AMENDMENT...........................................................................................62
9.4 WAIVER AND EXTENSION................................................................................62
9.5 COUNTERPARTS........................................................................................63
9.6 GOVERNING LAW.......................................................................................63
9.7 NOTICES.............................................................................................63
9.8 ENTIRE AGREEMENT; ASSIGNMENT........................................................................64
9.9 THIRD PARTIES.......................................................................................65
9.10 VALIDITY...........................................................................................65
9.11 CAPTIONS...........................................................................................65
9.12 INVESTMENT REPRESENTATIONS.........................................................................65
</Table>
EXHIBIT 1 - Amended and Restated Certificate of Incorporation of Holdings
EXHIBIT 2 - Membership Interest Assignment
EXHIBIT 3 - Master Agreement for Transitional Services
EXHIBIT 4 - Escrow Agreement
EXHIBIT 5 - Stockholders Agreement
EXHIBIT 6 - Registration Agreement
EXHIBIT 7A - Equity Financing Commitment
EXHIBIT 7B - Debt Financing Commitment
EXHIBIT 7C - Debt Financing Commitment
EXHIBIT 8 - Allocation
EXHIBIT 9 - Initial CSOC Spreadsheet
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of September 27, 2002 (this "Agreement"),
by and among GetronicsWang Co. L.L.C., a limited liability company formed under
the laws of the State of Delaware ("Parent"), Getronics Government Solutions,
L.L.C., a limited liability company formed under the laws of the State of
Delaware (the "Company"), DigitalNet Holdings, Inc., a corporation formed under
the laws of the State of Delaware ("Holdings"), and DigitalNet, Inc., a
corporation formed under the laws of the State of Delaware ("Purchaser").
WHEREAS, Parent owns all of the membership interests (the "Membership
Interests") of the Company; and
WHEREAS, Parent desires to sell the Membership Interests to Purchaser,
and Purchaser desires to purchase the Membership Interests from Parent, pursuant
to the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Parent, the Company, Holdings and Purchaser, intending to be
legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
For purposes of this Agreement:
"Affected Employee" shall have the meaning ascribed to it in Section
5.7(a).
"Affiliate" of any Person shall mean any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.
"Affiliated Group" shall mean an affiliated group as defined in
Section 1504 of the Code (or any analogous combined, consolidated or unitary
group as defined under income Tax Law).
"Agreement" shall have the meaning ascribed to it in the preamble.
"Allocation" shall have the meaning ascribed to it in Section 5.11.
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"Amended and Restated Certificate of Incorporation" shall have the
meaning ascribed to it in Section 2.2(a).
"Antitrust Division" shall have the meaning ascribed to it in Section
3.4(a).
"Balance Sheet" shall have the meaning ascribed to it in Section 3.5.
"Base Period" shall have the meaning ascribed to it in Section
5.14(a).
"Cash Portion of the Purchase Price" shall mean $181,500,000 plus or
minus, respectively, the amount by which (a) the amount of Closing Net Working
Capital is greater or less than $32,355,000, (b) the amount of "Depreciable
assets, net" reflected on the Final Closing Balance Sheet is greater or less
than $18,191,000 and (c) the amount of "Accrued contract losses" reflected on
the Final Closing Balance Sheet is less or greater than $8,724,000.
"Claim" shall have the meaning ascribed to it in Section 8.5.
"Closing" shall have the meaning ascribed to it in Section 2.3.
"Closing Balance Sheet" shall have the meaning ascribed to it in
Section 2.5(a).
"Closing CSOC Spreadsheet" shall have the meaning ascribed to it in
Section 5.14(c).
"Closing Date" shall mean the date on which the Closing occurs.
"Closing Net Working Capital" shall mean the amount equal to the
difference between (a) the amount of the "Total current assets" reflected on the
Final Closing Balance Sheet, less the amount of (i) Undisputed Closing CSOC
Accounts Receivable and Disputed Closing CSOC Accounts Receivable included in
"Accounts receivable, net" and (ii) "Deferred income taxes," in each case,
reflected on the Final Closing Balance Sheet, and (b) the amount of the "Total
current liabilities" reflected on the Final Closing Balance Sheet, less the
amount of "Accrued contract losses" reflected on the Final Closing Balance
Sheet.
"Closing Statements" shall have the meaning ascribed to it in Section
2.5(a).
"COBRA" shall mean the requirements of Part 6 of Subtitle B of Title I
of ERISA and Section 4980B of the Code and any similar state Law.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning ascribed to it in the preamble.
"Company Intellectual Property" shall mean all Intellectual Property
owned by the Company or any Company Subsidiary.
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"Company Subsidiary" shall have the meaning ascribed to it in Section
3.3.
"Company Transaction" shall have the meaning ascribed to it in Section
5.15.
"Confidentiality Agreement" shall mean the agreement dated as of March
1, 2002, by and between Parent and GTCR Golder Rauner, LLC.
"Contract" shall mean any written agreement, commitment, contract,
instrument or other binding arrangement.
"Coverage Period" shall have the meaning ascribed to it in Section
5.7(h).
"CSOC Action" shall have the meaning ascribed to it in Section
5.14(g).
"CSOC Customer" shall have the meaning ascribed to it in Section
5.14(a).
"CSOC Customer Contract" shall have the meaning ascribed to it in
Section 5.14(a).
"CSOC Operating Losses" shall have the meaning ascribed to it in
Section 5.14(h).
"CSOC Payment" shall have the meaning ascribed to it in Section
5.14(e)(i).
"Currently Being Paid Post-Closing CSOC Accounts Receivable" shall
have the meaning ascribed to it in Section 5.14(c).
"Customer Contracts" shall have the meaning ascribed to it in Section
3.15(a).
"Debt Financing Commitments" shall have the meaning ascribed to it in
Section 4.4.
"Direct Claim" shall have the meaning ascribed to it in Section 8.5.
"Disclosure Schedule" shall mean the disclosure schedule prepared by
Parent and delivered to Holdings and Purchaser concurrently with the execution
of this Agreement.
"Disputed Closing CSOC Accounts Receivable" shall have the meaning
ascribed to it in Section 5.14(c).
"Disputed Post-Closing CSOC Accounts Receivable" shall have the
meaning ascribed to it in Section 5.14(c).
"Disputed Post-Closing CSOC Accounts Receivable Bogey" shall mean an
amount equal to 50% of the Disputed Post-Closing CSOC Accounts Receivable.
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"DSP Agreement" shall mean the DSP Services and Support Agreement
between Wang Laboratories, Inc. and Dell Marketing, L.P., dated August 1, 1998,
as amended by amendments dated September 15, 1998, December 1, 1998, September
25, 1998, September 25, 1998, February 15, 1999, August 1, 1998, May 1, 1999,
May 15, 1999, May 3, 1999, April 26, 1999, May 14, 1999, May 3, 1999, May 17,
1999, May 24, 1999, July 1, 1999, July 1, 1999, July 15, 1999, September 20,
1999, October 1, 1999, October 15, 1999 and January 3, 2000 and any subsequent
amendments or extensions thereof.
"Environmental Laws" shall mean all Laws relating to pollution or
protection of the environment, including Laws relating to Hazardous Substances.
"Equity Financing Commitment" shall have the meaning ascribed to it in
Section 4.4.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall have the meaning ascribed to it in Section
3.10(a).
"Escrow Agreement" shall have the meaning ascribed to it in Section
2.4(c).
"Estimated Cash Portion of the Purchase Price" shall mean
$181,500,000.
"Executive Employees" shall mean each of Jeffrey Beck, James Destival,
James Fontana, William Ryan, Michael Sanders, Joseph Spaniol, Mary Stassie and
Anthony Urreta.
"Final and Binding" shall have the meaning ascribed to it in Section
2.5(b).
"Final Closing Balance Sheet" shall have the meaning ascribed to it in
Section 2.5(b).
"Final Closing Statements" shall have the meaning ascribed to it in
Section 2.5(b).
"Financial Statements" shall have the meaning ascribed to it in
Section 3.5.
"FTC" shall have the meaning ascribed to it in Section 3.4(a).
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authority" shall mean any agency, board, branch, bureau,
commission, department, legislature, instrumentality or other governmental or
quasi-governmental authority or entity of the United States, or any state, city,
county, district, municipality, territory or other local government within the
United States, or any governmental or quasi-governmental entity of any foreign
nation or multi-national authority or of a provincial, regional or metropolitan
government thereof.
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"Government Bid" shall mean any bid, offer or proposal which, if
accepted or awarded, would result in a Government Contract.
"Government Contract" shall mean any prime contract, subcontract,
joint venture, basic ordering agreement, blanket purchase agreement, letter
agreement, purchase order, delivery order, task order, grant, cooperative
agreement, change order or other commitment or funding vehicle with, or issued
by, a Governmental Authority or any Contract with a Person that has been awarded
a Government Contract if such Contract is a subcontract (at any tier) pursuant
to or in support of such Person's Government Contract.
"Government Sponsored Enterprises" shall have the meaning ascribed to
it in Section 5.17(b).
"Hazardous Substances" shall mean any chemical, material or substance
regulated as or defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "hazardous chemicals,"
"hazardous constituents," "restricted hazardous materials," "extremely hazardous
substances," "toxic substances," "contaminants," "pollutants," "toxic
pollutants," or words of similar meaning and regulatory effect under any
applicable Environmental Law, including petroleum and asbestos.
"HFSI Plan" shall have the meaning ascribed to it in Section 5.7(f).
"HFSI SERP" shall have the meaning ascribed to it in Section 5.7(f).
"Holdings" shall have the meaning ascribed to it in the preamble.
"HSR Act" shall have the meaning ascribed to it in Section 3.4(a).
"Indebtedness" shall mean, in each case as of the Closing, without
duplication, (a) any indebtedness of the Company or any Company Subsidiary for
borrowed money or issued in substitution of or exchange of indebtedness for
borrowed money, (b) any indebtedness of the Company or any Company Subsidiary
evidenced by any note, bond, debenture or other debt security and any contingent
reimbursement obligation with respect to any letter of credit, (c) any
indebtedness for borrowed money guaranteed in any manner by the Company or any
Company Subsidiary (including guarantees in the form of an agreement to
repurchase or reimburse) other than any guarantee between the Company and any
Company Subsidiary or between or among the Company Subsidiaries, (d) any
obligations under capitalized leases with respect to which the Company or any
Company Subsidiary is liable, contingently or otherwise, as obligor, guarantor
or otherwise, or with respect to which obligations the Company or any Company
Subsidiary assures a creditor against loss; (e) any indebtedness between the
Company or any Company Subsidiary on the one hand and Parent or any of its
Affiliates (other than the Company or any Company Subsidiary) on the other hand;
and (f) all interest, premiums, penalties, charges, fees, expenses and other
amounts due in connection with the payment and satisfaction in full of the
obligations described in the foregoing clauses (a) through (e) of this
definition, except that Indebtedness shall not include: (i) the trade
receivables, trade payables or "receivables from Parent, net" addressed in
Section 5.10, which shall be settled
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or not settled as provided in Section 5.10, or (ii) the letter of credit
required under the Office Space Lease, dated as of July 7, 2000, by and between
Jaco Horse Pen II LLC and the Company and issued under the Loan Agreement, dated
as of May 19, 2000, by and between SunTrust Bank and Wang Government Services,
Inc., as ratified and assumed by the Company, which letter of credit shall
terminate upon termination of such Loan Agreement upon consummation of the
Transaction.
"Indemnified Party" shall have the meaning ascribed to it in Section
8.4(c).
"Indemnifying Party" shall have the meaning ascribed to it in Section
8.4(c).
"Initial CSOC Spreadsheet" shall have the meaning ascribed to it in
Section 5.14(a).
"Intellectual Property" shall mean all of the following: (i) patents,
patent applications and patent disclosures; (ii) trademarks, service marks,
trade dress, trade names, corporate names, logos and slogans (and all
translations, adaptations, derivations and combinations of the foregoing) and
Internet domain names together with all goodwill associated with each of the
foregoing; (iii) copyrights and copyrightable works; (iv) registrations and
applications for any of the foregoing; (v) trade secrets, confidential
information, know-how and inventions (whether or not patentable and whether or
not reduced to practice); (vii) computer software (including source code, object
code, data, databases and documentation); and (viii) other proprietary
information and intellectual property.
"Law" shall mean any federal, state, local or foreign law, statute,
ordinance, rule or regulation.
"Lien" shall mean any mortgage, pledge, security interest, lien,
charge or other encumbrance.
"Litigation" shall mean any suit, complaint, claim, action or
proceeding.
"Losses" shall mean any and all losses, liabilities, damages, costs
and expenses (including interest, penalties, fines, reasonable attorneys' fees
and expenses and costs of investigation, defense or settlement); PROVIDED,
HOWEVER, that Losses shall not include (a) any consequential damages or (b) any
costs or expenses of any Indemnified Party related to the time spent on any
indemnified matter by employees or management of the Indemnified Party.
"Material Adverse Effect" shall mean any adverse change in the
business, properties, financial condition or results of operations of the
Company, which, individually or together with any other such adverse change, is
material to the Company, other than any such change attributable to or resulting
from (a) the public announcement of the Transaction, (b) any change in any Laws
of general applicability or interpretations thereof by courts or Governmental
Authorities, (c) any adverse change in general economic conditions or in
conditions affecting Persons in the business of providing information
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technology services or products generally, (d) the Company not having been
successful on any or all of the bids or proposals which are outstanding as of
the date hereof or which the Company makes after the date hereof or (e) any act
or omission of Parent or the Company taken or not taken with the prior consent
or at the specific request of Holdings or Purchaser.
"Membership Interests" shall have the meaning ascribed to it in the
preamble.
"Membership Interest Assignment" shall have the meaning ascribed to it
in Section 2.4(a)(i).
"Obligations Retained Payment" shall have the meaning ascribed to it
in Section 2.2(b).
"Order" shall mean any decree, injunction, judgment, rule or order of
any court or Governmental Authority.
"Parent" shall have the meaning ascribed to it in the preamble.
"Parent Cap" shall mean $25,770,500.
"Parent Deductible" shall mean $1,840,750.
"Parent Obligations Subject to the Parent Cap" shall mean (a) the
reimbursement obligations of Parent under: (i) Section 5.14(g)(ii); (ii) clauses
(1) and (2) of Section 5.14(g)(iii); and (iii) Section 5.14(h) and (b) the
indemnification obligations of Parent under Section 8.2(a).
"Parent Obligations Subject to the Parent Deductible" shall mean (a)
the reimbursement obligations of Parent under: (i) clause 2 of Section
5.14(g)(iii); and (ii) Section 5.14(h) and (b) the indemnification obligations
of Parent under Section 8.2(a).
"Parent 401(k) Plan" shall have the meaning ascribed to it in Section
5.7(d).
"Parent Welfare Plan Report" shall have the meaning ascribed to it in
Section 5.7(g).
"Parent's Knowledge" shall mean the actual knowledge of Jan Docter or
James Walpole acquired (a) in the performance of their duties in the ordinary
course of business or (b) in the course of consulting with the Executive
Employees in connection with the Transaction with respect to the subject matter
of the pertinent representations and warranties or covenants and agreements of
Parent herein, PROVIDED, HOWEVER, that Purchaser acknowledges that the actual
knowledge of Jan Docter and James Walpole with respect to the Company and the
Company Subsidiaries or any matter concerning the Company and the Company
Subsidiaries is constrained by the Proxy Agreement.
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"Pension Plan" shall have the meaning ascribed to such term in Section
3(2) of ERISA.
"Permit" shall mean any license, permit and other authorization from
Governmental Authorities applicable to or necessary for the operation of a
Person.
"Permitted Lien" shall mean (a) statutory liens for Taxes, which are
not yet due and payable or are being contested in good faith by appropriate
proceedings, (b) statutory or common law liens to secure landlords, lessors or
renters under leases or rental agreements confined to the premises rented, (c)
deposits or pledges made in connection with, or to secure payment of, worker's
compensation, unemployment insurance, old age pension or other social security
programs mandated under applicable Laws, (d) statutory or common law liens in
favor of carriers, warehousemen, mechanics and materialmen to secure claims for
labor, materials or supplies and other like liens and (e) restrictions on
transfer of securities imposed by applicable state and federal securities Laws.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, association, organization or
Governmental Authority.
"Plan" shall have the meaning ascribed to it in Section 3.10(a).
"Post-Closing CSOC Spreadsheet" shall have the meaning ascribed to it
in Section 5.14(d).
"Post-Closing Tax Period" shall have the meaning ascribed to it in
Section 8.3.
"Pre-Closing CSOC Spreadsheet" shall have the meaning ascribed to it
in Section 5.14(b).
"Pre-Closing Tax Period" shall have the meaning ascribed to it in
Section 8.2.
"Proxy Agreement" shall mean the Proxy Agreement with respect to the
Company dated July 25, 1999, as revised on April 30, 2001, and the Proxy Holder
Standard Operating Procedures thereunder dated August 31, 1999.
"Purchase Price" shall have the meaning ascribed to it in Section
2.2(a).
"Purchase Price Adjustment Arbitrator" shall have the meaning ascribed
to it in Section 2.5(b).
"Purchaser" shall have the meaning ascribed to it in the preamble.
"Purchaser 401(k) Plan" shall have the meaning ascribed to it in
Section 5.7(d).
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"Purchaser Cap" shall mean $25,770,500.
"Purchaser Deductible" shall mean $1,840,750.
"Purchaser Disclosure Schedule" shall mean the disclosure schedule
prepared by Holdings and Purchaser and delivered to Parent concurrently with the
execution of this Agreement.
"Purchaser Material Adverse Effect" shall mean any adverse change in
the business, properties, financial condition or results of operations of
Holdings or Purchaser, which, individually or together with any other such
adverse change, is material to Holdings or Purchaser.
"Purchaser Plan" shall have the meaning ascribed to it in Section
5.7(c).
"Representatives" shall have the meaning ascribed to it in Section
5.2(a).
"Restricted Business" shall have the meaning ascribed to it in Section
5.17(a).
"Restricted Contract" means any Contract with the United States
Government or subcontract under a Contract with the United States Government:
(a) pursuant to which the Company is providing products or services as of the
Closing or any re-compete or re-bid procedure for any such Contract or
subcontract pursuant to which the Company is providing products or services as
of the Closing in which the Company is participating; (b) awarded to the Company
pursuant to a bid or proposal made by the Company prior to the Closing or any
re-compete or re-bid procedure for any such Contract or subcontract awarded to
the Company pursuant to a bid or proposal made by the Company prior to the
Closing in which the Company is participating; or (c) being actively pursued by
the Company prior to the Closing and awarded to the Company after the Closing or
any re-compete or re-bid procedure for any such Contract or subcontract being
actively pursued by the Company prior to the Closing and awarded to the Company
after the Closing in which the Company is participating, PROVIDED, HOWEVER, that
a Contract with the United States Government or subcontract under a Contract
with the United States Government being actively pursued by the Company prior to
the Closing shall be a Restricted Contract until the date it is awarded and if
awarded to the Company on such date shall be a Restricted Contract subject to
clause (c) of this definition and if awarded to a Person other than the Company
on such date shall not be a Restricted Contract from and after such date.
"Restricted Period" shall have the meaning ascribed to it in Section
5.17(a).
"Restricted Territory" shall have the meaning ascribed to it in
Section 5.17(a).
"Retiree Medical Plan" shall have the meaning ascribed to it in
Section 5.7(f).
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"Reverse Agency Agreement" shall mean the Master Service Contract
Sales Brokerage Agreement between Wang Laboratories, Inc. and Dell USA L.P.,
dated July 24, 1997, including Schedules A, B, C and D thereto, as amended by
amendments dated February 1, 1998 and any subsequent amendments or extensions
thereof.
"Series B Preferred Stock" shall have the meaning ascribed to it in
Section 2.2(a).
"Stockholders Agreement" shall have the meaning ascribed to it in
Section 2.4(d).
"Straddle Period" shall have the meaning ascribed to it in Section
5.18(a).
"Subsidiary" shall mean any corporation, partnership, limited
liability company, joint venture or other legal entity of which a Person, either
alone or together with any other Subsidiary, owns, directly or indirectly, 50%
or more of the stock or other equity interests of such corporation or other
legal entity.
"Taxes" shall mean all federal, state, local, or foreign taxes,
charges, fees, levies or other assessment of a similar nature (whether imposed
directly or through withholding), including any interest, additions to tax or
penalties applicable thereto.
"Tax Benefit" shall mean any refund, credit or reduction in otherwise
required Tax payments, including any interest payable thereon.
"Tax Return" shall mean any return, declaration, statement, report,
schedule, form or information return required to be supplied to any taxing
authority with respect to Taxes, including any amendments thereto.
"Third Party" shall have the meaning ascribed to it in Section 8.7(a).
"Third Party Claim" shall have the meaning ascribed to it in Section
8.5.
"Transaction" shall mean the purchase and sale of the Membership
Interests described in Section 2.1.
"Transfer" shall have the meaning ascribed to it in Section 5.7(d).
"Transferred Account Balances" shall have the meaning ascribed to it
in Section 5.7(d).
"Transitional Services Agreement" shall have the meaning ascribed to
it in Section 2.4(a)(ii).
"Ultimate Parent" shall mean Getronics NV, a company organized under
the laws of the Netherlands.
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"Ultimate Parent Names" shall have the meaning ascribed to it in
Section 5.13.
"Undisputed Closing CSOC Accounts Receivable" shall have the meaning
ascribed to it in Section 5.14(c).
"Undisputed Post-Closing CSOC Accounts Receivable" shall have the
meaning ascribed to it in Section 5.14(c).
"Undisputed Post-Closing CSOC Accounts Receivable Bogey" shall mean an
amount equal to 80% of the Undisputed Post-Closing CSOC Accounts Receivable.
"United States Government" shall mean any agency, board, branch,
bureau, commission, department, legislature, instrumentality or other
governmental or quasi-governmental authority or entity of the United States.
"WARN Act" shall have the meaning ascribed to it in Section 3.11(b).
"Welfare Plan" shall have the meaning ascribed to such term in Section
3(1) of ERISA.
ARTICLE II
PURCHASE AND SALE OF MEMBERSHIP INTERESTS
2.1 PURCHASE AND SALE OF MEMBERSHIP INTERESTS. Subject to the terms
and conditions of this Agreement, at the Closing, Parent shall sell to
Purchaser, and Purchaser shall purchase from Parent, the Membership Interests
for the consideration set forth in Section 2.2 (the "Transaction").
2.2 PURCHASE PRICE; OBLIGATIONS RETAINED PAYMENT.
(a) In consideration of the sale of the Membership Interests to
Purchaser, Purchaser shall, subject to the terms and conditions of this
Agreement (including the adjustment to the Purchase Price pursuant to Section
2.5), pay to Parent (or one or more of its Affiliates) (i) the Cash Portion of
the Purchase Price, $10,626,000 of which shall be deposited in escrow pursuant
to Section 2.4(c) and (ii) 33,500 shares of Class B preferred stock, par value
$0.01 per share, of Holdings (the "Series B Preferred Stock" and together with
the Cash Portion of the Purchase Price, the "Purchase Price"), having the terms
set forth in the Amended and Restated Certificate of Incorporation of Holdings
attached as Exhibit 1 hereto (the "Amended and Restated Certificate of
Incorporation").
(b) In consideration of Parent's covenants and agreements in
Section 5.7(f), Purchaser shall, subject to the terms and conditions of this
Agreement, pay to Parent $1,940,000 in cash (the "Obligations Retained
Payment").
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2.3 CLOSING. The closing of the Transaction (the "Closing") shall
take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 333 West
Wacker Drive, Chicago, Illinois at 10:00 a.m. Chicago time on the second
business day following the satisfaction or waiver of the conditions set forth in
Article VI (other than those conditions to be satisfied at or as of the
Closing), or at such other time, date and place as Parent and Purchaser may
agree in writing.
2.4 CLOSING OBLIGATIONS.
(a) At the Closing, Parent shall deliver to Purchaser:
(i) a duly executed Membership Interest Assignment
substantially in the form attached as Exhibit 2 hereto (the "Membership Interest
Assignment");
(ii) a duly executed Master Agreement for Transitional
Services substantially in the form attached as Exhibit 3 hereto (the
"Transitional Services Agreement");
(iii) an amendment of the operating agreement of the Company
which amends Schedule A thereto to reflect the substitution of Purchaser for
Parent as a Member of the Company, as defined therein;
(iv) the officer's certificate described in Section 6.2(d);
(v) the resignation of each director of the Company; and
(vi) a valid certificate of non-foreign status which
complies with the requirements of Section 1445 of the Code and the regulations
promulgated thereunder.
(b) At the Closing, Purchaser shall deliver to Parent (or one or
more of its Affiliates):
(i) the Estimated Cash Portion of the Purchase Price and the
Obligations Retained Payment, by wire transfer of immediately available funds to
accounts designated by Parent in writing at least two business days prior to the
Closing Date; and
(ii) a certificate or certificates representing the Series B
Preferred Stock, accompanied by stock powers duly endorsed in blank or duly
executed instruments of transfer;
(iii) a duly executed Membership Interest Assignment;
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(iv) a duly executed Transitional Services Agreement; and
(v) the officer's certificates described in Section 6.3(c).
(c) At the Closing, Parent, Purchaser and State Street Bank and
Trust Company shall execute and deliver an Escrow Agreement substantially in the
form attached as Exhibit 4 hereto (the "Escrow Agreement") and Parent shall
deposit $10,626,000 of the Cash Portion of the Purchase Price in escrow
thereunder.
(d) At the Closing, Parent, Holdings and the other parties
thereto shall execute and deliver an Amended and Restated Stockholders Agreement
in the form attached as Exhibit 5 hereto as such form is required to be modified
to reflect the arrangements contemplated by the Debt Financing Commitment
attached as Exhibit 7C hereto (the "Stockholders Agreement");
(e) At the Closing, Parent shall become a holder of Other
Registerable Securities within the meaning of, and a party to, the Registration
Agreement in the form attached as Exhibit 6 hereto (as such form is required to
be modified to reflect the arrangements contemplated by the Debt Financing
Commitment attached as Exhibit 7C hereto), whether through execution of a
customary joinder agreement, amendment or otherwise.
2.5 ADJUSTMENT OF THE PURCHASE PRICE.
(a) Purchaser shall, on or before the date that is 45 calendar
days after the Closing Date, prepare and deliver to Parent an unaudited
consolidated balance sheet of the Company as of the close of business on the day
before the Closing Date (the "Closing Balance Sheet") and the related unaudited
consolidated statements of income and accumulated earnings and cash flows for
the period then ended (collectively, the "Closing Statements"). The Closing
Statements (i) shall present fairly, in all material respects, the financial
position, results of operations and cash flows of the Company as of date thereof
or for the period then ended, as applicable, and (ii) shall be prepared in
accordance with GAAP and in a manner consistent with the Financial Statements.
(b) Parent shall, on or before the date that is 45 calendar days
after receipt of the Closing Statements, notify Purchaser of any and all
objections it has regarding the manner in which any item or items are treated on
the Closing Statements (including the Closing Balance Sheet). If Parent fails to
notify Purchaser of any objection regarding the manner in which any item or
items are treated on the Closing Statements (including the Closing Balance
Sheet) within such 45-day period, Parent shall be deemed to have accepted the
Closing Statements (including the Closing Balance Sheet) and the Closing
Statements (and the Closing Balance Sheet) shall be the "Final Closing
Statements" (and the "Final Closing Balance Sheet"). If Parent notifies
Purchaser of any objections regarding the manner in which any item or items are
treated on the Closing Statements (including the Closing Balance Sheet) within
such 45-day period, Parent and
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Purchaser shall attempt to resolve such objections during the 30 calendar days
following such 45-day period. If Parent and Purchaser are unable to agree on the
manner in which any item or items should be treated in the Closing Statements
(including the Closing Balance Sheet) within such 30-day period, irrespective of
whether the basis of their disagreement arises out of the application of
accounting principles or the terms of this Agreement to the Closing Statements
(including the Closing Balance Sheet) or otherwise, Parent and Purchaser shall
each prepare separate written reports of such item or items and refer such
reports to Deloitte & Touche LLP (the "Purchase Price Adjustment Arbitrator")
within 30 calendar days after the expiration of such 30-day period. If for
whatever reason Deloitte & Touche LLP is unable or unwilling to serve as the
Purchase Price Adjustment Arbitrator, such reports shall be referred to an
alternative Purchase Price Adjustment Arbitrator mutually acceptable to Parent
and Purchaser. The Purchase Price Adjustment Arbitrator shall determine within
30 calendar days after receipt of such reports the manner in which such item or
items shall be treated in the Closing Statements (including the Closing Balance
Sheet); PROVIDED, HOWEVER, that the dollar amount of each item so determined
shall be within the range of dollar amounts proposed by Parent and Purchaser.
The determinations by the Purchase Price Adjustment Arbitrator regarding the
manner in which any item or items are treated on the Closing Statements
(including the Closing Balance Sheet) shall be in writing and shall be Final and
Binding on the parties. For purposes of this Agreement, "Final and Binding"
shall mean that the aforesaid determinations shall have the same preclusive
effect for all purposes as if such determinations had been embodied in a final
judgment, no longer subject to appeal, entered by a court of competent
jurisdiction, and either party may petition a court having jurisdiction over the
parties and subject matter to reduce such decision to judgment. The fees, costs
and expenses of retaining the Purchase Price Adjustment Arbitrator shall be
allocated by the Purchase Price Adjustment Arbitrator between Parent and
Purchaser in accordance with Purchase Price Adjustment Arbitrator's judgment as
to the relative merits of the respective positions of the parties regarding the
manner in which any item or items are treated on the Closing Statements
(including the Closing Balance Sheet) with respect to which they were unable to
agree as reflected in their respective reports to Purchase Price Adjustment
Arbitrator. Following the resolution of all objections of Parent regarding the
manner in which any item or items are treated on the Closing Statements
(including the Closing Balance Sheet), by mutual agreement or the Purchase Price
Adjustment Arbitrator, Purchaser shall prepare the final Closing Statements
(including the final Closing Balance Sheet) reflecting such resolution and shall
deliver copies thereof to Parent and such final Closing Statements (including
the final Closing Balance Sheet) shall be the "Final Closing Statements" (and
the "Final Closing Balance Sheet").
(c) If the Cash Portion of the Purchase Price derived from the
Final Closing Balance Sheet is greater than the Estimated Cash Portion of the
Purchase Price, Purchaser shall within two business days after delivery of the
Final Closing Statements, pay to Parent the amount of such difference, together
with interest thereon from and including the Closing Date to but not including
the date of such payment, computed at 8 % per annum, by wire transfer of
immediately available funds.
(d) If the Cash Portion of the Purchase Price derived from the
Final Closing Balance Sheet is less than the Estimated Cash Portion of the
Purchase Price,
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Parent shall within two business days after receipt of the Final Closing
Statements, pay to Purchaser the amount of such difference, together with
interest thereon from and including the Closing Date to but not including the
date of such payment, computed at 8 % per annum, by wire transfer of immediately
available funds.
(e) After the Closing and through the date the payment pursuant
to Section 2.5(c) or (d), as the case may be, is made, the Company shall, and
Holdings and Purchaser shall cause the Company to, (i) provide Parent and its
representatives with reasonable access, during normal business hours and without
material disruption to its day-to-day business, to the books, records, files and
personnel of the Company and (ii) furnish promptly to Parent or its
representatives all financial, operating and other data and other information
concerning the Company as may reasonably be requested for purposes of reviewing
and commenting on the Closing Statements and the Final Closing Statements,
preparing the Pre-Closing CSOC Spreadsheets and the Closing CSOC Spreadsheet and
otherwise performing its obligations or enforcing its rights under this Section
2.5 and Section 5.14.
(f) Any payment made by Purchaser pursuant to Section 2.5(c) or
Parent pursuant to Section 2.5(d), as the case may be, shall be treated as an
adjustment to the Purchase Price for all Tax purposes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent represents and warrants to Holdings and Purchaser, subject to
the exceptions set forth in the Disclosure Schedule (which Disclosure Schedule
shall be arranged in sections corresponding to the numbered and lettered
sections contained in this Article III, and the disclosure in any such numbered
and lettered section of the Disclosure Schedule shall qualify the corresponding
section in this Article III and any other section in this Article III to which
such disclosure reasonably relates), that:
3.1 ORGANIZATION, QUALIFICATION AND POWER AND AUTHORITY.
(a) Each of Parent and the Company is a limited liability
company duly formed, validly existing and in good standing under the laws of the
State of Delaware. The Company is qualified and in good standing as a foreign
limited liability company in each jurisdiction which recognizes such concept
where the properties owned, leased or operated, or the business conducted, by it
requires such qualification, except where any failure to be so qualified or be
in good standing would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect. The Company has all requisite limited
liability company power and authority, and all Permits necessary, to own, lease
and operate its properties and to carry on its business as it is now being
conducted, except where any failure to have such power and authority or Permits
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect. Parent has made
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available to Purchaser complete and correct copies of the certificate of
formation and operating agreement of the Company as in effect as of the date
hereof.
(b) Each of Parent and the Company has the requisite limited
liability company power and authority to execute and deliver this Agreement and
to consummate the Transaction. This Agreement and the consummation by Parent and
the Company of the Transaction have been duly and validly authorized by the
members of Parent and the member of the Company, and no other limited liability
company proceeding on the part of Parent or the Company is necessary to
authorize this Agreement or to consummate the Transaction. This Agreement has
been duly and validly executed and delivered by Parent and the Company and,
assuming this Agreement constitutes the valid and binding agreement of
Purchaser, constitutes the valid and binding agreement of Parent and the
Company, enforceable against Parent and the Company in accordance with its
terms, except as such enforcement may be limited by (i) applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
Laws now or hereinafter in effect relating to or affecting creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
3.2 MEMBERSHIP INTERESTS. Parent is beneficial owner of, and has
good and marketable title to, all of the Membership Interests, free and clear of
all Liens (except restrictions on transfers of securities imposed by applicable
state and federal securities Laws). The Membership Interests are the only
outstanding membership interests of the Company. The Company does not have
outstanding any securities convertible into or exchangeable for any membership
interests, any rights to subscribe for or to purchase or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any other character
relating to the issuance of, any membership interests. The Company is not
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire, or to register under the Securities Act of 1933, as amended,
any membership interests. The Company has not violated any federal or state
securities laws in connection with the offer, sale or issuance of any of the
Membership Interests. The Membership Interests have been duly authorized and are
validly issued.
3.3 SUBSIDIARIES. Section 3.3 of the Disclosure Schedule sets forth
the name, jurisdiction of incorporation or organization and authorized capital
of each Subsidiary of the Company and the jurisdictions in which each Subsidiary
of the Company is qualified to do business (each, a "Company Subsidiary" and
collectively, the "Company Subsidiaries"). All the outstanding capital stock of
each Company Subsidiary has been duly authorized, is owned directly by the
Company free and clear of all Liens (except restrictions on transfers of
securities imposed by applicable state and federal securities Laws) and is
validly issued, fully-paid and non-assessable. Each Company Subsidiary is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized. Each
Company Subsidiary is qualified and in good standing as a foreign corporation or
other legal entity in each jurisdiction which recognizes such concept where the
properties owned, leased or operated,
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or the business conducted by it requires such qualification, except where any
failure to be so qualified or be in good standing would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect. Each
Company Subsidiary has all requisite corporate power and authority, and all
Permits necessary, to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where any failure to have such
power and authority or Permits would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect. Parent has made available
to Purchaser complete and correct copies of the organizational documents of each
Company Subsidiary as in effect as of the date hereof.
3.4 GOVERNMENTAL CONSENTS; NO VIOLATIONS.
(a) Except for (i) the filing of notification and report forms
with the United States Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act")
and the expiration or termination of any applicable waiting period thereunder
and (ii) such actions as are necessary to comply with the industrial security
regulations of the United States Department of Defense and the Proxy Agreement,
no notices to, consents of, or filings with, any Governmental Authority are
necessary in connection with the execution and delivery by Parent and the
Company of this Agreement and the consummation by Parent and the Company of the
Transaction.
(b) Neither the execution, delivery or performance of this
Agreement by Parent and the Company nor the consummation by Parent and the
Company of the Transaction does or will (i) conflict with or result in any
breach of the certificate of formation or operating agreement of Parent or the
Company, (ii) conflict with or result in a breach of or default under any Permit
or (iii) subject to the matters referred to in clauses (i) and (ii) of Section
3.4(a), conflict with or violate any Order or Law applicable to Parent or the
Company or any of their respective properties or assets, except, in the case of
clauses (ii) or (iii) of this Section 3.4(b) for conflicts, breaches, defaults
or violations which would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect or a material adverse effect on the
ability of Parent to consummate the Transaction.
3.5 FINANCIAL STATEMENTS. Parent has previously delivered to
Purchaser (a) the Company's audited consolidated balance sheet as of December
31, 2001 and the related audited consolidated statements of income and
accumulated earnings and cash flows for the year then ended, along with the
report of the Company's independent auditors, PricewaterhouseCoopers LLP, on
such statements and (b) the Company's unaudited consolidated balance sheet as of
June 30, 2002 (the "Balance Sheet") and the related unaudited consolidated
statements of income and accumulated earnings and cash flows for the six months
then ended (collectively, the "Financial Statements"). The Financial Statements
(including the notes thereto, if any) (i) present fairly, in all material
respects, the financial position, results of operations and cash flows of the
Company as of their respective dates or for the periods ended on such dates, as
applicable, except that the unaudited Financial Statements were and are subject
to normal and recurring year-end adjustments, and (ii) have been prepared in
accordance with GAAP consistently applied throughout the periods covered
thereby.
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3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as a consequence
of, or as contemplated by, this Agreement, since December 31, 2001, (a) the
business and operations of the Company have been conducted in the ordinary
course of business and there has not been any Material Adverse Effect and (b)
the Company has not made any material changes to its accounting methods,
principles or practices, including those relating to its accounts receivable and
accounts payable.
3.7 NO UNDISCLOSED LIABILITIES. Neither the Company nor any Company
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent, known, unknown or otherwise) other than (a) liabilities or
obligations disclosed or provided for in the Financial Statements and (b)
liabilities and obligations incurred in the ordinary course of business, which
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect.
3.8 LITIGATION. There is no Litigation pending, or to Parent's
Knowledge threatened, against the Company, any Company Subsidiary or any of the
Executive Employees in their capacities as such, the outcome of which,
individually or in the aggregate, would be reasonably likely to have a Material
Adverse Effect. There is no Litigation pending, or to Parent's Knowledge
threatened, against Parent, the Company or any Company Subsidiary which would be
reasonably likely to have a material adverse effect on the ability of Parent to
consummate the Transaction.
3.9 TAXES.
(a) The Company and each Company Subsidiary (i) has filed (or
there has been filed on its behalf), within the time and in the manner
prescribed by Law (taking into account any extensions of time permitted by Law),
all Tax Returns required to be filed, either separately or as a member of an
Affiliated Group, and all such Tax Returns have been prepared in compliance with
all applicable Laws and regulations and are true, complete and correct in all
material respects, (ii) has timely paid (or there has been paid on its behalf)
all Taxes due and payable, whether or not shown or required to be shown on Tax
Returns, and (iii) has not waived any statute of limitations with respect to
Taxes or agreed to any extension of time within which to file any Tax Return for
any taxable period, which such Tax Return has not since been filed.
(b) There are no Liens (other than Permitted Liens) for Taxes
upon the assets of the Company or any Company Subsidiary that arose in
connection with any failure (or alleged failure) to pay any Taxes. There are not
pending or, to Parent's Knowledge, threatened any audits, examinations,
investigations or other proceedings in respect of Taxes or Tax Returns of the
Company or any Company Subsidiary.
(c) For federal income tax purposes, the Company is classified
to be disregarded as an entity separate from its owner within the meaning of
Section 7701 of the Code and Treasury Regulation Section 301.7701-3. Parent has
elected to be taxed as a corporation under Section 7701 of the Code and Treasury
Regulation Section 301.7701-3 and is the common parent of a consolidated group
(within the meaning of Treasury
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Regulation Section 1.1502-1(h)) filing consolidated returns for federal income
Tax purposes.
(d) The Company has furnished to Purchaser complete and accurate
copies of all income Tax Returns and any other material Tax Returns filed by the
Company or any Company Subsidiary, in each case, relating to taxable years
beginning on or after January 1, 1999, together with copies of any audit reports
or other similar documents with respect to Taxes of the Company or any Company
Subsidiary for the periods for which the applicable statute of limitations has
not expired.
(e) No Governmental Authority has made a written claim that the
Company or any Company Subsidiary is required to file a Tax Return with such
Governmental Authority that has not been filed.
(f) The unpaid Taxes of the Company and the Company Subsidiaries
(i) do not exceed the reserve for Tax liabilities (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth (on the face of) on the Balance Sheet (rather than on any
notes thereto) and (ii) will not exceed that reserve as adjusted for the passage
of time through the Closing Date in accordance with the past custom and practice
of the Company and the Company Subsidiaries in filing their Tax Returns. None of
the Company or the Company Subsidiaries has consented to extend to a date later
than the date hereof the time in which any Tax may be assessed or collected by
any taxing authority. No deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Tax has been proposed, asserted
or assessed in writing by any taxing authority against any of the Company or the
Company Subsidiaries. Section 3.9(f) of the Disclosure Schedule contains a list
of states, territories and jurisdictions (whether foreign or domestic) in which
any of the Company and the Company Subsidiaries is required to file Tax Returns
relating to income Taxes of the Company and the Company Subsidiaries.
(g) None of the Company or the Company Subsidiaries is a party
to any Tax allocation, sharing or similar agreement. None of the Company and the
Company Subsidiaries (i) has been a member of an Affiliated Group (other than a
group the common parent of which was Parent) or (ii) has any liability for the
Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar
provision of income Tax Law), as a transferee or successor, by contract, or
otherwise.
(h) No Company Subsidiary will be required to include any item
of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
any: (i) change in method of accounting for a taxable period ending on or prior
to the Closing Date; (ii) "closing agreement" as described in Section 7121 of
the Code (or any corresponding or similar provision of income Tax Law) executed
on or prior to the Closing Date; (iii) installment sale or open transaction
disposition made on or prior to the Closing Date; or (iv) prepaid amount
received on or prior to the Closing Date.
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3.10 EMPLOYEE BENEFIT PLANS AND AGREEMENTS.
(a) Section 3.10(a) of the Disclosure Schedule lists (i) all
deferred compensation, incentive compensation and equity compensation plans,
funds or programs, (ii) all Welfare Plans, (iii) all Pension Plans and (iv) all
other material employee benefit plans, funds, programs, policies or arrangements
(other than Contracts referred to in Section 3.16(d)), in each case, that are
sponsored, maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated, that together
with the Company would be deemed a "single employer" within the meaning of
Section 414 of the Code (an "ERISA Affiliate"), for the benefit of any employee
or former employee of the Company or with respect to which the Company has any
liability or potential liability (each, a "Plan" and collectively, the "Plans").
(b) With respect to each Plan, Parent has made available to
Purchaser complete and correct copies of the Plan as in effect on the date
hereof, any related trust or other funding vehicle, any reports or summaries
required under ERISA or the Code (including copies of Forms 5500 as filed with
respect to each Plan for the most recent 3 plan years), the most recent
determination letter received from the Internal Revenue Service with respect to
each Plan intended to qualify under Section 401 of the Code and other material
documents pursuant to which the Plans are maintained, funded or administered.
(c) No liability under Title IV or Section 302 of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full prior to the Closing Date, and no condition currently exists that presents
a risk to the Company or any ERISA Affiliate of incurring any liability to the
Pension Benefit Guaranty Corporation (other than with respect to premium
payments not yet due) or otherwise under Title IV of ERISA (including any
withdrawal liability as defined in Section 4201 of ERISA), under the Code with
respect to any Pension Plan, or under COBRA with respect to any Welfare Plan.
(d) Neither the Company nor any ERISA Affiliate contributes to,
has any obligation to contribute to, or any liability or potential liability
under or with respect to a "multiemployer pension plan," as defined in Section
3(37) of ERISA, nor is any Plan a plan described in Section 4063(a) of ERISA.
(e) Each Plan has been operated and administered in all material
respects in accordance with its terms, the terms of any related agreements or
contracts and applicable Law, including but not limited to ERISA and the Code.
(f) Each Plan intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service and each such Plan has been amended within the
applicable remedial amendment period to reflect the changes made by the tax
legislation commonly referred to as "GUST" and timely submitted to the Internal
Revenue Service for an updated favorable determination letter which takes into
account such changes.
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(g) There is no Litigation pending or, to Parent's Knowledge,
threatened against the Company by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan (with respect to a Plan), or otherwise
involving any Plan (other than routine claims for benefits).
(h) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been made within the
time periods prescribed by ERISA and the Code to each Pension Plan, and all
contributions for any period ending on or before the Closing Date which are not
yet due have been made or properly accrued; all premiums or other payments for
all periods ending on or before the Closing Date which are due have been paid
with respect to each Welfare Plan.
(i) There have been no "prohibited transactions" (as such term
is defined in Section 4975 of the Code and Section 406 of ERISA) with respect to
any Plan, and no fiduciary has any liability for breach of fiduciary duty or
other failure to act or comply in connection with the administration or
investment of the assets of any such Plan.
(j) Neither the Company nor any ERISA Affiliate maintains,
contributes to, sponsors or has any obligation relating to any employee benefit
plan, program, agreement or arrangement established or maintained outside of the
United States primarily for the benefit of employees outside the United States
with respect to which the Company could reasonably be expected to have any
material liability.
3.11 LABOR AND EMPLOYEE MATTERS.
(a) There is not currently pending or, to Parent's Knowledge,
threatened against the Company, nor has there been in the last two years, (i)
any unfair labor practice charge before the National Labor Relations Board or
any comparable state, local or foreign agency or (ii) any labor strike, dispute,
slowdown, stoppage, lockout or other concerted action by any of the employees of
the Company. The Company is not a party to or bound by any collective bargaining
agreement applicable to its employees. The Company is in compliance in all
material respects with all applicable labor, employment and occupational safety
Laws.
(b) The Company has not effectuated in the last two years (i) a
"mass layoff" (as defined in the Worker Adjustment and Retraining Notification
Act of 1988 (the "WARN Act")) in the United States affecting any site of
employment or facility or operating unit within any site of employment or
facility of the Company or (ii) a "plant closing" (as defined in the WARN Act)
in the United States affecting any site of employment or facility of the
Company.
(c) Section 3.11(c) of the Disclosure Schedule sets forth the
name and current annual salary of each of the Company's and each of the Company
Subsidiaries' employees receiving more than $100,000 in annual compensation.
3.12 ENVIRONMENTAL LAWS. The Company and each Company Subsidiary is
in compliance in all material respects with all applicable Environmental Laws.
Within the last two years, neither the Company nor any Company Subsidiary has
received any
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written notice with respect to the business of, or any real property owned or
leased by, the Company or any Company Subsidiary from any Person alleging that
the Company or any Company Subsidiary is not in compliance with any
Environmental Law or that the Company or any Company Subsidiary has liability or
potential liability under Environmental Laws. To Parent's Knowledge, there has
not been any "release" of a Hazardous Substance on any real property owned,
leased or operated by the Company or any Company Subsidiary or at any property
at which wastes of the Company or any Company Subsidiary have been managed or
disposed resulting in liability of the Company or any Company Subsidiary under
Environmental Laws.
3.13 COMPLIANCE WITH LAWS. The Company and each Company Subsidiary is
in compliance with all Laws applicable to it, its business or operations or any
of its properties or assets (other than labor, employment and occupational
safety Laws or Environmental Laws which are addressed in Sections 3.11(a) and
3.12, respectively), except for instances of noncompliance which would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.
3.14 PROPERTIES.
(a) The Company or a Company Subsidiary has good, valid and
marketable title to the assets reflected in the Balance Sheet or acquired after
the date thereof, free and clear of any Liens (other than Permitted Liens),
other than assets sold or otherwise disposed of since the date of the Balance
Sheet in the ordinary course of business. Section 3.14(a) of the Disclosure
Schedule sets forth a listing of all fixed assets owned by the Company and the
Company Subsidiaries and used in their business as of August 31, 2002.
(b) The Company is in possession of and has good title to, or
has valid and enforceable leasehold interests in or valid rights under contract
to use, all furniture, machinery, equipment, fixtures and other tangible
personal property which are material to the operations of the Company as
currently conducted, and such furniture, machinery, equipment, fixtures and
other tangible personal property are in good condition and repair (excepting
ordinary wear and tear) and are suitable for the uses for which they are
intended.
(c) The Company does not own any real property. Section 3.14(c)
of the Disclosure Schedule lists each parcel of real property leased by the
Company and sets forth the term thereof. Each lease listed in Section 3.14(c) of
the Disclosure Schedule is a legal, valid and binding agreement, enforceable in
accordance with its terms, of the Company and, to Parent's Knowledge, of each
other Person that is a party thereto subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally and, as to enforceability, general equitable principles. The
Company has not received any written notice that it is in breach of or default
under any lease listed in Section 3.14(c) of the Disclosure Schedule. The
Company has not subleased, licensed or otherwise granted any Person the right to
use or occupy any of the real property leased by the Company or any portion
thereof. Neither the execution,
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delivery or performance of this Agreement by Parent and the Company nor the
consummation by Parent and the Company of the Transaction does or will conflict
with or result in a breach of or default under any lease listed on Section
3.14(c) of the Disclosure Schedule. Parent has made available to Purchaser
complete and correct copies of all leases or amendments thereto listed on
Section 3.14(c) of the Disclosure Schedule as in effect on the date hereof.
3.15 CUSTOMER CONTRACTS; GOVERNMENT CONTRACTS AND BIDS; SUSPENSION.
(a) CUSTOMER CONTRACTS.
(i) Section 3.15(a)(i) of the Disclosure Schedule lists the
following Contracts (the "Customer Contracts"):
(aa) Contracts, and where applicable delivery or task
orders under such Contracts, from which the Company (x) derived in the
first six months of its fiscal year ending December 31, 2002, service
revenues in excess of $500,000 or (y) expects to (without making any
representation or warranty that it will) derive in its fiscal year ending
December 31, 2002, service revenue in excess of $1,000,000; and
(bb) Contracts, and where applicable delivery or task
orders under such Contracts, from which the Company (x) derived in first
six months of its fiscal year ending December 31, 2002, product revenue
in excess of $250,000 or (y) expects to (without making any
representation or warranty that it will) derive in its fiscal year ending
December 31, 2002, product revenue in excess of $500,000.
(ii) Parent has made available to Purchaser complete and
correct copies of all Customer Contracts (other than Customer Contracts with the
United States Government which are classified) as in effect on the date hereof
(other than terms incorporated therein by reference).
(iii) Each Customer Contract is in full force and effect and
constitutes a legal, valid and binding agreement, enforceable in accordance with
its terms, of the Company, and, to Parent's Knowledge, of each other party
thereto, subject to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally and, as to
enforceability, general equitable principles.
(iv) The Company has performed in all material respects all
obligations required to be performed by it under, and has complied in all
material respects with all requirements and terms and conditions of, each
Customer Contract.
(v) Within the last four years, the Company has not received
any written notice or claim or assertion of default, breach or termination, or
any written cure or show cause notice, with respect to any Customer Contract.
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(vi) To Parent's Knowledge, no event has occurred, which,
with the passage of time or the giving of notice or both, would result in the
Company being in a material default under, or in breach of, any Customer
Contract.
(vii) All invoices and claims (including requests for
progress payments and provisional costs payments) submitted under each Customer
Contract were current, accurate and complete in all material respects as of
their submission date.
(viii) There has not been any material withholding or
set-off, nor has there been any attempt to materially withhold or set-off, any
money due under any Customer Contract.
(ix) Neither the execution, delivery or performance of this
Agreement by Parent and the Company nor the consummation by Parent and the
Company of the Transaction does or will conflict with or result in a breach of
or default under any Customer Contract.
(b) GOVERNMENT CONTRACTS AND BIDS. Within the last four years,
(i) all representations and certifications of the Company or any Company
Subsidiary executed, acknowledged or set forth in or pertaining to a Government
Contract or a Government Bid of the Company or any Company Subsidiary were
current, accurate and complete in all material respects as of their effective
date and (ii) the Company and the Company Subsidiaries have adhered to and
complied in all material respects with all such representations and
certifications. Within the last four years, neither the Company nor any Company
Subsidiary has engaged in or been charged with, or received or been advised in
writing or, to Parent's Knowledge, orally of any charge, investigation, claim or
assertion of, nor has the Company or any Company Subsidiary or, to Parent's
Knowledge, any of their respective directors, officers or employees in their
capacities as such been subject to, any criminal indictment or information,
lawsuit, subpoena, civil investigative demand, discovery request, administrative
proceeding, voluntary disclosure, claim, dispute, mediation or arbitration with
regard to, any material violation of any requirement pertaining to a Government
Contract or Government Bid, including material violations concerning (i)
defective pricing within the meaning of the Truth in Negotiations Act, as
amended, (ii) accounting, estimating, inventory, material requirements planning,
material management and accounting systems, government property records or
purchasing system deficiencies, (iii) mischarging of direct or indirect costs,
(iv) delivery to the United States Government or to a United States Government
prime or subcontractor of material, components, items or services that do not or
did not meet specifications or standards therefor, or delivery to the United
States Government or to a United States Government prime or subcontractor of
foreign-made material, components or items where domestic-made material,
components or items were required, (v) improperly soliciting, obtaining,
attempting to solicit or obtain or making or attempting to make any payment for
any non-public proprietary or source selection information, (vi) unallowable
costs, including unallowable direct or indirect costs, (vii) improper testing or
test reports, (viii) failure to abide by the terms of a Government Contract or a
Government Bid or (ix) Laws relating to any Government Contract or Government
Bid, including the following: (A) the False Statements Act (18 U.S.C. 1001), (B)
the False Claims Act (18 U.S.C. 287), (C) the False
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Claims Act (31 U.S.C. 3729), (D) the Bribery, Gratuities and Conflicts of
Interest Act (18 U.S.C. 201 and 5 U.S.C. 7353), (E) the Anti-Kickback Act (41
U.S.C. 51, 54), (F) the Anti-Kickback Enforcement Act of 1986 (Pub. L. 99-634),
(G) the Arms Export Control Act (22 U.S.C. 277 et seq), (H) the Foreign Corrupt
Practices Act (15 U.S.C. 78 m, 78 dd-1, 78 ff), (I) the Export Administration
Act (Pub. L. 99-64), (J) the War and National Defense Act (18 U.S.C. 793), (K)
the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. 1961-68) or of
any statute the violation of which would constitute "racketeering activity"
within the meaning of such act, (L) the Conspiracy to Defraud the Government Act
(18 U.S.C. 371), (M) the Program Fraud Civil Remedies Act (Pub. L. 99-509), (N)
the Byrd Amendment, Pub. L. 101-121, Section 319, (O) "revolving door"
legislation (37 U.S.C. 801, 41 U.S.C. 423, 18 U.S.C. 207, 18 U.S.C. 208, 18
U.S.C. 218, 18 U.S.C. 281, 10 U.S.C. 2397, 10 U.S.C. 2397a, 10 U.S.C. 2397b, 10
U.S.C. 2397), (P) the Defense Production Act (50 U.S.C. App. 2061), (Q) United
States antiboycott laws (the Ribicoff Amendment to the 1976 Tax Reform Act, and
the 1979 Export Administration Act), (R) the Defense Industrial Regulation (DoD
5220.22-R) or National Industrial Security Program Operating Manual (DoD
5220.22-M), or any agreement with the Defense Security Service, (S) Federal
Acquisition Regulations, any applicable supplements thereto, alternative
regulations applicable in lieu thereof, or applicable predecessor regulations,
(T) the Service Contract Act of 1965, as amended, (U) Cost Accounting Standards,
(V) Treasury Department embargo and sanctions regulations, 31 C.F.R. Part 500
et. seq., (W) the Small Business Act, as amended, (X) Executive Order 11246, as
amended, and corresponding Department of Labor regulations, (Y) the
Anti-Assignment Act, 41 U.S.C. Section 15, (Z) the Davis-Bacon Act, as amended,
(AA) the Fair Labor Standards Act, as amended, (BB) the Walsh-Healey Act, as
amended or (CC) the Drug-Free Workplace Act, as amended, nor has the Company or
any Company Subsidiary conducted any internal investigation in connection with
any such material violation with the assistance of any legal counsel, auditor,
accountant or investigator outside the Company.
(c) SUSPENSION. Within the last four years, neither the Company,
any Company Subsidiary, nor any of their respective directors, officers or
employees in connection with the performance of the duties for or on behalf of
the Company or a Company Subsidiary has been debarred, suspended, declared
nonresponsible or ineligible, or otherwise excluded from participation in the
award of any Government Contract or for any reason been listed on the List of
Parties Excluded from Federal Procurement and Non-procurement Programs. Within
the last four years, no debarment, suspension or exclusion proceeding has been
initiated against Company, any Company Subsidiary or any of their respective
directors, officers or employees in connection with the performance of the
duties for or on behalf of the Company or any Company Subsidiary. To Parent's
Knowledge, no circumstances exist that would warrant the institution of
suspension or debarment proceedings against the Company, any Company Subsidiary
or any of their respective directors, officers or employees in connection with
the performance of the duties for or on behalf of the Company or any Company
Subsidiary.
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3.16 OTHER CONTRACTS. Section 3.16 of the Disclosure Schedule lists
the following Contracts to which the Company or any Company Subsidiary is a
party or by or to which any of their respective assets, properties or securities
are bound or subject:
(a) any Contract, which cannot be terminated by the Company or
such Company Subsidiary on 90 days' notice or less and without penalty or
premium, pursuant to which the Company or any Company Subsidiary (i) in the
first six months of the Company's fiscal year ending December 31, 2002 purchased
goods or services costing in excess of $50,000 or (ii) expects to (without
making any representation or warranty that it will) purchase in the Company's
fiscal year ended December 31, 2002, goods or services costing in excess of
$100,000;
(b) any Contract, which cannot be terminated by the Company or
any Company Subsidiary on 90 days' notice or less and without penalty or
premium, pursuant to which the Company or such Company Subsidiary is obligated
to purchase all or substantially all of its requirements of a particular product
or service from a supplier or to make periodic minimum purchases of a particular
product or service from a supplier;
(c) any Contract (excluding Plans) between the Company or any
Company Subsidiary, on the one hand, and Parent or any Affiliate of Parent
(other than the Company or any Company Subsidiary), on the other hand;
(d) any Contract (excluding Plans) between (i) the Company or
any Company Subsidiary, on the one hand, and any past or present director,
proxyholder, officer or employee of the Company or any Company Subsidiary, on
the other hand, or (ii) Parent or any of its Affiliates (other than the Company
or any Company Subsidiary), on the one hand, and any present director,
proxyholder, officer or employee of the Company or any Company Subsidiary, on
the other hand;
(e) any Contract providing for consulting services pursuant to
which the Company or any Company Subsidiary will make payments in any year to
any Person exceeding $50,000;
(f) any Contract pursuant to which the Company or any Company
Subsidiary, since January 1, 2000, sold, or after the date hereof is obligated
to sell, to another Person securities, assets or properties for consideration
(including the assumption of liabilities) in excess of $100,000, other than in
the ordinary course of business;
(g) any Contract pursuant to which the Company or any Company
Subsidiary, since January 1, 2000, acquired, or after the date hereof is
obligated to acquire, from another Person securities, assets or properties for
consideration (including the assumption of liabilities) in excess of $100,000,
other than in the ordinary course of business;
(h) any Contract which contains covenants of the Company or any
Company Subsidiary not to compete in any line of business, in any geographic
area or with any Person or covenants of any Person not to compete with the
Company or any Company Subsidiary or in any line of business of the Company or
any Company Subsidiary; and
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(i) any Contract under which the Company or any Company
Subsidiary has advanced or loaned any other Person amounts in the aggregate
exceeding $50,000.
Parent has made available to Purchaser complete and correct copies of all
Contracts listed on Section 3.16 of the Disclosure Schedule as in effect on the
date hereof (other than terms incorporated therein by reference). The Company or
the Company Subsidiary party thereto has performed in all material respects all
obligations required to be performed by it under, and has complied in all
material respects with all requirements and terms and conditions of, each
Contract listed on Section 3.16 of the Disclosure Schedule to which it is a
party. Within the last two years, neither the Company nor any Company Subsidiary
has received any written notice or claim or assertion of default, breach or
termination, or any written cure or show cause notice, with respect to any
Contract listed on Section 3.16 of the Disclosure Schedule to which it is a
party.
3.17 INTELLECTUAL PROPERTY.
(a) The Company owns, or is licensed or otherwise possesses all rights
necessary to use, all Intellectual Property and other proprietary information
used in or necessary for the conduct of the business of the Company as such
business is currently conducted.
(b) The Company has taken all reasonable steps to protect the Company
Intellectual Property. All registered Company Intellectual Property is in good
standing with all fees and filings due as of the date hereof having been duly
made. Section 3.17(b) of the Disclosure Schedule sets forth a full and complete
list of all United States and foreign patents and patent applications,
registered trademarks and trademark applications, registered service marks and
service mark applications, registered copyrights and copyright applications.
With respect to the patent application set forth on Section 3.17(b) of the
Disclosure Schedule: (i) the Company has not made any intentional
misrepresentations or misstatements and has not intentionally failed to disclose
material information during the prosecution of such patent application; (ii) the
Company has not sought or received a written opinion of patent counsel
specifically opining as to the likelihood of obtaining or not obtaining patent
rights under such patent application; and (iii) to Parent's Knowledge, such
patent application was filed in the name of the proper inventor(s). The Company
Intellectual Property is free and clear of any and all Liens (other than
Permitted Liens) and restrictions on transferability (including in the event of
change of control of the Company).
(c) To Parent's Knowledge, no Person is infringing or misappropriating
the rights of the Company with respect to any Company Intellectual Property.
Within the last six years, neither the Company nor the operation of the Company
has infringed, misappropriated or otherwise conflicted with any trademark, trade
secret, service mark or copyright of any third party or, to Parent's Knowledge,
infringed any patent of any third party. There is no Litigation pending or, to
Parent's Knowledge, threatened against the Company that involves a claim of
infringement of any patent, trademark, service mark or copyright or violation or
misappropriation of any trade secret or other proprietary right of any Person.
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(d) Section 3.17(d) of the Disclosure Schedule sets forth any offers
for a license or written notices of infringement or misappropriation in
connection with Intellectual Property that the Company has received in the last
three years.
(e) Neither the execution, delivery or performance of this Agreement
by Parent and the Company nor the consummation by Parent and the Company of the
Transaction does or will conflict with or result in a breach of or default under
any license of Intellectual Property to which the Company is a party or
otherwise bound.
(f) Since December 31, 2001, the Company has not: (i) sold, assigned,
transferred, leased, licensed or otherwise encumbered any Company Intellectual
Property; (ii) disclosed any proprietary confidential information or Company
Intellectual Property to any Person (other than Purchaser and its Affiliates)
except under the Company's customary non-disclosure agreement in the ordinary
course of business; or (iii) permitted to lapse any registered Company
Intellectual Property.
(g) All software delivered by the Company in performance of a
Government Contract, other than third party software, either (i) has included
the proper restrictive legends such as "Restricted Rights," "Government Purpose
Rights," "Limited Rights" or "Special Purpose Rights," within the meaning of the
Federal Acquisition Regulations, or (ii) otherwise has been delivered with the
appropriate restrictive notices in accordance with the terms of the Government
Contract.
(h) Immediately following the Closing, all software systems and
applications used by the Company in the operation of its business (other than
readily-available commercial software programs having a price per copy or per
seat of less than $3,000) shall be available for use by the Company on
substantially the same terms and conditions under which the Company used such
software systems and applications immediately prior to the Closing, except that
if immediately following the Closing any such software systems or applications
are made available to the Company pursuant to the Transitional Services
Agreement, such software systems or applications shall be available for use by
the Company on the terms and conditions of the Transitional Services Agreement.
3.18 BROKERS AND FINDERS. Neither Parent, the Company nor any Company
Subsidiary has entered into any agreement or arrangement entitling any agent,
broker, investment banker, financial advisor or other firm or Person to any
broker's or finder's fee or any other commission or similar fee in connection
with the Transaction, except Goldman, Sachs & Co., whose fees and expenses will
be paid by Ultimate Parent in accordance with Ultimate Parent's agreement with
such firm.
3.19 SUPPLIERS. Section 3.19 of the Disclosure Schedule lists the top
ten suppliers of the Company and the Company Subsidiaries (on a consolidated
basis) by volume of purchases from such suppliers, for the fiscal year ended
December 31, 2001 and the six-month period ended June 30, 2002. Neither the
Company nor any Company Subsidiary has received any written notice from any such
supplier to the effect that such
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supplier will stop, materially decrease the rate of, or materially change the
terms with respect to, supplying materials, products or services to the Company
or any Company Subsidiary (whether as a result of the consummation of the
Transaction or otherwise).
3.20 BANK ACCOUNTS; OFFICERS AND DIRECTORS. Section 3.20 of the
Disclosure Schedule lists all of the Company's and the Company Subsidiaries'
bank accounts (designating each authorized signatory and the level of each
signatory's authorization) and all of the Company's and the Company
Subsidiaries' officers and directors.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND PURCHASER
Holdings and Purchaser, jointly and severally, represent and warrant
to Parent that:
4.1 ORGANIZATION, QUALIFICATION AND POWER AND AUTHORITY.
(a) Each of Holdings and Purchaser is a corporation duly formed,
validly existing and in good standing under the laws of the State of Delaware.
Purchaser has made available to Parent complete and correct copies of the
respective certificates of incorporation of Holdings and Purchaser as in effect
as of the date hereof.
(b) Each of Holdings and Purchaser has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
Transaction. This Agreement and the consummation by Holdings and Purchaser of
the Transaction have been duly and validly authorized by Holdings and Purchaser,
and no other corporate proceeding on the part of Holdings or Purchaser is
necessary to authorize this Agreement or to consummate the Transaction. This
Agreement has been duly and validly executed and delivered by Holdings and
Purchaser and, assuming this Agreement constitutes the valid and binding
agreement of Parent and the Company, constitutes the valid and binding agreement
of Holdings and Purchaser, enforceable against Holdings and Purchaser in
accordance with its terms, except as such enforcement may be limited by (i)
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar Laws now or hereinafter in effect relating to or
affecting creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
4.2 CAPITAL STOCK. As of the date hereof, (a) the authorized capital
stock of Holdings consists of (i) 96,790 shares of Class A Preferred Stock, par
value $0.01 per share, of which no shares are issued and outstanding, and (ii)
54,851,563 shares of Common Stock, par value $0.001 per share, of which
24,527,463 shares are issued and outstanding, and (b) the authorized capital
stock of Purchaser consists of 1,000 shares of Common Stock, par value $0.01 per
share, all of which are issued and outstanding and owned beneficially and of
record by Holdings. Not later than immediately prior to, and as of, the Closing,
(a) the authorized capital stock of Holdings shall consist of (i) 96,790
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shares of Class A Preferred Stock, par value $0.01 per share, (ii) 33,500 shares
of Class B Preferred Stock, par value $0.01 per share, all of which shares shall
then be issued and outstanding, and (iii) 57,738,488 shares of Common Stock, par
value $0.001 per share, of which 53,864,235 shares shall then be issued and
outstanding and (b) the authorized capital stock of Purchaser shall consist of
1,000 shares of Common Stock, par value $0.01 per share, all of which shall then
be issued and outstanding and owned beneficially and of record by Holdings.
Except as set forth in Section 4.2 of the Purchaser Disclosure Schedule, neither
Holdings nor Purchaser has outstanding any securities convertible into or
exchangeable for any shares of capital stock, any rights to subscribe for or to
purchase or any options for the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls, commitments or claims of
any other character relating to the issuance of, any shares of capital stock.
Except as set forth in Section 4.2 of the Purchaser Disclosure Schedule, neither
Holdings nor Purchaser is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire, or to register under the Securities
Act of 1933, as amended, any shares of its capital stock. All of the shares of
Holdings' and Purchaser's outstanding capital stock have been duly authorized
and are validly issued, fully-paid and non-assessable. Not later than
immediately prior to, and as of, the Closing, the shares of Series B Preferred
Stock will be duly authorized, owned directly by Purchaser free and clear of all
Liens (except restrictions on transfers of securities imposed by applicable
state and federal securities Laws or the Stockholders Agreement) and validly
issued, fully-paid and non-assessable. Upon delivery at the Closing pursuant to
Section 2.4(b)(ii) of the certificate or certificates representing the shares of
Series B Preferred Stock, accompanied by stock powers duly endorsed in blank or
duly executed instruments of transfer, Parent or its Affiliate will acquire
good, valid and marketable title to the shares of Series B Preferred Stock free
and clear of all Liens (except restrictions on transfers of securities imposed
by applicable state and federal securities Laws or the Stockholders Agreement)
and the shares of Series B Preferred Stock will be duly authorized, validly
issued, fully-paid and non-assessable.
4.3 GOVERNMENTAL CONSENTS; NO VIOLATIONS.
(a) Except for the filing of notification and report forms with
the FTC and the Antitrust Division under the HSR Act and the expiration or
termination of any applicable waiting period thereunder no notices to, consents
of, or filings with, any Governmental Authority are necessary in connection with
the execution and delivery by Holdings and Purchaser of this Agreement and the
consummation by Holdings and Purchaser of the Transaction.
(b) Neither the execution, delivery or performance of this
Agreement by Holdings and Purchaser nor the consummation by Holdings and
Purchaser of the Transaction does or will (i) conflict with or result in a
breach of the respective certificates of incorporation or bylaws of Holdings or
Purchaser, (ii) conflict with or result in a breach of or default under any
Contract to which Holdings or Purchaser is a party or by which Holdings or
Purchaser or any of their respective properties or assets are bound, (iii)
conflict with or result in or constitute a breach of or default under any
license, Permit or other authorization from Governmental Authorities applicable
to or necessary for the operation of Holdings' or Purchaser's business or (iv)
subject to the filing referred to in
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Section 4.3(a), conflict with or violate any Order or Law applicable to Holdings
or Purchaser or any of their respective properties or assets, except, in the
case of clauses (ii), (iii) or (iv) of this Section 4.3(b) for conflicts,
breaches, defaults or violations which would not, individually or in the
aggregate, be reasonably likely to have a Purchaser Material Adverse Effect or a
material adverse effect on the ability of Holdings or Purchaser to consummate
the Transaction.
4.4 FINANCING. Attached hereto as Exhibit 7A is a complete and
correct copy of a written commitment from GTCR Fund VII, L.P. committing
(subject to the conditions set forth therein) to provide Holdings and Purchaser
with the cash equity financing they will require in order to consummate the
Transaction (the "Equity Financing Commitment"). The Equity Financing Commitment
is in full force and effect and constitutes a legal, valid and binding
agreement, enforceable in accordance with its terms, of Holdings and Purchaser,
and to the knowledge of Holdings and Purchaser, of each other party thereto,
subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar Laws now or hereinafter in effect
relating to or affecting creditors' rights generally and general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law). Attached hereto as Exhibit 7B and Exhibit 7C are complete and
correct copies of written commitments from third parties committing (subject to
the conditions set forth therein) to provide Holdings and Purchaser with all of
the debt financing they will require in order to consummate the Transaction (the
"Debt Financing Commitments"). Each of the Debt Financing Commitments is in full
force and effect and constitutes a legal, valid and binding agreement,
enforceable in accordance with its terms, of Holdings and Purchaser, and to the
knowledge of Holdings and Purchaser, of each other party thereto, subject to
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar Laws now or hereinafter in effect relating to or
affecting creditors' rights generally and general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
4.5 HOLDINGS' AND PURCHASER'S OPERATIONS AND LIABILITIES. Holdings
and Purchaser were incorporated on August 31, 2001 and since that date, Holdings
and Purchaser have pursued various acquisitions (none of which have been
consummated), but have not otherwise engaged in any business activities or
conducted any other operations. Holdings and Purchaser have incurred customary
liabilities and obligations in connection with pursuing such acquisitions,
including liabilities and obligations incurred in connection with (a) the
engagement of legal, accounting and other advisors, (b) the hiring and
employment of employees and (c) the execution of a lease for their headquarters.
In addition, Purchaser has executed a Professional Services Agreement with GTCR
Golder Rauner, L.L.C., a complete and correct copy of which has been made
available to Parent. Other than with respect to the matters described in the
preceding sentences of this Section 4.5 and the liabilities and obligations of
Holdings and Purchaser under the Contracts listed on Section 4.5 of the
Purchaser Disclosure Schedule, Holdings and Purchaser have no material
liabilities of any nature (whether accrued, absolute, contingent, known, unknown
or otherwise).
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4.6 LITIGATION. There is no Litigation pending, or to Holdings' or
Purchaser's knowledge, threatened against Holdings or Purchaser.
4.7 COMPLIANCE WITH LAWS. Each of Holdings and Purchaser is in
compliance with all Laws applicable to it or any of its properties or assets.
4.8 BROKERS AND FINDERS. Purchaser has not entered into any
agreement or arrangement entitling any agent, broker, investment banker,
financial advisor or other firm or Person to any broker's or finder's fee or any
other commission or similar fee in connection with the Transaction, except GTCR
Golder Rauner, LLC, whose fees and expenses will be paid by Purchaser (or if the
Transaction is consummated in accordance with this Agreement, by the Company) in
accordance with Purchaser's agreement with such firm.
ARTICLE V
COVENANTS
5.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as otherwise set
forth in Section 5.1 of the Disclosure Schedule, as consented to in writing by
Purchaser, which consent shall not be unreasonably withheld, conditioned or
delayed, or as otherwise contemplated by this Agreement, during the period from
the date of this Agreement to the earlier of the Closing Date or the termination
of this Agreement pursuant to Article VII, the Company shall, and the Company
shall cause each Company Subsidiary to, conduct its operations in the ordinary
course of business and use its commercially reasonable efforts to keep available
the services of the its current directors, proxyholders, officers and employees
and to preserve its relationships with customers and suppliers. Without limiting
the generality of the foregoing, and except as otherwise set forth in Section
5.1 of the Disclosure Schedule, as consented to in writing by Purchaser, which
consent shall not be unreasonably withheld, conditioned or delayed, or as
otherwise contemplated by this Agreement, Parent agrees as to itself and the
Company, and the Company agrees as to itself and the Company Subsidiaries, that,
during the period from the date hereof to the earlier of the Closing Date or the
termination of this Agreement pursuant to Article VII:
(a) GOVERNING DOCUMENTS; MEMBERSHIP INTERESTS; DISTRIBUTIONS.
The Company shall not (i) amend its certificate of formation or operating
agreement, (ii) issue, authorize or propose the issuance of any additional
membership interests, any securities convertible into or exchangeable for any
membership interest or rights to subscribe for or to purchase or any options for
the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any other character
relating to the issuance of, any membership interests, (iii) repurchase, redeem
otherwise reacquire any of its membership interests or (iv) declare, pay or make
any distribution in respect of its membership interests and none of the Company
Subsidiaries shall do any of the foregoing with respect to its organizational
documents or capital.
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(b) INDEBTEDNESS; CREDIT. Except for Indebtedness up to
$15,000,000 under its existing line of credit, neither the Company nor any
Company Subsidiary shall incur any Indebtedness for money borrowed. Neither the
Company nor any Company Subsidiary shall guarantee any Indebtedness for money
borrowed by another Person. Except in the ordinary course of business consistent
with past practice, neither the Company nor any Company Subsidiary shall extend
credit in the sale of its services or products.
(c) CAPITAL EXPENDITURES. Neither the Company nor any Company
Subsidiary shall make, or make any commitment for, capital expenditures.
(d) ACQUISITIONS; DISPOSITIONS. Except in the ordinary course of
business and consistent with past practices, neither the Company nor any Company
Subsidiary shall (i) acquire, lease or license any right or other asset from any
other Person or (ii) sell or otherwise dispose of, or lease or license, any
right or other asset to any other Person.
(e) CUSTOMER CONTRACTS; OTHER CONTRACTS. Except in the ordinary
course of business and consistent with past practices, neither the Company nor
any Company Subsidiary shall enter into, modify or amend in any material
respect, transfer or terminate, or waive, release or assign any material rights
or claims under, any Customer Contract or any Contract required to be listed on
Section 3.16 of the Disclosure Schedule.
(f) EMPLOYEE MATTERS. Except as required by Law or an existing
Contract or Plan, neither the Company nor any Company Subsidiary shall (i)
increase the compensation or fringe benefits of any of the Executive Employees,
(ii) materially increase the compensation or fringe benefits of any of its
employees other than the Executive Employees, (iii) enter into any Contract with
any of its employees, officers or directors regarding his or her employment,
compensation or benefits, other than the Company's standard employment agreement
with newly-hired employees in the ordinary course of business or (iv) adopt any
plan, arrangement or policy which would become a Plan or amend any Plan to the
extent such adoption or amendment would create or increase in any material
respect any liability or obligation on the part of the Company.
(g) ACCOUNTING POLICIES AND PROCEDURES. Neither the Company nor
any Company Subsidiary shall make any material change to its accounting methods,
principles or practices, except as may be required by applicable Laws or GAAP.
(h) TAXES. None of Parent, the Company or any of the Company
Subsidiaries shall make any material Tax election or settle or compromise any
material Tax liability relating to the businesses of the Company, except in the
ordinary course of business; PROVIDED, HOWEVER, that the foregoing restrictions
shall not apply to any such Tax election or Tax liability related to a Tax
Return filed with respect to an Affiliated Group that includes Parent or any
Subsidiary of Parent (other than the Company or any of the Company
Subsidiaries).
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(i) INTELLECTUAL PROPERTY. The Company and the Company
Subsidiaries shall take all reasonable actions to maintain and protect the
Company Intellectual Property so as not to adversely affect the validity or
enforcement thereof and shall not dispose of any of its rights to the use of any
other Intellectual Property, except in the ordinary course of business and
consistent with past practices. Without limiting the generality of the
foregoing, except in the ordinary course of business and consistent with past
practices, neither the Company nor any Company Subsidiary shall dispose of or
disclose to any Person any trade secrets, formula, process, confidential
information or know-how contained in Company Intellectual Property and not
heretofore a matter of public knowledge except pursuant to the Company's
customary non-disclosure agreement.
(j) AFFILIATED TRANSACTIONS. Neither Parent, the Company nor any
Company Subsidiary shall (and the Parent shall cause its Affiliates not to)
directly or indirectly engage in any transaction, or execute, modify or amend
any Contract, with any director, proxyholder, officer or employee of the Company
or any Company Subsidiary.
(k) NO AGREEMENTS. Neither Parent, the Company nor any Company
Subsidiary shall authorize or announce an intention to do any of the foregoing,
or agree or enter into any Contract to do any of the foregoing.
5.2 ACCESS TO INFORMATION.
(a) From the date of this Agreement to the earlier of the
Closing Date or termination of this Agreement, the Company shall, and the
Company shall cause the Company Subsidiaries to, provide Purchaser and its
authorized agents and representatives and its lenders and their authorized
agents and representatives (collectively, the "Representatives"), with
reasonable access, during normal business hours and without material disruption
to its day-to-day business, to the books and records pertaining to the Company
or the Company Subsidiaries and, during such period, the Company shall, and the
Company shall cause the Company Subsidiaries to, furnish promptly to such
Representatives all financial, operating and other data and other information
concerning the Company's and the Company Subsidiaries' businesses, properties
and personnel as may reasonably be requested.
(b) The Confidentiality Agreement shall apply with respect to
Evaluation Material, as defined therein, furnished to the Representatives
pursuant to this Section 5.2.
5.3 HSR ACT FILING. Parent, Holdings and Purchaser shall, as
promptly as practicable but in any event not more than 10 days after the date
hereof, file, or cause to be filed, any required notification and report forms
under the HSR Act with the FTC and the Antitrust Division in connection with the
Transaction, and will use their respective commercially reasonable efforts to
respond as promptly as practicable to all inquiries received from the FTC or the
Antitrust Division for additional information or documentation and to cause the
waiting periods under the HSR Act to terminate or expire at the earliest
possible date. Parent, Holdings and Purchaser will each furnish to the other
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such information and assistance as the other may reasonably request in
connection with its preparation of any filings necessary under the HSR Act.
5.4 REASONABLE EFFORTS; CONSENTS.
(a) Parent, Holdings and Purchaser shall, as promptly as
practical, use all commercially reasonable efforts to consummate the
Transaction, including filing notices to or filings with Governmental
Authorities, and obtaining any consents, waivers and approvals from Persons
(including the relevant licensors under Sections 4.1 and 6.3 of TSA C1 of the
Transitional Services Agreement), in each case required in connection with the
execution and delivery by Parent, the Company, Holdings or Purchaser of this
Agreement or the consummation by Parent, the Company, Holdings or Purchaser of
the Transaction. Parent, Holdings and Purchaser shall furnish to the other such
information and assistance as the other may reasonably request in connection
with required filings, notices, consents, waivers and approvals, and they shall
keep each other advised of the progress of making all such filings and notices
and obtaining all such consents, waivers and approvals.
(b) Holdings and Purchaser shall use their respective
commercially reasonable efforts to obtain cash equity financing and debt
financing in the amounts set forth in, and on substantially the terms and
conditions set forth in, the Equity Financing Commitment and Debt Financing
Commitments, respectively.
5.5 FURTHER ASSURANCES; COOPERATION. On and after the Closing Date,
Parent, Holdings and Purchaser shall use all commercially reasonable efforts to
take or cause to be taken all appropriate actions and do, or cause to be done,
all things necessary or appropriate to consummate and make effective the
Transaction, including the execution of any additional documents or instruments
of any kind (not containing additional representations and warranties) which may
be reasonably necessary or appropriate to carry out any of the provisions
hereof.
5.6 PUBLICITY. Parent, Holdings and Purchaser will consult with each
other and will mutually agree upon any press release or public announcement or
announcement to employees, customers or suppliers pertaining to this Agreement
or the Transaction and shall not issue any such press release or announcement
prior to such consultation and agreement, except as may be required by
applicable Law or by obligations pursuant to any listing agreement with any
securities exchanges (in which case each of Parent, Holdings and Purchaser shall
use reasonable efforts to consult with the other party as to the form and
content of such disclosure prior to any such disclosure).
5.7 EMPLOYEE MATTERS
(a) AFFECTED EMPLOYEES. Each employee of the Company or any
Company Subsidiary immediately prior to the Closing is referred to hereinafter
as an "Affected Employee." Except as set forth in Section 5.7(h) or the
Transitional Services Agreement, as of the Closing each Affected Employee shall
cease to be an active participant in any Plan that is not sponsored or
maintained solely by the Company.
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(b) EMPLOYEE COMPENSATION AND BENEFITS. For the period
commencing on the Closing Date and ending upon December 31, 2002, the employee
benefits to be provided to the Affected Employees shall be governed by the
Transitional Services Agreement. Following such period, Purchaser shall provide
the Affected Employees with compensation and employee benefit plans, policies
and arrangements that are comparable, in the aggregate, with the compensation
and employee benefit plans, policies and arrangements provided to similarly
situated employees of other employers operating in the Company's sector.
(c) SERVICE CREDIT; WELFARE BENEFIT OBLIGATIONS. Following the
Closing, for purposes of determining eligibility to participate, vesting and
entitlement to benefits (but not for purposes of accrual of benefits) with
respect to each employee benefit or compensation plan of Purchaser, the Company
or any other Affiliate of Purchaser in which any Affected Employee participates
(each, a "Purchaser Plan"), service with Parent, the Company or any other
Affiliate of Parent (or predecessor employers to the extent Parent, the Company
or any other Affiliate of Parent provided past service credit) prior to the
Closing shall be treated as service with Purchaser, the Company or any other
Affiliate of Purchaser; PROVIDED, HOWEVER, that such service shall not be
recognized to the extent that such recognition would result in a duplication of
benefits or with respect to equity based plans, policies or arrangements. Such
service also shall apply for purposes of satisfying any waiting periods,
evidence of insurability requirements, or the application of any preexisting
condition limitations. Each Purchaser Plan shall waive pre-existing condition
limitations to the same extent waived under the analogous Plan. Affected
Employees shall be given credit under the applicable Purchaser Plan for amounts
paid under an analogous Plan during the same period for purposes of applying
deductibles, copayments and out-of-pocket maximums as though such amounts had
been paid in accordance with the terms and conditions of the Purchaser Plan.
Without limiting the generality of the foregoing, as of the Closing, the
Purchaser shall assume and agree to provide all accrued vacation and other paid
time off entitlements to the Affected Employees to the extent such liabilities
are accrued on the Closing Statements.
(d) TREATMENT OF 401(k) ACCOUNTS. As soon as practicable
following the Closing Date, Parent shall cause the trustee of the Getronics
Retirement Savings Plan, effective January 1, 2001 (the "Parent 401(k) Plan") to
transfer (in accordance with the requirements of Section 414(l) of the Code), in
cash (or, with respect to Parent 401(k) Plan loan promissory notes, in kind),
the account balances (including outstanding loan balances) under the Parent
401(k) Plan (the "Transferred Account Balances") of each Affected Employee who
is a participant in the Parent 401(k) Plan to the trustee of a defined
contribution plan (the "Purchaser 401(k) Plan") and trust maintained by
Purchaser or the Company on or after the Closing Date (such plan and trust to be
established or designated by Purchaser) which are intended to be qualified under
Sections 401(a) and 501(a) of the Code, respectively. Upon the making of such
transfer (the "Transfer") and the receipt by the trustee of the Purchaser 401(k)
Plan of the Transferred Account Balances, the Purchaser 401(k) Plan shall
automatically assume all liabilities for accrued benefits under the Parent
401(k) Plan in respect of such Affected Employees, and the Parent 401(k) Plan
shall be relieved of all such liabilities. Effective as of the Transfer,
Purchaser shall indemnify and hold harmless the Parent 401(k) Plan, the trustees
thereof,
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Parent, its officers, directors, employees and agents and affiliates, from and
against any and all liabilities arising out of or related to the participation
of such Affected Employees in the Parent 401(k) Plan and the transfer of assets
described herein provided, however, that such indemnification shall in no way
limit, alter or affect the representations and warranties in Section 3.10. The
parties shall cooperate in the taking of any action and the filing of any
documents that may be required in connection with the transfer of assets and
liabilities described herein.
(e) CERTAIN AGREEMENTS.
(i) Following the Closing, Purchaser shall cause the Company
to perform, in accordance with their terms, all employment or compensation
agreements between the Company, on the one hand, and any past or present
director, officer or employee of the Company, on the other hand to the extent
that such agreements are listed on Section 5.7(e)(i) of the Disclosure Schedule
and copies of such agreements are provided to Purchaser prior to the date
hereof.
(ii) Section 5.7(e)(ii) of the Disclosure Schedule sets
forth the incremental severance costs of the severance letters listed in Item 8
of Section 3.16(d) of the Disclosure Schedule over the severance costs of the
severance pay plan named in Item 1(d) of Section 3.10(a) of the Disclosure
Schedule for the Affected Employees listed on Section 5.7(e)(ii) of the
Disclosure Schedule, in each case as in effect and as applied to such Affected
Employees as of the date hereof. Parent shall reimburse the Company for the
incremental severance costs set forth on Section 5.7(e)(ii) of the Disclosure
Schedule if and when such incremental costs are incurred by the Company.
(iii) Parent shall reimburse the Company for $4,167 of the
monthly severance costs for the Affected Employee named in Item 7(a) of Section
3.16(d) of the Disclosure Schedule under the severance plan named in Item 7 of
Section 3.16(d) of the Disclosure Schedule, as in effect and as applied to such
Affected Employee as of the date hereof, if and when such monthly severance
costs are incurred by the Company.
(iv) The Company shall pay, and Parent shall cause the
Company to pay, the amount due as a result of execution of this Agreement under
each of the letters listed on Section 5.7(e)(iv) of the Disclosure Schedule
prior to the Closing in accordance with such letter as in effect on the date
hereof.
(v) Parent shall reimburse the Company for up to an
aggregate of $250,000 of pro-rated bonus payments made in accordance with
Section K of the Company's 2002 Short Term Incentive Program for Executive and
Staff Management or Section K of the Company's 2002 Short Term Incentive Program
for Program Management Staff, in each case as in effect on the date hereof, to
Affected Employees terminated by the Company prior to December 31, 2002.
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(f) HFSI RETIREMENT PLAN, HFSI SERP AND RETIREE MEDICAL PLAN.
Immediately prior to the Closing, (i) Parent (or such Affiliate as Parent may
designate) shall assume sponsorship of the HFSI Retirement Plan, established
effective October 1, 1990, as amended and restated from time to time (the "HFSI
Plan"), the HFSI Supplemental Executive Retirement Plan, as amended effective
July 1, 1993 (the "HFSI SERP"), and the Wang Federal Inc. Retiree Medical Plan,
established as of January 1, 1996 (the "Retiree Medical Plan") and (ii) Parent
shall cause the Company to transfer all assets or liabilities relating to the
HFSI Plan, the HFSI SERP and the Retiree Medical Plan to Parent or such
Affiliate of Parent. Parent shall take all actions necessary to cause the
Company and each Company Subsidiary to cease to participate in the HFSI Plan,
the HFSI SERP and the Retiree Medical Plan, effective as of the Closing. Prior
to the Closing, Parent shall cause the Company to transfer all records, consents
and election forms with respect to the HFSI Plan, the HFSI SERP and the Retiree
Medical Plan to Parent or an Affiliate of Parent. From and after the Closing,
Parent shall indemnify and hold harmless the Company, Purchaser and its
Affiliates with respect to all liabilities attributable to the HFSI Plan, the
HFSI SERP and the Retiree Medical Plan.
(g) CERTAIN BENEFIT PLAN OBLIGATIONS. Commencing on January 16,
2003 and not later than the fifteenth business day after the end of each
subsequent month following such date during 2003, Parent shall prepare and
deliver to the Company a report (each, a "Parent Welfare Plan Report")
reflecting (i) the amount of all claims and expenses and premiums related
thereto, net of third-party insurance, made during the preceding month by any
Affected Employees (or their covered beneficiaries) under any medical or dental
benefit plan that is maintained by Parent in which such Affected Employees
participated prior to the Closing, (ii) the amount of all claims, premiums and
expenses attributable to the provision of the Services (as defined in the
Transitional Services Agreement) by Parent pursuant to TSA C9 of the
Transitional Services Agreement and (iii) the premiums for long-term disability
coverage described in Section 5.7(h), in each case to the extent that such
claims, expenses or premuims (as applicable) (aa) are covered under the
applicable plan, (bb) are attributable to periods on or prior to December 31,
2002, and (cc) have not previously been paid by the Company to Parent pursuant
TSA C9 of the Transitional Services Agreement. Not later than the fifth business
day following receipt of each Parent Welfare Plan Report, the Company shall, and
Holdings and Purchaser shall cause the Company to, reimburse Parent for the
amount of such claims, expenses or premiums (as applicable) reflected on such
Parent Welfare Plan Report by wire transfer of immediately available funds to an
account specified by Parent in such Parent Welfare Plan Report.
(h) LONG AND SHORT-TERM DISABILITY MATTERS. Following the
Closing, the Company shall, and Holdings and Purchaser shall cause the Company
to, continue to provide the short-term disability benefits to each Affected
Employee who is on short-term disability leave of absence as of the Closing
which would have been provided to such employees under the short-term disability
plan of Parent until the earlier of (i) the date upon which such employee would
no longer be eligible for benefits had such employee continued to be covered
under Parent's short-term disability plan and (ii) the sixth month anniversary
of the date upon which such employee became eligible for benefits under the
short-term disability plan of Parent (such period, the "Coverage
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Period"). During the Coverage Period, Parent shall cause each Affected Employee
who (i) is on short-term disability leave as of the Closing and (ii) was
participating in Parent's long-term disability plan as of the Closing to remain
eligible for such long-term disability coverage, notwithstanding the occurrence
of the Closing, provided, however, that the continuation of such eligibility
shall be conditioned upon the payment of the applicable long-term disability
coverage premium to the Company by the Affected Employee and the Company's
payment of such amounts to Parent in accordance with Section 5.7(g).
(i) On and after the Closing Date, Parent, the Company and
Purchaser shall fully cooperate in providing information necessary to file
reports, complete claims or otherwise effect the provisions of this Section 5.7.
5.8 INDEMNIFICATION.
(a) Holdings and Purchaser shall not permit the indemnification
obligations set forth in the Company's organizational documents, in each case as
of the date of this Agreement, to be amended, repealed or otherwise modified for
a period of six years after the Closing Date in any manner that would adversely
affect the rights thereunder of the parties entitled to indemnification.
(b) If the Company or any of its respective successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity in such consolidation or
merger or (ii) transfers all or substantially all its properties and assets to
any Person, then, and in each case, Holdings and Purchaser shall cause proper
provision to be made so that the successors and assigns of the Company honor the
indemnification obligations set forth in the Company's organizational documents.
5.9 INDEBTEDNESS. Prior to the Closing, the Company and the Company
Subsidiaries shall payoff all Indebtedness outstanding such that there is no
Indebtedness outstanding as of the Closing.
5.10 INTERCOMPANY ACCOUNTS. The trade receivables and payables
arising out of transactions occurring between Parent and any of its Affiliates
(other than the Company and the Company Subsidiaries), on the one hand, and the
Company and any Company Subsidiary, on the other hand, reflected on the Final
Closing Balance Sheet shall be settled in the ordinary course of business
consistent with past practice. The amount reflected on the Final Closing Balance
Sheet as an offset to member's capital as "receivables from Parent, net" (which
is a cumulative balance of the distributions to Parent) shall not be settled at
or after the Closing and neither Parent nor the Company shall have any
obligation with respect thereto from and after the Closing.
5.11 ALLOCATION OF PURCHASE PRICE. The Purchase Price, the
Obligations Retained Payment and all other capitalizable costs shall be
allocated among the assets of the Company as set forth in Exhibit 8 hereto (the
"Allocation"), which has been arrived at by arm's length negotiation and in
compliance with Section 1060 of the Code and the regulations promulgated
thereunder. Each of Parent and Purchaser shall (i) timely file (and
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cause its Affiliates to file) all forms (including Internal Revenue Service Form
8594) and Tax Returns required to be filed in connection with the Allocation,
(ii) be bound, and cause its Affiliates to be bound, by the Allocation for
purposes of determining Taxes (iii) prepare and file, and cause its Affiliates
to prepare and file, its Tax Returns on a basis consistent with the Allocation
and (iv) take no position, and cause its Affiliates to take no position,
inconsistent with the Allocation on any applicable Tax Return, in any audit or
proceeding before any tax authority, in any report, or for any other purpose,
except to the extent required under applicable Law or financial reporting
standards. In the event that the Allocation is disputed by any tax authority,
the party receiving notice of the dispute shall promptly notify the other
parities hereto concerning resolution of the dispute.
5.12 TRANSFER TAXES. All transfer, documentary, sales, use
registration and other such Taxes (including all applicable real estate transfer
Taxes) and related fees incurred in connection with any of the transactions
contemplated by this Agreement shall be borne one-half by Parent and one-half by
Purchaser. Each of Purchaser and Parent shall prepare and file any Tax Return
required to be filed by it in connection with any of the transactions
contemplated by this Agreement (regardless of whether any Tax is required to be
paid in connection with such filing), and Purchaser and Parent shall cooperate
with each other in the preparation, execution and filing of such Tax Returns.
5.13 NAME CHANGE. On or before the four-month anniversary of the
Closing Date, Purchaser will change the name of the Company and cease using
Ultimate Parent Names in any manner, except that the Company may continue to use
the name of the Company in correspondence concerning any bid or proposal
outstanding as of the Closing (a) until the earlier of (i) the date an award to
any Person is made with respect to such bid or proposal or (ii) June 30, 2003
and (b) if after June 30, 2003 such bid or proposal remains outstanding, with
the written consent of Parent which consent shall not be unreasonably delayed or
withheld. Purchaser agrees that from and after the Closing Date, (a) the name of
Ultimate Parent, the names of any Affiliate of Ultimate Parent, all trademarks
or service marks of Ultimate Parent or any Affiliate of Ultimate Parent, or
portions of any of the foregoing, and all similar or related names (all such
names and marks being the "Ultimate Parent Names") shall be owned by Ultimate
Parent or its Affiliates, (b) neither Purchaser nor the Company shall have any
rights in, and shall not, after the four-month anniversary of the Closing Date,
use, any Ultimate Parent Name and (c) neither Purchaser nor the Company shall
contest the ownership or validity of any rights of Ultimate Parent or any of its
Affiliates in or to any Ultimate Parent Name.
5.14 CSOC CUSTOMER CONTRACT.
(a) INITIAL CSOC SPREADSHEET. Subcontract #GA64208B06, dated
November 9, 1998, by and between the Company and Lockheed Martin Space
Operations Company (the "CSOC Customer") is hereafter referred to as the "CSOC
Customer Contract" and the base period of the CSOC Customer Contract ending
December 31, 2003 is hereinafter referred to as the "Base Period." Attached as
Exhibit 9 hereto is a spreadsheet mutually developed by Parent, the Company,
Holdings and Purchaser (the "Initial CSOC Spreadsheet") reflecting: (i) the
amounts paid to the Company under the CSOC Customer Contract during the period
from January 1, 2002 through August 31, 2002
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divided into the general categories entitled "Currently Being Paid CSOC
Amounts," "Undisputed CSOC Amounts" and "Disputed CSOC Amounts" and the
subcategories within such general categories reflected thereon, which general
categories and subcategories reflect the mutual agreement of Parent, the
Company, Holdings and Purchaser as to how the amounts paid to the Company under
the CSOC Customer Contract during this period should be categorized; (ii) the
accounts receivable outstanding as of August 31, 2002 under the CSOC Customer
Contract divided into the general categories entitled "Currently Being Paid CSOC
Accounts Receivable," "Undisputed CSOC Accounts Receivable" and "Disputed CSOC
Accounts Receivable" and the subcategories within such general categories
reflected thereon, which general categories and subcategories reflect the mutual
agreement of Parent, the Company, Holdings and Purchaser as to how the accounts
receivable outstanding under the CSOC Customer Contract should be categorized;
and (iii) the amounts projected to be billed by the Company under the CSOC
Customer Contract during each month remaining in the Base Period divided into
the general categories entitled "Projected Currently Being Paid CSOC Accounts
Receivable," "Projected Undisputed CSOC Accounts Receivable" and "Projected
Disputed CSOC Accounts Receivable" and the subcategories within such general
categories reflected thereon, which general categories and subcategories reflect
the mutual agreement of Parent, the Company, Holdings and Purchaser as to how
the amounts projected to be billed by the Company under the CSOC Customer
Contract should be categorized.
(b) PRE-CLOSING CSOC SPREADSHEETS. Not later than the tenth
business day after the end of each month prior to the Closing, the Company
shall, and Parent shall cause the Company to, prepare and deliver to Purchaser a
spreadsheet (each a "Pre-Closing CSOC Spreadsheet") reflecting: (i) the amounts
paid to or received by the Company under or with respect to the CSOC Customer
Contract during such month divided into the same general categories and
subcategories reflected on the Initial CSOC Spreadsheet for such amounts; (ii)
the accounts receivable outstanding as of the end of such month under the CSOC
Customer Contract divided into the same general categories and subcategories
reflected on the Initial CSOC Spreadsheet for such amounts; and (iii) the
amounts projected to be billed by the Company under the CSOC Customer Contract
during each month remaining in the Base Period divided into the same general
categories and subcategories reflected on the Initial CSOC Spreadsheet for such
amounts. Each Pre-Closing CSOC Spreadsheet shall be prepared, and shall allocate
the amounts paid to or received by the Company under or with respect to the CSOC
Customer Contract, the accounts receivable outstanding under the CSOC Customer
Contract and the amounts projected to be billed by the Company under the CSOC
Customer Contract, in a manner consistent with the mutually agreed methodologies
used in preparing, and in categorizing such amounts, accounts receivable and
amounts projected to be billed on, the Initial CSOC Spreadsheet.
(c) CLOSING CSOC SPREADSHEET. Not later than the tenth business
day after the Closing, Purchaser shall prepare and deliver to Parent a
spreadsheet (the "Closing CSOC Spreadsheet") reflecting: (i) the amounts paid to
or received by the Company under or with respect to the CSOC Customer Contract
during the period from the month end reported on the last Pre-Closing CSOC
Spreadsheet to the Closing Date divided into the same general categories and
subcategories reflected on the Initial CSOC
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Spreadsheet for such amounts; (ii) the accounts receivable outstanding as of the
Closing Date under the CSOC Customer Contract divided into the same general
categories and subcategories reflected on the Initial CSOC Spreadsheet for such
amounts; and (iii) the amounts projected to be billed by the Company under the
CSOC Customer Contract during each month remaining in the Base Period divided
into the same general categories and subcategories reflected on the Initial CSOC
Spreadsheet for such amounts. The total amount projected to be billed during the
remainder of the Base Period on the Closing CSOC Spreadsheet in the category
entitled "Projected Currently Being Paid CSOC Accounts Receivable" shall be
referred to herein as the "Currently Being Paid Post-Closing CSOC Accounts
Receivable." The total amount of accounts receivable outstanding as of the
Closing Date on the Closing CSOC Spreadsheet in the category entitled
"Undisputed CSOC Accounts Receivable" shall be referred to herein as the
"Undisputed Closing CSOC Accounts Receivable." The total amount projected to be
billed during the remainder of the Base Period on the Closing CSOC Spreadsheet
in the category entitled "Projected Undisputed CSOC Accounts Receivable" shall
be referred to herein as the "Undisputed Post-Closing CSOC Accounts Receivable."
The total amount of accounts receivable outstanding as of the Closing Date on
the Closing CSOC Spreadsheet in the category entitled "Disputed CSOC Accounts
Receivable" shall be referred to herein as "Disputed Closing CSOC Accounts
Receivable." The total amount projected to be billed during the remainder of the
Base Period on the Closing CSOC Spreadsheet in the category entitled "Projected
Disputed CSOC Accounts Receivable" shall be referred to herein as "Disputed
Post-Closing CSOC Accounts Receivable." The Closing CSOC Spreadsheet shall be
prepared, and shall allocate amounts paid to or received by the Company under or
with respect to the CSOC Customer Contract, the accounts receivable outstanding
under the CSOC Customer Contract and amounts projected to be billed under the
CSOC Customer Contract, in a manner consistent with the mutually agreed
methodologies used in preparing, and in categorizing such amounts, accounts
receivable and amounts projected to be billed on, the Initial CSOC Spreadsheet.
Parent shall, on or before the date that it is required to notify Purchaser of
any objections regarding the manner in which any item or items are treated on
the Closing Statements (including the Closing Balance Sheet) pursuant to Section
2.5(b), notify Parent of any and all objections it has regarding the manner in
which any item or items are treated on the Closing CSOC Spreadsheet. If Parent
fails to notify Purchaser of any objection regarding the manner in which any
item or items are treated on the Closing CSOC Spreadsheet within such period,
Parent shall be deemed to have accepted the Closing CSOC Spreadsheet and such
Closing CSOC Spreadsheet shall be the "Closing CSOC Spreadsheet." If Parent
notifies Purchaser of any objections regarding the manner in which any item or
items are treated or classified on the Closing CSOC Spreadsheet by such date,
Parent and Purchaser shall attempt to resolve such objections during the 30
calendar days following such date. If Parent and Purchaser are unable to agree
on the manner in which any item or items should be treated in the Closing CSOC
Spreadsheet, Parent and Purchaser shall each prepare separate written reports of
such item or items and refer such reports to the Purchase Price Adjustment
Arbitrator within 30 calendar days after the expiration of such 30-day period.
The Purchase Price Adjustment Arbitrator shall determine within 30 calendar days
after receipt of such reports the manner in which such item or items shall be
treated on the Closing CSOC Spreadsheet; PROVIDED, HOWEVER, that the dollar
amount of each item so determined shall be within the
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range of dollar amounts proposed by Parent and Purchaser. The determinations by
the Purchase Price Adjustment Arbitrator regarding the manner in which any item
or items are treated on the Closing CSOC Spreadsheet shall be in writing and
shall be Final and Binding. Following the resolution of all objections of Parent
regarding the manner in which any item or items are treated on the Closing CSOC
Spreadsheet, by mutual agreement or the Purchase Price Adjustment Arbitrator,
Purchaser shall prepare a revised Closing CSOC Spreadsheet reflecting such
resolution and shall deliver copies thereof to Parent, and such Closing CSOC
Spreadsheet shall be the "Closing CSOC Spreadsheet."
(d) POST-CLOSING CSOC SPREADSHEETS. Not later than the tenth
business day after the end of each month following the Closing, the Company
shall, and Holdings and Purchaser shall cause the Company to, prepare and
deliver to Parent a spreadsheet (each a "Post-Closing CSOC Spreadsheet")
reflecting: (i) the amounts paid to or received by the Company under or with
respect to the CSOC Customer Contract during such month divided into the same
general categories and subcategories reflected on the Initial CSOC Spreadsheet
for such amounts; (ii) the accounts receivable outstanding as of the end of such
month under the CSOC Customer Contract divided into the same general categories
and subcategories reflected on the Initial CSOC Spreadsheet for such amounts;
(iii) the amounts projected to be billed by the Company under the CSOC Customer
Contract during each month remaining in the Base Period divided into the same
general categories and subcategories reflected on the Initial CSOC Spreadsheet
for such amounts; and (iv) all CSOC Payments paid over to Parent or retained by
the Company pursuant to Section 5.14(e)(ii) during such month and for the period
from the Closing to the end of such month divided into the same general
categories and subcategories reflected on the Initial CSOC Spreadsheet for such
amounts. Each Post-Closing CSOC Spreadsheet shall be prepared, and shall
allocate the amounts paid to or received by the Company with respect to the CSOC
Customer Contract, the accounts receivable outstanding under the CSOC Customer
Contract, the amounts projected to be billed by the Company under the CSOC
Customer Contract and the CSOC Payments, in a manner consistent with the
mutually agreed methodologies used in preparing, and in categorizing such
amounts, accounts receivable, amounts projected to be billed and CSOC Payments
on, the Initial CSOC Spreadsheet.
(e) SHARING OF CSOC PAYMENTS.
(i) Any and all consideration in any form paid to or
received by the Company after the Closing Date under or with respect to, or in
any way related to, the CSOC Customer Contract for the Base Period, whether paid
or received in the ordinary course of business, as a result of a settlement,
compromise or consent to entry of judgment in the CSOC Action (made with or
without Parent's prior written consent under Section 5.14(g)(i)), an arbitration
or court award (in the CSOC Action or otherwise) or otherwise, are hereinafter
referred to individually as a "CSOC Payment" and collectively as the "CSOC
Payments," except that amounts paid to the Company with respect to Currently
Being Paid Post-Closing CSOC Accounts Receivable consistent (or with respect to
the timing of the payment of such amounts, substantially consistent) with the
current practice of the CSOC Customer of paying "Currently Being Paid CSOC
Amounts" reflected on the Initial
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CSOC Spreadsheet shall be excluded from the defined terms CSOC Payment and CSOC
Payments. If any CSOC Payment is received by the Company as a result of
arbitration or court award in the CSOC Action and such arbitration or court
award also awards monetary relief to the CSOC Customer, the amount of such CSOC
Payment to be paid over to Parent or retained by the Company pursuant to Section
5.14(e)(ii) shall be the amount of such CSOC Payment net of the amount of the
monetary relief awarded to the CSOC Customer and paid by the Company. If, after
the Closing, any Affiliate of the Company, Holdings or Purchaser is paid or
receives any consideration in any form with respect to, or in any way related
to, the CSOC Customer Contract for the Base Period, whether paid or received in
the ordinary course of business, as a result of a settlement, compromise or
consent to entry of judgment in the CSOC Action negotiated settlement (made with
or without Parent's prior written consent under Section 5.14(g)(i)), an
arbitration or court award (in the CSOC Action or otherwise) or otherwise, such
consideration shall be deemed to have been paid to or received by the Company
under or with respect to the CSOC Customer Contract and to be a CSOC Payment. If
after the Closing Parent or any of its Affiliates receives any payment from the
CSOC Customer relating to the CSOC Customer Contract, such payment shall be
received and held in trust by Parent apart from its other assets and paid over
to the Company for distribution in accordance with Section 5.14(e)(ii).
(ii) The CSOC Payments shall be paid over to Parent or
retained by the Company as follows:
(aa) first, an amount equal to the Undisputed Closing
CSOC Accounts Receivable shall be paid over to Parent by the Company;
(bb) second, after an amount has been paid over in
accordance with Section 5.14(e)(ii)(aa), an amount equal to the
Undisputed Post-Closing CSOC Accounts Receivable shall be retained by the
Company;
(cc) third, after amounts have been paid over or
retained, respectively, in accordance with Sections 5.14(e)(ii)(aa) and
(bb), an amount equal to the Disputed Closing CSOC Accounts Receivable
shall be paid over to Parent by the Company;
(dd) fourth, after the amounts have been paid over or
retained, as the case may be, in accordance with Sections (e)(ii)(aa),
(bb) or (cc) , an amount equal to the Disputed Post-Closing CSOC Accounts
Receivable shall be retained by the Company; and
(ee) fifth, after amounts have been paid over or
retained, as the case may be, in accordance with Sections
5.14(e)(ii)(aa), (bb), (cc) and (dd), one-half of each and every CSOC
Payment shall be
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retained by the Company and the remaining one-half of each and every CSOC
Payment shall be paid over to Parent.
(iii) If the aggregate amount retained by the Company
pursuant to Sections 5.14(e)(ii)(bb) is less than the Undisputed Post-Closing
CSOC Accounts Receivable Bogey, Parent shall pay Purchaser an amount equal to
the difference between the aggregate amount retained by the Company pursuant to
Section 5.14(e)(ii)(bb) and the Undisputed Post-Closing CSOC Accounts Receivable
Bogey; PROVIDED, HOWEVER, that: (aa) Parent shall have no obligation or
liability under this Section 5.14(e)(iii) until the Company shall have exhausted
all commercially reasonable efforts to collect an amount of Undisputed
Post-Closing CSOC Accounts Receivable at least equal to the Undisputed
Post-Closing CSOC Accounts Receivable Bogey; (bb) if for any reason whatsoever
the Company is relieved of all or any part of its obligations under, or in any
way related to, services performed or products supplied under the CSOC Customer
Contract giving rise to Undisputed Post-Closing CSOC Accounts Receivable, then
the Undisputed Post-Closing CSOC Accounts Receivable Bogey shall be reduced
dollar-for-dollar for the cost savings, plus any margin associated therewith,
directly or indirectly resulting from the Company having been so relieved of all
or any part of its obligations under, or in any way related to, the services
performed or products supplied under CSOC Customer Contract giving rise to
Undisputed Post-Closing CSOC Accounts Receivable; and (cc) Parent's obligation
and liability to pay Purchaser under this Section 5.14(e)(iii) shall expire upon
the first to occur of any amendment of the CSOC Customer Contract made without
Parent's prior written consent under Section 5.14(f) or any settlement or
compromise of the CSOC Action or consent to the entry of any judgment in the
CSOC Action, in each case, made without Parent's prior written consent under
Section 5.14(g)(i). Parent's obligation and liability to pay Purchaser under
this Section 5.14(e)(iii), as determined, conditioned, reduced or terminated
pursuant to this Section 5.14(e)(iii), shall be satisfied by a release from the
Escrow Agreement pursuant to Section 1.2(a)(vi)(aa) thereof. If after any such
release from the Escrow Agreement, the Company collects any Undisputed
Post-Closing CSOC Accounts Receivable any and all amounts so collected shall be
paid over to Parent, and the Company shall not retain any CSOC Payments pursuant
to Sections (e)(ii)(bb), (dd) or (ee), until an amount equal to the amount of
such release has been paid over to Parent.
(iv) If the aggregate amount retained by the Company
pursuant to Section 5.14(e)(ii)(dd) is less than the Disputed Post-Closing CSOC
Accounts Receivable Bogey, Parent shall pay Purchaser an amount equal to the
difference between the aggregate amount retained by the Company pursuant to
Section 5.14(e)(ii)(dd) and the Disputed Post-Closing CSOC Accounts Receivable
Bogey; PROVIDED, HOWEVER, that: (aa) Parent shall have no obligation or
liability under this Section 5.14(e)(iv) until the Company shall have exhausted
all commercially reasonable efforts to collect an amount of Disputed
Post-Closing CSOC Accounts Receivable at least equal to the Disputed
Post-Closing CSOC Accounts Receivable Bogey; (bb) if for any reason whatsoever
the Company is relieved of all or any part of its obligations under, or in any
way related to, services performed or products supplied under the CSOC Customer
Contract giving rise to Disputed Post-Closing CSOC Accounts Receivable, then the
Disputed Post-Closing CSOC Accounts Receivable Bogey shall be reduced
dollar-for-dollar for the cost savings, plus any margin associated therewith,
directly or indirectly resulting from the Company having
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been so relieved of all or any part of its obligations under, or in any way
related to services performed or products supplied under, the CSOC Customer
Contract giving rise to Disputed Post-Closing CSOC Accounts Receivable; and (cc)
Parent's obligation and liability to pay Purchaser under this Section
5.14(e)(iv) shall expire upon the first to occur of any amendment of the CSOC
Customer Contract made without Parent's prior written consent under Section
5.14(f) or any settlement or compromise of the CSOC Action or consent to the
entry of any judgment in the CSOC Action, in each case, made without Parent's
prior written consent under Section 5.14(g)(i). Parent's obligation and
liability to pay Purchaser under this Section 5.14(e)(iv), as determined,
conditioned, reduced or terminated pursuant to this Section 5.14(e)(iv), shall
be satisfied by a release from the Escrow Agreement pursuant to Section
1.3(a)(vi)(aa) thereof. If after any such release from the Escrow Agreement, the
Company collects any Disputed Post-Closing CSOC Accounts Receivable any and all
amounts so collected shall be paid over to Parent, and the Company shall not
retain any CSOC Payments pursuant to Sections (e)(ii)(bb), (dd) or (ee), until
an amount equal to the amount of such release has been paid over to Parent.
(v) The Company shall, and Holdings and Purchaser shall
cause the Company to, make the payments due Parent under Section
5.14(e)(ii)(aa), (cc) or (ee) in cash not later than the tenth business day
after the end of the month in which the date of the CSOC Payment giving rise to
the obligation falls. The obligation of the Company to pay, and of Holdings and
Purchaser to cause the Company to pay, Parent the amounts due Parent under
Sections 5.14(d)(ii)(aa), (bb) or (ee) shall apply irrespective of whether the
CSOC Payment giving rise to such obligation is in the ordinary course of
business or results from a negotiated settlement or arbitration or court award
or otherwise.
(f) PERFORMANCE OF CSOC CUSTOMER CONTRACT AND COLLECTION OF CSOC
AMOUNTS. The Company shall, and Holdings and Purchaser shall cause the Company
to, use all commercially reasonable efforts to (i) perform its obligations under
the CSOC Customer Contract in accordance with the terms thereof and (ii) bill
and collect all of the Undisputed Closing CSOC Accounts Receivable, Undisputed
Post-Closing CSOC Accounts Receivable, Disputed Closing CSOC Accounts Receivable
and Disputed Post-Closing CSOC Accounts Receivable. The Company shall not, and
Holdings and Purchaser shall not permit the Company to, agree to amend the CSOC
Customer Contract in any manner whatsoever without Parent's prior written
consent (which consent shall not be unreasonably withheld, conditioned or
delayed) unless simultaneously with such amendment: (i) the Company pays over to
Parent an amount equal to the difference between the Undisputed Closing CSOC
Account Receivable and the aggregate amount previously paid over to Parent under
Section 5.14(e)(ii)(aa); (ii) Holdings, Purchaser and the Company release Parent
from any and all obligations under (aa) Sections 5.14(e)(iii), 5.14(e)(iv),
5.14(g) and 5.14(h) and (bb) the Escrow Agreement such that all amounts held in
escrow thereunder are released and paid to Parent; (iii) Purchaser pays to
Parent an amount in cash equal to difference between the sum of the Undisputed
Post-Closing CSOC Accounts Receivable Bogey and the Disputed Post-Closing CSOC
Accounts Receivable Bogey and the amount released and paid to Parent pursuant to
the immediately preceding clause (ii)(bb); and (iv) the CSOC Customer releases
Parent and its Affiliates from any and all claims arising out of the CSOC
Customer Contract.
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(g) CSOC ACTION.
(i) The Company shall, and Holdings and Purchaser shall
cause the Company to, use all commercially reasonable efforts to prosecute the
action entitled GETRONICS GOVERNMENT SOLUTIONS, L.L.C. v. LOCKHEED MARTIN SPACE
OPERATIONS COMPANY; Cause No. 2002-05998, In the District Court of Harris
County, Texas; 295th Judicial District (the "CSOC Action") and defend against
claims or counterclaims asserted in the CSOC Action. The Company shall, and
Holdings and Purchaser shall cause the Company to, continue the use of the law
firms of Wiley Rein & Fielding LLP and Clements, O'Neill, Pierce, Wilson &
Fulkerson, L.L.P. in their prosecution and defense of the CSOC Action. Parent
shall have the right but not the obligation to participate, subject to the
Company's right to have final say in case management decisions, in the
management of the CSOC Action with its own counsel and at its own expense. The
Company shall and shall cause its counsel to, and Holdings and Parent shall
cause the Company to, inform Parent and its counsel of and consult with Parent
and its counsel regarding the prosecution and defense of the CSOC Action and any
settlement or compromise of the CSOC Action or any consent to the entry of any
judgment in the CSOC Action. The Company shall not, and Holdings and Purchaser
shall not permit the Company to, agree to settle or compromise the CSOC Action
or consent to the entry of any judgment in the CSOC Action without Parent's
prior written consent (which consent shall not be unreasonably withheld,
conditioned or delayed) unless simultaneously with such settlement, compromise
or consent to entry of judgment: (aa) the Company pays over to Parent an amount
equal to the difference between the Undisputed Closing CSOC Accounts Receivable
and the aggregate amount previously paid over to Parent under Section
5.14(e)(ii)(aa); (bb) Holdings, Purchaser and the Company release Parent from
any and all obligations under (1) Sections 5.14(e)(iii), 5.14(e)(iv) and 5.14(h)
and this Section 5.14(g) and (2) the Escrow Agreement such that all amounts held
in escrow thereunder are released and paid to Parent; (cc) Purchaser pays to
Parent an amount in cash equal to difference between the sum of the Undisputed
Post-Closing CSOC Accounts Receivable Bogey and the Disputed Post-Closing CSOC
Accounts Receivable Bogey and the amount released and paid to Parent pursuant to
the immediately preceding clause (ii)(bb); and (dd) the CSOC Customer releases
Parent and its Affiliates from any and all claims arising out of the CSOC
Customer Contract.
(ii) The costs and expenses incurred by the Company in
prosecuting and defending the CSOC Action through the Closing Date, to the
extent not paid prior to the Closing Date, shall be included in "Current
Liabilities" on the Final Closing Balance Sheet for purposes of calculating
Closing Net Working Capital and the resulting Cash Portion of the Purchase
Price. The Company shall pay, and Holdings and Purchaser shall cause the Company
to pay, all costs and expenses incurred by the Company in prosecuting and
defending the CSOC Action on or after the Closing Date, except that if such
costs and expenses incurred after the Closing Date exceed $1,000,000, Parent
shall reimburse the Company for the lesser of (aa) 80% of the amount of such
excess costs and expenses incurred after the Closing Date or (bb) $1,000,000;
PROVIDED, HOWEVER, that Parent shall have no further obligation or liability
under this second sentence of this Section 5.14(g)(ii) after the aggregate
amount paid by Parent for Parent Obligations Subject to the Parent Cap equals
the Parent Cap.
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(iii) If, in a final and nonappealable judgment by a court
of competent jurisdiction in the CSOC Action, (aa) the Company is denied any
monetary relief and (bb) the CSOC Customer is awarded monetary relief related to
Company's performance of the CSOC Customer Contract prior to the Closing: (1)
Parent will reimburse the Company for the lesser of (A) the portion of such
monetary relief related to the amounts paid to the Company by the CSOC Customer
under the CSOC Customer Contract prior to January 1, 2002 with respect to
accounts receivable of the nature reflected in the category "Disputed CSOC
Accounts Receivable" on the Initial CSOC Spreadsheet or (B) $1,500,000, in each
case, when and if paid by the Company; and (2) Parent will reimburse the Company
for 50% of the balance of such monetary relief when and if paid by the Company;
PROVIDED, HOWEVER, that: (xx) Parent shall have no obligation or liability under
clause (2) of this Section 5.14(g)(iii) until such time as the aggregate amount
of Parent Obligations Subject to the Parent Deductible which would otherwise be
due and payable exceeds the Parent Deductible and thereafter the obligation and
liability of Parent under clause (2) of this Section 5.14(g)(iii) shall only be
for amounts due and payable under clause (2) of this Section 5.14(g)(iii) which,
when combined with the aggregate amount of other Parent Obligations Subject to
the Parent Deductible, are in excess of the Parent Deductible; and (yy) Parent
shall have no further obligation or liability under clause (1) or (2) of this
Section 5.14(g)(iii) after the aggregate amount paid by Parent for Parent
Obligations Subject to the Parent Cap equals the Parent Cap.
(h) CSOC CONTRACT OPTION YEARS. "CSOC Operating Losses" shall
mean, for any period of determination, an amount equal to the difference between
(i) all revenues earned in connection with the performance of the CSOC Customer
Contract for such period, and (ii) all costs and expenses incurred in connection
with the performance of the CSOC Customer Contract for such period (before any
allocations for corporate overhead other than "selling, general and
administrative" expenses and 50% of the materials and handling expenses, in each
case, incurred in connection with the performance of the CSOC Customer Contract
for such period), in each case determined in a manner consistent with the
Company's past practices. If (i) the Company shall not have previously agreed to
amend the CSOC Customer Contract or previously agreed to settle or compromise
the CSOC Action or previously consented to the entry of any judgment on the CSOC
Action and (ii) the CSOC Customer exercises its right to extend the period of
performance under the CSOC Customer Contract in accordance with its terms as in
effect on the date hereof, Parent shall reimburse the Company for an amount of
CSOC Operating Losses equal to the lesser of (aa) 50% of the annual CSOC
Operating Losses incurred by the Company in its fiscal years ending December 31,
2004, 2005, 2006, 2007 or 2008, in connection with the performance of the CSOC
Customer Contract during those fiscal years as a result of the exercise by the
CSOC Customer of its right to extend the performance period under the CSOC
Customer Contract in accordance with its terms as in effect on the date hereof
or (bb) $5,000,000; PROVIDED, HOWEVER, that: (xx) Parent shall have no
obligation or liability under this Section 5.14(h) until such time as the
aggregate amount of Parent Obligations Subject to the Parent Deductible exceeds
the Parent Deductible and thereafter the obligation and liability of Parent
under this Section 5.14(h) shall only be for amounts due and payable under this
Section 5.14(h) which, when combined with the aggregate amount of other Parent
Obligations Subject to the Parent Deductible, are in excess of the Parent
Deductible; and (yy) Parent shall have no further obligation or liability
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under this 5.14(h) after the aggregate amount paid by Parent for Parent
Obligations Subject to the Parent Cap equals the Parent Cap. Not later than 90
days after the end of such fiscal year in which the Company incurs such CSOC
Operating Losses, the Company shall prepare and deliver to Parent a financial
report on all revenues earned in connection with the performance of the CSOC
Customer Contract during such fiscal year and all costs and expenses incurred in
connection with the performance of the CSOC Customer Contract during such fiscal
year (before any allocations for corporate overhead), in each case determined in
a manner consistent with the Company's past practices, and such other
information as Parent may reasonably request in connection with its review of
such financial report; the reimbursement payment, if any, required to be made by
Parent with respect to such fiscal year under this Section 5.14(h) shall be made
promptly after Parent and Purchaser shall have mutually agreed on the amount of
such CSOC Operating Losses for such fiscal year.
(i) RISKS AND COST OF CSOC CUSTOMER CONTRACT AND CSOC ACTION.
Except as otherwise specifically provided in this Section 5.14, the risks and
costs of the CSOC Customer Contract (including the performance and financial
risks during the Base Period or any extension of the CSOC Customer Contract) and
the CSOC Action (including the risk of an adverse judgment and attorneys' fees)
shall remain with the Company and Parent shall have no liability or obligation
whatsoever with respect to any such risk or costs.
5.15 EXCLUSIVITY. Neither Parent, the Company, nor any Company
Subsidiary shall, and each shall cause their respective Affiliates,
representatives, officers, employees, directors and agents not to, directly or
indirectly, (a) submit, solicit, initiate, encourage or discuss any proposal or
offer from any Person (other than Purchaser and its Affiliates in connection
with the Transaction) or enter into any agreement or accept any offer relating
to or consummate any (i) reorganization, liquidation, dissolution or
recapitalization of the Company or any Company Subsidiary, (ii) merger or
consolidation involving the Company or any Company Subsidiary, (iii) purchase or
sale of any assets or capital stock (or any rights to acquire, or securities
convertible into or exchangeable for, any such capital stock) of the Company or
any Company Subsidiary (other than the purchase and sale of inventory in the
ordinary course of business consistent with past practice), or (iv) similar
transaction or business combination involving the Company or any Company
Subsidiary or their business or assets (each of the foregoing transactions
described in clauses (i) through (iv), a "Company Transaction") or (b) furnish
any information with respect to, assist or participate in or facilitate in any
other manner any effort or attempt by any Person (other than Purchaser and its
Affiliates) to do or seek to do any of the foregoing. Each of Parent and the
Company agree to notify Purchaser immediately if any Person makes any proposal,
offer, inquiry or contact with respect to a Company Transaction.
5.16 ASSIGNMENT OF NONDISCLOSURE AGREEMENTS. On the Closing Date,
Parent shall assign and delegate (or cause to be assigned and delegated) to
Purchaser or the Company all of its rights and obligations under all
confidentiality and nondisclosure (or similar) agreements between Parent or its
Affiliates, on the one hand, and prospective
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purchasers of the Membership Interests, on the other hand, entered into in
connection with the sale of the Membership Interests or the evaluation of such
sale.
5.17 NON-COMPETITION AND NON-SOLICITATION.
(a) Except as permitted under Section 5.17(b), during the period
beginning on the Closing Date and ending on the thirty-month anniversary of the
Closing Date (the "Restricted Period"), Parent shall not (and Parent shall cause
its Affiliates not to), directly or indirectly: (i) engage in the business of
providing information assurance products and services, infrastructure solutions,
integration and applications development services and networking services to the
United States Government (the "Restricted Business") in the United States or in
any other country or territory in which the Company is engaging in the
Restricted Business as of the Closing (the "Restricted Territory"); (ii) own any
interest in, or manage or control, any Person engaged in the Restricted Business
in the Restricted Territory; (iii) consult with, or render services for, any
Person engaged in the Restricted Business in the Restricted Territory with
respect to the Restricted Business in the Restricted Territory; (iv) induce or
attempt to induce any employee of the Company or any Company Subsidiary to leave
the employ of the Company or any Company Subsidiary; or (v) hire any person who
was employed by the Company or any Company Subsidiary as a director or higher at
any time during the six-month period prior to the date of such hire.
(b) Notwithstanding Section 5.17(a): (i) Parent or any of its
Affiliates may during the Restricted Period own up to 2% of the stock of a
publicly traded Person engaged in the Restricted Business in the Restricted
Territory; (ii) Parent or any of its Affiliates may during the Restricted Period
engage in the Restricted Business in any country or territory in which the
Company is engaging in the Restricted Business as of the Closing other than the
United States, except that Parent and its Affiliates may not during the
Restricted Period pursue or otherwise bid for any Restricted Contract involving
the provision of products or services in any such country or territory; (iii)
Parent or any of its Affiliates may during the Restricted Period engage in the
Restricted Business in the Restricted Territory with instrumentalities or other
governmental or quasi-governmental authorities or entities of the United States
which have outstanding equity securities held by Persons other than the United
States Government (so-called "Government Sponsored Enterprises"), except that
Parent and its Affiliates may not during the Restricted Period pursue or
otherwise bid for any Restricted Contract with any such Government Sponsored
Enterprise; (iv) Parent or any of its Affiliates may during the Restricted
Period acquire, acquire an interest in, acquire management or control of, or
joint venture with, any Person engaged in the Restricted Business in the
Restricted Territory, except that such Person or joint venture may not during
the Restricted Period pursue or otherwise bid for any Restricted Contract; (v)
Parent or any of its Affiliates (other than Ultimate Parent) may during the
Restricted Period merge or combine with, or be acquired by (by way of sale of
ownership interests or assets, direct or indirect merger or combination or other
transaction), any Person engaged in the Restricted Business in the Restricted
Territory as of the Closing or at the time of such transaction and, if after
such transaction Ultimate Parent does not control Parent (or in the case of a
transaction involving an Affiliate of Parent (other than Ultimate Parent), such
Affiliate) or such Person, after such transaction Parent (or in the
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case of a transaction involving an Affiliate of Parent (other than Ultimate
Parent), such Affiliate) and such Person may engage in the Restricted Business
in the Restricted Territory during the remainder of the Restricted Period; (vi)
Ultimate Parent may during the Restricted Period merge or combine with, or be
acquired by (by way sale of ownership interests or assets, direct or indirect
merger or combination or other transaction), any Person (other than an Affiliate
of Ultimate Parent prior to such transaction) engaged in the Restricted Business
in the Restricted Territory as of the Closing or at the time of such transaction
and after such transaction Ultimate Parent, any such Person, any such Person
surviving such transaction and any of their Affiliates may engage in the
Restricted Business in the Restricted Territory during the remainder of the
Restricted Period; (vii) if asked by any of their respective global alliance
partners to partner with, or serve as a subcontractor for, such global alliance
partner on Restricted Business in the Restricted Territory during the Restricted
Period, Parent or any of its Affiliates may so partner or serve if (aa) prior to
agreeing to so partner or serve, Parent or such Affiliate first offers the
opportunity to so partner or serve to the Company in a written notice setting
forth in reasonable detail the terms and conditions of such opportunity and (bb)
the Company either elects not to pursue such opportunity or does not promptly
after such notice devote appropriate personnel and other resources to the
pursuit of such opportunity in conjunction with such global alliance partner;
(viii) during the Restricted Period, QualxServ LLC may continue to provide the
installation and on-site diagnostic and maintenance services contemplated by
either the DSP Agreement or the Reverse Agency Agreement to be provided by
Parent or its Affiliates to United States Government customers of Dell
Marketing, L.P. or Dell USA, L.P., respectively, in the Restricted Territory;
(ix) Parent or any of its Affiliates may during the Restricted Period perform
their respective obligations under the Transitional Services Agreement; or (x)
Parent or any of its Affiliates may solicit to hire employees of the Company or
any of the Company Subsidiaries by placing general advertisements in trade
journals, newspapers or similar publications so long as such advertisements are
not directed at such employees.
(c) If, at the time of enforcement of the covenants and
agreements in this Section 5.17(a), a court shall hold that the Restricted
Period, Restricted Business or Restricted Area are unreasonably long, broad or
large under circumstances then existing, such court shall be allowed and
directed to reduce, narrow or shorten the Restricted Period, Restricted Business
or Restricted Area to cover the maximum period, scope and area permitted by Law.
(d) Holdings and Purchaser have advised Parent that (i) the
covenants and agreements in Section 5.17(a) were a material inducement to
Holdings and Purchaser to enter into this Agreement and to perform their
respective obligations hereunder and (ii) Holdings and Purchaser would not
obtain the benefit of the bargain set forth in this Agreement as specifically
negotiated by the parties hereto, and the Company and the Company Subsidiaries
would suffer a significant loss of goodwill, if either Parent or any of its
Affiliates breached the covenants and agreements in Section 5.17(a).
5.18 TAX MATTERS.
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(a) ALLOCATION OF TAXES FOR STRADDLE PERIOD. For purposes of
Sections 8.2(d) and 8.3(e), in the case of any taxable period that includes (but
does not end on) the Closing Date (a "Straddle Period"), (i) the amount of any
Taxes based on or measured by income or receipts of the Company and any Company
Subsidiary for the Pre-Closing Tax Period shall be determined based on an
interim closing of the books as of the close of business on the Closing Date and
(ii) the amount of other Taxes of the Company and its Subsidiaries for a
Straddle Period (A) which relate to the Pre-Closing Tax Period shall be deemed
to be the amount of such Tax for the entire taxable period multiplied by a
fraction the numerator of which is the number of days in the taxable period
ending on the Closing Date and the denominator of which is the number of days in
such Straddle Period and (B) which relate to the Post-Closing Tax Period shall
be deemed to be the amount of such Tax for the entire taxable period multiplied
by a fraction the numerator of which is the number of days in the taxable period
ending after the Closing Date and the denominator of which is the number of days
in such Straddle Period.
(b) COOPERATION ON TAX MATTERS.
(i) Purchaser, the Company and the Company Subsidiaries, and
Parent shall cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the filing of Tax Returns for taxable periods
beginning before the Closing Date and with any audit or Litigation with respect
to Taxes. Such cooperation shall include the retention and (upon the other
party's request) the provision of records and information which are reasonably
relevant to any such audit or Litigation and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Company, the Company Subsidiaries, Parent
and Purchaser agree (A) to retain all books and records with respect to Tax
matters pertinent to the Company and each of the Company Subsidiaries relating
to any Pre-Closing Taxable Period until the expiration of the statute of
limitations (and, to the extent notified by Purchaser or Parent, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (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,
each Company Subsidiary or Parent, as the case may be, shall allow the other
party to take possession of such books and records.
(ii) Purchaser, the Company, the Company Subsidiaries and
Parent further agree, upon request, 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 Transaction).
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ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE TRANSACTION
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO CONSUMMATE THE
TRANSACTION. The respective obligations of each party to consummate the
Transaction are subject to the satisfaction at or prior to the Closing Date of
the following conditions:
(a) INJUNCTION. There shall not be in effect any Order of any
court or Governmental Authority of competent jurisdiction directing that the
Transaction not be consummated as provided herein.
(b) HSR ACT. The waiting periods applicable to the
consummation of the Transaction under the HSR Act shall have expired or been
terminated.
6.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF HOLDINGS AND
PURCHASER. The obligations of Holdings and Purchaser to consummate the
Transaction are subject to the satisfaction at or prior to the Closing Date of
the following conditions, any and all of which may be waived in whole or in part
by Holdings and Purchaser to the extent permitted by applicable Law:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Parent in Article III that are subject to
materiality or Material Adverse Effect qualifications shall be true and correct
in all respects and each of the representations and warranties of Parent in
Article III that are not subject to materiality or Material Adverse Effect
qualifications shall be true and correct in all material respects, in each case
as of the date of this Agreement and (except to the extent any such
representation and warranty speaks as of an earlier date) as of the Closing Date
as though made on and as of the Closing Date.
(b) PERFORMANCE. Parent and the Company shall have performed
in all material respects all of their respective covenants and agreements under
this Agreement to be performed or complied with on or prior to the Closing Date
and the Company and the Company Subsidiaries shall have performed in all
respects the covenants and agreements in Section 5.9.
(c) FINANCING. Holdings and Purchaser shall have obtained debt
financing in the amounts set forth in, and on substantially the terms and
conditions set forth in, the Debt Financing Commitments.
(d) OTHER DELIVERIES. At the Closing, Purchaser shall have
received (i) a certificate dated the Closing Date and executed by the chief
executive officer or chief financial officer of Parent certifying to the
fulfillment of the conditions specified in Sections 6.2(a) and (b); (ii) good
standing certificates for each of the Company and the Company Subsidiaries from
their respective jurisdictions of incorporation and each jurisdiction in which
the Company and the Company Subsidiaries are qualified to do business as a
foreign corporation, in each case dated as of a recent date prior to the Closing
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Date; (iii) certified copies of the resolutions of the members of Parent and the
board of directors of the Company authorizing the execution, delivery and
performance by Parent and the Company of this Agreement and the other agreements
contemplated hereby and the consummation by Parent and the Company of the
Transaction; and (iv) the deliveries required by Sections 2.4(a), (c) and (d).
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATION OF PARENT. The
obligation of Parent to consummate the Transaction is subject to the
satisfaction at or prior to the Closing Date of the following conditions, any
and all of which may be waived in whole or in part by Parent to the extent
permitted by applicable Law:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of Holdings and Purchaser in Article IV that are subject to
materiality or Purchaser Material Adverse Effect qualifications shall be true
and correct in all respects and each of the representations and warranties of
Holdings and Purchaser in Article III that are not subject to materiality or
Purchaser Material Adverse Effect qualifications shall be true and correct in
all material respects, in each case as of the date of this Agreement and (except
to the extent any such representation and warranty speaks as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date.
(b) PERFORMANCE. Holdings and Purchaser shall have performed in
all material respects their respective covenants and agreements under this
Agreement to be performed or complied with on or prior to the Closing Date.
(c) OTHER DELIVERIES. At the Closing, Parent shall have
received (i) certificates dated the Closing Date and executed by the respective
chief executive officers or chief financial officers of Holdings and Purchaser
certifying to the fulfillment of the conditions specified in Sections 6.3(a) and
(b); (ii) good standing certificates for each of Holdings and Purchaser from
their respective jurisdictions of incorporation and each jurisdiction in which
Holdings or Purchaser is qualified to do business as a foreign corporation, in
each case dated as of a recent date prior to the Closing Date; (iii) certified
copies of the resolutions of the boards of directors of Holdings and Purchaser
authorizing the execution, delivery and performance by Holdings and Purchaser of
this Agreement and the other agreements contemplated hereby and the consummation
by Holdings and Purchaser of the Transaction; and (iv) the deliveries required
by Sections 2.4(b), (c), (d) and (e).
ARTICLE VII
TERMINATION
7.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the Transaction may be abandoned at any time prior to the Closing Date by
the mutual written consent of Parent, Holdings and Purchaser.
7.2 TERMINATION BY HOLDINGS AND PURCHASER. This Agreement may be
terminated and the Transaction may be abandoned by Holdings and Purchaser at any
time
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prior to Closing if there has been a breach by Parent of any representation,
warranty, covenant or agreement in this Agreement which, if uncured, would give
rise to the failure of a condition in Sections 6.2(a) or (b) and such breach is
incapable of being cured or, if capable of being cured, has not been cured
within fifteen business days following receipt by Parent of written notice of
such breach from Holdings and Purchaser and has not been waived by Holdings and
Purchaser pursuant hereto.
7.3 TERMINATION BY PARENT. This Agreement may be terminated and the
Transaction may be abandoned by Parent at any time prior to Closing if there has
been a breach by Holdings or Purchaser of any representation, warranty, covenant
or agreement in this Agreement which, if uncured, would give rise to the failure
of a condition in Sections 6.3(a) or (b), and such breach is incapable of being
cured or, if capable of being cured, has not been cured within fifteen business
days following receipt by Holdings and Purchaser of written notice of such
breach from Parent and has not been waived by Parent pursuant hereto.
7.4 TERMINATION BY EITHER PARTY. This Agreement may be terminated
and the Transaction may be abandoned either by Parent, on the one hand, or
Holdings and Purchaser, on the other hand, by prompt written notice to the other
party or parties if:
(a) any court or Governmental Authority shall have issued an
Order permanently restraining, enjoining or otherwise prohibiting the
Transaction, and such Order shall have become final and nonappealable; PROVIDED,
HOWEVER, that the party seeking to terminate this Agreement pursuant to this
Section 7.4(a) shall have used all commercially reasonable efforts to have such
Order vacated; or
(b) the Transaction shall not have been consummated by December
13, 2002; PROVIDED, HOWEVER, that neither Parent, Holdings, nor Purchaser may
terminate this Agreement pursuant to this Section 7.4(b) if such party's breach
(including the breach by the Company in the case of Parent) of this Agreement
has prevented consummation of the Transaction on or prior to such date.
7.5 EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to this Article VII, the Transaction shall be abandoned, without
further action by either of the parties hereto, and this Agreement shall become
void and have no further force and effect, except that (a) Section 9.2 and the
Confidentiality Agreement shall survive such termination and remain in effect
and (b) no party shall be relieved from any liabilities or damages arising out
of a willful breach of this Agreement prior to such termination.
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ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
8.1 SURVIVAL. The respective representations and warranties of
Parent, on the one hand, and Holdings and Purchaser, on the other hand, in
Articles III and IV shall survive until the earlier of (a) the date on which the
audit of the Company's financial statements for its fiscal year ending December
31, 2003 has been completed or (b) March 31, 2004 (and shall terminate and be of
no further force or effect as of the earlier of such dates), except that (i) the
representations and warranties in Section 3.1, 3.2 and 3.18 shall survive the
Closing forever and shall not terminate and (ii) the representations and
warranties in Sections 3.9 and 3.12 shall survive the Closing and until the
expiration of the applicable statute of limitations period. The respective
covenants and agreements of Parent, the Company, Holdings and Purchaser in this
Agreement which are to be performed or complied with before the Closing shall
terminate and, except as provided in Section 8.4(c), be of no further force or
effect as of the Closing. The respective covenants and agreements of Parent, the
Company, Holdings and Purchaser in this Agreement which are to be performed or
complied with after the Closing shall survive the Closing and shall be fully
effective and enforceable for the periods therein indicated or where not
indicated, forever.
8.2 INDEMNIFICATION BY PARENT. Subject to the other provisions of
this Article VIII, if the Transaction is consummated, Parent shall indemnify
Holdings, Purchaser and the Company from and against and in respect of any and
all Losses incurred by Holdings, Purchaser or the Company to the extent relating
to or arising out of: (a) any failure of any of the representations and
warranties of Parent in Article III to be true and correct as of the date of
this Agreement or (except to the extent any such representation and warranty
speaks as of an earlier date or as set forth in the certificate delivered
pursuant to Section 6.2(d)(i)) as of the Closing Date; (b) any failure by Parent
to perform or comply with its covenants and agreements in this Agreement; (c)
any failure by the Company to perform or comply with its covenants and
agreements in this Agreement which are to be performed or complied with by it
before the Closing; or (d) except to the extent reserved for on the Final
Closing Balance Sheet, (i) all Taxes (or the non-payment thereof) of the Company
and the Company Subsidiaries for all taxable periods ending on or before the
Closing Date and the portion through the end of the Closing Date for any taxable
period that includes (but does not end on) the Closing Date (a "Pre-Closing Tax
Period") and (ii) any liability for Taxes of any Person imposed on the Company
or any Company Subsidiary pursuant to Treasury Regulation Section 1.1502-6 (or
any analogous or similar provision of income Tax Law), as a transferee or
successor, by contract, or otherwise, to the extent such liability is
attributable to a Pre-Closing Tax Period. For purposes of determining under
Section 8.2(a) whether there has been a failure of any representation and
warranty of Parent in Sections 3.1(a), 3.3, 3.4(b), 3.6(b), 3.7, 3.8, 3.9(a),
3.9(d), 3.10(c), 3.10(e), 3.11(a), 3.12, and 3.13 to be true and correct, the
materiality and Material Adverse Effect qualifications in those representations
and warranties shall be ignored.
8.3 INDEMNIFICATION BY HOLDINGS AND PURCHASER. Subject to the other
provisions of this Article VIII, if the Transaction is consummated, Holdings and
Purchaser, jointly and severally, shall indemnify Parent from and against and in
respect of any and all
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Losses incurred by Parent, to the extent relating to or arising out of: (a) any
failure of any of the representations and warranties of Holdings or Purchaser in
Article IV to be true and correct as of the date of this Agreement or (except to
the extent any such representation and warranty speaks as of an earlier date or
as set forth in the certificate delivered pursuant to Section 6.3(c)(i)) as of
the Closing Date; (b) any failure by Holdings or Purchaser to perform or comply
with their respective covenants and agreements in this Agreement; (c) any
failure by the Company to perform or comply with its covenants and agreements in
this Agreement which are to be performed or complied with by it after the
Closing; (d) the use of any Ultimate Parent Name from and after the Closing
Date; or (e) except with respect to any Taxes that Parent is required to
indemnify Holdings, Purchaser or the Company with respect to any breach of any
of the representations of Parent in Section 3.9 pursuant to Section 8.2(a), (i)
all Taxes (or the non-payment thereof) of the Purchaser and its Affiliates
(including the Company and the Company Subsidiaries after the Closing Date) for
all taxable periods beginning after the Closing Date and the portion of any
taxable period beginning the day after the Closing Date for any taxable period
that includes (but does not end on) the Closing Date (a "Post-Closing Tax
Period") and (ii) all Taxes to the extent reserved for on the Final Closing
Balance Sheet. For purposes of determining under Section 8.3(a) whether there
has been a failure of any representation and warranty of Holdings or Purchaser
in Sections 4.3(b) to be true and correct, the materiality and Purchaser
Material Adverse Effect qualifications in those representations and warranties
shall be ignored.
8.4 LIMITATION OF LIABILITY.
(a) Parent shall not have any obligation or liability under
Section 8.2(a) until the aggregate amount of Parent Obligations Subject to the
Parent Deductible exceeds the Parent Deductible, and thereafter the obligation
and liability of Parent under Section 8.2(a) shall only be Losses under Section
8.2(a) which, when combined with the aggregate amount of other Parent
Obligations Subject to the Parent Deductible, are in excess of the Parent
Deductible. Parent shall have no further obligation or liability under Section
8.2(a) after the aggregate amount paid by Parent for Parent Obligations Subject
to the Parent Cap equals the Parent Cap. The Parent Deductible and Parent Cap
shall not apply to any breach of any representation and warranty in Sections
3.1(b), 3.2 or 3.18. The liability and obligation of Parent for breaches of the
covenants and agreements containing the Parent Obligations Subject to the Parent
Deductible and the Parent Obligations Subject to the Parent Cap under Section
8.2(b) shall be limited to the liability and obligation of Parent for the Parent
Obligations Subject to the Parent Deductible and the Parent Obligations Subject
to the Parent Cap as set forth in the respective Sections of this Agreement
containing the respective Parent Obligations Subject to the Parent Deductible
and the Parent Obligations Subject to the Parent Cap.
(b) Holdings and Purchaser shall not have any obligation or
liability under Section 8.3(a) until such time as the aggregate amount of Losses
under Section 8.3(a) exceeds the Purchaser Deductible, and thereafter the
liability and obligation of Holdings and Purchaser under Section 8.3(a) shall be
only for Losses in excess of the Purchaser Deductible. Holdings and Purchaser
shall have no further obligation or liability under Section 8.3(a) after the
aggregate amount paid by Holdings and Purchaser under
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Section 8.3(a) equals the Purchaser Cap. The Purchaser Deductible and Purchaser
Cap shall not apply to any breach of any representation and warranty in Sections
4.1(b), 4.2 or 4.8.
(c) No party shall be liable for any Losses under Sections 8.2
or 8.3 unless the party seeking such indemnification (the "Indemnified Party")
has: (i) delivered the notice of Claim in respect of such Loss required by
Section 8.5; and (ii) such notice of Claim is received by the party from which
indemnification is sought (the "Indemnifying Party") prior to (aa) the date on
which the representation and warranty or covenant and agreement to which such
Loss relates to or arises out of terminates pursuant to Section 8.1 or (bb) if
such notice of Claim relates to a breach of a covenant and agreement which was
to be performed or complied with prior to the Closing, the earlier of (A) the
date on which the audit of the Company's financial statements for its fiscal
year ending December 31, 2003 has been completed or (B) March 31, 2004. If a
notice of Claim has been delivered and received in accordance with this Section
8.4(c), the termination of the representation and warranty or covenant and
agreement to which such notice or Claim relates shall have no effect on the
liability of an Indemnifying Party under Sections 8.2 or 8.3.
(d) If the Transaction is consummated, Indemnification under
Sections 8.2 and 8.3 shall be the exclusive remedy of Parent, Holdings and
Purchaser, as applicable, for breach of any representation and warranty or
covenant and agreement contained in this Agreement; PROVIDED, HOWEVER, that the
limitation in this Section 8.4(d) shall not apply to: (i) any breach of the
covenants and agreements in Section 5.13 or indemnification under Section 8.3(c)
which Holdings and Purchaser acknowledge could not be remedied solely by
recovery of monetary damages and that, therefore, in addition to any other
remedy or relief available to Ultimate Parent or its Affiliates for any such
breach, Ultimate Parent or its Affiliates shall be entitled to injunctive
relief; or (ii) any breach of covenants and agreements in Section 5.17 which
Parent acknowledge could not be remedied solely by recovery of monetary damages
and that, therefore, in addition to any other remedy or relief available for any
such breach, Holdings and Purchaser shall be entitled to injunctive or similar
relief.
8.5 NOTICE OF CLAIM. If the Indemnified Party shall become aware of
any claim, proceeding or other matter (a "Claim") which may give rise to a Loss
that will be taken into account for purposes of calculating whether the
Indemnifying Party's indemnification obligation arises pursuant to Sections 8.2
or 8.3, the Indemnified Party shall promptly give notice thereof to the
Indemnifying Party. Such notice shall specify whether the Claim arises as a
result of a Claim by a Person against the Indemnified Party (a "Third Party
Claim") or whether the Claim does not so arise (a "Direct Claim"), and shall
also specify with reasonable particularity (to the extent that the information
is available) the factual basis for the Claim and the amount of the Claim, if
known. If the Indemnified Party does not promptly give notice of any Claim as
specified above, such failure shall not be deemed a waiver of the Indemnified
Party's right to indemnification or application to the applicable deductible set
forth in Section 8.4 for Losses in connection with such Claim, but the amount of
reimbursement to which the Indemnified Party is entitled or application to the
applicable deductible shall be reduced by the amount, if any,
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by which the Indemnified Party's Losses would have been reduced had such notice
been promptly delivered.
8.6 DIRECT CLAIMS. With respect to any Direct Claim, following
receipt of notice from the Indemnified Party of the Claim, the Indemnifying
Party shall have 45 days to make such investigation of the Claim as is
considered necessary or desirable. For the purpose of such investigation, the
Indemnified Party shall make available to the Indemnifying Party the information
relied upon by the Indemnified Party to substantiate the Claim, together with
all such other information as the Indemnifying Party may reasonably request. If
the Indemnifying Party and the Indemnified Party agree at or prior to the
expiration of such 45-day period to the validity and amount of such Claim, the
Indemnifying Party shall pay, subject to the applicable limitations in Sections
8.4(a) or (b), the agreed-upon amount of the Claim to the Indemnified Party in
accordance with Section 8.8. If the Indemnifying Party and the Indemnified Party
do not so agree within such 45-day period, the Indemnified Party may initiate
litigation with respect thereto before a court of competent jurisdiction in the
State of Delaware.
8.7 THIRD PARTY CLAIMS.
(a) With respect to any Third Party Claims, the Indemnifying
Party shall have the right, at its expense and at its election, to assume
control of the negotiation, settlement and defense of the Claim through counsel
of its choice, except that the Indemnifying Party shall, upon the Indemnified
Party's request, not assume control of, or if it shall have previously assumed
control of, transfer to the Indemnified Party control of (i) any Third Party
Claim brought by a Governmental Authority in which such Governmental Authority
alleges in writing that the Indemnified Party or any of its Affiliates committed
a criminal offense or (ii) any Third Party Claim in which injunctive or
equitable relief which could reasonably be expected to have a material adverse
effect on the business of the Indemnified Party or any of its Affiliates is
sought. The election of the Indemnifying Party to assume such control shall be
made within 90 days of receipt of notice of the Third Party Claim or such
earlier time in the event a responsive pleading, appearance or motion is due
with respect to such Claim, failing which the Indemnifying Party shall be deemed
to have elected not to assume such control. If the Indemnifying Party elects to
assume such control, the Indemnified Party shall have the right to be informed
and consulted with respect to the negotiation, settlement or defenses of such
Third Party Claim and to retain counsel to act on its behalf, but the fees and
disbursements of such counsel shall be paid by the Indemnified Party unless the
Indemnifying Party consents to the retention of such counsel or unless the named
parties to any action or proceeding include both the Indemnifying Party and the
Indemnified Party and a representation of both the Indemnifying Party and the
Indemnified Party by the same counsel would be inappropriate due to the actual
or potential differing interests between them (such as the availability of
different defenses). If the Indemnifying Party, having elected to assume such
control, thereafter fails to prosecute or defend the Third Party Claim within a
reasonable period of time, the Indemnified Party shall be entitled to assume
such control, and the Indemnifying Party shall be bound by the results obtained
by the Indemnified Party with respect to the Third Party Claim. If any Third
Party Claim is of a nature such that the Indemnified Party is required by
applicable Law to make a payment to
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any Person (a "Third Party") with respect to the Third Party Claim before the
completion of settlement negotiations or related legal proceedings, the
Indemnified Party may make such payment and the Indemnifying Party shall,
subject to this Article VIII, after demand by the Indemnified Party, reimburse
the Indemnified Party for such payment. If the amount of any liability of the
Indemnified Party under the Third Party Claim in respect of which such payment
was made, as finally determined, is less than the amount which was paid by the
Indemnifying Party to the Indemnified Party, the Indemnified Party shall,
promptly after receipt of the difference from the Third Party, pay the amount of
such difference to the Indemnifying Party.
(b) If the Indemnifying Party fails to assume control of the
defense of any Third Party Claim, the Indemnified Party shall have the exclusive
right to consent, settle or pay the amount claimed. Whether or not the
Indemnifying Party assumes control of the negotiation, settlement or defense of
any Third Party Claim, the Indemnifying Party shall not settle any Third Party
Claim without the written consent of the Indemnified Party, which consent shall
not be unreasonably withheld, conditioned or delayed, unless such settlement
provides solely for monetary damages or other monetary payments.
(c) The Indemnified Party and the Indemnifying Party shall
cooperate fully with each other with respect to Third Party Claims and,
regardless of which party has control thereof as provided for herein, shall keep
each other reasonably advised with respect thereto.
8.8 MANNER OF PAYMENT. Indemnification payments pursuant to this
Agreement shall be in cash, except that after Parent has made $22,169,630 in
indemnification payments in cash, it may elect to pay up to $3,600,870 in
indemnification payments in shares of Series B Preferred Stock valued at the
"Liquidation Value" for such shares, as defined in the Amended and Restated
Certificate of Incorporation. Indemnification Payments shall be due and payable
not later than ten days after the determination of the validity and amount
thereof in accordance with this Agreement and if not paid on such tenth day
shall bear interest at 6% per annum from such tenth day until the date of
payment. Cash indemnification payments shall be effected by wire transfer of
immediately available funds from the Indemnifying Party to an account designated
by the Indemnified Party.
8.9 DETERMINATION OF LOSSES.
(a) Subject to Sections 8.9(b) and (c), indemnification payments
shall be paid by the Indemnifying Party without reduction for any Tax Benefits
or insurance proceeds available to the Indemnified Party.
(b) If the Indemnified Party receives insurance proceeds as a
result of any Losses, the Indemnified Party shall pay the amount of such
insurance proceeds (but not in excess (when coupled with any Tax Benefits paid
pursuant to Section 8.9(c)) of the indemnification payment or payments actually
received from the Indemnifying Party with respect to such Losses) to the
Indemnifying Party as such insurance proceeds are actually received by the
Indemnified Party.
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(c) If the Indemnified Party or any Affiliate of the Indemnified
Party (other than in the case of Holdings, Purchaser and the Company, the
stockholders of Holdings as of the Closing) recognizes a Tax Benefit as a result
of any Losses, the Indemnifying Party shall be entitled to such Tax Benefit and
the Indemnified Party shall pay to the Indemnifying Party the amount of such Tax
Benefit (but not in excess (when coupled with any insurance proceeds paid
pursuant to Section 8.9(b)) of the indemnification payment or payments actually
received from the Indemnifying Party with respect to such Losses) at such time
or times as and to the extent that the Indemnified Party or any Affiliate of the
Indemnified Party (other than in the case of Holdings, Purchaser and the
Company, the stockholders of Holdings as of the Closing) actually realizes such
benefit through a refund of Tax or reduction in the actual amount of Taxes which
the Indemnified Party or any Affiliate of the Indemnified Party (other than in
the case of Holdings, Purchaser and the Company, the stockholders of Holdings as
of the Closing) would otherwise have had to pay if such payment for Losses had
not been made, calculated by computing the amount of Taxes before and after
inclusion of any Tax items attributable to such Losses for which indemnification
was made and treating such Tax items as the last items claimed for any taxable
year; PROVIDED, HOWEVER, that any such Tax Benefit shall be reduced by the
amount of Tax detriment (including the tax effect of any item of income or gain
or other item (including any decrease in Tax basis) which increases any amounts
paid or payable with respect to Taxes, any reduction in the amount of any refund
of Tax which would otherwise have been available, the utilization of any net
operating loss or capital loss or the utilization of any Tax credits or other
Tax attributes) that the Indemnified Party suffered as a result of any Losses.
If any adjustments are made to any Tax Return relating to the Indemnified Party
for any taxable period as a result of or in settlement of any audit, other
administrative proceeding or judicial proceeding or as the result of the filing
of an amended return to reflect the consequences of any determination made in
connection with any such audit or proceeding and if such adjustment results in
any change in the amount of any Tax Benefit or Tax detriment to the Indemnified
Party, appropriate payments will be made between the Indemnifying Party and the
Indemnified Party in accordance with the previous sentence to properly reflect
such adjustment amount.
8.10 TAX TREATMENT OF INDEMNIFICATION AND CSOC PAYMENTS. Any
indemnification payment made pursuant to this Article VIII, any payments made by
the Company to Parent pursuant to Sections 5.14(e)(ii)(aa), (cc) or (ee) or any
payments made by Parent to (a) Purchaser pursuant to Sections 5.14(e)(iii),
5.14(e)(iv) or (b) the Company pursuant to Sections 5.14(g)(ii), 5.14(g)(iii) or
5.14(h) shall be treated as an adjustment to the Purchase Price for Tax
purposes.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 INTERPRETATION.
(a) Whenever the words "include," "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation."
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(b) The words "hereof," "hereby," "herein" and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this Agreement,
and article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified.
(c) The plural of any defined term shall have a meaning
correlative to such defined term, the singular of any defined term shall have a
meaning correlative to such term defined in the plural and words denoting any
gender shall include all genders. Where a word or phrase is defined herein, each
of its other grammatical forms shall have a corresponding meaning.
(d) A reference to any party to this Agreement or any other
agreement or document shall include such party's permitted successors and
permitted assigns.
(e) A reference to any legislation or to any provision of any
legislation shall include any amendment, modification or re-enactment thereof,
any legislative provision substituted therefore and all regulations and
statutory instruments issued thereunder or pursuant thereto.
(f) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
9.2 PAYMENT OF EXPENSES AND OTHER PAYMENTS. Whether or not the
Transaction shall be consummated and except as otherwise provided in this
Agreement, each party hereto shall pay its own expenses incident to preparing,
entering into and carrying out this Agreement and the consummation of the
Transaction, except that if the Transaction is consummated in accordance with
this Agreement, the Company shall pay all of the expenses of Holdings and
Purchaser incident to preparing, entering into and carrying out this Agreement
and the consummation of the Transaction. The expenses which have been incurred
by the Company as of the Closing in preparing, entering into and carrying out
this Agreement and the consummation of the Transaction but which have not been
paid as of the Closing, shall be included in "Current Liabilities" on the Final
Closing Balance Sheet for purposes of calculating Closing Net Working Capital
and the resulting Cash Portion of the Purchase Price.
9.3 AMENDMENT. This Agreement may be amended only by a written
agreement signed by each party hereto.
9.4 WAIVER AND EXTENSION. At any time prior to the Closing Date, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) except to the extent
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prohibited by Law, waive compliance with any of the agreements described or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by such party. The failure of any party at any time or times to
demand performance of any provision hereof shall in no manner affect the right
of such party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or the breach of any term contained in
this Agreement in one or more instances shall be deemed to be a, or construed as
a further or continuing, waiver of such condition or breach.
9.5 COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute one agreement.
9.6 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware, without regard
to the conflict of law provisions thereof.
9.7 NOTICES. Any notice, request, instruction or other document to
be given hereunder by any party to another party shall be in writing and shall
be deemed given when delivered personally, upon receipt of a transmission
confirmation (with a confirming copy sent by overnight courier) if sent by
facsimile or like transmission and on the next business day when sent by Federal
Express, United Parcel Service, Express Mail, or other reputable overnight
courier, as follows:
(a) If to Parent, to:
GetronicsWang Co. LLC
290 Concord Road
Billerica, Massachusetts 01821
Attention: Steven Boyce, Vice President and
General Counsel, North America
(978) 625-3010 (telephone)
(978) 625-4213 (facsimile)
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with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
Boston, MA 02108
Attention: David T. Brewster, Esq.
(617) 573-4800 (telephone)
(617) 573-4822 (facsimile)
(b) If to Holdings or Purchaser, to:
DigitalNet, Inc.
6700-A Rockledge Drive
Suite 525
Bethesda, MD 20817
Attn: Jack Pearlstein
(301) 530-2464 (telephone)
(301) 530-5023 (facsimile)
and:
GTCR Golder Rauner, LLC
6100 Sears Tower
Chicago, IL 60606-6402
Attn: Philip Canfield and Craig Bondy
(312) 382-2200 (telephone)
(312) 575-3211 (facsimile)
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attn: Stephen L. Ritchie, Esq. and Martin A. DiLoreto, Esq.
(312) 861-2000 (telephone)
(312) 861-2200 (facsimile)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice. Nothing in this section shall be deemed to
constitute consent to the manner and address for service of process in
connection with any legal proceeding (including Litigation arising out of or in
connection with this Agreement), which service shall be effected as required by
applicable Law.
9.8 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and the
Confidentiality Agreement together constitute the entire agreement among the
parties with
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respect to the subject matter hereof and thereof and supersede all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof and thereof. This Agreement
and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior written consent
of the other parties, except (a) by operation of law or (b) as otherwise
permitted in this Section 9.8. Prior to the Closing, Holdings and Purchaser may
assign their respective rights and obligations under this Agreement (including
Purchaser's right to purchase the Membership Interests), in whole or in part, to
any of their Affiliates without the consent of any of the other parties hereto;
PROVIDED, HOWEVER, that no such assignment shall relieve Holdings or Purchaser
of any of their respective obligations hereunder. After the Closing, Holdings
and Purchaser may assign their respective rights and obligations under this
Agreement, in whole or in part, in connection with any disposition or transfer
of all or any substantial portion of the Company or any Company Subsidiary or
their respective businesses in any form of transaction without the consent of
any of the other parties hereto; PROVIDED, HOWEVER, that no such assignment
shall relieve Holdings or Purchaser of any of their respective obligations
hereunder. Holdings, Purchaser and, following the Closing, the Company and the
Company Subsidiaries, may assign any or all of their rights under this
Agreement, including their right to indemnification, to any of their lenders as
collateral security without the consent of any of the other parties hereto;
PROVIDED, HOWEVER, that no such assignment shall relieve Holdings, Purchaser,
the Company or any Company Subsidiary of any of their respective obligations
hereunder. After the Closing, Parent may assign any or all of its rights under
this Agreement, including its right to indemnification, in whole or in part, to
any of its Affiliates without the consent of any of the other parties hereto;
PROVIDED, HOWEVER, that no such assignment shall relieve Parent of any of its
obligations hereunder.
9.9 THIRD PARTIES. Except for the parties entitled to
indemnification referred to in Section 5.8, nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any Person other
than the parties hereto and their respective successors or assigns, any rights
or remedies under or by reason of this Agreement.
9.10 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
9.11 CAPTIONS. The article, section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
9.12 INVESTMENT REPRESENTATIONS. In connection with the issuance of
the Series B Preferred Stock to Parent hereunder, Parent hereby represents and
warrants that: (a) it has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of the Series B
Preferred Stock, has had full access to such other information concerning
Holdings and Purchaser as it has requested and possesses
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substantial information about, and familiarity with, Holdings and Purchaser as a
result of the information provided to it or possessed by it prior to the date
hereof; (b) it is able to bear the economic risk of a complete loss of the
investment in the Series B Preferred Stock for an indefinite period of time; and
(c) it is acquiring the Series B Preferred Stock for its own account with the
present intention of holding the Series B Preferred Stock for investment
purposes and has no intention of selling such Series B Preferred Stock or any
portion thereof in a public distribution in violation of federal or state
securities laws. The Series B Preferred Stock will be imprinted with a legend in
substantially the following form:
THE SECURITIES REPRESENTED HEREBY WERE ORIGINALLY ISSUED ON [_____],
2002, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION THEREUNDER.
PRIOR TO ANY SALE OR TRANSFER OF THESE SECURITIES, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ALL APPLICABLE STATE
SECURITIES LAWS COVERING SUCH SALE OR TRANSFER, THE HOLDER HEREOF SHALL HAVE
DELIVERED TO THE ISSUER HEREOF (THE "COMPANY") AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE OR TRANSFER IS EXEMPT
FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement as of the date first above written.
GETRONICSWANG CO. LLC
By: /s/ William J. Clark
---------------------------------------------
Name: William J. Clark
Title: Chief Financial Officer
GETRONICS GOVERNMENT SOLUTIONS, L.L.C.
By: Its Sole Member
GETRONICSWANG CO. LLC
By: /s/ William J. Clark
---------------------------------------------
Name: William J. Clark
Title: Chief Financial Officer
DIGITALNET HOLDINGS, INC.
By: /s/ Ken S. Bajaj
---------------------------------------------
Name: Ken S. Bajaj
Title: President and Chief Executive Officer
DIGITALNET, INC.
By: /s/ Ken S. Bajaj
---------------------------------------------
Name: Ken S. Bajaj
Title: President and Chief Executive Officer