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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JULY 1, 1996
DATA PROCESSING RESOURCES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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CALIFORNIA 0-27612 95-3931443
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) file number) Identification No.)
4400 MACARTHUR BOULEVARD, SUITE 610
NEWPORT BEACH, CA 92660
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (714) 553-1102
NOT APPLICABLE
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On July 1, 1996, Data Processing Resources
Corporation ("DPRC") acquired two branch facilities and substantially
all of the related assets of the Applications Design and Development
division of ADD Consulting, Inc. ("ADD"), a Nebraska corporation. The
acquisition was achieved pursuant to an Agreement of Purchase and Sale
of Assets dated July 1, 1996 ("Asset Purchase Agreement"), by and
among DPRC, ADD and the controlling shareholder of ADD, Gerald R. Ladd
("LADD").
Under the terms of the Asset Purchase Agreement, the purchase
price was $12,850,000, consisting of $8,785,000 in cash, 152,121
shares of DPRC common stock, valued at $3,765,000 (computed using the
average closing price of DPRC's common stock for the last five trading
days ending three trading days before the signing of the Asset
Purchase Agreement) and a deferred payment of $300,000. Under the
Asset Purchase Agreement, ADD has certain registration rights with
respect to the 152,121 shares of DPRC common stock it received in the
acquisition. ADD and LADD have each entered into a covenant
not-to-compete with DPRC in the geographic areas in which ADD's
business was conducted.
In determining the consideration to be paid in the
acquisition, DPRC reviewed ADD and its business and determined an
approximate aggregate value of ADD's information technology staffing
business to DPRC based on a multiple of adjusted earnings before
interest and taxes on a twelve month trailing basis. A final
determination of such value was arrived at by means of arm's length
bargaining among the parties to the Asset Purchase Agreement.
There was no material relationship between ADD (including its
officers, directors and shareholders) and DPRC or any of its
affiliates, or any director or officer of DPRC, or any associate of
any such officer or director.
DPRC used a portion of the proceeds obtained from its initial
public offering of securities to pay the cash portion of the purchase
price. DPRC was not required to borrow any of the funds necessary to
consummate the acquisition.
(b) At the time of the acquisition, the Applications
Design and Development division of ADD was engaged in the information
technology staffing business, which it operated from the two branch
facilities, one in Omaha, Nebraska and the other in Overland Park,
Kansas. DPRC intends to continue to engage in the information
technology staffing business in substantially the same manner and for
the same purposes.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
As of the date hereof, it is impractical to provide the
required audited financial information. DPRC will file the
required audited financial information under the cover of Form
8-K/A as soon as practicable, but not later than 60 days after
the date of filing hereof.
(b) Pro Forma Financial Information.
As of the date hereof, it is impractical to provide the
required pro forma financial information. DPRC will file the
required pro forma financial information under the cover of
Form 8-K/A as soon as practicable, but not later than 60 days
after the date of filing hereof.
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(c) Exhibits.
The following exhibits are filed herewith:
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<CAPTION>
Exhibit No. Document
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<S> <C>
2.1 Agreement of Purchase and Sale of Assets dated July 1, 1996,
by and among Data Processing Resources Corporation, ADD Consulting,
Inc. and Gerald R. Ladd
2.2 Registration Rights Agreement dated July 1, 1996, by and between
Data Processing Resources Corporation and ADD Consulting, Inc.
99.1 Text of Press Release dated July 2, 1996
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATA PROCESSING RESOURCES CORPORATION
Date: July 16, 1996 By: /s/ Michael A. Piraino
----------------------------------
Michael A. Piraino, Senior Vice
President and Chief Financial Officer
(Principal Financial and Accounting
Officer)
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EXHIBIT INDEX
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<CAPTION>
Exhibit No. Document
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2.1 Agreement of Purchase and Sale of Assets dated July 1, 1996,
by and among Data Processing Resources Corporation, ADD Consulting,
Inc. and Gerald R. Ladd
2.2 Registration Rights Agreement dated July 1, 1996, by and between
Data Processing Resources Corporation and ADD Consulting, Inc.
99.1 Text of Press Release dated July 2, 1996
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Exhibit 2.1
AGREEMENT OF PURCHASE
AND SALE OF ASSETS
BY AND AMONG
DATA PROCESSING RESOURCES CORPORATION,
ADD CONSULTING, INC.
AND
GERALD R. LADD
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TABLE OF CONTENTS
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ARTICLE 1 PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Purchased Assets Free of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5 Consideration for Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.6 Escrowed Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.8 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Organization and Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Authorization of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 No Actions or Proceedings Related to the Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Violation of Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.8 Financial Statements and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.9 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.10 No Materially Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.11 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.12 Title to Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.13 Condition and Possession of Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.14 Receivables and Unbilled Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.15 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.16 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.18 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.20 Employees and Contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.21 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.22 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.23 Transactions with Affiliated Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.24 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.25 Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.26 No Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.27 Purchase for Seller's Own Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.28 Investment Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.29 Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.30 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF
SHAREHOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.3 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 No Actions or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.5 Seller's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1 Organization and Existence of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Authority of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.3 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.5 No Actions or Proceedings Related to the Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6 No Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.7 Financial Statements and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.8 No Materially Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.10 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 5 SELLER'S OBLIGATIONS BEFORE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 Business Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Employees and Contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.6 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.8 No Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 6 PURCHASER'S OBLIGATIONS BEFORE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 7 CONDITIONS PRECEDENT TO PURCHASER'S
PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.1 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.3 Performance of Seller and Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.4 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.6 Pay-Off Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.7 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.8 Absence of Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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7.9 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.10 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.11 Delivery of Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.12 Name Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.13 Updates to Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.14 No Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.15 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.16 Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.17 Execution of Transfer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.18 Securities Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 8 CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.2 Accuracy of Purchaser's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 Performance of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.4 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.5 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.6 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.7 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.9 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.10 Absence of Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.11 Delivery of Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.12 Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.13 Securities Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 9 TERMINATION PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Effect on Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 10 THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Seller's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Purchaser's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 11 POST CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.2 Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.3 Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.4 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.7 Rasmussen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.8 Deferred Acquisition Bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE 12 COVENANT NOT TO COMPETE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.1 Non-Compete Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.2 Definition of Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.3 Direct or Indirect Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.4 Confidential Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.5 Reasonableness of Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.6 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 13 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.2 Governing Law and Choice of Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.4 Waiver and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.9 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.10 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.11 Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.12 Warranty of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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EXHIBITS
A Form of Escrow Agreement
B Allocation of Purchase Price
C Form of Seller's and Shareholder's Certificate
D Form of Ladd Employment Agreement
E Form of Consent to Assignment
F Registration Rights Agreement
G Form of Purchaser's Officer's Certificate
H Form of Bill of Sale
I Form of Assignment and Assumption
J Net Working Capital of Seller as of the Balance Sheet Date
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SCHEDULES
1.1(a) FF&E
1.1(c) Other Tangible Property
1.1(d) Receivables
1.1(e) Unbilled Receivables
1.1(h) Prepaid Items
1.1(l) Numbers and Addresses
1.2(a)(1) I-Mark FF&E
1.2(a)(3) I-Mark Other Tangible Property
1.2(a)(4) I-Mark Receivables
1.2(a)(5) I-Mark Unbilled Receivables
1.2(a)(7) I-Mark Contracts
1.2(a)(9) I-Mark Prepaid Items
1.2(a)(13) I-Mark Numbers and Addresses
1.2(h) Other Excluded Assets
1.3 Permitted Encumbrances
1.4(a) Liabilities for Transferred Employees
1.5(a)(2) Third Party Payments
2.1 Seller's Articles and Bylaws
2.3 Severance or Similar Payments
2.4 Seller's and Shareholder's Consents
2.5 Pending Litigation
2.8 Financial Statements and Balance Sheet
2.11 Certain Changes or Events
2.12 Exceptions to Title
2.15 Leases
2.16 Contracts
2.17 List of Seller's Insurance
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2.18 List of Permits
2.19 List of Business Intellectual Property
2.20 Employee Information
2.21 Employee Benefit Plans
2.23 Affiliate Transactions
2.24 Tax Sites and Audits
4.4 Purchaser's Consents and Approvals
4.7 Purchaser's Financial Statements
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AGREEMENT OF PURCHASE AND SALE OF ASSETS
THIS AGREEMENT OF PURCHASE AND SALE OF ASSETS (this "Agreement") is
made and entered into as of this 1st day of July 1996 (the "Effective Date"),
by and among Data Processing Resources Corporation, a California corporation
("Purchaser"), ADD Consulting, Inc., a Nebraska corporation ("Seller"), and
Gerald R. Ladd ("Shareholder").
R E C I T A L S
A. Seller owns and operates a division commonly known as
Applications Design and Development which provides temporary technical
personnel to third parties (the "Business"), and desires to sell to Purchaser,
on the terms and subject to the conditions of this Agreement, substantially all
of the assets of Seller used by Seller in connection with the Business.
B. The Business is conducted from offices located at 11213
Davenport Street, Omaha, Nebraska and 9393 W. 110th Street, Suite 253, Overland
Park, Kansas (collectively, the "Business Offices").
C. Purchaser desires to purchase from Seller, on the terms and
subject to the conditions of this Agreement, substantially all of the assets of
Seller used in connection with the Business, and to assume certain enumerated
liabilities of Seller in connection therewith.
D. Shareholder owns a majority of the issued and outstanding
shares of capital stock of Seller and desires that Seller sell to Purchaser
such assets, on the terms and subject to the conditions of this Agreement.
E. Seller also owns and operates a division commonly known as
I-Mark Systems which develops software and hardware products, including the
so-called "Electronic Precinct System," which provides advanced technology for
the election processing industry (the "I-Mark Business"), and all of the assets
and liabilities of Seller which are used or were incurred by Seller in
connection with the I-Mark Business shall remain the sole and exclusive assets
and liabilities of Seller.
F. The I-Mark Business is conducted from an office located at
9290 W. Dodge Road, Omaha, Nebraska (the "I-Mark Office").
A G R E E M E N T
In consideration of the foregoing recitals and the respective
covenants, agreements, representations and warranties contained herein, the
parties, intending to be legally bound, agree as follows:
<PAGE> 10
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 PURCHASE AND SALE OF ASSETS. Subject to the terms and
conditions of this Agreement (including, without limitation, the updating, if
necessary, of one or more of the Schedules under this Section 1.1 at the
Closing pursuant to Section 7.13, below), at the Closing (as defined in Section
10.1, below), Seller shall sell, transfer, assign and deliver to Purchaser, and
Purchaser shall purchase or acquire from Seller, all of Seller's right, title
and interest in and to all of the following assets, rights or claims of Seller
(collectively, the "Purchased Assets"):
(a) The furniture, fixtures and equipment located at the
Business Offices, which furniture, fixtures and equipment with an initial
purchase price of at least $500 are set forth on Schedule 1.1(a) hereto, and
the other furniture, fixtures and equipment which are set forth on Schedule
1.1(a) hereto (collectively, the "FF&E"), which schedule includes the location,
acquisition date, depreciation history, lease information, if applicable, and
such other information concerning the FF&E that may reasonably be requested by
Purchaser;
(b) All catalogs, price lists, brochures and related
sales materials, and all listings pertaining to the Business in all telephone
books and other directories utilized by Seller in connection with the Business
(the "Sales Materials");
(c) Any additional items of tangible property located at
the Business Offices, which additional items of tangible property with an
initial purchase price of at least $500 are set forth on Schedule 1.1(c)
hereto, and the other items of tangible property which are set forth on
Schedule 1.1(c) hereto (collectively, the "Other Tangible Property");
(d) The accounts and notes receivable with respect to the
Business, as specified on Schedule 1.1(d) hereto (the "Receivables"), which
schedule includes an aging report for the Receivables;
(e) All services performed by Seller as of the Closing
Date with respect to the Business and capable of being billed, but which have
not yet been billed, as specified by customer on Schedule 1.1(e) hereto (the
"Unbilled Receivables");
(f) All of the contracts, licenses, leases, arrangements,
understandings or other agreements related in any way to the Business or the
Purchased Assets (the "Contracts"), including, without limitation, all of the
Contracts described on Schedules 2.15, 2.16 and 2.20 hereto;
(g) The Business Intellectual Property (as defined in
Section 2.19, below), including, without limitation, the names "ADD
Consulting," "Applications Design and Development" and all other fictitious
business names and trade names used by Seller in connection with the Business;
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(h) The prepaid items relating to the Business, such as,
insurance, prepaid taxes, prepaid expenses, deferred charges, advance payments,
security deposits, prepaid rent and other prepaid items, as specified on
Schedule 1.1(h) hereto (the "Prepaid Items");
(i) The goodwill with respect to the Business, as carried
and all reserves with respect to the Business, reflected on the Balance Sheet
(as defined in Section 2.8, below) (the "Goodwill");
(j) All Books and Records (as defined in Section 2.7,
below);
(k) All Permits (as defined in Section 2.18, below); and
(l) All telephone and facsimile numbers, including "800"
numbers, and post office boxes, used in connection with the Business, as
described on Schedule 1.1(l) hereto (the "Numbers and Addresses").
1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary in
Section 1.1, above, or any of the Schedules hereto, Purchaser shall not
purchase at the Closing (nor assume any liability related thereto) and Seller
shall retain all right, title and interest in and to the following assets
(collectively, the "Excluded Assets"):
(a) All of the assets of Seller which are used by Seller
primarily in connection with the I-Mark Business, including, without
limitation, the following:
(1) The furniture, fixtures and equipment located
at the I-Mark Office, which furniture, fixtures and equipment with an initial
purchase price of at least $500 are set forth on Schedule 1.2(a)(1) hereto, and
the other furniture, fixtures and equipment used primarily in the I-Mark
Business and which are specified on Schedule 1.2(a)(1) hereto, which schedule
includes the location of such furniture, fixture and equipment;
(2) All catalogs, price lists, brochures and
related sales material, and all listings pertaining primarily to the I-Mark
Business in all telephone books and other directories, utilized by Seller
primarily in connection with the I-Mark Business;
(3) Any additional items of tangible property
located at the I-Mark Office, which additional items of tangible property with
an initial purchase price of at least $500 are set forth on Schedule 1.2(a)(3)
hereto, and the other items of tangible property used primarily in the I-Mark
Business and which are set forth on Schedule 1.2(a)(3) hereto;
(4) The accounts and notes receivable with
respect to the I-Mark Business, and notes receivable due and owing from
Shareholder, all of which is specified on Schedule 1.2(a)(4) hereto;
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<PAGE> 12
(5) All services performed by Seller as of the
Closing Date with respect to the I-Mark Business and capable of being billed,
but which have not been billed, as specified by customer on Schedule 1.2(a)(5)
hereto;
(6) Subject to Section 11.2, below, all of
Seller's cash and cash equivalents;
(7) All of the contracts, licenses, leases,
arrangements and understandings or other agreements primarily pertaining to the
I-Mark Business or the Excluded Assets and as specified on Schedule 1.2(a)(7)
hereto;
(8) The intellectual property used primarily in
connection with the I-Mark Business, including without limitation, all trade
names, trade marks, copyrights and patents, any and all applications and
registrations pertaining thereto, trade secrets, inventions, know-how,
formulae, and the names "I-Mark Systems," "Electronic Precinct Manager,"
"Electronic Ballot Station," "Electronic Poll Book," "Electronic Reporting
Manager," and all other fictitious business names and trade names used by
Seller primarily in connection with the I-Mark Business;
(9) The prepaid items relating primarily to the
I-Mark Business, such as insurance, prepaid taxes, deferred charges, advance
payments, security deposits, prepaid rent and other prepaid items, and as
specified on Schedule 1.2(a)(9) hereto;
(10) The goodwill with respect to the I-Mark
Business, as carried and all reserves with respect to the I-Mark Business
reflected on Seller's unaudited balance sheet for the I-Mark Business dated
April 30, 1996;
(11) All books, ledgers, files, records, manuals
and other materials (in any form or medium) pertaining primarily to the I-Mark
Business or the other Excluded Assets;
(12) All Permits relating primarily to the I-Mark
Business;
(13) All telephone and facsimile numbers,
including "800" numbers, and post-office boxes, used primarily in connection
with the I-Mark Business, as described on Schedule 1.2(a)(13) hereto;
(b) The corporate seal, articles of incorporation,
minutes book, stock books, tax returns, books of account or other records
having to do with the corporate organization of Seller;
(c) All of Seller's right, title and interest in and to
this Agreement;
(d) All of Seller's right, title and interest in and to
any insurance proceeds for any of the Excluded Liabilities (as defined in
Section 1.4(b), below) and any and all subrogation rights related thereto;
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<PAGE> 13
(e) All of Seller's right, title and interest in and to
claims for any federal, state, local or foreign tax refunds for any periods
ending before the Closing Date, but excluding any claims for refunds which
relate to taxes paid by Purchaser, if any;
(f) The agreement for investment advisory services among
Seller, Mega Investments and Jim Protzman;
(g) All records and documents relating exclusively to any
of the Excluded Assets; and
(h) Certain other assets of Seller, all of which are set
forth on Schedule 1.2(h) hereto.
1.3 PURCHASED ASSETS FREE OF LIENS. Except as otherwise
specifically provided in this Agreement, all of the Purchased Assets shall be
transferred by Seller to Purchaser free and clear of any claim, lien, pledge,
option, charge, security interest, restriction, encumbrance or other right of
third parties, of any kind or nature ("Encumbrances"), other than the
Encumbrances set forth on Schedule 1.3 hereto (the "Permitted Encumbrances").
1.4 LIABILITIES.
(a) Assumed Liabilities. Purchaser shall, on and as of
the Closing Date, expressly assume, and unconditionally agree to pay, perform
or otherwise discharge as the same shall become due in accordance with their
respective terms, all of the following liabilities, obligations and commitments
of Seller existing or arising on or after the Closing Date (the "Assumed
Liabilities"):
(i) Any and all liabilities, obligations and
commitments of Seller relating exclusively to the Business or the Purchased
Assets and that are (A) reflected on the Balance Sheet, or (B) incurred after
the Balance Sheet Date (as defined in Section 2.8, below) in the ordinary
course of business consistent with prior practice and in accordance with the
terms of this Agreement, except, in each case, for all of the following: (1)
Except to the extent set forth on Schedule 1.4(a) hereto, past, present and
future employment or retention of any and all persons who were, are or may be
employed or hired by Seller at any time and arising out of Seller's employment
or retention of such persons, including, without limitation, any claims for
unfair labor and discriminatory employment or hiring practices, salaries,
vacation pay, severance pay, sick pay, health insurance, COBRA benefits,
workers' compensation, employee contracts and other employee payments and
benefits; (2) any defective condition in the design, material, workmanship or
performance of any product or services that were designed, assembled,
manufactured, distributed, sold or furnished by or on behalf of Seller before,
on or after the Closing Date; (3) any applicable federal, state or local taxes,
any withholding obligations, governmental charges, penalties, interest and
fines of Seller (whether due or payable, before, on or after the Closing Date);
(4) notwithstanding anything to the contrary in any Contract, the presence or
migration on or before the Closing Date of any pollutants, contaminants,
chemicals
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<PAGE> 14
or industrial, toxic or hazardous substances or wastes, including, without
limitation, asbestos in, on, into or from any owned or leased real property or
any other real property previously owned, leased or acquired by Seller; (5) any
defaults or breaches of the Contracts by Seller or a predecessor-in-interest
incurred prior to the Closing; (6) past, present and future Actions related to
or arising out of Seller's conduct of the Business; and (7) all liabilities,
obligations and commitments relating to the obligations to provide health care
continuing coverage pursuant to COBRA with respect to all "qualifying events"
(as defined in COBRA) that occur on or before the Closing Date regardless of
whether the expenses were incurred before, on or after the Closing Date;
(ii) Any and all liabilities, obligations and
commitments of Seller arising out of the Contracts, but not including any
liability, obligation or commitment of Seller (A) for any breach thereof by
Seller or a predecessor-in-interest occurring prior to the Closing Date, or (B)
relating to the I-Mark Business or the Excluded Assets;
(iii) All liabilities, obligations and commitments
of Seller with respect to the Transferred Employees (as defined in Section 5.4,
below) which are set forth on Schedule 1.4(a) hereto.
(iv) The other liabilities, obligations and
commitments of Seller that are expressly set forth on Schedule 1.4(a) hereto.
(b) Excluded Liabilities. Notwithstanding anything to
the contrary herein or in any Schedule or Exhibit hereto, except for the
Assumed Liabilities, Purchaser shall not assume any liabilities, obligations or
commitments of Seller, whether arising before, on or after the Closing Date,
and all such liabilities, obligations and commitments (the "Excluded
Liabilities") shall remain the exclusive liabilities, obligations and
commitments of Seller.
1.5 CONSIDERATION FOR PURCHASED ASSETS.
(a) Initial Purchase Price. Subject to the terms hereof,
at the Closing, as consideration for the sale, transfer, assignment and
delivery of the Purchased Assets to Purchaser (the "Purchase Price"), Purchaser
shall:
(1) Assume and unconditionally pay, perform or
otherwise discharge as the same shall become due in accordance with their
respective terms, all of the Assumed Liabilities;
(2) Pay, on behalf of Seller, to the persons set
forth on Schedule 1.5(a)(2) hereto, the amounts set forth opposite such
persons' names (the "Third Party Payments");
(3) Deliver to Seller a certified or bank
cashier's check payable to Seller, or cash by wire transfer to Seller's account
(the "Cash Purchase Price"), in the amount of Eight Million Seven Hundred
Eighty-Five Thousand and No/100 Dollars ($8,785,000.00) less
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the aggregate amount of the Third Party Payments, as set forth on Schedule
1.5(a)(2) hereto; and
(4) Deliver to Seller a stock certificate of
Purchaser certifying that Seller is the record holder of 152,121 shares of the
common stock of Purchaser (the "DPRC Common Shares"), which number, when
multiplied by the DPRC Average Closing Price (as defined herein), equals Three
Million Seven Hundred Sixty-Five Thousand and No/100 Dollars ($3,765,000.00)
(the "Seller Shares"). The DPRC Average Closing Price is the average closing
price as publicly reported by the Nasdaq Stock Market as of 4:00 p.m. Eastern
Time of DPRC Common Shares over the last five trading days ending three trading
days prior to the Effective Date. The Seller Shares will be free and clear of
all Encumbrances (other than Encumbrances generally imposed on the transfer of
securities under federal and state securities Laws).
(b) Deferred Purchase Price. Subject to the terms
hereof, on or before July 31, 1997, as additional consideration for the sale,
transfer, assignment and delivery of the Purchased Assets to Purchaser (the
"Deferred Purchase Price"), Purchaser shall (i) pay Kerri Allender
("Allender"), on the terms and subject to the conditions of the Allender
Employment Agreement (as defined in Section 7.10, below), the Deferred
Acquisition Bonus (as defined in Section 11.8, below), as required pursuant to
Section 11.8, below, and (ii) if the aggregate amount of (A) the Deferred
Acquisition Bonus earned by Allender prior to June 30, 1997, and (B) any
amounts paid to Allender upon a termination of Allender without cause (not to
exceed $25,000) (collectively, the "Aggregate Deferred Acquisition Bonus
Amount"), is less than $300,000, then Purchaser shall deliver to Seller a
certified or bank cashier's check payable to Seller, or cash by wire transfer
to Seller's account, in an amount equal to Three Hundred Thousand and No/100
Dollars ($300,000.00) less the amount of the Aggregate Deferred Acquisition
Bonus Amount. Neither Seller nor Shareholder shall have any obligation to
reimburse Purchaser if the amount of the Aggregate Deferred Acquisition Bonus
Amount is more than $300,000.
1.6 ESCROWED SHARES. All of the Seller Shares (the "Escrowed
Shares") shall be issued in the name of Seller but shall be held by an escrow
agent (the "Escrow Agent") pursuant to an escrow agreement in substantially the
form attached hereto as Exhibit A (the "Escrow Agreement"), to secure claims by
Purchaser for the indemnification obligations of Seller and Shareholder
pursuant to Section 11.3, below.
1.7 TAXES. Seller shall pay all sales and use taxes and transfer
fees, if any, arising out of the transfer of the Purchased Assets and shall pay
its portion, prorated as of the Closing Date, of state and local property
taxes. Purchaser shall not be responsible for any payroll, excise, income,
business, occupation, withholding or similar tax, or any taxes of any kind,
related to any period up to and including the Closing Date.
1.8 ALLOCATION OF PURCHASE PRICE. The Initial Purchase Price and
the Deferred Purchase Price (collectively, the "Purchase Price") will be
allocated among the Purchased Assets in accordance with a schedule which
Purchaser and Seller shall attempt to agree upon during the
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<PAGE> 16
30 day period commencing immediately following the Closing Date. If Purchaser
and Seller are unable to agree upon such allocation, the allocation shall be
conducted by the Accountant (as defined in Section 11.2, below). The
allocations shall be evidenced by attaching Exhibit B to this Agreement on
which the Purchase Price allocations shall be set forth. Seller and Purchaser
each agree (a) to report the sale of the Purchased Assets for federal and state
income tax purposes in accordance with the allocations to be set forth on
Exhibit B, (b) not to take any position inconsistent with such allocations on
any of its tax returns, and (c) to timely file federal tax Form 8594 with the
applicable tax return for the year of this transaction reflecting such Purchase
Price allocations. Any increase or decrease in the Purchase Price as a result
of the adjustment made pursuant to Section 11.2 of this Agreement shall
increase or decrease the allocation on a dollar for dollar basis as mutually
agreed to by the parties, or in the event that the parties are unable to reach
such an agreement within 90 days after the determination of the Net Working
Capital of Seller as of the Closing Date, as determined by the Accountant (as
defined in Section 11.2, below).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that the following
statements are true and correct and not materially misleading as of the
Effective Date:
2.1 ORGANIZATION AND EXISTENCE. Seller is a corporation duly
organized, validly existing and in good standing under the Laws (as defined in
Section 2.3, below) of the State of Nebraska. Seller has the requisite
corporate power and authority to own and operate the Business and the Purchased
Assets, to carry on the Business as presently conducted and to consummate the
transactions contemplated hereby. Seller is qualified to do business as a
foreign corporation in each jurisdiction in which the conduct of its business
or the ownership or leasing of properties makes such qualification necessary,
such jurisdictions being limited to Colorado, Iowa, Kansas, Missouri and South
Dakota. Seller has complete corporate power and authority to consummate the
transaction contemplated hereby. Copies of Seller's Articles of Incorporation,
certified by the Secretary of State of the State of Nebraska, and Bylaws,
certified by Seller's Secretary, are attached hereto as Schedule 2.1, and are
complete and correct and, since the respective dates of certification thereof,
there have not been and will not be any amendments to such Articles of
Incorporation or Bylaws.
2.2 AUTHORIZATION OF SELLER. Seller has full power, authority and
legal right and capacity to enter into this Agreement and the agreements
contemplated hereby (the "Ancillary Agreements"), to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by Seller of this
Agreement and the Ancillary Agreements have been duly authorized by all
necessary corporate action on the part of Seller to make this Agreement and the
Ancillary Agreements valid and binding upon Seller in accordance with their
respective terms. This Agreement has been, and on the Closing Date the
Ancillary Agreements will be, duly executed
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<PAGE> 17
and delivered by Seller, and constitute the valid and binding obligations of
Seller, enforceable against Seller in accordance with their terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other Laws of general application affecting enforcement of creditors' rights
generally, and (b) as limited by Laws relating to the availability as specific
performance, injunctive relief or other equitable remedies (collectively, the
"Creditor Exceptions").
2.3 NO CONFLICT OR VIOLATION. Neither the execution and delivery
of this Agreement and the Ancillary Agreements by Seller, nor the consummation
of the transactions contemplated hereby and thereby, will result in (a) a
violation of, or a conflict with, Seller's charter documents or any
subscription, shareholders' or similar types of agreements or understandings to
which Seller is a party; (b) a breach of, or a default (or an event which, with
notice or lapse of time or both would constitute a default) under or result in
the termination of, or accelerate the performance required by, or create a
right of termination or acceleration under, any Contract, Encumbrance or Permit
to which Seller is a party or by which the Purchased Assets or the Business is
bound or affected; (c) except as set forth on Schedule 2.3 hereto, the payment
by, or the creation of any obligation (absolute or contingent) to pay on behalf
of, any party of any severance, termination, "golden parachute" or other
similar payments pursuant to any employment or other Contracts of Seller, or
Seller's current or former officers, directors or employees; (d) to Seller's
knowledge, a violation by Seller of any applicable law, statute, code,
ordinance, rule, regulation or order whether federal, state, local or other
("Laws"); (e) to Seller's knowledge, a violation by Seller of any order,
judgment, writ, injunction decree or award to which Seller is a party or by
which the Purchased Assets or the Business are bound; or (f) an imposition of
any Encumbrance on the Purchased Assets other than a Permitted Encumbrance.
2.4 CONSENTS AND APPROVALS. Except as set forth on Schedule 2.4
hereto, no consent, Permit, approval or authorization of, or declaration,
filing, application, transfer, registration with, any governmental or
regulatory authority, or any other person or entity is required to be made or
obtained by Seller by virtue of its execution, delivery and performance of this
Agreement or any of the Ancillary Agreements or to avoid the loss of any
Permit, or the violation, breach or termination of, or any default under, or
the creation of Encumbrances on any Purchased Assets pursuant to the terms of
any Law, or to enable Purchaser to own the Purchased Assets and continue the
operation of the Business on the Closing Date in the manner presently conducted
by Seller.
2.5 NO ACTIONS OR PROCEEDINGS RELATED TO THE AGREEMENTS. Except
as disclosed on Schedule 2.5 hereto, there is no pending or, to Seller's
knowledge, threatened action, claim, suit, litigation, proceeding, arbitration,
mediation or other dispute (an "Action"), whether private or public, affecting
Seller or the Business which could reasonably be expected to affect the
enforceability of this Agreement or any of the Ancillary Agreements or which
could reasonably be expected to materially and adversely affect the Business,
the Purchased Assets or Seller's ability to consummate the transactions
contemplated by or perform its obligations under this Agreement or any of the
Ancillary Agreements.
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2.6 VIOLATION OF APPLICABLE LAW. To Seller's knowledge, Seller's
operation of the Business and ownership and/or use of the Purchased Assets is
in compliance with all Laws (including, but not limited to, environmental
Laws). Seller has not received any notice from or otherwise been advised that
any governmental authority or other person is claiming any violation or
potential violation of any Law.
2.7 BOOKS AND RECORDS. Seller has made and kept (and given
Purchaser or its representatives access to) the Books and Records pertaining to
the Business, which, in reasonable detail, accurately and fairly reflect, in
all material respects, the activities and transactions of Seller related to the
Business, the Purchased Assets, the Assumed Liabilities, the dispositions of
assets related to the Business and the financial condition of Seller and the
Business. As used herein, "Books and Records" means all books, ledgers, files,
records, manuals and other materials (in any form or medium) maintained by
Seller with respect to the Business or the Purchased Assets, including, but not
limited to, any and all correspondence, personnel records, data base of
current, former and prospective technical contractors, purchasing materials and
records, vendor lists, operation and quality control records and procedures,
research and development files, intellectual property disclosures and
documentation, accounting records and systems, litigation files, sales order
files, purchase order files, advertising materials, catalogs, price lists,
brochures, mailing lists, customer lists, distribution lists, sales and
promotional materials and all other records utilized by Seller in connection
with the Business and all computer hardware, software and data files necessary
to access or review or continue to compile or utilize any of the foregoing.
2.8 FINANCIAL STATEMENTS AND OTHER INFORMATION. Seller has
furnished to Purchaser copies of: (a) the audited balance sheets of Seller at
December 31, 1995 and 1994, and the related statements of income, shareholders'
equity and cash flows for the periods then ended, together with the related
notes thereto and the auditors' report thereon, and (b) Seller's unaudited
balance sheet (the "Balance Sheet") at April 30, 1996 (the "Balance Sheet
Date"), and the related statement of income and cash flows for the period then
ended, together with the related notes thereto. All financial statements
referred to in this Section 2.8 (the "Financial Statements") are complete and
correct, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the respective periods, and,
except for any year-end adjustments which would customarily be made to interim
financials, fairly present in all material respects the financial condition of
Seller as at the respective dates thereof and the results of operations of
Seller for the respective periods covered by the statements of income contained
therein. The Financial Statements and the Balance Sheet are attached hereto as
Schedule 2.8. All reserves made by Seller in the Financial Statements are
appropriate and adequate for all known or anticipated liabilities. To Seller's
knowledge, Seller has provided and disclosed to Purchaser, its accountants and
other representatives all material facts and information relating to the
preparation of the Financial Statements.
2.9 UNDISCLOSED LIABILITIES. To Seller's knowledge, except as set
forth on any of the Schedules hereto, Seller does not have any liabilities,
obligations or commitments (absolute, accrued, contingent or otherwise) related
to the Business or the Purchased Assets except for liabilities, obligations and
commitments that are (a) reflected on the Balance Sheet, (b) under and
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pursuant to any Contract (other than by breach thereof by Seller or a
predecessor-in-interest), and (c) incurred after the Balance Sheet Date in the
ordinary course of business consistent with prior practice and in accordance
with the terms of this Agreement.
2.10 NO MATERIALLY ADVERSE CHANGE. Since the Balance Sheet Date,
there have been no changes in the condition, financial or otherwise, of the
Business, or in its prospects, earnings or properties, whether or not arising
from transactions in the ordinary course of business, that, individually or in
the aggregate, have been, or could reasonably be expected to be, materially
adverse to the prospects, earnings, properties or condition, financial or
otherwise, of the Business.
2.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
Schedule 2.11 hereto, since the Balance Sheet Date, there has not been any:
(a) Transaction by Seller in connection with the conduct
of the Business except in the ordinary course of business as conducted on that
date;
(b) Destruction, damage to, or loss of any material asset
of Seller (whether or not covered by insurance) used in the Business;
(c) Labor dispute or other event or condition of any
character materially and adversely affecting the prospects, earnings,
properties or condition, financial or otherwise, of the Business;
(d) Change in accounting methods or practices by Seller
(including, without limitation, any change in depreciation, amortization or
valuation policies or rates) or revaluation of any of the Purchased Assets or
the Assumed Liabilities or reserves reflected on the Balance Sheet with respect
to the Business, or any change in any assumption underlying or methods of
calculating any bad debt, contingency or other reserves related to the
Business;
(e) Increase in the salary or other compensation payable
or to become payable by Seller to any of its officers, directors, consultants,
contractors or employees, or the declaration, payment, commitment or obligation
of any kind for the payment, by Seller, of a bonus or other additional salary
or compensation to any such person;
(f) Amendment or termination of any Contract or Permit
related to either the Purchased Assets or the Business, except in the ordinary
course of business;
(g) Cancellation of indebtedness or waiver or release of
any right or claim of Seller related in any way to the Business;
(h) Declaration by the board of directors of Seller of,
or agreement by Seller to declare or make, any payment or distribution with
respect to the capital stock of Seller of any assets used in connection with
the Business of any kind whatsoever;
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(i) Granting any preferential rights to purchase any of
the assets, properties or rights (including management and control thereof)
related to the Business, or requiring the consent of any party to the transfer
or assignment of any such assets, properties or rights (including management
and control thereof);
(j) Material Encumbrance (other than a Permitted
Encumbrance) on or affecting either the Purchased Assets or the Business;
(k) Material capital expenditure or incurring of any
obligation to make any material capital expenditure in connection with the
conduct of the Business;
(l) Failure to pay or satisfy when due any obligation of
Seller;
(m) Providing technical contractors at other than an
hourly rate;
(n) Agreement by Seller or Shareholder to do any of the
things described in clauses (a) through (m), above;
(o) Citation or notice of threatened citation received
for any violations or alleged violations of any Law or by any governmental
entity or agency;
(p) Claim incurred for damages or alleged damages for
actual or alleged negligence or other tort or breach of Contract (whether or
not fully covered by insurance); or
(q) Other event or condition of any character which it is
reasonable to expect will or could, individually or in the aggregate,
materially and adversely affect Seller, the Purchased Assets or the Business.
2.12 TITLE TO PURCHASED ASSETS. Seller either owns or holds under
leases or licenses all of the material properties used by it in the Business
and all such properties are included in the Purchased Assets. Seller has good,
indefeasible and marketable title to all of the Purchased Assets owned by it,
and to its leased or licensed interests in all leased or licensed assets used
by it, including, but not limited to, the Purchased Assets reflected on the
Balance Sheet, free and clear of all Encumbrances, except only as set forth on
Schedule 2.12 hereto.
2.13 CONDITION AND POSSESSION OF PURCHASED ASSETS. Except as
otherwise expressly set forth herein or in any of the Ancillary Agreements,
Seller makes no warranties or representations, express or implied, concerning
the condition of any of the Purchased Assets. Notwithstanding the foregoing,
the Purchased Assets are adequate and sufficient for the operations of the
Business as presently conducted by Seller. Seller enjoys peaceful and
undisturbed possession of all of the Purchased Assets. None of the Purchased
Assets is subject to any commitment or other arrangement for their use by any
Affiliated Party of Seller, Shareholder or any third party.
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2.14 RECEIVABLES AND UNBILLED RECEIVABLES. Attached hereto as
Schedules 1.1(d) and 1.1(e) are true and complete lists of the Receivables at
the Balance Sheet Date and Unbilled Receivables as of the Effective Date.
Except to the extent collected since the Balance Sheet Date, all Receivables
are reflected on the Financial Statements and Schedule 1.1(d), and all
Receivables and Unbilled Receivables accruing or created after the Balance
Sheet Date are (a) valid bona fide claims against debtors for sales or other
charges, and (b) subject to no defenses, set-offs or counterclaims. No
additional loss reserves are required with respect to the Receivables and
Unbilled Receivables other than that which is provided in the Financial
Statements. Seller has no reason to believe that the Receivables and Unbilled
Receivables are not collectible in accordance with their terms. Seller will
update Schedules 1.1(d) and 1.1(e) at Closing to list all Receivables and
Unbilled Receivables as of the Closing Date.
2.15 LEASES. Schedule 2.15 hereto sets forth a true, correct and
complete list and description of all leases, subleases, licenses and other
occupancy or lease agreements under which Seller leases, subleases, licenses,
occupies or uses any real or personal property included in the Purchased Assets
(the "Leases"). To Seller's knowledge, all of the Leases are in good standing,
legal, valid, binding and in full force and effect. There is not under any of
such Leases any existing default, violation or breach by Seller or event or
condition which after notice or lapse of time or both would constitute a
default, violation or breach by Seller. Seller has provided or made available
to Purchaser true and correct copies of all Leases.
2.16 CONTRACTS.
(a) Validity of Contracts. To Seller's knowledge, all of
the Contracts are in good standing, and are enforceable, legal, valid, binding
and in full force and effect. Notwithstanding the foregoing, Seller makes no
representation or warranty regarding the enforceability, legality, validity and
binding force or effect of any nonsolicitation, noncompetition or
confidentiality provisions contained in any of the Contracts. Seller has duly
performed all of its obligations under each Contract to the extent those
obligations have accrued and no default, violation or breach by Seller under
any Contract has occurred which affects the enforceability of such Contract or
any parties' rights thereunder. Since the Balance Sheet Date, Seller has not
entered into any Contracts, including, without limitation, any joint venture,
research and development, profit sharing agreement or the like, with customers,
suppliers, vendors, contractors and employees other than those set forth on the
Schedules hereto. True and complete copies of all Contracts with customers,
suppliers, vendors, contractors and employees or any other agreement of the
type described in this Section 2.16, any other Section of this Agreement or
listed or described in any Schedule hereto, including all amendments,
modifications, renewals or extensions of such Contracts, have been previously
furnished or made available to Purchaser.
(b) Customer Contracts. Schedule 2.16 hereto sets forth
a correct and complete list of the 10 largest customers (by sales volume) (the
"Major Customers") of the Business during the 12-month period ended at the
Balance Sheet Date indicating the sales to such Major Customers within such
period and the existing contractual arrangements with each such Major Customer.
As of the Balance Sheet Date, Seller had no outstanding Contracts with
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customers requiring payments or credits in excess of $500 on an annualized
basis, except for those listed on Schedule 2.16 hereto. There are no
outstanding disputes with any Major Customer and no Major Customer has refused
to do business with Seller or has stated its intention not to continue to do
business with or increase or reduce its purchases from Seller or Purchaser upon
consummation of the transactions contemplated hereby. Seller has no reason to
believe that any customer account is not collectible in accordance with its
terms. No existing contractual arrangement with a customer contains any fixed
price arrangement.
(c) Suppliers. As of the Balance Sheet Date, Seller had
no outstanding Contracts with suppliers or vendors requiring payments in excess
of $1,000 on an annualized basis except those listed on Schedule 2.16 hereto.
2.17 INSURANCE. Attached as Schedule 2.17 hereto is a true and
complete list and summary of all insurance maintained by Seller with respect to
the Business or the Purchased Assets since July 15, 1994. Seller has provided
or made available to Purchaser true and correct copies of all such insurance
policies. Seller has not agreed to modify or cancel any of such insurance, nor
has Seller received notice of any actual or threatened modification or
cancellation of such insurance.
2.18 PERMITS. Seller holds, free from all Encumbrances and
burdensome restrictions, all permits, licenses, qualifications, municipal and
other approvals, authorizations, orders, consents, and other rights from, and
filings with, any governmental authority of any jurisdiction where the Business
is presently conducted relating to the conduct of the Business and the
ownership or use of the Purchased Assets ("Permits"). Each of the Permits is
sufficient for the lawful ownership of the Purchased Assets and the lawful and
efficient operation of the Business as presently conducted. Attached hereto as
Schedule 2.18 is a list of all such Permits, true and complete copies of which
have been furnished or made available to Purchaser. All Permits required for
the lawful ownership of the Purchased Assets and the lawful and efficient
operation of the Business as presently conducted will be in full force and
effect on the Closing Date.
2.19 INTELLECTUAL PROPERTY. Seller owns, has a license for, or
rightfully possesses all of the intellectual property of the Business (the
"Business Intellectual Property") necessary and sufficient for the lawful and
efficient operation of the Business as presently conducted, without any known
conflict with the rights of others. Attached hereto as Schedule 2.19 is a list
of all of the Business Intellectual Property, including without limitation, all
trade names, trademarks, copyrights and patents, any and all applications and
registrations pertaining thereto, trade secrets, inventions know-how and
formulae. Except as set forth on Schedule 2.19 hereto, there are no
outstanding options, licenses or agreements of any kind relating to Seller's
grant of any of its rights, title and interest in and to any such Business
Intellectual Property. Seller has not received any communication alleging that
it has violated or, by conducting the Business, would violate any of the
proprietary rights of any other person or entity.
2.20 EMPLOYEES AND CONTRACTORS. Attached hereto as Schedule 2.20
is a list of the names, current annual rates of salary, bonuses, employee
benefits, accrued vacation times, sick pay and other compensation, date of hire
and location of all the present employees, contractors
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and agents of Seller who provide services in connection with the Business.
Except as set forth on Schedule 2.11, none of such persons has received an
increase in salary or other compensation from Seller since the Balance Sheet
Date. Except as set forth on Schedule 2.20, there are no employment or
consulting contracts or arrangements, including pensions, bonus or profit
sharing plans, or other severance or termination contracts or arrangements
which constitute contractual obligations of Seller not terminable on 14 days'
notice. There are no collective bargaining agreements with any union or other
bargaining group for any of Seller's employees, nor is Seller aware of any
efforts by its employees or contractors to organize or participate in any of
the foregoing. To Seller's knowledge, no employee or contractor is in
violation of any of its obligations to, or any employment agreement with, a
prior employer. Seller has made available to Purchaser true and correct copies
of all performance reviews conducted of the persons set forth on Schedule 2.20.
2.21 EMPLOYEE BENEFITS. Except as set forth on Schedule 2.21
hereto, there are no pension, bonus, profit sharing, stock option or employee
benefit plans maintained by Seller or to which Seller contributes or is
required to contribute. All such plans set forth on Schedule 2.21 hereto, and
their related trusts, if any, comply with the provisions of and have been
administered in compliance with the provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and all other applicable
Laws.
2.22 LABOR MATTERS. Seller has complied with all provision of Law
pertaining to the employment of employees and the hiring and terminating of
contractors, including, without limitation all such Laws relating to labor
relations, equal employment practices, fair employment practices, entitlements,
COBRA, prohibited discrimination, terms and conditions of employment, wages and
hours, or other similar employment practices or acts, and Seller is not engaged
in any unfair labor practices and is not a party to any Action involving a
violation or alleged violation of any of any of the foregoing Laws. Except as
set forth on Schedule 2.5 hereto, there are no pending or, to Seller's
knowledge, threatened Actions against Seller by any employee or contractor with
respect to any matter arising out of, relating to or in connection with such
employee's or contractor's employment by Seller.
2.23 TRANSACTIONS WITH AFFILIATED PARTIES. Attached hereto as
Schedule 2.23 is a true and complete list and description of all transactions
engaged in between Seller and any director, officer, employee, shareholder
(including Shareholder) or agent of Seller or, to Seller's knowledge, any of
their spouses or children, any trust of which any such person is the grantor,
trustee or beneficiary, any corporation of which any such person or party is a
shareholder, employee, officer or director, or any partnership in which any
such person or party owns an interest (all such persons, trusts, corporations
and partnerships being herein referred to collectively as "Affiliated Parties"
and individually as an "Affiliated Party"). Except as described on Schedule
2.23 hereto, no Affiliated Party of Seller owns or has any interest in,
directly or indirectly, any of the Purchased Assets. To Seller's knowledge, no
Affiliated Party has any ownership interest, directly, indirectly or
beneficially, in any competitor or potential competitor, supplier or customer
of Seller.
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2.24 TAXES.
(a) All federal, state and other tax returns of Seller
required by Law to be filed have been duly filed on a timely basis. All tax
returns filed or to be filed with respect to all fiscal periods through and
including the fiscal year ended December 31, 1995 by Seller are true, correct
and complete in all material respects and no taxes, assessments, fees or other
governmental charges upon Seller or any of its properties or assets (other than
those already paid or reserved for with respect to such tax returns) are or
will be required to be paid. All deposits required to be made by Seller with
respect to any tax or withholding obligation on its part have been made by
Seller on a timely basis in accordance with applicable Law.
(b) As used in this Agreement, "tax" and "taxes" are
defined to include all taxes, charges, fees, levies or other assessments
imposed by and required to be paid to any federal, state, local or foreign
taxing authority, including, without limitation, income, excise, property,
sales, transfer, ad valorem, payroll and franchise taxes (including any
interest, penalties or additions attributable to or imposed on or with respect
to any such assessment) and any estimated payments or estimated taxes.
(c) As used in this Agreement, "tax return" is defined as
any return, report, information return or other document (including any related
or supporting information) filed or required to be filed with any federal,
state, local or foreign governmental entity or other authority in connection
with the determination, assessment or collection of any tax (whether or not
such tax is imposed on Seller) or the administration of any Laws relating to
any tax.
(d) Schedule 2.24 hereto lists each jurisdiction in which
Seller is required to file tax returns in connection with the conduct of the
Business or related to the Purchased Assets and any investigation, audit or
claim now pending against Seller in respect of any tax or assessment, or any
claim for any additional tax or assessment asserted by any such authority
against Seller. True and correct copies of all such returns for the past three
years have been provided to Purchaser.
(e) Seller has not granted any extensions of statutes of
limitations with respect to any taxes.
(f) The charges, accruals and reserves on the books of
Seller in respect of federal and state income taxes for all periods since the
fiscal year ended December 31, 1995, and in respect of other taxes for all
outstanding periods, are adequate and Seller does not know of any additional
assessments for such years or any basis therefor. Notwithstanding anything
contained in this Agreement to the contrary, if any claims or assessments for
additional federal, state, local or foreign taxes are made against Seller for
any period prior to the Closing Date, Seller shall indemnify and hereby holds
harmless Purchaser from and against any such damage, liability, loss, cost or
deficiency (including interest and penalties), subject to and in accordance
with the procedures set forth in Section 11.3, below.
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2.25 CERTAIN PAYMENTS. Neither Seller nor, to the knowledge of
Seller, any other person or other entity has, directly or indirectly, on behalf
of or with respect to Seller: (a) made an unreported political contribution;
(b) made or received any payment which was not legal to make or receive; (c)
engaged in any transaction or made or received any payment which was not
properly recorded in the Books and Records; (d) created or used any "off-book"
bank or cash account or "slush fund"; or (e) engaged in any conduct
constituting a violation of the Foreign Corrupt Practices Act of 1977.
2.26 NO FINDER. Neither Seller nor any person or entity acting on
its behalf has paid or has become obligated to pay any fee or commission to any
broker, finder or intermediary on account of the transactions contemplated
herein.
2.27 PURCHASE FOR SELLER'S OWN ACCOUNT. Seller is acquiring the
Seller Shares for investment and for Seller's own account, and not with a view
to the resale or distribution of any part thereof.
2.28 INVESTMENT EXPERIENCE. Seller is experienced in investing in
securities of companies such as Purchaser and can evaluate and bear the
economic risk of its investment.
2.29 RESTRICTED SECURITIES. Seller understands that the Seller
Shares will be characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired directly from Purchaser in
a transaction not involving a public offering. Seller acknowledges that the
certificate and instruments evidencing the Seller Shares will bear the
following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE RESTRICTED
SECURITIES AND MAY NOT BE SOLD OR OFFERED FOR SALE EXCEPT IN
COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED.
2.30 FULL DISCLOSURE. To Seller's knowledge, no representation,
warranty or other statement of Seller contained in this Agreement, the
Ancillary Agreements or any other document, certificate or written statement
furnished to Purchaser in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
Shareholder represents and warrants to Purchaser that the following
statements are true and correct and not materially misleading as of the
Effective Date:
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3.1 AUTHORIZATION. Shareholder has full power, authority and
legal right and capacity to enter into this Agreement and each of the Ancillary
Agreements to which he is a party, to perform his obligation hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
This Agreement and each of the Ancillary Agreements to which he is a party have
been duly executed and delivered by him and constitute the valid and binding
obligation of him, enforceable against him, in accordance with the terms hereof
and thereof, except as the same may be limited by the Creditor Exceptions.
3.2 CONSENTS AND APPROVALS. No consent, permit, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority, or to Shareholder's knowledge, any other person or
entity, is required to be obtained or made by Shareholder in connection with
his execution, delivery and performance of this Agreement and any of the
Ancillary Agreements to which he is a party or the consummation of the
transactions contemplated hereby or thereby in accordance with the provisions
hereof and thereof.
3.3 NO CONFLICT OR VIOLATION. Neither the execution and delivery
of this Agreement or any of the Ancillary Agreements to which Shareholder is a
party by him, nor his consummation of the transactions contemplated hereby or
thereby, nor the fulfillment of, or compliance with the terms and conditions of
any of the foregoing, will result in (a) a material breach of, or a material
default (or an event which, with notice or lapse of time or both would
constitute a material default) under or result in the termination of, or
accelerate the performance required by, or create a right of termination or
acceleration under, any material contract, agreement, instrument, license,
Encumbrance or Permit to which he is a party or by which his assets are bound
or affected, or (b), to Shareholder's knowledge, a violation of any Law, order,
judgment, writ, injunction, decree or award to which he is subject or a party
to or by which he or his assets are bound.
3.4 NO ACTIONS OR PROCEEDINGS. There is no pending or, to
Shareholder's knowledge, threatened Action affecting or involving him or his
assets which could reasonably be expected to materially affect the
enforceability of this Agreement or any of the Ancillary Agreements to which he
is a party or which could reasonably be expected to materially affect his
ability to consummate the transactions contemplated hereby or thereby or to
perform his obligations hereunder or thereunder in accordance with the
provisions hereof and thereof.
3.5 SELLER'S REPRESENTATIONS AND WARRANTIES. Shareholder has no
actual knowledge, nor does Shareholder have any reason to believe, that any of
the representations and warranties of Seller contained herein and in each of
the Ancillary Agreements to which it is a party are not true and correct and
not materially misleading as of the Effective Date or that they will not
continue to be true, correct, and not materially misleading at all times
thereafter up to and including the Closing Date.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that the following
statements are true and correct and not materially misleading as of the
Effective Date:
4.1 ORGANIZATION AND EXISTENCE OF PURCHASER. Purchaser is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of California, and has all requisite corporate power to enter
into and perform this Agreement and the transactions contemplated hereby.
Except for the State of Washington, Purchaser is qualified to do business as a
foreign corporation in each jurisdiction in which the conduct of its business
or the ownership or leasing of properties makes such qualification necessary.
4.2 AUTHORITY OF PURCHASER. Purchaser has full power, authority
and legal right and capacity to enter into this Agreement and the Ancillary
Agreements, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Purchaser of this Agreement and the Ancillary
Agreements have been duly authorized by the Board of Directors of Purchaser.
No further corporate action is necessary on the part of Purchaser to make this
Agreement and the Ancillary Agreements valid and binding upon Purchaser in
accordance with their respective terms. This Agreement has been, and on the
Closing Date the Ancillary Agreements will be, duly executed and delivered by
Purchaser and constitute the valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with their respective terms, except
as the same may be limited by the Creditor Exceptions.
4.3 NO CONFLICT OR VIOLATION. Neither the execution and delivery
of this Agreement and the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby, will result in (a) a violation
of, or a conflict with, Purchaser's charter documents or any subscription,
shareholders' or similar types of agreements or understandings to which
Purchaser is a party; (b) to Purchaser's knowledge, a violation by Purchaser of
any Law; or (c) to Purchaser's knowledge, a violation by Purchaser of any
order, judgment, writ, injunction decree or award to which Purchaser is a
party.
4.4 CONSENTS AND APPROVALS. Except as set forth on Schedule 4.4
hereto, no consent, permit, approval or authorization of, or declaration,
filing, application, transfer or registration with, any governmental or
regulatory authority, or any other person or entity is required to be made or
obtained by Purchaser by virtue of its execution, delivery and performance of
this Agreement or any of the Ancillary Agreements or Purchaser's consummation
of the transactions contemplated hereby or thereby other than state and federal
filings that may be required under securities Laws with respect to the issuance
and sale of the Seller Shares.
4.5 NO ACTIONS OR PROCEEDINGS RELATED TO THE AGREEMENTS. There is
no pending or, to Purchaser's knowledge, threatened Action affecting Purchaser
which could reasonably be
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expected to affect the enforceability of this Agreement or any of the Ancillary
Agreements or which could reasonably be expected to materially and adversely
affect Purchaser's ability to consummate the transactions contemplated by, or
to perform its obligations under, this Agreement or any of the Ancillary
Agreements.
4.6 NO FINDER. Neither Purchaser nor any person or entity acting
on its behalf has paid or has become obligated to pay any fee or commission to
any broker, finder or intermediary on account of the transactions contemplated
herein.
4.7 FINANCIAL STATEMENTS AND OTHER INFORMATION. Purchaser has
furnished to Seller copies of: (a) the audited balance sheets of Purchaser at
July 31, 1995 and 1994, and the related statements of income, shareholders'
equity and cash flows for the periods then ended, together with the related
notes thereto and the auditors' report thereon, and (b) Purchaser's unaudited
balance sheet ("Purchaser's Balance Sheet") at April 30, 1996, and the related
statements of income and cash flows for the period then ended, together with
the related notes thereto. All financial statements referred to in this
Section 4.7 ("Purchaser's Financial Statements") are complete and correct, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the respective periods, and, except for
any year-end adjustments which would customarily be made to interim financial
statements, fairly present in all material respects the financial condition of
Purchaser as at the respective dates thereof and the results of operations of
Purchaser for the respective periods covered by the statements of income
contained therein. Purchaser's Financial Statements and Purchaser's Balance
Sheet are attached hereto as Schedule 4.7.
4.8 NO MATERIALLY ADVERSE CHANGE. Since the Balance Sheet Date,
there have been no changes in the condition, financial or otherwise, of
Purchaser's business, or in its prospects, earnings or properties, whether or
not arising from transactions in the ordinary course of business, that,
individually or in the aggregate, have been, or could reasonably be expected to
be, materially adverse to the prospects, earnings, properties or condition,
financial or otherwise, of Purchaser or Purchaser's business.
4.9 TAXES.
(a) All federal, state and other tax returns of Purchaser
required by Law to be filed have been duly filed on a timely basis. Subject to
the resolution of the pending audit that is disclosed in a footnote to
Purchaser's Financial Statements (the "Pending Audit"), all tax returns filed
or to be filed with respect to all fiscal periods through and including the
fiscal year ended July 31, 1995 by Purchaser are true, correct and complete in
all material respects and no taxes, assessments, fees or other governmental
charges upon Purchaser or any of its properties or assets (other than those
already paid or reserved for with respect to such tax returns) are or will be
required to be paid.
(b) Subject to the resolution of the Pending Audit, the
charges, accruals and reserves on the books of Purchaser in respect of federal
and state income taxes for all periods since the fiscal year ended July 31,
1995, and in respect of other taxes for all outstanding
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periods, are adequate and Purchaser does not know of any additional assessments
for such years or any basis therefor.
4.10 CAPITAL STRUCTURE. The authorized capital stock of Purchaser
consists of 20,000,000 DPRC Common Shares and 2,000,000 shares of Preferred
Stock ("DPRC Preferred Shares"). As of March 31, 1996, there were not more
than 6,993,000 DPRC Common Shares outstanding, no shares of DPRC Preferred
Shares outstanding, and not more than 441,120 DPRC Common Shares reserved for
issuance upon the exercise of outstanding employee stock options (the
"Purchaser Options"). All outstanding DPRC Common Shares are, and any DPRC
Common Shares issued on exercise of any Purchaser Options will be, validly
issued, fully paid, non-assessable and not subject to any preemptive rights or
to any agreement to which Purchaser is a party or by which Purchaser may be
bound. The Seller Shares are duly authorized and reserved for issuance, and
when issued in accordance with the terms of this Agreement, will be validly
issued, fully paid, nonassessable and not subject to any preemptive rights.
Except for the DPRC Common Shares issuable pursuant to Purchaser Options, there
are not any options, warrants, calls, conversion rights, commitments,
agreements, contracts, understandings, restrictions, arrangements or rights of
any character to which Purchaser is a party by which it may be bound obligating
Purchaser to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of Purchaser or obligating Purchaser to
grant, extend or enter into any such option, warrant, call, conversion right,
amendment, agreement, contract, understanding, restriction, arrangement or
right. Neither the offer nor the issuance and sale of the Seller Shares does
or will constitute an event under any anti-dilution provisions of any
securities issued or issuable by Purchaser or any agreements with respect to
the issuance of securities by Purchaser, which will either increase the number
of shares issuable pursuant to such provisions or decrease the consideration
per share to be received by Purchaser pursuant to such provisions. To
Purchaser's knowledge, all outstanding securities of Purchaser have been
issued: (a) in compliance with the registration and prospectus delivery
requirements of the applicable federal securities statutes and regulations and
the registration and qualification requirements of all applicable state
securities laws; or (b) in compliance with any one or more applicable
exemptions to such federal and state securities laws. Since March 1996,
Purchaser has filed all necessary disclosure documents and reports in
connection with its securities and all such documents and reports contain no
untrue statement of material fact or omit to state a material fact.
ARTICLE 5
SELLER'S OBLIGATIONS BEFORE CLOSING
Seller covenants that from the Effective Date until the Closing:
5.1 ACCESS TO INFORMATION. Purchaser and its counsel, accountants
and other representatives shall have full access during normal business hours
to all properties, Books and Records, Contracts, Permits and other documents of
or relating to the Business and the Purchased Assets so that Purchaser may have
full opportunity to make such investigation as it
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shall desire to make of the affairs of Seller. Seller shall furnish or cause
to be furnished to Purchaser and its representatives all data and information
concerning the Business, finances and properties that may reasonably be
requested.
5.2 CONDUCT OF BUSINESS. Seller will carry on the Business and
its activities diligently, in the ordinary course and in substantially the same
manner as they previously have been carried out, and, in any event, Seller,
without the prior written consent of Purchaser, will not:
(a) Cause any change in the assets, liabilities,
financial condition or operating results of the Business from that reflected in
the Financial Statements, except changes in the ordinary course of business
that are not, in the aggregate, materially adverse;
(b) Cause any material change or amendment to a material
Contract or arrangement by which Seller or any of the Purchased Assets is bound
or subject;
(c) Cause any material change in any compensation
arrangement or agreement with any employee or contractor;
(d) Pay any employee a bonus or stock dividend other than
that which may become due and payable under any applicable Contract or pursuant
to Seller's written commission payment plan;
(e) Sell, or permit any transfer of, whether individually
or in the aggregate, any controlling ownership interest in Seller, or grant, or
permit any granting of, any option to acquire, whether individually or in the
aggregate, any controlling ownership interest in Seller;
(f) Incur any indebtedness for borrowed money other than
pursuant to the terms and conditions of any one or more of the Excluded Assets;
(g) Allow any existing insurance to lapse or be amended
in any material respects;
(h) Enter into any agreement to provide technical
contractors at other than an hourly rate; or
(i) Enter into any agreement or commitment to do any of
the things described in this Section 5.2.
5.3 BUSINESS RELATIONSHIPS. Seller will use its best efforts to
(a) preserve its business organizations intact, and (b) preserve its present
relationships with customers, suppliers, contractors and employees and others
having business relationships with Seller.
5.4 EMPLOYEES AND CONTRACTORS. Seller acknowledges that Purchaser
intends to hire all or substantially all of Seller's employees and contractors
who work primarily for the
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Business, as Purchaser's employees and contractors. Seller will cooperate
fully in providing the necessary information or to perform any other duties as
may be reasonably requested by Purchaser to accomplish this result. Any
current employee or contractor of Seller who shall be hired by Purchaser shall
be referred to herein as a "Transferred Employee."
5.5 CONFIDENTIALITY. Seller and Shareholder will, and will each
use its best efforts to cause Seller's employees, contractors, officers,
directors and other representatives to, hold in strict confidence, and will not
use to the detriment of Purchaser, any information or data obtained in
connection with this Agreement; and if the transaction contemplated by this
Agreement is not consummated, Seller will return to Purchaser all such
information and data as Purchaser may reasonably request, including, but not
limited to, worksheets, test reports, manuals, lists, memoranda and other
documents prepared or made available to Seller or their respective
representatives in connection with this transaction.
5.6 THIRD PARTY CONSENTS. Seller shall take, as promptly as
possible, or cause to be taken, all action and do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement and Seller will use reasonable
efforts to obtain all waivers, Permits, consents, approvals, authorizations and
clearances and to effect all registrations, filings and notices with or to
third parties or governmental, regulatory or public bodies or authorities which
are in the reasonable opinion of Purchaser necessary or desirable in connection
with the transactions contemplated by this Agreement.
5.7 NO SOLICITATION. Prior to the Closing, neither Seller nor
Shareholder will, directly or indirectly, through any officer, director,
partner, agent or otherwise, solicit, initiate or encourage submission of
proposals or offers from any person relating to any acquisition or purchase,
whether individually or in the aggregate, of any controlling equity interest
in, or all or a substantial portion of the Purchased Assets of, Seller or any
business combination with Seller in which Seller is not the surviving entity,
or participate in any negotiations regarding or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing, except as provided for herein.
5.8 NO PRESS RELEASE. Seller and Shareholder expressly agree that
they will not, whether before, on, or after the Closing Date, issue or
authorize to be issued any press release or similar announcement concerning
this Agreement or any of the transactions contemplated hereby without the prior
written approval of Purchaser. Seller and Shareholder acknowledge that
Purchaser may make any press release or similar announcement reasonably
required so as to allow Purchaser or any of its affiliates to comply with the
disclosure requirements of any applicable securities Laws. Purchaser will
provide Seller and Shareholder with a courtesy copy of any such press release
or similar announcement prior to such release or announcement.
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ARTICLE 6
PURCHASER'S OBLIGATIONS BEFORE CLOSING
Purchaser covenants that from the Effective Date until the Closing:
6.1 CONFIDENTIALITY. Purchaser will, and Purchaser will use its
best efforts to cause its employees, officers, directors and other
representatives to, hold in strict confidence, and will not use to the
detriment of Seller, any information or data provided to Purchaser by Seller or
its representatives in connection with this Agreement; and if the transaction
contemplated by this Agreement is not consummated, Purchaser will return to
Seller all such information and data as Seller may reasonably request,
including but not limited to worksheets, test reports, manuals, lists,
memoranda and other documents prepared or made available to Purchaser or its
representatives in connection with this transaction.
6.2 THIRD PARTY CONSENTS. Purchaser shall take as promptly as
possible, or cause to be taken, all actions due or cause to be done, all things
necessary, proper and advisable to consummate or make effective the
transactions contemplated by this Agreement and Purchaser will use reasonable
efforts to obtain all waivers, permits, consents, approvals, authorizations,
and clearances and to effect all registrations, filings and notices with or to
third parties or governmental, regulatory or public bodies or authorities which
are in the reasonable opinion of Seller necessary or desirable in connection
with the transactions as contemplated by this Agreement.
ARTICLE 7
CONDITIONS PRECEDENT TO PURCHASER'S PERFORMANCE
7.1 CONDITIONS. The obligations of Purchaser to purchase the
Purchased Assets pursuant to this Agreement are subject to the satisfaction, at
or before the Closing Date, of all of the conditions set out below in this
Article 7.
7.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Except as
otherwise permitted by this Agreement and without giving effect to any of the
Updated Schedules other than the Updated Schedules to Schedules 1.1(d) and
1.1(e) hereto, all representations and warranties made by Seller and
Shareholder in this Agreement or in any written Schedule or statement delivered
to Purchaser by Seller or Shareholder under this Agreement or the Ancillary
Agreements shall be true, correct and not materially misleading on and as of
the Closing Date as though made at that time except to the extent that such
representations and warranties by their terms speak as of an earlier date, in
which case such representations and warranties shall have been true and correct
as of such earlier date.
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7.3 PERFORMANCE OF SELLER AND SHAREHOLDER. Seller and Shareholder
each shall have performed, satisfied and complied with all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by them on or before the Closing Date.
7.4 OFFICER'S CERTIFICATE. Purchaser shall have received a
certificate, in the form attached as Exhibit C hereto, dated the Closing Date,
signed and verified by the President of Seller and Shareholder certifying, that
the conditions specified in Sections 7.2 and 7.3, above, have been fulfilled.
7.5 CONSENTS. All necessary agreements, waivers, approvals,
authorizations, assurances and consents of third parties to the consummation of
the transactions contemplated by this Agreement, including, without limitation,
those set forth on Schedule 2.4 hereto, shall have been obtained by Seller and
delivered to Purchaser. All of such agreements, waivers, approvals,
authorizations, assurances and consents shall be in form and substance
reasonably satisfactory to Purchaser.
7.6 PAY-OFF LETTERS. Seller shall have obtained and delivered to
Purchaser lien release or termination statements and pay-off letters, each in
form and substance to the reasonable satisfaction of Purchaser, from each of
the persons receiving a Third Party Payment, as set forth on Schedule 1.5(a)(2)
hereto.
7.7 ABSENCE OF LITIGATION. No Action shall have been instituted
or threatened which (a) questions the validity or enforceability of the
transactions contemplated hereby, (b) materially and adversely affects the
Purchased Assets or the Business, (c) is reasonably likely to result in any
material liability to Purchaser if the transactions contemplated by this
Agreement or the Ancillary Agreements are consummated, or (d) which could
reasonably be expected to adversely affect Purchaser's ability to own the
Purchased Assets following the Closing Date.
7.8 ABSENCE OF MATERIAL ADVERSE CHANGES. There shall not have
occurred any material adverse change in the Business nor shall there exist any
event or condition of any character which, individually or in the aggregate,
could reasonably be expected to materially and adversely affect the assets,
properties, financial condition, operating results, or prospects of the
Business.
7.9 ESCROW AGREEMENT. Purchaser shall have obtained an executed
Escrow Agreement from Seller and the Escrow Agent.
7.10 EMPLOYMENT AGREEMENTS. Purchaser shall have obtained (a) an
executed employment agreement from Gerald R. Ladd in the form of Exhibit D
hereto (the "Ladd Employment Agreement"), (b) an executed employment agreement
from Allender in form and substance reasonably satisfactory to Purchaser (the
"Allender Employment Agreement"), and (c) Consents to Assignment in
substantially the form attached hereto as Exhibit E (the "Consents to
Assignment"), with respect to each of the employment agreements entered into
between Seller and James Beaman, Kevin L. Masten, Richard P. Ocken, Jerome D.
Pape, Randy D. Shoults and Susan E. Thaden, duly executed by Seller and each of
the foregoing employees.
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7.11 DELIVERY OF CORPORATE DOCUMENTS. There shall have been
delivered to Purchaser (a) copies (certified by the Secretary of Seller) of the
minutes of the meetings of the Board of Directors and the shareholders of
Seller at which the Board of Directors and the shareholders of Seller shall
have authorized and approved the transactions hereunder. Seller shall have
delivered to Purchaser certified copies of Seller's Articles of Incorporation
and Bylaws, all Permits, Contracts and other documents as required by Article
2, above.
7.12 NAME CHANGE. At the Closing, Seller shall have taken all
necessary corporate action to authorize the change of its name to a name which
does not include the words "ADD Consulting," "Applications Design and
Development," or any variant thereof.
7.13 UPDATES TO SCHEDULES. Seller and Shareholder shall have
delivered to Purchaser Schedules updated through the Closing Date (the "Updated
Schedules"). Each of the Updated Schedules shall reflect all applicable
changes to the information required to be disclosed by Seller or Shareholder
therein from the Effective Date through the Closing Date; provided, however,
that nothing herein shall relieve Seller or Shareholder of any liability
hereunder due to the fact that any Schedule updated hereunder was not true and
correct, or was materially misleading, as of the Effective Date. Each of the
Updated Schedules shall be in form and substance reasonably satisfactory to
Purchaser.
7.14 NO CASUALTY. There shall not have occurred any damage,
destruction or loss which has (whether or not covered by insurance) materially
and adversely affected the Purchased Assets.
7.15 OPINION OF COUNSEL. Purchaser shall have received from
Abrahams, Kaslow & Cassman, counsel for Seller, an opinion, dated the Closing
Date, as to such matters as Purchaser may reasonably request.
7.16 REGISTRATION RIGHTS AGREEMENT. Purchaser shall have obtained
an executed registration rights agreement from Seller in the form of Exhibit F
hereto (the "Registration Rights Agreement").
7.17 EXECUTION OF TRANSFER DOCUMENTS. Seller shall have executed
and delivered to Purchaser such bills of sale, warranty deeds, assignments,
certificates of title and any and all other instruments of conveyance and
transfer as shall have been required by Purchaser and Purchaser's counsel in
order to effectively convey and transfer to Purchaser the Purchased Assets,
free and clear of all Encumbrances other than Permitted Encumbrances.
7.18 SECURITIES MATTERS. The offer, sale and issuance of the
Seller Shares shall constitute a transaction exempt from the registration and
prospectus delivery or permit requirements of Section 5 of the Security Act of
1933, as amended (the "Securities Act"), and Purchaser shall obtain all
necessary qualifications, permits, approvals and consents, if any, required by
all applicable state Laws governing the offer, sale and issuance of the Seller
Shares hereunder.
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ARTICLE 8
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
8.1 CONDITIONS. The obligations of Seller to sell and transfer
the Purchased Assets under this Agreement are subject to the satisfaction, at
or before the Closing Date, of all the following conditions of this Article 8.
8.2 ACCURACY OF PURCHASER'S REPRESENTATIONS AND WARRANTIES.
Except as otherwise permitted by this Agreement, all representations and
warranties by Purchaser contained in this Agreement or the Ancillary Agreements
shall be true, correct and not materially misleading on and as of the Closing
Date as though made at that time except to the extent that such representations
and warranties by their terms speak as of an earlier date, in which case such
representations and warranties shall have been true and correct as of such
earlier date.
8.3 PERFORMANCE OF PURCHASER. Purchaser shall have performed,
satisfied and complied with all covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by it on or
before the Closing Date.
8.4 OFFICER'S CERTIFICATE. Seller shall have received a
certificate, in the form attached as Exhibit G hereto, dated the Closing Date,
signed and verified by an officer of Purchaser certifying, that the conditions
specified in Sections 8.2 and 8.3, above, have been fulfilled.
8.5 ESCROW AGREEMENT. Seller shall have obtained an executed
Escrow Agreement from Purchaser and the Escrow Agent.
8.6 EMPLOYMENT AGREEMENTS. Seller shall have obtained executed
copies of (a) the Ladd Employment Agreement from Shareholder, (b) the Allender
Employment Agreement from Allender, and (c) Consents to Assignment with respect
to each of the employment agreements between Seller and James Beaman, Kevin L.
Masten, Richard P. Ocken, Jerome D. Pape, Randy D. Shoults and Susan E. Thaden,
duly executed by each of the foregoing employees.
8.7 OPINION OF COUNSEL. Seller shall have received from Riordan &
McKinzie, counsel for Purchaser, an opinion, dated the Closing Date, as to such
matters as Seller may reasonably request.
8.8 CONSENTS. All necessary agreements, waivers, approvals,
authorizations, assurances and consents of third parties to the consummation of
the transactions contemplated by this Agreement, including, without limitation,
those set forth on Schedule 4.4 hereto, shall have been obtained by Purchaser
and delivered to Seller. All of such agreements, waivers, approvals,
authorizations, assurances and consents shall be in form and substance
reasonably satisfactory to Seller.
8.9 ABSENCE OF LITIGATION. No Actions shall have been instituted
or threatened which (a) questions the validity or enforceability of the
transactions contemplated hereby, (b) materially
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and adversely affects Purchaser's business, (c) is reasonably likely to result
in any material liability to Seller if the transactions contemplated by this
Agreement or the Ancillary Agreements are consummated, or (d) which could
reasonably be expected to materially and adversely effect Seller's right, title
and interest in and to the Seller Shares.
8.10 ABSENCE OF MATERIAL ADVERSE CHANGES. There shall not have
occurred any material adverse change in Purchaser's business nor shall there
exist any event or condition or any character which, individually or in the
aggregate, could reasonably be expected to materially and adversely affect the
assets, properties, financial condition, operating results or prospects of
Purchaser's business.
8.11 DELIVERY OF CORPORATE DOCUMENTS. There shall have been
delivered to Seller (a) copies (certified by the Secretary of Purchaser) of the
minutes of the meetings of the Board of Directors of Purchaser which Board of
Directors of Purchaser shall have authorized and approved the transactions
hereunder. Purchaser shall have delivered to Seller certified copies of
Purchaser's Articles of Incorporation and Bylaws.
8.12 REGISTRATION RIGHTS AGREEMENT. Seller shall have obtained an
executed counterpart of the Registration Rights Agreement.
8.13 SECURITIES MATTERS. The offer, sale and issuance of the
Seller Shares shall constitute a transaction exempt from the registration and
prospectus delivery or permit requirements of Section 5 of the Securities Act,
and Purchaser shall have obtained all necessary qualifications, permits,
approvals and consents, if any, required by all applicable state Laws governing
the offer, sale and issuance of the Seller Shares hereunder.
ARTICLE 9
TERMINATION PRIOR TO CLOSING
9.1 TERMINATION. This Agreement and the transactions contemplated
herein may be terminated at any time prior to Closing:
(a) By the mutual written consent of Purchaser and
Seller;
(b) By either Purchaser or Seller in writing, without
liability to the party terminating this Agreement on account of such
termination, if the Closing shall not have occurred on or before July 2, 1996;
or
(c) By either Purchaser or Seller in writing, without
liability to the party terminating this Agreement on account of such
termination, if Purchaser or Seller, as the case may be, shall (i) fail to
perform in any material respect its agreements contained herein required to be
performed prior to the Closing Date, or (ii) materially breaches any of its
representations, warranties or covenants contained herein.
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9.2 EFFECT ON OBLIGATIONS. Termination of this Agreement pursuant
to this Article 9 shall terminate all obligations of the parties hereunder and
this Agreement shall become void and have no effect without any liability on
the part of any party or the shareholders, directors, officers or partners in
respect thereof, except for the obligations under Sections 5.5, 6.1 and 11.3,
below; provided, however, that termination pursuant to clause (b) or (c) of
Section 9.1, above, shall not relieve the defaulting or breaching party from
any liability to the other party.
ARTICLE 10
THE CLOSING
10.1 CLOSING. The closing of the sale and purchase of the
Purchased Assets (the "Closing" or "Closing Date") shall take place at such
place, time and date as may be mutually agreed to by the parties.
Notwithstanding anything in this Agreement to the contrary, the Closing shall
be deemed effective as of the close of business on June 30, 1996.
10.2 SELLER'S OBLIGATIONS. At the Closing, Seller shall deliver to
Purchaser the following:
(a) The Bill of Sale in the form of Exhibit H hereto and
such other instruments of transfer which may be reasonably necessary to
transfer to Purchaser all of Seller's right, title and interest in and to the
Purchased Assets, all in form and substance reasonably satisfactory to
Purchaser duly executed by Seller;
(b) The Assignment and Assumption in the form of Exhibit
I hereto, and all other instruments of assignment and transfer of all other
Purchased Assets of every kind and description and wherever situated;
(c) The Officer's Certificate required by Section 7.4,
above;
(d) The consents required by Section 7.5, above;
(e) The lien releases or termination statements and
pay-off letters required by Section 7.6, above;
(f) All Books and Records and other data relating to the
Business (other than its corporate records);
(g) The Escrow Agreement referred to in Section 7.9,
above, shall have been duly executed by Seller and the Escrow Agent and
originals thereof shall have been delivered to Purchaser;
(h) The Ladd Employment Agreement, the Allender
Employment Agreement and the Consents to Assignment referred to in Section
7.10, above, shall have been duly
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executed by the parties thereto (other than Purchaser) and originals thereof
shall have been delivered to Purchaser;
(i) The certified resolutions and charter documents
required by Section 7.11, above;
(j) An originally executed amendment to Seller's Articles
of Incorporation, for filing by Purchaser, amending Seller's Articles of
Incorporation to amend the name of Seller to a name other than "ADD
Consulting," "Applications Design and Development," or any variant thereof, as
required by Section 7.12, above;
(k) The updated Schedules required by Section 7.13,
above;
(l) The opinion of counsel required by Section 7.15,
above; and
(m) The Registration Rights Agreement referred to in
Section 7.16, above, shall have been duly executed by Seller and originals
thereof shall have been delivered to Purchaser.
10.3 PURCHASER'S OBLIGATIONS. At the Closing, Purchaser shall
deliver to Seller the following:
(a) The Assignment and Assumption in the form of Exhibit
I hereto;
(b) Evidence of the payment, concurrently with the
Closing, to all persons entitled to Third Party Payments, as required under
Section 1.5(a)(2), above, in accordance with the pay-off letters provided to
Purchaser by Seller under Section 7.6, above;
(c) A certified or bank cashier's check payable to
Seller, or cash by wire transfer to Sellers' account, in the amount of the Cash
Purchase Price, as required by Section 1.5(a)(3), above;
(d) A stock certificate certifying that Seller is the
registered owner of the Seller Shares, as required under Section 1.5(a)(4),
above;
(e) The Officer's Certificate required by Section 8.4,
above;
(f) The Escrow Agreement referred to in Section 8.5,
above, shall have been duly executed by Purchaser and the Escrow Agent and
originals thereof shall have been delivered to the appropriate persons;
(g) The Ladd Employment Agreement, the Allender
Employment Agreement and the Consents to Assignment referred to in Section 8.6,
above, shall have been duly executed by Purchaser and originals thereof shall
have been delivered to the appropriate persons;
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(h) The opinion of counsel required by Section 8.7,
above;
(i) The consents required by Section 8.8, above;
(j) The certified resolutions and charter documents
required by Sections 8.11, above; and
(k) The Registration Rights Agreement referred to in
Section 8.12, above, shall have been duly executed by Purchaser and originals
thereof shall have been delivered to Seller.
ARTICLE 11
POST CLOSING
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Regardless of any
investigation at any time made by or on behalf of any party, or of any
information any party may have in respect thereof, all representations and
warranties made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Closing for a period of two
years, except all representations and warranties with respect to tax matters
shall survive through the applicable statute of limitations (each, a "Survival
Date").
11.2 POST-CLOSING ADJUSTMENT.
(a) Within 90 days after the Closing Date, Purchaser
shall compute the amount of Net Working Capital (as defined in Section 11.2(c),
below) of Seller as of the Closing Date in accordance with generally accepted
accounting principles, and shall provide to Seller, for Seller's review and
approval, its computations and working papers reflecting how such computations
were made. If Seller has any objections to the amount of the Net Working
Capital determined by Purchaser, it will deliver detailed statements describing
its objections to Purchaser within 30 days after receiving Purchaser's
computations and working papers reflecting how Purchaser's computations were
made. The parties will use their reasonable efforts to resolve any such
objections. If, however, the parties do not obtain final resolution of this
matter within 30 days after Purchaser has received the statements of
objections, the dispute shall be referred to Ernst & Young, LLP (the
"Accountant") within 15 days following such 30-day period. The Accountant's
determination of Net Working Capital shall be binding upon all parties.
Purchaser and Seller shall use their best efforts to aid the Accountant in
reaching a decision within 30 days from the date the Accountant is so selected.
Purchaser and Seller will share responsibility for the fees and expenses of the
Accountant based on the degree to which the Accountant accepts the respective
positions of the parties, as conclusively determined by the Accountant.
(b) If the Net Working Capital of Seller as of the
Closing Date is less than $750,000, Seller shall pay to Purchaser within 10
business days of such determination a cash amount equal to the difference
between $750,000 and the Net Working Capital of Seller as of
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the Closing Date. If, however, the Net Working Capital of Seller as of the
Closing Date is more than $750,000, Purchaser shall pay to Seller within 10
business days of such determination a cash amount equal to one-half (1/2) of
the difference between the Net Working Capital of Seller as of the Closing Date
and $750,000.
(c) For purposes of this Agreement, "Net Working Capital"
means the difference between the Purchased Assets and the Assumed Liabilities,
determined in accordance with generally accepted accounting principles as of
the applicable dates. The Net Working Capital of Seller as of the Balance
Sheet Date is shown on Exhibit J attached hereto. The Net Working Capital of
Seller as of the Closing Date shall be determined in the same manner used by
the parties to determine the Net Working Capital of Seller as of the Balance
Sheet Date.
11.3 INDEMNIFICATION OBLIGATIONS.
(a) Indemnification by Seller. Seller shall indemnify,
defend and hold harmless Purchaser and any of its affiliates and their
respective officers, directors, partners, agents, employees, attorneys and
representatives, and their respective heirs, executors, administrators,
successors and assigns (collectively, "Purchaser Representatives"), and shall
reimburse Purchaser and any of its affiliates and Purchaser Representatives, on
demand, for any claim, demand, loss, liability, damage or expense, including
without limitation interest, penalties and reasonable attorneys', accountants'
and experts' fees and costs of investigation incurred as a result thereof
("Damages"), resulting from any of the following:
(i) The Excluded Liabilities;
(ii) Any breach or default in the performance by
Seller of any covenant or agreement of Seller contained herein, in any
agreement contemplated hereby, or in any Schedule or Exhibit hereto or thereto,
or in any certificate or other instrument delivered or to be delivered by or on
behalf of Seller pursuant hereto or thereto;
(iii) Any breach of warranty or inaccurate or
erroneous representation made by Seller herein, in any agreement contemplated
hereby, or in any Schedule or Exhibit hereto or thereto, or in any certificate
or other instrument delivered or to be delivered by or on behalf of Seller
pursuant hereto or thereto;
(iv) Purchaser's failure to comply with any
applicable bulk sale or transfer Law; or
(v) Any liability arising out of any and all
Actions, demands, judgments, costs and expenses incident to any of the
foregoing.
(b) Indemnification by Shareholder. Shareholder shall
indemnify, defend and hold harmless Purchaser and any of its affiliates and
their respective Purchaser Representatives, and shall reimburse Purchaser and
any of its affiliates and Purchaser Representatives, on demand, for any Damages
resulting from any of the following:
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<PAGE> 41
(i) The Excluded Liabilities;
(ii) Any breach or default in the performance by
Shareholder of any covenant or agreement of Shareholder contained herein, in
any agreement contemplated hereby, or in any Schedule or Exhibit hereto or
thereto, or in any certificate or other instrument delivered or to be delivered
by or on behalf of Shareholder pursuant hereto or thereto;
(iii) Any breach of warranty or inaccurate or
erroneous representation made by Shareholder herein, in any agreement
contemplated hereby, or in any Schedule or Exhibit hereto or thereto, or in any
certificate or other instrument delivered or to be delivered by or on behalf of
Shareholder pursuant hereto or thereto;
(iv) Purchaser's failure to comply with any
applicable bulk sale or transfer Law; or
(v) Any liability arising out of any and all
Actions, demands, judgments, costs and expenses incident to any of the
foregoing.
(c) Indemnification by Purchaser. Purchaser shall
indemnify, defend and hold harmless Seller and Shareholder, and any of their
affiliates and their respective officers, directors, partners, agents,
employees, attorneys and representatives, and their respective heirs,
executors, administrators, successors and assigns (collectively, "Seller
Representatives"), and shall reimburse Seller and Shareholder, and any of their
respective affiliates and Seller Representatives, on demand, for any Damages
resulting from any of the following:
(i) The Assumed Liabilities;
(ii) Any breach or default in the performance by
Purchaser of any covenant or agreement of Purchaser contained herein, in any
agreement contemplated hereby, or in any Schedule or Exhibit hereto or thereto,
or in any certificate or other instrument delivered or to be delivered by or on
behalf of Purchaser pursuant hereto or thereto;
(iii) Any breach of warranty or inaccurate or
erroneous representation made by Purchaser herein, in any agreement
contemplated hereby, or in any Schedule or Exhibit hereto or thereto, or in any
certificate or other instrument delivered or to be delivered by or on behalf of
Purchaser pursuant hereto or thereto; or
(iv) Any liability arising out of any and all
Actions, demands, judgments, costs and expenses incident to any of the
foregoing.
(d) Claims for Indemnity. Whenever a claim for Damages
shall arise for which one party ("Indemnitee") shall be entitled to
indemnification hereunder, Indemnitee shall notify the other party hereto
("Indemnitor") in writing within 30 days of the first receipt of notice of such
claim, and in any event within such shorter period as may be necessary for
Indemnitor to take appropriate action to resist such claim. Such notice shall
specify all facts
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<PAGE> 42
known to Indemnitee giving rise to such indemnity rights and shall estimate the
amount of the liability arising therefrom. The right of Indemnitee to
indemnification and the estimated amount thereof, as set forth in this notice,
shall be deemed agreed to by Indemnitor unless, within 30 days after the
mailing of such notice, Indemnitor shall notify Indemnitee in writing that it
disputes the right of Indemnitee to indemnification, or that Indemnitor elects
to defend such claim in the manner provided in Section 11.3(e), below. If
Indemnitee shall be duly notified of such dispute, the parties shall attempt to
settle and compromise the same, or if unable to do so within 20 days of
Indemnitor's delivery of notice of a dispute, such dispute shall be settled by
binding arbitration before a single arbitrator in the County of Orange, State
of California, in proceedings conducted by the American Arbitration Association
and pursuant to such organization's rules for commercial disputes, and any
rights of indemnification established by reason of such settlement, compromise
or arbitration shall promptly thereafter be paid and satisfied by Indemnitor.
(e) Defense of Claims. Upon receipt by Indemnitor of a
notice from Indemnitee with respect to any claim of a third party against
Indemnitee, and acknowledgment by Indemnitor (whether after resolution of a
dispute or otherwise) of Indemnitee's right to indemnification hereunder with
respect to such claim, Indemnitor shall assume the defense of such claim with
counsel reasonably satisfactory to Indemnitee and Indemnitee shall cooperate to
the extent reasonably requested by Indemnitor in defense or prosecution thereof
and shall furnish such records, information and testimony and attend all such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by Indemnitor in connection therewith. If Indemnitor
shall acknowledge Indemnitee's right to indemnification and elect to assume the
defense of such claim, Indemnitee shall have the right to employ its own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of Indemnitee. If Indemnitor has assumed the defense of any claim
against Indemnitee, Indemnitor shall have the right to settle any claim for
which indemnification has been sought and is available hereunder; provided
that, to the extent that such settlement requires Indemnitee to take, or
prohibits Indemnitee from taking, any action or purports to obligate
Indemnitee, then Indemnitor shall not settle such claim without the prior
written consent of Indemnitee. If Indemnitor does not assume the defense of a
third party claim and disputes Indemnitee's right to indemnification,
Indemnitor shall have the right to participate in the defense of such claim
through counsel of its choice, at Indemnitor's expense, and Indemnitee shall
have control over the litigation and authority to resolve such claim subject to
this Section 11.3. If Seller or Shareholder, as the indemnifying party, fails
to give written notice to Purchaser, as the indemnified party, of Seller's or
Shareholder's, as the case may be, intention to contest or settle any such
claim within 20 calendar days after Purchaser has notified Seller or
Shareholder, respectively, that any such claim has been made in writing and
received by Purchaser, or if any such notice is given but any such claim is not
properly contested by Seller or Shareholder, respectively, notwithstanding any
provision herein to the contrary, Purchaser shall have the right to satisfy and
discharge the same by payment, compromise or otherwise, in accordance with the
procedures set forth in the Escrow Agreement. Purchaser's rights, benefits and
privileges, and Seller's and Shareholder's liabilities, obligations and
commitments, under and pursuant to the Escrow Agreement are more specifically
described therein and incorporated herein by this reference.
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<PAGE> 43
(f) Limitations on Warranty Claims.
(i) Deductible. Notwithstanding anything to the
contrary in Sections 11.3(a) and (b), above, Purchaser agrees that neither
Seller nor Shareholder shall be obligated to indemnify Purchaser for any
Damages caused by or arising out of, and Purchaser shall not be entitled to
make any claim for Damages due to, any breach of warranty or inaccurate or
erroneous representation made by Seller or Shareholder herein, in any agreement
contemplated hereby, or in any Schedule or Exhibit hereto or thereto, or in any
certificate or other instrument delivered or to be delivered by or on behalf of
Seller or Shareholder pursuant hereto or thereto (collectively, "Warranty
Claims"), unless and until the amount of all claims for Damages caused by or
arising out of Warranty Claims, in the aggregate, shall be equal to $50,000,
and then only to the extent of such excess.
(ii) Maximum Liability. Notwithstanding the
foregoing, Purchaser also agrees that the maximum, aggregate amount of claims
for Damages caused by or arising out of Warranty Claims is $2,500,000;
provided, however, that with respect to any claims for Damages caused by or
arising out of Warranty Claims alleged or threatened during the period
commencing on the first anniversary of the Closing Date and ending on the
applicable Survival Date, the maximum, aggregate amount of claims for Damages
caused by or arising out of Warranty Claims for which Seller and Shareholder
shall collectively be obligated to pay shall be the difference between (a)
$1,250,000 and (b) the aggregate amount of all claims for Damages caused by or
arising out of Warranty Claims for which Seller and Shareholder have already
paid Purchaser. Purchaser acknowledges and agrees that neither Seller nor
Shareholder shall have any liability to Purchaser for any claims for Damages
caused by or arising out of Warranty Claims that are first alleged or
threatened after the applicable Survival Date.
(iii) Nonrecourse. Purchaser acknowledges and
agrees that Seller's and Shareholder's obligation to indemnify Purchaser for
any Damages caused by or arising out of Warranty Claims is a nonrecourse
obligation. Specifically, neither Seller nor Shareholder shall have personal
liability for its obligation to indemnify Purchaser for any Damages caused by
or arising out of Warranty Claims. Purchaser acknowledges and agrees that its
sole recourse for any Damages caused by or arising out of Warranty Claims shall
be the exercise of Purchaser's rights, benefits and privileges against the
Escrowed Shares on the terms and subject to the conditions of the Escrow
Agreement. Notwithstanding the foregoing, Seller's and Shareholder's
obligation to indemnify Purchaser for any Damages caused by or arising out of
their Warranty Claim with respect to the adequacy of the loss reserves required
with respect to the Receivables and Unbilled Receivables under and pursuant to
Section 2.14, above, shall be limited to the remedy provided in Section 11.4,
below, which obligation, if breached by Seller shall give rise to an
indemnification obligation on the part of Seller under and pursuant to Section
11.3(a)(ii), above, and, therefore, not subject to the terms and conditions of
this Section 11.3(f).
(g) Insurance Proceeds. Neither party shall be entitled
to indemnification for any claim for Damages for which it would otherwise be
entitled to indemnification hereunder to the extent that such party has
received insurance proceeds covering such Damages. Each party acknowledges and
agrees that it will not demand payment from the other party of any
35
<PAGE> 44
claim for Damages covered by insurance until it has made reasonable efforts
(but not litigation) to collect such proceeds from the relevant carrier or
carriers.
(h) Defense of Claimed Breaches. For purposes of this
Section, any assertion of fact and/or law by a third party which, if true,
would constitute a breach of a representation or warranty made by a party to
this Agreement shall, on the date that assertion is made, be deemed a breach of
such representation or warranty and immediately invoke that party's obligation
to protect, defend, hold harmless and indemnify the other party to this
Agreement.
11.4 RECEIVABLES. After the Closing, Seller and Purchaser shall
jointly send a letter to each of the obligors on the Receivables, informing
each such obligor of the transfer hereunder and instructing them to remit all
payments and other items in respect of such Receivables and all future accounts
receivable of Purchaser to Purchaser as specified in the letter. Any amounts
paid to or received by Seller attributable to the Receivables or the Unbilled
Receivables shall be immediately paid to Purchaser. If Purchaser is unable to
collect any of the Receivables or Unbilled Receivables within 180 days after
the Closing Date (the "Uncollected Receivables"), Purchaser may, at its option,
assign and transfer the Uncollected Receivables to Seller and Seller, in
consideration of such assignment and transfer, within 10 business days thereof,
shall pay Purchaser an amount equal to the face value of the Uncollected
Receivables less the aggregate reserve on the Balance Sheet allocated to the
Receivables and Unbilled Receivables as of the Closing Date. If Purchaser
elects to assign and transfer the Uncollected Receivables to Seller, then
Purchaser shall give Seller written notice of such assignment, describing the
amount of each Uncollected Receivable and including copies of all available
invoices and other correspondences sent by Purchaser to the debtor with respect
to each Uncollected Receivable. Following the assignment and transfer of the
Uncollected Receivables by Purchaser to Seller, all amounts collected by Seller
shall be retained by Seller and Seller shall thereafter have no liability to
Purchaser to account for any of such Uncollected Receivables.
11.5 FURTHER ASSURANCES. Seller, at any time on or after the
Closing, will execute, acknowledge and deliver any further assignments and
other assurances, documents and instruments of transfer, reasonably requested
by Purchaser, and will take any other action that may be requested by
Purchaser, for the purpose of assigning, transferring, granting, conveying and
confirming to Purchaser, or reducing to possession, any or all property to be
conveyed and transferred by this Agreement. Purchaser, at the Closing, or any
time after the Closing, will execute, acknowledge and deliver any further
assignments and other assurances, documents and instruments of transfer
reasonably requested by Seller, for the purpose of issuing, transferring,
granting, conveying and confirming to Seller the Seller Shares.
11.6 EXPENSES. Each of the parties shall pay all costs and
expenses incurred by it or on its behalf in connection with this Agreement and
the transactions contemplated hereby, including, without limiting the
generality of the foregoing, fees and expenses of its own financial
consultants, accountants and counsel.
11.7 RASMUSSEN. Upon at least 24 hours prior written notice,
Seller will make available to Purchaser the services of William Rasmussen on an
as-needed basis to assist in the
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<PAGE> 45
transition of the Business. The specific time, duration and nature of such
services shall be mutually agreeable to Purchaser and Mr. Rasmussen. Within 10
business days of Purchaser's receipt of an appropriate invoice from Seller,
Purchaser will reimburse Seller for each hour of services rendered by Mr.
Rasmussen to Purchaser based upon the hourly rate paid (or determined from his
annual salary) to Mr. Rasmussen by Seller.
11.8 DEFERRED ACQUISITION BONUS. On the terms and subject to the
conditions of the Allender Employment Agreement, in addition to the salary and
4% commission that shall be payable to Allender thereunder, during the period
commencing on the effective date of the Allender Employment Agreement and
ending June 30, 1997, Purchaser agrees to pay Allender a bonus (the "Deferred
Acquisition Bonus") in an amount equal to 3% of the base upon which the 4%
commission is payable to her thereunder.
ARTICLE 12
COVENANT NOT TO COMPETE
12.1 NON-COMPETE COVENANT. The parties agree that, for a period of
three years from the Effective Date, neither Seller nor Shareholder will,
without the prior written consent of Purchaser, directly or indirectly, in the
States of Colorado, Iowa, Kansas, Missouri, Nebraska, and South Dakota (the
"Territory"), own, manage, finance, operate, join, control or participate in
the ownership, management, financing, operation or control of, or be employed
or connected in any manner with, any business that competes with the Business.
Notwithstanding the foregoing, the restrictions set forth under this Article 12
shall remain in full force and effect with respect to Shareholder for such
three-year period or the three-year period commencing with the termination of
Shareholder's employment agreement, whichever is later.
12.2 DEFINITION OF COMPETE. For purposes of this Agreement, the
term "compete" shall mean (a) calling on, soliciting or taking away, as a
client or customer any individual or entity that was a client or customer of
Seller during the 24 calendar month period immediately preceding any such act
for the purpose of competing with Purchaser; (b) hiring, soliciting, taking
away or attempting to hire, solicit or take away any employee of Purchaser
either on behalf of itself or any other person or entity; or (c) entering into
or attempting to enter into any business substantially similar to or competing
in any way with the Business within the Territory, either alone or with any
individual or entity.
12.3 DIRECT OR INDIRECT COMPETITION. For purposes of this
Agreement, the words "directly or indirectly" shall mean (a) acting as an
agent, representative, consultant, officer, director, independent contractor or
employee of any entity or enterprise, which is competing (as defined in Section
12.2, above) with the Business; (b) participating in any such competing entity
or enterprise, or the affiliate of such entity or enterprise, as an owner,
partner, limited partner, joint venturer, creditor or shareholder; or (c)
communicating to any such competing entity or enterprise the names or addresses
or any other information concerning any past, present or identified prospective
client or customer of Seller.
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12.4 CONFIDENTIAL DATA. Seller and Shareholder agree that, during
the period set forth in Section 12.1, above, and thereafter, each of them will
keep confidential and not directly or indirectly divulge, furnish, make
accessible to anyone, or appropriate for their own use any confidential
information of Purchaser, and that at no time will either of them divulge,
furnish and make accessible to anyone or appropriate for their own use any
trade secrets of Purchaser; provided, however, that this obligation shall not
apply to any such confidential information or trade secrets that shall have
become generally known in the trade from no act or omission of Seller or
Shareholder. Seller and Shareholder further acknowledge and agree that
Purchaser has a legitimate interest in protecting proprietary customer
information from misappropriation or diversion by Seller and Shareholder or any
competitor.
12.5 REASONABLENESS OF RESTRICTIONS. Seller and Shareholder
recognize that the territorial and time limitations set forth in Section 12.1,
above, are reasonable, not burdensome and are properly required by Law for the
adequate protection of Purchaser, and in the event that such territorial or
time limitations are deemed to be unreasonable by a court of competent
jurisdiction, then Seller, Shareholder and Purchaser agree and submit to the
reduction of either such territorial or time limitation, or both, to such an
area or period as the court shall deem reasonable.
12.6 INJUNCTIVE RELIEF. Seller and Shareholder acknowledge that
their expertise in the Business is of a special, unique, unusual, extraordinary
and intellectual character, which gives said expertise a peculiar value, and
that a breach by either or both of them of the provisions of this Agreement
cannot be reasonably or adequately compensated in damages in an action at Law
and that such breach will cause Purchaser irreparable injury and damage.
Seller and Shareholder further acknowledge that each of them possesses unique
skills, knowledge and ability that competition in violation of this Agreement
would be extremely detrimental to Purchaser. By reason thereof, Seller and
Shareholder agree that Purchaser shall be entitled, in addition to any other
remedies it may have under this Agreement or otherwise, to temporary,
preliminary and/or permanent injunctive and other equitable relief to prevent
or curtail any breach of this Agreement, without proof of actual damages that
have been or may be caused to Purchaser by such breach or threatened breach;
provided, however, that no specification in this Agreement of a specific legal
or equitable remedy shall be construed as a waiver or prohibition against the
pursuing of other legal or equitable remedies in the event of a breach, by
either party.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 ENTIRE AGREEMENT. This Agreement, together with the
agreements referred to herein and in the Schedules and Exhibits hereto and
thereto, set forth the entire agreement between the parties with regard to the
subject matter of this Agreement. All agreements, covenants, representations
and warranties, express or implied, oral and written, of the parties with
regard to the subject matter of this Agreement (including, without limitation,
the letter of intent between the parties dated April 19, 1996) are contained in
this Agreement, in the
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<PAGE> 47
Schedules and Exhibits to this Agreement, and the documents referred to or
implementing the provisions of this Agreement. This is an integrated
agreement.
13.2 GOVERNING LAW AND CHOICE OF FORUM. The validity, construction
and performance of this Agreement, and any Action arising out of or relating to
this Agreement or any of the Ancillary Agreements, shall be governed by the
Laws, without regard to the Laws as to choice or conflict of Laws, of the State
of California. Any Action arising out of or relating hereto or thereto, or the
interpretation, performance or breach hereof or thereof, shall be instituted in
the United States District Court for the Central District of California or any
court of the State of California located in Orange County, and each party
irrevocably submits to the jurisdiction of those courts and waives any and all
objections to jurisdiction or venue that it may have under the Laws of the
State of California or otherwise in those courts in any such Action. Each
party agrees to accept service of process in any such Action in the manner
provided for in Section 13.7, below.
13.3 INTERPRETATION. The language in all parts of this Agreement
and each of the other Ancillary Agreements shall be in all cases construed
simply according to its fair meaning and not strictly for or against any party.
Whenever the context requires, all words used in the singular will be construed
to have been used in the plural, and vice versa, and each gender will include
any other gender. The captions of the Sections and Subsections of this
Agreement are for convenience only and shall not affect the construction or
interpretation of any of the provisions of this Agreement.
13.4 WAIVER AND AMENDMENT. This Agreement may be amended,
supplemented, modified and/or rescinded only through an express written
instrument signed by all parties or their respective successors and permitted
assigns. Any party may specifically and expressly waive in writing any portion
of this Agreement or any breach hereof, but only to the extent such provision
is for the benefit of the waiving party, and no such waiver shall constitute a
further or continuing waiver of any preceding or succeeding breach of the same
or any other provision. The consent by one party to any act for which such
consent was required shall not be deemed to imply consent or waiver of the
necessity of obtaining such consent for the same or similar acts in the future,
and no forbearance by a party to seek a remedy for noncompliance or breach by
another party shall be construed as a waiver of any right or remedy with
respect to such noncompliance or breach.
13.5 ASSIGNMENT. Except as specifically provided otherwise in this
Agreement, neither this Agreement nor any interest herein shall be assignable
(voluntarily, involuntarily, by judicial process, operation of Law or
otherwise), in whole or in part, by any party without the prior written consent
of all other parties. Any attempt at such an assignment without such consent
shall be void and, at the option of the non-consenting party, shall be an
incurable breach of this Agreement resulting in the termination of this
Agreement. Purchaser may, without the consent of Seller or Shareholder, assign
all of its rights and obligations under this Agreement to any affiliate of
Purchaser, but in such event Purchaser shall remain fully liable as a primary
party under this Agreement and such assignment shall in no way relieve
Purchaser from any liability under this Agreement.
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<PAGE> 48
13.6 SUCCESSORS AND ASSIGNS. Each of the terms, provisions and
obligations of this Agreement shall be binding upon, shall inure to the benefit
of, and shall be enforceable by the parties and their respective legal
representatives, successors and permitted assigns.
13.7 NOTICES. All notices, requests, demands and other
communications made under this Agreement shall be in writing, correctly
addressed to the recipient at the addresses set forth under such recipient's
signature on the signature page hereto and shall be deemed to have been duly
given; (a) upon delivery, if served personally on the party to whom notice is
to be given; or (b) on the date or receipt, refusal or non-delivery indicated
on the receipt if mailed to the party to whom notice is to be given by first
class mail, registered or certified, postage prepaid, or by air courier. Any
party may give written notice of a change of address in accordance with the
provisions of this Section 13.7 and after such notice of change has been
received, any subsequent notice shall be given to such party in the manner
described at such new address.
13.8 SEVERABILITY. Each provision of this Agreement is intended to
be severable. Should any provision of this Agreement or the application
thereof be judicially declared to be or becomes illegal, invalid, unenforceable
or void, the remainder of this Agreement will continue in full force and effect
and the application of such provision to other persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto.
13.9 FURTHER ACTION. Each party agrees to perform any further acts
and to execute and deliver any other documents which may be reasonably
necessary to effect the provisions of this Agreement.
13.10 SPECIFIC PERFORMANCE. Each party's obligations under this
Agreement are unique. If any party should default in any of its obligations
under this Agreement, the parties each acknowledge that it would be
impracticable to measure the resulting damages. Accordingly, without prejudice
to the right to seek and recover monetary damages, each nondefaulting party
shall be entitled to sue in equity for specific performance of this Agreement
or other injunctive relief, and each party hereby waives any defense that a
remedy in damages would be adequate. Notwithstanding any breach or default by
any of the parties of any of their respective representations, warranties,
covenants, or agreements under this Agreement, if the purchase and sale
contemplated by it shall be consummated at the Closing, each of the parties
waives any rights that it or he may have to rescind this Agreement or the
transaction consummated by it; provided, however, this waiver shall not affect
any other rights or remedies available to the parties under this Agreement or
under the Law.
13.11 CUMULATIVE REMEDIES. No remedy made available hereunder by
any of the provisions of this Agreement is intended to be exclusive of any
other remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise.
13.12 WARRANTY OF AUTHORITY. Each of the individuals signing this
Agreement on behalf of a party hereto warrants and represents that such
individual is duly authorized and empowered to enter into this Agreement and
bind such party hereto.
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13.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single agreement.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the Effective Date.
"SELLER": "PURCHASER":
ADD CONSULTING, INC., DATA PROCESSING
a Nebraska corporation RESOURCES CORPORATION,
a California corporation
By: /s/ Gerald R. Ladd By: /s/ David M. Connell
------------------------ ---------------------------
Gerald R. Ladd Its: President
President and CEO -------------------------
Address: Address:
9290 West Dodge Road 4400 MacArthur Boulevard
Suite 203 Suite 610
Omaha, Nebraska 68114 Newport Beach, CA 92660-2037
Phone No.: (800) 683-9929 Phone No.: (714) 752-9111
FAX No.: (402) 393-0500 FAX No.: (714) 752-5850
"SHAREHOLDER":
/s/ Gerald R. Ladd
--------------------------
GERALD R. LADD
Address:
c/o ADD Consulting, Inc.
9290 West Dodge Road
Suite 203
Omaha, Nebraska 68114
Phone No.: (800) 683-9929
FAX No.: (402) 393-0500
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<PAGE> 50
DISCLOSURE OF OMITTED EXHIBITS AND SCHEDULES
The following exhibits and schedules to the Agreement of Purchase and
Sale set forth above have been omitted from this Exhibit 2.1. Data Processing
Resources Corporation, the reporting company, hereby agrees to furnish a
supplemental copy of such omitted exhibits or schedules to the Securities and
Exchange Commission upon request. Capitalized terms used herein have the
meanings set forth in the Agreement of Purchase and Sale.
<TABLE>
<CAPTION>
Exhibits Description
-------- -----------
<S> <C>
A Form of Escrow Agreement
B Allocation of Purchase Price
C Form of Seller's and Shareholder's Certificate
D Form of Ladd Employment Agreement
E Form of Consent to Assignment
F Registration Rights Agreement**
G Form of Purchaser's Officer's Certificate
H Form of Bill of Sale
I Form of Assignment and Assumption
J Net Working Capital of Seller as of the Balance Sheet Date
</TABLE>
<TABLE>
<CAPTION>
Schedules Description
--------- -----------
<S> <C>
1.1(a) FF&E
1.1(c) Other Tangible Property
1.1(d) Receivables
1.1(e) Unbilled Receivables
1.1(h) Prepaid Items
1.1(l) Numbers and Addresses
1.2(a)(1) I-Mark FF&E
1.2(a)(3) I-Mark Other Tangible Property
1.2(a)(4) I-Mark Receivables
1.2(a)(5) I-Mark Unbilled Receivables
1.2(a)(7) I-Mark Contracts
1.2(a)(9) I-Mark Prepaid Items
1.2(a)(13) I-Mark Numbers and Addresses
1.2(h) Other Excluded Assets
1.3 Permitted Encumbrances
1.4(a) Liabilities for Transferred Employees
1.5(a)(2) Third Party Payments
2.1 Seller's Articles and Bylaws
2.3 Severance or Similar Payments
2.4 Seller's and Shareholder's Consents
2.5 Pending Litigation
</TABLE>
** An executed copy of the Registration Rights Agreement has been filed as
Exhibit 2.2 to this 8-K.
<PAGE> 51
<TABLE>
<S> <C>
2.8 Financial Statements and Balance Sheet
2.11 Certain Changes or Events
2.12 Exceptions to Title
2.15 Leases
2.16 Contracts
2.17 List of Seller's Insurance
2.18 List of Permits
2.19 List of Business Intellectual Property
2.20 Employee Information
2.21 Employee Benefit Plans
2.23 Affiliate Transactions
2.24 Tax Sites and Audits
4.4 Purchaser's Consents and Approvals
4.7 Purchaser's Financial Statements
</TABLE>
<PAGE> 1
EXHIBIT 2.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is entered into
as of July 1, 1996, by and between Data Processing Resources Corporation, a
California corporation (the "Company"), and ADD Consulting, Inc., a Nebraska
corporation ("ADD").
WHEREAS, this Agreement is made in connection with the sale by ADD to
the Company of substantially all of the assets of ADD's consulting division
pursuant to that certain Agreement of Purchase and Sale of Assets dated July 1,
1996 (the "Asset Purchase Agreement"). The Company has issued to ADD 152,121
shares of the common stock of the Company (the "Shares") as part of the
consideration for the assets purchased by the Company pursuant to the Asset
Purchase Agreement and the terms of the Asset Purchase Agreement require the
Company to provide ADD certain registration rights with respect to the Shares.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
ARTICLE I
REGISTRATION RIGHTS
Section 1. Certain Definitions. In addition to the other terms defined
elsewhere in this Agreement, as used in this Agreement, the following terms
shall have the following respective meanings:
a. "ACT" means the Securities Act of 1933, as amended.
b. "COMMISSION" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Act.
c. "HOLDER" means ADD and any person beneficially owning
Registrable Securities through permitted assignment thereof in
accordance with Section 9 hereof.
d. "REGISTRABLE SECURITIES" means the Shares and any shares
of the Company's common stock issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of
the Shares, excluding any Registrable Securities sold by a person in a
transaction in which his rights under this Agreement are not assigned;
provided further that shares which would otherwise constitute
Registrable Securities shall cease to do so once they have been sold
to the public.
e. The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer
to a registration effected by preparing and filing a registration
statement in compliance with the Act and the declaration or ordering of
effectiveness of such registration statement.
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Section 2. Demand Registration. If the Company shall receive from any
Holder or Holders at any time after April 1, 1997 a written request or requests
that the Company effect a registration with the Commission with respect to all
or part of the Registrable Securities owned by such Holder or Holders, the
Company will:
a. promptly give written notice of the proposed registration to
all other Holders; and
b. subject to Section 3 hereof, as soon as practicable, effect
such registration as may be so requested and as would permit or facilitate the
sale and distribution of all or such portion of such Holder's Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given 10 days after receipt of
such written notice from the Company. The Company may, if permitted by law,
effect any such registration on Form S-3 or any successor or similar short form
registration statement (or Form S-1 or any other available form if Form S-3 is
not available).
Section 3. Limitations on Registration. The Company shall not be
required to prepare and file a registration statement pursuant to Section 2
hereof (i) which would become effective within six (6) months following the
effective date of a registration statement (other than a registration statement
filed on Form S-8 or any successor form) filed by the Company with the
Commission pertaining to an underwritten public offering of securities, (ii) if
the Company in good faith gives written notice to the Holders of the
Registrable Securities stating that in the good faith judgment of a majority of
the board of directors it would be detrimental to the Company or its
shareholders for a registration statement to be filed in the near future, in
which case the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed 135 days;
provided, however, that the Company shall not obtain such a deferral more than
one time in any twelve month period, (iii) if the Holders, together with the
holders of any other securities of the Company entitled to be included in such
registration, propose to sell Registrable Securities and other securities of the
company (if any) at any aggregate price to the public of less than $1 million,
(iv) if in any given 12-month period, the Company has effected a registration
pursuant to Section 2 hereof at the request of a Holder, or (v) which is
effected more than three years after the date of this Agreement. If a requested
registration pursuant to Section 2 hereof involves an underwritten offering, and
the managing underwriter shall advise the Company in writing (with a copy to
each Holder of Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Securities)
exceeds the maximum dollar amount or number that can be sold in such offering
without materially adversely affecting the proposed offering price, the timing,
the distribution method or the probability of success of such offering (the
"Maximum Number of Demand Shares"), then the Company shall include in any such
registration to the extent of the Maximum Number of Demand Shares which the
Company is so advised can be sold in such offering (i) first, Registrable
Securities requested to be included in such registration by the Holder or
Holders of Registrable Securities pro rata among such Holders on the basis of
the number of Registrable Securities requested to be included by such Holders,
and (ii) second, to the extent
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the Maximum Number of Demand Shares has not been reached under the foregoing
clause (i), other securities of the Company proposed to be included in such
registration without exceeding the Maximum Number of Demand Shares, in
accordance with the priorities, if any, then existing among the Company and the
holders of such other securities.
Section 4. Incidental Registration. If, at any time and from time to
time during a period commencing on the date of this Agreement and ending on the
third anniversary of the date of this Agreement, the Company shall propose to
register in a public offering any of its common stock (whether for the Company's
account or for the account of other shareholders) to be offered for cash
pursuant thereto (other than a registration statement (i) on Form S-4 or Form
S-8 (or any substitute or successor form that may be adopted by the Commission),
(ii) filed in connection with any employee stock option or other benefit plan,
(iii) for an exchange offer or offering of securities solely to the Company's
existing shareholders, or (iv) for a dividend reinvestment plan), it shall give
written notice (the "Company's Notice") to all Holders of Registrable
Securities of its intention to do so at least thirty (30) days prior to the
anticipated filing date. If any Holder of Registrable Securities desires to
dispose of all or part of such Holder's Registrable Securities, it may request
registration thereof in connection with the Company's registration by delivering
to the Company, within ten (10) days after receipt of the Company's Notice,
written notice of such request (the "Holder's Notice") stating the number of
shares of Registrable Securities to be included. The Company shall use its best
efforts to cause all shares specified in the Holder's Notices to be registered
under the Act so as to permit the sale or other disposition by such Holder or
Holders of the shares so registered, subject however, to the limitations set
forth in Section 5 hereof.
Section 5. Limitations on Incidental Registration. If the managing
underwriter or underwriters for registration under Section 4 hereof advises the
Company and the Holders requesting inclusion in such registration in writing,
that the dollar amount or number of shares of Registrable Securities and other
shares of common stock or securities to be included in the offering exceeds the
maximum dollar amount or number that can be sold in such offering without
adversely affecting the proposed offering price, the timing, the distribution
method or the probability of success of such offering (the "Maximum Number of
Shares"), then the Company shall include in such registration:
a. if the registration is a primary offering for the Company, (i)
first, the shares of common stock or other securities that the Company proposes
to sell which can be sold without exceeding the Maximum Number of Shares; (ii)
second, to the extent the Maximum Number of Shares has not been reached under
the foregoing clause (i), the shares of common stock or other securities
requested to be included in such registration by other shareholders with
registration rights granted prior to the date hereof which can be sold without
exceeding the Maximum Number of Shares (allocated pro rata among such other
shareholders, as nearly as practicable, on the basis of the number of shares of
common stock or other securities requested to be included in such offering by
such other shareholders); and (iii) third, to the extent the Maximum Number of
Shares has not been reached under the foregoing clauses (i) and (ii), the
Registrable Securities and shares of common stock or other securities requested
to be included in such registration by the Holders and other shareholders with
registration rights which can be
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sold without exceeding the Maximum Number of Shares (allocated pro rata among
such Holders and other shareholders, as nearly as practicable, on the basis of
the number of shares of Registrable Securities and common stock or other
securities requested to be included in such offering by the Holders and such
other shareholders); and
b. if the registration is for a secondary offering for any of the
Company's securityholders, (i) first, if the registration was requested by other
shareholders with demand registration rights, then the shares of common stock or
other securities that such other shareholders have requested to be included in
such offering which can be sold without exceeding the Maximum Number of Shares;
(ii) second, to the extent the Maximum Number of Shares has not been reached
under the foregoing clause (i), the shares of common stock or other securities
requested to be included in such registration by other shareholders with
registration rights granted prior to the date hereof which can be sold without
exceeding the Maximum Number of Shares (allocated pro rata among such other
shareholders, as nearly as practicable, on the basis of the number of shares of
common stock or other securities requested to be included in such offering by
such other shareholders); and (iii) third, to the extent the Maximum Number of
Shares has not been reached under the foregoing clauses (i) and (ii), the
Registrable Securities and shares of common stock or other securities requested
to be included in such registration by the Holders and other shareholders with
registration rights which can be sold without exceeding the Maximum Number of
Shares (allocated pro rata among such Holders and other shareholders, as nearly
as practicable, on the basis of the number of shares of Registrable Securities
and common stock or other securities requested to be included in such offering
by the Holders and such other shareholders).
Section 6. Registration Procedures.
a. If and when the Company is required by the provisions of
this Agreement to use its best efforts to effect the registration of
shares of Registrable Securities, the Company shall:
(i) Prepare and file with the Commission a
registration statement with respect to such shares and use its
best efforts to cause such registration statement to become
and remain effective for the periods provided herein;
(ii) Prepare and file with the Commission such
supplements to such registration statement and the
prospectuses used in connection therewith as may be necessary
to keep such registration statement effective and current for
a reasonable amount of time so that all of such securities can
be disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such
registration statement;
(iii) Furnish to the Holders such reasonable number
of copies of the registration statement, preliminary
prospectus, final prospectus and such
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other documents as the Holders may reasonably request to
facilitate the public offering of the Registrable Securities;
(iv) Use its best efforts to register or qualify the
shares covered by such registration statement under such other
securities or Blue Sky or other applicable laws of such
jurisdictions as the Holders shall reasonably request;
provided, however, the Company shall not be obligated to
qualify to do business in such jurisdiction or consent to
general service of process in such jurisdiction, or subject
itself to taxation in any such jurisdiction;
(v) Notify counsel for the Holders, promptly after it
shall receive notice thereof, of the time when such
registration statement has become effective under the Act or a
supplement to any prospectus forming a part of such
registration statement has been filed;
(vi) Notify counsel for the Holders promptly of any
request by the Commission for the amending or supplementing of
such registration statement or prospectus or for additional
information;
(vii) Prepare and file with the Commission, promptly
upon the request of the Holders, any amendments or supplements
to such registration statement or prospectus which, in the
reasonable opinion of counsel for the Holders (and reasonably
concurred in by counsel for the Company), is required under
the Act or the rules and regulations thereunder in connection
with the distribution of the Registrable Securities;
(viii) Prepare and promptly file with the Commission
and promptly notify counsel for the Holders of the filing of
such amendment or supplement to any such registration
statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus
relating to the Registrable Securities is required to be
delivered under the Act, any event shall have occurred as the
result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which
they were made, not misleading;
(ix) Advise counsel for the Holders, promptly after
it shall receive notice or obtain knowledge thereof, of the
issuance of any stop order by the Commission suspending the
effectiveness of such registration statement under the Act or
the initiation or threatening of any proceeding for such
purpose, and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;
(x) Use its best efforts to cause all such
Registrable Securities to be listed on each securities
exchange or over-the-counter market on which
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similar securities issued by the Company are then listed and
file all required listing applications and pay all required
fees in connection with such listings; and
(xi) Cooperate with Holders in effecting the transfer
of any shares sold pursuant to a registration effected
hereunder.
Section 7. Expenses of Registration. Except as provided below, all of
the expenses incurred by the Company in effecting any registration requested
pursuant to Section 2 hereof, including, without limitation, all registration
and filing fees, printing expenses, expenses of compliance with Blue Sky laws
(including, without limitation, fees and disbursements of underwriters counsel
relating thereto), fees and disbursements of counsel for the Company, and
expenses of any audits incidental to or required by any such registration
("Registration Expenses") shall be borne by the Company; provided, however, that
the participating Holders shall reimburse the Company for up to $10,000 of such
Registration Expenses within ten (10) days after receipt of an invoice from the
Company describing such Registration Expenses in reasonable detail; and
provided, further, that if other shareholders with registration rights are
included in such registration, the Registration Expenses shall be allocated pro
rata among the participating Holders and each of such other shareholders of the
Company, as nearly as practicable, on the basis of the fair market value of
Registrable Securities, common stock and other securities of the Company
requested by the Holders and such other shareholders of the Company to be
included in such registration, but in no event shall the participating Holders'
share of the expenses exceed $10,000. Except as provided below, all Registration
Expenses incurred by the Company in effecting any registration requested
pursuant to Section 4 hereof, shall be borne by the Company. In either event,
notwithstanding anything in this Section 7 to the contrary, the Company shall
have no obligation to pay or otherwise bear (i) any underwriting discounts or
brokerage fees or commissions relating to the sale of Registrable Securities by
the Holders, or (ii) any Registration Expenses if the payment of such expenses
by the Company is prohibited by the laws of a state in which such offering is
qualified and only to the extent so prohibited, or (iii) any expenses of any
compliance with Blue Sky laws which pertains only to an individual Holder, or
(iv) any fees and disbursements of counsel for the Holders.
Section 8. Indemnification.
(a) The Company will indemnify, hold harmless and defend each
Holder, its officers, directors, partners, legal counsel and accountants, and
each person who controls a Holder within the meaning of Section 15 of the Act,
against any and all expenses, claims, losses, damages and liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereof, incident to any registration
or qualification of the Registrable Securities, or which arise out of or are
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of any rule or
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regulation promulgated under the Act or any state securities laws applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each such indemnified party for any legal and any other expenses
reasonably incurred by them in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action. The Company also
shall indemnify any underwriter of the Registrable Securities, their officers,
directors, partners, members and agents and each person who controls such
underwriters on substantially the same basis as that of the indemnification of
the Holders provided in this Section 8(a).
The indemnity agreement contained in this Section 8(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage or liability
or any action in respect thereof if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable to any Holder or its officers, directors, partners,
members or agents in any such case for any loss, claim, damage, liability or any
action in respect thereof to the extent that it arises solely from or is based
solely upon and is in conformity with written information relating to such
Holder furnished expressly for use in connection with such registration by such
Holder or its agents, nor shall the Company be liable to any Holder for any such
loss, claim, damage or liability or any action in respect thereof to the extent
it arises solely from or is based solely upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities delivered by such
Holder after the Company had provided written notice to such Holder that such
registration statement or prospectus contained such untrue statement or alleged
untrue statement of a material fact, (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading after the Company had provided written
notice to such Holder that such registration statement or prospectus contained
such omission or alleged omission, or (iii) the failure of such Holder to
deliver any preliminary or final prospectus, or any amendments or supplements
thereto, required under applicable securities laws, including the Act, to be so
delivered, provided that a sufficient number of copies thereof had been timely
provided by the Company to such Holder.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, and each
of its officers, directors, legal counsel and accountants, and each person who
controls the Company within the meaning of Section 15 of the Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Holder of any rule or
regulation promulgated under the Act or any state securities laws applicable to
the Holder and relating to action or inaction required by the Holder in
connection with any such registration, qualification or compliance, and will
reimburse each such indemnified person for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that
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such untrue statement (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by or on behalf of such Holder and stated to be specifically for
use therein. Each Holder shall also indemnify and hold harmless any underwriter
of the Registrable Securities, their officers, directors, partners, members and
agents and each person who controls such underwriters on substantially the same
basis as that of the indemnification of the Company provided in this Section
8(b).
(c) Each person to be indemnified pursuant to this Section 8 (the
"Indemnified Party") will, promptly after its receipt of written notice of the
commencement of any action against such Indemnified Party in respect of which
indemnity may be sought from an indemnifying person under this Section 8 (the
"Indemnifying Party") notify the Indemnifying Party in writing of the
commencement thereof, provided, however, that the failure of any person to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement except to the extent that such Indemnifying
Party is actually materially and adversely prejudiced by such failure to give
notice. If any such action shall be brought against any Indemnified Party and it
shall notify an Indemnifying Party of the commencement thereof, the Indemnifying
Party will be entitled to participate therein and, to the extent it may desire,
jointly with any other Indemnifying Party similarly notified, to assume the
defense thereof with counsel satisfactory to such Indemnified Party, and after
notice from the Indemnifying Party to such Indemnified Party of its election so
to assume the defense thereof, the Indemnifying Party will not be liable to such
Indemnified Party under this Section 8 for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation unless (i) the Indemnified
Party shall have employed counsel in an action in which the Indemnified Party
and Indemnifying Party are both defendants and there is a conflict of interest
between such parties that would prevent counsel from adequately representing
both parties, (ii) the Indemnifying Party shall not have employed counsel
satisfactory within the exercise of reasonable judgment of the Indemnified Party
to represent the Indemnified Party within a reasonable time after the notice of
the commencement of the action or (iii) the Indemnifying Party has authorized
the employment of counsel for the Indemnified Party at the expense of the
Indemnifying Party. The undertaking contained in this Section 8 shall be in
addition to any liabilities which the Indemnifying Party may have pursuant to
law.
(d) If the indemnification provided for in this Section 8 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements, actions or omissions which resulted in such
loss, liability, claim, damage or expense as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties'
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relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
Section 9. Transfer of Registration Rights. The rights to cause the
Company to register securities granted to a Holder under Sections 2 and 4 may be
transferred or assigned by such Holder to a transferee or assignee in connection
with any transfer or assignment of Registrable Securities, provided that: (a)
such transfer or assignment may otherwise be effected in accordance with
applicable securities laws, (b) prompt written notice of such transfer or
assignment is given to the Company, and (c) such transferee or assignee
expressly agrees in writing delivered to the Company to be bound by the
provisions of this Agreement.
Section 10. Standoff or Lock-Up Agreement. Each Holder of Registrable
Securities agrees in connection with any firmly underwritten public offering of
the Company's common stock that, upon request of the Company or the underwriters
managing any underwritten offering of the Company's securities, such Holder
shall not sell, make any short sale of, loan, grant any option for the purchase
of, or otherwise dispose of any Registrable Securities (other than those
included in the registration) without the prior written consent of the Company
or such underwriters, as the case may be, during the 14 days prior to, and
during the 120-day period beginning on, the effective date of the registration
statement relating to such offering (except as part of such registration
statement). In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities until the
end of such period.
Section 11. Rule 144 Reporting. With a view to making available to the
Holders the benefits of certain rules and regulations of the Commission which at
any time permit the sale of the Registrable Securities to the public without
registration, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Act, at all times;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Act and the
Securities and Exchange Act of 1934, as amended (the "Exchange Act");
and
(c) so long as any Holder owns any unregistered Registrable
Securities, furnish to such Holder forthwith upon request a written
statement by the Company as to its compliance with the reporting
requirements of said Rule 144 and of the Act and Exchange Act, a copy
of the most recent annual or quarterly report of the Company and such
other reports and documents of the Company as the Holder may reasonably
request in availing Holder of any rule or regulation of the Commission
allowing the sale of any such securities without registration.
Section 12. Amendment. Any modification, amendment, or waiver of this
Agreement or any provision hereof shall be effective only if in writing and
executed by the Holders of at least a majority of the Registrable Securities and
the Company.
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Section 13. Governing Law. This Agreement shall be governed in all
respects by the laws of the State of California without regard to its conflicts
of laws principles.
Section 14. Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, permitted assigns, heirs, executors and
administrators of the parties hereto.
Section 15. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall either be delivered personally
or be mailed by first class mail, postage prepaid, addressed, if to a Holder, to
such Holder in care of ADD Consulting, Inc., 9290 West Dodge Road, Omaha,
Nebraska, 68114, Attention: Gerald R. Ladd or to the Company at 4400 MacArthur
Boulevard, Suite 610, Newport Beach, California 92660-2037, Attention:
President, or at such other address as either party shall have furnished to the
other party in writing. All notices shall be deemed effective (a) when received,
if personally delivered or (b) three days after deposit in the mail, if mailed
as set forth above.
Section 16. Severability. If any provision of this Agreement shall be
judicially determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
Section 17. Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
Section 18. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
Section 19. Termination of Registration Rights. The rights of any
Holder to request registration or inclusion in any registration pursuant to
Section 2 or 4 hereof shall terminate on the date that all Registrable
Securities held by such Holder may immediately be sold under Commission Rule 144
during any 90-day period.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be executed by their respective representatives thereunto duly
authorized as of the date first above written.
Data Processing Resources
Corporation, a California corporation
By: /s/ David M. Connell
----------------------------------
Title: President
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ADD Consulting, Inc., a Nebraska
corporation
By: /s/ Gerald R. Ladd
----------------------------------
Title: President and Chief Executive
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Officer
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EXHIBIT 99.1
Michael A. Piraino
Chief Financial Officer
(714)752-9111, ext. 146
DATA PROCESSING RESOURCES CORPORATION ACQUIRES
OMAHA BASED INFORMATION TECHNOLOGY STAFFING FIRM
FOR $12.850 MILLION
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Two Facilities Added
NEWPORT BEACH, CALIFORNIA - July 2, 1996 - Data Processing Resources
Corporation (Nasdaq:DPRC) today announced that it has acquired the
information technology staffing business of Nebraska - based ADD
Consulting, Inc. (ADD). The acquisition expands DPRC's branch network by
two locations.
Under the terms of the agreement, the purchase price was $12,850,000,
consisting of $8,785,000 in cash, 152,121 shares of restricted DPRC common
stock valued at $3,765,000 (computed using an average closing price of
DPRC's stock for five business days preceding the signing of the definitive
purchase agreement) and a deferred payment of $300,000. The transaction
has been approved by each company's board of directors.
ADD, which operates under the name Applications Design and
Development, currently operates two branch facilities, one in Omaha,
Nebraska and the other in Overland Park, Kansas. An additional branch
location is planned to be opened in Des Moines, Iowa before the end of the
calendar year. ADD's revenues for the twelve months ended April 30, 1996
were approximately $13,000,000. The business has been profitable since
inception and currently employs approximately 170 full-time salaried
consultants serving six states. The acquisition was accretive to DPRC's
pro forma net earnings on a twelve months trailing basis.
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David M. Connell, President and Chief Operating Officer, stated, "We
have taken some time since the initial public offering to select an IT staffing
firm which shares our culture and business characteristics. ADD has met each
and every one of our acquisition criteria which includes cultural fit, quality
consultant staff, loyal and diverse customer base and strong historical
financial performance."
Mr. Connell added, "Gerald R. Ladd, ADD's President and Chief
Executive Officer, will remain with the organization under the terms of a
three-year employment agreement". Mr. Gerald R. Ladd, said "We are looking
forward to working with the senior management of DPRC as they expand their
business into the Midwest."
Data Processing Resources Corporation provides information technology
staffing services to a diverse group of corporate clients through a database of
highly qualified technical consultants. DPRC's company and services
information will soon be available via the Internet's World Wide Web at
http://www.dprc.com.
