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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): August 27, 1997
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THE REGISTRY, INC.
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(Exact name of registrant as specified in charter)
MASSACHUSETTS 0-28192 04-2920563
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(State or other (Commission File Number) (I.R.S.Employer
jurisdiction of Identification No.)
incorporation)
189 Wells Avenue, Newton, MA 02159
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 527-6886
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This is page 1 of 5 pages.
Exhibit Index appears on page 5.
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ITEM 2. ACQUISITION OF STOCK
(a) On August 27, 1997 (the "Closing"), pursuant to a Stock Purchase Agreement
dated August 27, 1997 (the "Agreement") by and among the Registrant, Eligibility
Management Systems, Inc., a Florida corporation (the "Company"), Richard K.
Dolan, Charles C. Cain and Thomas A. DiMartino (each a "Seller" and collectively
the "Sellers"), the Registrant acquired all of the outstanding capital stock of
the Company from the Sellers for the aggregate consideration of up to $21
million. The aggregate consideration paid to the Sellers consists of (i) $15
million in cash paid at Closing, (ii) two additional cash payments of $500,000
payable on the first year and on the eighteen month anniversaries of the
Closing, respectively, (iii) a cash payment of $1,000,000 payable on the second
anniversary of the Closing and (iv) additional cash consideration of up to
$4,000,000 payable in accordance with certain performance objectives as
described in Exhibit 1.2 (c) to the Agreement. The amount and nature of the
consideration was determined by arms-length negotiation among the parties.
The foregoing description is qualified in its entirety by reference to the
Agreement, a copy of which is attached hereto as Exhibit 2 and incorporated
herein by reference.
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ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
No financial statements are required to be filed in connection with
the acquisition.
(c) Exhibits:
2 Stock Purchase Agreement dated August 27, 1997 by and among The
Registry, Inc., Eligibility Management Systems, Inc., Richard K.
Dolan, Charles C. Cain and Thomas A. DiMartino.*
* In accordance with Item 601(b)(2) of Regulation S-K, the registrant has
omitted exhibits and schedules to the Agreement from this filing. The
registrant agrees to provide any omitted schedules and exhibits
supplementally to the Commission upon request.
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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.
THE REGISTRY, INC.
By: /s/ Richard L. Bugley
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Name: Richard L. Bugley
Title: General Counsel
Date: September 10, 1997
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EXHIBIT INDEX
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<CAPTION>
Exhibit No. Description of Exhibits Page
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2 Stock Purchase Agreement dated August 27, 1997 by and among the
Registrant, Eligibility Management Systems, Inc., a Florida
corporation, Richard K. Dolan, Charles C. Cain and Thomas A.
DiMartino.
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CONFORMED COPY
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STOCK PURCHASE AGREEMENT
BY AND AMONG
THE REGISTRY, INC.
ELIGIBILITY MANAGEMENT SYSTEMS, INC.
RICHARD K. DOLAN
CHARLES C. CAIN
AND
THOMAS A. DiMARTINO
Dated as of August 27, 1997
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TABLE OF CONTENTS
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ARTICLE I
PURCHASE AND SALE OF THE SHARES........................................................... 1
SECTION 1.1 Basic Transaction......................................................... 1
SECTION 1.2 Purchase Price............................................................ 1
SECTION 1.3 The Closing............................................................... 2
SECTION 1.4 Material Adverse Effect................................................... 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS............................................. 3
SECTION 2.1 Sellers................................................................... 3
SECTION 2.2 Authority................................................................. 3
SECTION 2.3 Noncontravention.......................................................... 3
SECTION 2.4 Brokers' Fees............................................................. 4
SECTION 2.5 The Shares................................................................ 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY..................................... 4
SECTION 3.1 Organization and Qualification and Other Equity Interests................. 4
SECTION 3.2 Authority................................................................. 4
SECTION 3.3 Certificate of Incorporation and By-Laws.................................. 5
SECTION 3.4 Capitalization............................................................ 5
SECTION 3.5 No Conflict; Required Filings and Consents................................ 5
SECTION 3.6 Compliance, Permits....................................................... 6
SECTION 3.7 Financial Statements...................................................... 6
SECTION 3.8 Absence of Certain Changes or Events...................................... 7
SECTION 3.9 No Undisclosed Liabilities................................................ 7
SECTION 3.10 Absence of Litigation.................................................... 7
SECTION 3.11 Employee Benefit Plans, Employment Agreements............................ 7
SECTION 3.12 Labor Matters............................................................ 9
SECTION 3.13 Restrictions on Business Activities...................................... 9
SECTION 3.14 Title to Property........................................................ 9
SECTION 3.15 Taxes.................................................................... 9
SECTION 3.16 Environmental Matters.................................................... 11
SECTION 3.17 Intellectual Property.................................................... 11
SECTION 3.18 Immigration Compliance................................................... 11
SECTION 3.19 Insurance................................................................ 12
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SECTION 3.20 Accounts Receivable...................................................... 12
SECTION 3.21 Brokers.................................................................. 12
SECTION 3.22 Change in Control Payments............................................... 13
SECTION 3.23 Expenses................................................................. 13
SECTION 3.24 Full Disclosure.......................................................... 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER............................................... 13
SECTION 4.1 Organization and Qualification; Subsidiaries.............................. 13
SECTION 4.2 Charter and By-Laws....................................................... 13
SECTION 4.3 Authority Relative to this Agreement...................................... 13
SECTION 4.4 No Conflict, Required Filings and Consents................................ 14
SECTION 4.5 SEC Filings; Financial Statements......................................... 14
ARTICLE V
CONDUCT OF BUSINESS PENDING THE CLOSING................................................... 15
SECTION 5.1 Conduct of Business by the Company Pending the Closing.................... 15
SECTION 5.2 No Solicitation........................................................... 17
ARTICLE VI
ADDITIONAL AGREEMENTS..................................................................... 18
SECTION 6.1 Access to Information; Confidentiality.................................... 18
SECTION 6.2 Consents; Approvals....................................................... 18
SECTION 6.3 Notification of Certain Matters........................................... 18
SECTION 6.4 338(h)(10) Election....................................................... 18
SECTION 6.5 Further Action/Tax Treatment.............................................. 19
SECTION 6.6 Public Announcements...................................................... 19
SECTION 6.7 Conveyance Taxes.......................................................... 19
SECTION 6.8 Stock Options............................................................. 19
SECTION 6.9 Bonus Plan................................................................ 20
SECTION 6.10 Distribution of Accounts Receivable...................................... 20
SECTION 6.11 Operations after the Closing............................................. 20
SECTION 6.12 Intercreditor/Subordination Agreement.................................... 20
SECTION 6.13 Audited Financials....................................................... 20
ARTICLE VII
CONDITIONS TO CLOSING..................................................................... 21
SECTION 7.1 Conditions to Obligation of Each Party to Closing......................... 21
SECTION 7.2 Additional Conditions to Obligations of Buyer............................. 21
SECTION 7.3 Additional Conditions to Obligation of the Sellers........................ 22
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ARTICLE VIII
TERMINATION............................................................................... 23
SECTION 8.1 Termination............................................................... 23
SECTION 8.2 Effect of Termination..................................................... 24
SECTION 8.3 Fees and Expenses......................................................... 24
ARTICLE IX
INDEMNIFICATION........................................................................... 24
SECTION 9.1 Survival of Representations and Warranties................................ 24
SECTION 9.2 Indemnification by the Sellers............................................ 25
SECTION 9.3 Indemnification by the Buyer.............................................. 25
SECTION 9.4 Third Person Claims....................................................... 26
SECTION 9.5 Limitations on Indemnification............................................ 26
SECTION 9.6 Method of Payment......................................................... 27
ARTICLE X
GENERAL PROVISIONS....................................................................... 27
SECTION 10.1 Survival, Etc............................................................ 27
SECTION 10.2 Notices.................................................................. 27
SECTION 10.3 Certain Definitions...................................................... 28
SECTION 10.4 Amendment................................................................ 29
SECTION 10.5 Waiver................................................................... 29
SECTION 10.6 Headings................................................................. 29
SECTION 10.7 Severability............................................................. 29
SECTION 10.8 Entire Agreement......................................................... 29
SECTION 10.9 Assignment............................................................... 30
SECTION 10.10 Parties in Interest..................................................... 30
SECTION 10.11 Failure or Indulgence Not Waiver; Remedies Cumulative................... 30
SECTION 10.12 Governing Law........................................................... 30
SECTION 10.13 Counterparts............................................................ 30
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EXHIBIT LIST
Exhibit 1.2(c) Additional Consideration
Exhibit 6.4 338(h)(10) Election/ Asset Allocation
Exhibit 6.8 List of Employees receiving Stock Options
Exhibit 6.9 Bonus Plan
Exhibit 7.2(e) Form of Employment Agreement
Exhibit 7.2(f) Form of Noncompetition Agreement
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is dated as of August 27, 1997 (this
"Agreement"), among The Registry, Inc., a Massachusetts corporation (the
"Buyer"), Eligibility Management Systems, Inc., a Florida corporation (the
"Company"), Richard K. Dolan, Charles C. Cain and Thomas A. DiMartino (each a
"Seller" and collectively the "Sellers").
Recitals
Whereas, the Buyer is a corporation organized and existing under the laws
of The Commonwealth of Massachusetts;
Whereas, the Sellers are the beneficial and record owners of all of the
outstanding capital stock of the Company (the "Shares");
Whereas, the Buyer desires to purchase the Shares from the Sellers, and the
Sellers desire to sell the Shares to the Buyer; and
Whereas, the payments provided for herein and the agreements set forth
herein constitute good and valuable consideration to the Sellers and the Sellers
acknowledge that the Buyer is relying upon the promises and indemnities made by
the Sellers herein as a material inducement to enter into this Agreement.
Now, Therefore, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
SECTION 1.1 Basic Transaction. The Sellers hereby agree to sell to the
Buyer, and the Buyer hereby agrees to purchase from the Sellers, at the Closing,
subject to and upon the terms and conditions contained herein, the Shares.
SECTION 1.2 Purchase Price. The purchase price (the "Purchase Price")
which the Buyer shall pay for the Shares and in consideration of the agreements
and covenants of the Sellers contained herein is the sum of the amounts set
forth in paragraph (a) through (c) below, payable as follows:
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(a) Cash Consideration. At the Closing, the Buyer shall pay to each of
the Sellers $5,000,000, for an aggregate payment of $15,000,000, in cash, bank
or certified check or by wire transfer.
(b) Deferred Consideration.
(i) On the first anniversary of the Closing Date, the Buyer shall pay
to each of the Sellers $166,666.67, for an aggregate payment of $500,000,
in cash, bank or certified check or by wire transfer.
(ii) On the eighteen month anniversary of the Closing Date, the Buyer
shall pay to each of the Sellers $166,666.67, for an aggregate payment of
$500,000, in cash, bank or certified check or by wire transfer.
(iii) On the second anniversary of the Closing Date, the Buyer shall
pay to each of the Sellers $333,333.33, for an aggregate payment of
$1,000,000, in cash, bank or certified check or by wire transfer (the
payments referred to in Sections 1.2(b)(i) through (iii) being referred to
as "Deferred Consideration").
(iv) The Deferred Consideration shall earn simple interest at the rate
of four percent (4%) on the basis of a 360 day year, which interest shall
be due and payable upon each payment of Deferred Consideration in
accordance with Sections 1.2(b)(i) -(iii) above.
(c) Additional Consideration. The Buyer shall pay to the Sellers
additional consideration of up to $4,000,000 in accordance with the formula, and
subject to the conditions and limitations, set forth on Exhibit 1.2(c).
SECTION 1.3 The Closing. The closing of the purchase and sale of the
Shares and the other transactions contemplated hereby (the "Closing") shall take
place at the offices of Ropes & Gray, One International Place, Boston
Massachusetts 02110, or at such other place as may be agreed to by the Buyer and
the Sellers, on August 22, 1997 or on such date not later than September 30,
1997 as may be agreed to by the Buyer and the Sellers (the "Closing Date").
(a) At the Closing:
(i) the Company and the Sellers shall deliver to the Buyer the
various certificates, instruments and documents referred to in Section 7.2
below;
(ii) the Buyer shall deliver to the Company and the Sellers the
various certificates, instruments and documents referred to in Section 7.3
below;
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(iii) the Sellers will deliver to the Buyer stock certificates
representing the Shares, endorsed in blank or accompanied by duly executed
assignment documents; and
(iv) the Buyer shall deliver to the Sellers the cash portion of the
Purchase Price payable at Closing
SECTION 1.4 Material Adverse Effect. When used in connection with the
Company, or Buyer or any of its subsidiaries, as the case may be, the term
"Material Adverse Effect" means any change, effect or circumstance that,
individually or when taken together with all other such changes, effects or
circumstances that have occurred prior to the date of determination of the
occurrence of the Material Adverse Effect, (a) is or is reasonably likely to be
materially adverse to the business, properties, assets (including intangible
assets), prospects, financial condition or results of operations of the Company
or Buyer and its subsidiaries, as the case may be, in the case of the Buyer
taken as a whole, or (b) is or is delaying or preventing or is reasonably likely
to delay or prevent, the consummation of the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers hereby represents and warrants to the Buyer, severally
and not jointly, that, except as set forth in the written disclosure schedule
delivered on or prior to the date hereof by the Sellers to Buyer that is
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in Articles II and III (the "Seller Disclosure Schedule"):
SECTION 2.1 Sellers. Each Seller is an individual residing at the address
indicated on the signature page hereto.
SECTION 2.2 Authority. Each Seller has full power and authority to
execute and deliver this Agreement and to perform his obligations hereunder.
This Agreement has been duly and validly executed and delivered by each Seller
and, assuming the due authorization, execution and delivery by the other parties
hereto, constitutes the valid and legally binding obligation of such Seller,
enforceable in accordance with its terms and conditions. No Seller need give
any notice to, make any filing with or obtain any authorization, consent or
approval of any government or governmental agency or any other third party in
order to consummate the transactions contemplated by this Agreement.
SECTION 2.3 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statue, regulation, rule, injunction,
judgment, order, decree, ruling, charge or other restriction of any government,
governmental agency or court to which the Seller is subject to or (ii) conflict
with, result in a breach of, constitute a default under, result in the
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acceleration of, create in any party the right to accelerate, terminate, modify
or cancel or require any notice under any Agreement, contract, lease, license,
instrument or other legally binding arrangement to which any Seller is a party
or by which he is bound or to which any of his assets is subject.
SECTION 2.4 Brokers' Fees. No Seller has any liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Buyer or the Company
could become liable or obligated.
SECTION 2.5 The Shares. Each Seller holds of record and owns beneficially
that number of the issued and outstanding shares of common stock of the Company
indicated on the signature page hereto, free and clear of any restrictions on
transfer (other than restrictions under applicable securities laws), mortgages,
pledges, liens, encumbrances, charges, security interests, options, warrants,
purchase rights, contracts, commitments, equities, claims and demands. No
Seller is a party to any option, warrant, purchase right or other contract or
commitment that could require such Seller to sell, transfer or otherwise dispose
of any capital stock of the Company (other than this Agreement). No Seller is a
party to any voting trust, proxy or other Agreement or understanding with
respect to the voting of any capital stock of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
The Company and Sellers hereby represent and warrant to Buyer, jointly and
severally, that, except as set forth in the Seller Disclosure Schedule:
SECTION 3.1 Organization and Qualification and Other Equity Interests.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida and has the requisite corporate
power and authority necessary to own, lease and operate the properties it
purports to own, lease or operate and to carry on its business as it is now
being conducted. The Company is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary except where the
failure to be so duly qualified or licensed would not have a Material Adverse
Effect on the Company. The Company does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
SECTION 3.2 Authority. The Company has all necessary corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions
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contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Company, and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated thereby. This Agreement has been duly
and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes a
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms.
SECTION 3.3 Certificate of Incorporation and By-Laws. Attached to the
Seller Disclosure Schedule are complete and correct copies of the Articles of
Incorporation and By-Laws of the Company as amended to date. Such Articles of
Incorporation and By-Laws are in full force and effect. The Company is not in
violation of any of the provisions of its Articles of Incorporation or By-Laws.
SECTION 3.4 Capitalization. The authorized capital stock of the Company
consists of 30 shares of common stock, par value $1.00 per share ("Company
Common Stock"). As of the date hereof, 30 shares of Company Common Stock
(constituting all of the Shares) were issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and no shares were held in
treasury. No change in such capitalization has occurred during the twenty-four
month period ending on the date hereof. There are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or obligating the Company to
issue or sell any shares of capital stock of, or other equity interests in, the
Company. There are no obligations, contingent or otherwise, of the Company to
repurchase, redeem or otherwise acquire any shares of Company Common Stock.
SECTION 3.5 No Conflict; Required Filings and Consents.
(a) Section 3.5(a) of the Seller Disclosure Schedule includes a list of
(i) all loan agreements, indentures, mortgages, pledges, conditional sale or
title retention agreements, security agreements, equipment obligations,
guaranties, standby letters of credit, equipment leases or lease purchase
agreements to which the Company is a party or by which it is bound and (ii) all
contracts, agreements, commitments or other understandings or arrangements to
which the Company is a party or by which it or any of its properties or assets
are bound or affected, but excluding contracts, agreements, commitments or other
understandings or arrangements entered into in the ordinary course of business
and involving, in each case, payments or receipts by the Company of less than
$10,000 in any single instance but not more than $50,000 in the aggregate
(collectively, the "Contracts").
(b) (i) The Company has not breached, is not in default under, and has not
received written notice of any breach of or default under, any of the Contracts,
(ii) to the knowledge of the Company or the Sellers, no other party to any of
the Contracts has breached or is in default of any of its obligations
thereunder, and (iii) each of the Contracts is in full force and
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effect, except in any such case for breaches, defaults or failures to be in full
force and effect that are immaterial in amount and significance.
(c) The execution and delivery of this Agreement by the Company and the
Sellers does not, and the performance of this Agreement by the Company and the
Sellers and the consummation of the transactions contemplated hereby will not,
(i) conflict with or violate the Articles of Incorporation or By-Laws of the
Company, (ii) conflict with or violate any federal, foreign, state or provincial
law, rule, regulation, order, judgment or decree (collectively, "Laws")
applicable to the Company or by which any of its properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default under), or
impair the Company's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a security
interest, lien, claim, encumbrance or any other restriction on any of the
properties or assets of the Company pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company is a party or by which the Company
or any of its properties is bound or affected, except for any such conflicts,
violations, breaches, defaults or occurrences that, individually and in the
aggregate, would not have a Material Adverse Effect on the Company.
(d) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any federal, foreign, state or provincial governmental or regulatory
authority except for applicable requirements, if any, of the Securities Act of
1933, as amended, and the rules and regulations thereunder (the "Securities
Act"), the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (the "Exchange Act"), and state securities laws ("Blue
Sky Laws")
SECTION 3.6 Compliance, Permits.
(a) The Company is in compliance in all material respects with all Laws
applicable to the Company or by which any of its properties are bound or
affected.
(b) The Company holds all permits, licenses, easements, variances,
exemptions, consents, certificates, orders and approvals from governmental
authorities which are necessary for the operation of the business of the Company
as it is now being conducted (collectively, the "Company Permits"). The Company
is in compliance with the terms of the Company Permits, except where the failure
to so comply would not have a Material Adverse Effect.
SECTION 3.7 Financial Statements.
(a) Attached to the Seller Disclosure Schedule are (i) the compiled
balance sheet of the Company as of December 31, 1996, together with the related
statement of income, cash flows and stockholders' equity for the year then ended
(the "Compiled Financial Statements"), and
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(ii) the unaudited balance sheet of the Company as of June 30, 1997 and the
related statement of income, cash flows and stockholders' equity for the six
months then ended (the "Unaudited Financial Statements", and together with the
Compiled Financial Statements, collectively the "Financial Statements").
(b) Each of the Financial Statements was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto), and each fairly presents in all material respects the consolidated
financial position of the Company as at the respective dates thereof and the
consolidated results of its operations, cash flows and stockholder equity for
the periods indicated, except that the Unaudited Financial Statements are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount and do not contain complete footnotes required
by generally accepted accounting principles.
SECTION 3.8 Absence of Certain Changes or Events. Since December 31,
1996, the Company has conducted its business in the ordinary course and there
has not occurred: (a) any Material Adverse Effect; (b) any amendments or changes
in the Articles of Incorporation or By-laws of the Company; (c) any damage to,
destruction or loss of any asset of the Company (whether or not covered by
insurance) that has had a Material Adverse Effect; (d) any material change by
the Company in its accounting methods, principles or practices; (e) any material
sale or revaluation by the Company of any of its assets, including, without
limitation, writing off notes or accounts receivable other than in the ordinary
course of business; (f) any other action or event that would have required the
consent of Buyer pursuant to Section 5.1 had such action or event occurred after
the date of this Agreement; or (g) any sale of the property or assets of the
Company, except in the ordinary course of business.
SECTION 3.9 No Undisclosed Liabilities. The Company has no liabilities
(absolute, accrued, contingent or otherwise), except liabilities (a) adequately
provided for in the Financial Statements, (b) incurred since June 30, 1997 in
the ordinary course of business consistent with past practice, or (c) incurred
in connection with this Agreement.
SECTION 3.10 Absence of Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company or the
Sellers, threatened against the Company or any properties or rights of the
Company before any federal, foreign, state or provincial court, arbitrator or
administrative, governmental or regulatory authority or body.
SECTION 3.11 Employee Benefit Plans, Employment Agreements.
(a) Section 3.11 (a) of the Seller Disclosure Schedule lists all employee
pension plans (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), all employee welfare plans (as
defined in Section 3(1) of ERISA), and all other bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement, severance
and other similar fringe or employee benefit plans, programs or
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arrangements, and any current or former employment or executive compensation
agreement, written or otherwise, for the benefit of, or relating to, any present
or former employee (including any beneficiary of any such employee) of, or any
present or former consultant (including any beneficiary of any such consultant)
to the Company, any trade or business (whether or not incorporated) which is a
member of a controlled group including the Company or which is under common
control with the Company (an "ERISA Affiliate") within the meaning of Section
414 of the Code (all such plans, practices, programs and arrangements are
referred to as the "Company Employee Plans"). There have been made available to
Buyer copies of (i) the most recent annual report on Form 5500 series, with
accompanying schedules and attachments, filed with respect to each Company
Employee Plan required to make such a filing, and (ii) the most recent Internal
Revenue Service determination letter with respect to each Company Employee Plan
intended to be qualified under Section 401(a) of the Code.
(b) (i) None of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, and neither the Company
nor any ERISA Affiliate has ever maintained, contributed to, or been required to
contribute to, any plan that is or was a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA, a pension plan subject to Title IV of ERISA
or a plan subject to Part 3 of Title I of ERISA; (ii) there has been no
"prohibited transaction," as such term is defined in Section 406 of ERISA and
Section 4975 of the Code, with respect to any Company Employee Plan, which could
result in any material liability of the Company; (iii) all Company Employee
Plans are in compliance in all material respects with the requirements
prescribed by any and all Laws (including ERISA and the Code), currently in
effect with respect thereto (including all applicable requirements for
notification to participants or the Department of Labor, Internal Revenue
Service (the "IRS") or Secretary of the Treasury), and the Company has performed
all material obligations required to be performed by it under, is not in any
material respect in default under or violation of, and neither the Company nor
the Sellers has any knowledge of any default or violation by any other party to,
any of the Company Employee Plans; (iv) each Company Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code is the subject of a favorable determination
letter from the IRS, and nothing has occurred which may reasonably be expected
to impair such determination; and (v) there are no lawsuits or other claims
(other than claims for benefits in the ordinary course) pending or, to the best
knowledge of the Company or the Sellers, threatened with respect to any Company
Employee Plan.
(c) Section 3.11(c) of the Seller Disclosure Schedule sets forth a true
and complete list of each current or former employee, officer or director of the
Company who holds (i) any option to purchase Company Common Stock as of the date
hereof, together with the number of shares of Company Common Stock subject to
such option, the option price of such option (to the extent determined as of the
date hereof), whether such option is intended to qualify as an incentive stock
option within the meaning of Section 422(b) of the Code (an "ISO"), and the
expiration date of such option; (ii) any other right, directly or indirectly, to
acquire Company Common Stock, together with the number of shares of Company
Common Stock subject to
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such right. Section 3.11(c) of the Seller Disclosure Schedule also sets forth
the total number of such ISOs, such nonqualified options and such other rights.
(d) Section 3.11(d) of the Seller Disclosure Schedule sets forth a true
and complete list of: (i) all employment agreements with officers of the
Company; (ii) all agreements with consultants who are individuals obligating the
Company to make annual cash payments in an amount exceeding $50,000 (iii) all
employees of, or consultants to, the Company who have executed a non-competition
agreement with the Company; (iv) all severance agreements, programs and policies
of the Company with or relating to its employees, in each case with outstanding
commitments exceeding $50,000, excluding programs and policies required to be
maintained by law; and (v) all plans, programs, agreements and other
arrangements of the Company with or relating to its employees which contain
change in control provisions.
SECTION 3.12 Labor Matters. (i) There are no controversies pending or, to
the knowledge of the Company or the Sellers, threatened between the Company and
any of its employees; (ii) the Company is not a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company, nor does the Company or any Seller know of any
activities or proceedings of any labor union to organize any such employees; and
(iii) neither the Company nor any Seller has knowledge of any strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to
any employees of the Company.
SECTION 3.13 Restrictions on Business Activities. Except for this
Agreement, to the best of the Sellers' or the Company's knowledge, there is no
agreement, judgement, injunction, order or decree binding upon the Company or
any other person which has or could reasonably be expected to have the effect of
prohibiting or impairing any business practice of the Company as currently
conducted or as proposed to be conducted by the Company.
SECTION 3.14 Title to Property. The Company has good and marketable title
to all of its properties and assets, free and clear of all liens, charges and
encumbrances, except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby or
which would have a Material Adverse Effect; and, to the knowledge of the Sellers
and the Company, all leases pursuant to which the Company leases from others
real or personal property, are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the knowledge of
the Sellers and the Company, under any of such leases, any existing default or
event of default (or event which with notice or lapse of time, or both, would
constitute a default thereunder). The Company does not own any real property.
SECTION 3.15 Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
fees, levies, duties, tariffs, imposts, and governmental impositions or charges
of any kind in the nature of (or similar to) taxes, payable to any federal,
state, local or foreign taxing authority, including,
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without limitation, (i) income, franchise, profits, gross receipts, ad valorem,
net worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "Tax Returns" shall mean returns, reports, and
information statements with respect to Taxes required to be filed with the IRS
or any other federal, foreign, state or provincial taxing authority, domestic or
foreign, including, without limitation, consolidated, combined and unitary tax
returns.
(b) (i) all Tax Returns of, relating to or which include the Company
which are required to have been filed have been filed on a timely basis with the
appropriate authorities and all such Tax Returns are true, correct and complete
in all respects, (ii) all Taxes required to have been paid by the Company have
been paid in full on a timely basis to the appropriate authorities, and (iii)
all Taxes or other amounts required to have been collected or withheld by the
Company have been timely and properly collected or withheld.
(c) (i) no Taxing authority has asserted in writing any adjustment,
deficiency, or assessment that could result in additional Tax for which the
Company is or may be liable, (ii) there is no pending audit, examination,
investigation, dispute, proceeding or claim for which the Company has received
notice relating to any Tax for which the Company is or may be liable, (iii) no
statute of limitations with respect to any Tax for which the Company is or may
be liable has been waived or extended, (iv) the due date of any Tax Returns that
the Company is required to file has not been extended, and (v) the Company is
not a party to any Tax sharing or Tax allocation agreement, arrangement or
understanding.
(d) There are no liens on any of the assets of the Company which arose in
connection with any failure or asserted failure to pay any Tax, other than liens
for current Taxes not yet due and payable.
(e) The Company is not a party to any contract, agreement, plan or
arrangement that, individually or collectively, could give rise to any payment
that would not be deductible by reason of Section 162, 280G or 404 of the Code.
(f) The Company has not been a member of an affiliated group filing a
consolidated federal income Tax Return, and the Company is not liable for the
Taxes of any person under Treasury Regulation 1.1502-6 (or any similar provision
of state, local, or foreign law) as transferee or successor, by contract or
otherwise.
(g) The Company at all times since ______________ has been an S
corporation within the meaning of Section 1361 of the Code.
(h) Copies of (i) any Tax examinations, (ii) extensions of statutory
limitations, (iii) the federal, state and local income Tax Returns of the
Company, and (iv) correspondence between
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the Company and all Taxing authorities for its last three (3) taxable years have
previously been furnished to the Buyer and such Tax Returns are true, correct
and complete.
SECTION 3.16 Environmental Matters. The Company: (i) has obtained all
approvals (collectively, the "Environmental Approvals") which are required to be
obtained under all applicable federal, state, foreign or local laws or any
regulation, code, plan, order, decree, judgment, notice or demand letter issued,
entered, promulgated or approved thereunder relating to pollution or protection
of the environment, including laws relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, or hazardous or toxic
materials or wastes into ambient air, surface water, ground water, or land or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants or
hazardous or toxic materials or wastes by the Company or its respective agents
("Environmental Laws"); (ii) is in compliance with all terms and conditions of
such required Environmental Approvals, and also are in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in applicable Environmental
Laws; and (iii) as of the date hereof, is not aware of nor has received notice
of any past or present violations of Environmental Laws or any event, condition,
circumstance, activity, practice, incident, action or plan which is reasonably
likely to interfere with or prevent continued compliance with or which would
give rise to any common law or statutory liability, or otherwise form the basis
of any claim, action, suit or proceeding, against the Company based on or
resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge or release
into the environment, of any pollutant, contaminant or hazardous or toxic
material or waste.
SECTION 3.17 Intellectual Property. The patents, patent applications,
trademarks, service marks, trade names, corporate names, copyrights, trade
secrets or other proprietary rights necessary to the conduct of the business of
the Company are owned by or licensed to the Company and listed in Section 3.17
of the Seller Disclosure Schedule. The Company has not licensed from any third
party any proprietary rights or, infringed, misappropriated or otherwise
conflicted with any proprietary rights of any third parties. To the knowledge
of the Sellers or the Company, no activity of any third party infringes upon the
rights of the Company to the items listed in Section 3.17 of the Seller
Disclosure Section. The Company has good title to all of the trademarks and
trade names listed in Section 3.17 of the Seller Disclosure Schedule hereto free
and clear of any lien, charge, license or other encumbrance.
SECTION 3.18 Immigration Compliance.
(a) The Company is in compliance with all applicable foreign, federal,
state and local laws, rules, directives and regulations relating to the
employment authorization of its employees (including, without limitation, the
Immigration Reform and Control Act of 1986, as amended and supplemented, and
Section 212(n) and 274A of the Immigration and Nationality Act, as amended and
supplemented, and all implementing regulations relating thereto), and the
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Company has not employed nor is it currently employing any unauthorized aliens
(as such term is defined under 8 CFR 27a.1(a)).
(b) The Company has not received any notice from the Immigration and
Naturalization Service (the "INS") or the U.S. Department of Labor (the "DOL")
of the disapproval or denial of any visa petition or entry permit pending before
the INS or labor certification pending before the DOL on behalf of any employee
or prospective employee of the Company.
(c) Section 3.17 (c) of the Seller Disclosure Schedule contains a true,
complete and accurate list of all non-immigrant or immigrant visa petitions and
entry permits pending before the INS and labor certifications pending before the
DOL on behalf of any of the employees or prospective employees of the Company.
(d) Since the approval of each of their respective visa petitions, there
has been no material change in the terms and conditions of employment of any
employees of the Company, provided that it is acknowledged that certain
employees from time to time unilaterally breach the terms of their employment
with the Company.
(e) The Company shall have delivered to Buyer by the Closing Date true,
accurate and complete copies of all visa petitions, entry permits and visa
applications (and all supporting documents) submitted to the INS for all foreign
employees and prospective foreign employees of the Company.
SECTION 3.19 Insurance. All fire and casualty, general liability, business
interruption, product liability, professional liability and sprinkler and water
damage insurance policies maintained by the Company is in character and amount
at least equivalent to that carried by persons engaged in similar businesses and
subject to the same or similar perils or hazards, and all such policies are with
reputable insurance carriers, provide full and adequate coverage for all normal
risks incident to the business of the Company and its respective properties and
assets.
SECTION 3.20 Accounts Receivable. The accounts receivable of the Company
as reflected in the most recent Financial Statements, to the extent uncollected
on the date hereof and the accounts receivable reflected on the books of the
Company are valid and existing and represent monies due, and the Company has
made reserves adequate for receivables not collectible in the ordinary course of
business, and (subject to the aforesaid reserves) are subject to no refunds or
other adjustments and to no defenses, rights of setoff, assignments,
restrictions, encumbrances or conditions enforceable by third parties on or
affecting any thereof, except for such refunds, adjustments, defenses, rights of
setoff, assignments, restrictions, encumbrances or conditions as could not
reasonably be expected to have a Material Adverse Effect.
SECTION 3.21 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions
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contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or the Sellers.
SECTION 3.22 Change in Control Payments. The Company is neither a party
nor subject to any plan, program or agreement pursuant to which payments may be
required or acceleration of benefits may be required upon a change of control of
the Company.
SECTION 3.23 Expenses. Section 3.23 of the Seller Disclosure Schedule sets
forth a description of all of the estimated expenses of the Company which the
Company expects to incur, or has incurred, in connection with the transactions
contemplated by this Agreement.
SECTION 3.24 Full Disclosure. No representation or warranty made by the
Sellers or the Company contained in this Agreement and no statement contained in
any certificate or schedule furnished or to be furnished by the Company or the
Sellers to Buyer in, or pursuant to the provisions of, this Agreement, including
without limitation the Seller Disclosure Schedule, contains or shall contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary, in the light of the circumstances under which it was made, in
order to make statements herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Buyer hereby represents and warrants to the Company and the Sellers that,
except as set forth in the written disclosure schedule delivered on or prior to
the date hereof by Buyer to the Sellers that is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
IV (the "Buyer Disclosure Schedule"):
SECTION 4.1 Organization and Qualification; Subsidiaries. Each of Buyer
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority necessary to own, lease and operate
the properties it purports to own, operate or lease and to carry on its business
as it is now being conducted. Each of Buyer and its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not reasonably be expected
to have a Material Adverse Effect.
SECTION 4.2 Charter and By-Laws. Buyer has heretofore furnished to the
Company a complete and correct copy of its Articles of Organization and By-Laws,
as amended to date. Such Articles of Organization and By-Laws are in full force
and effect. Buyer is not in violation of any of the provisions of its Articles
of Organization or By-Laws.
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SECTION 4.3 Authority Relative to this Agreement. Buyer has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Buyer and
the consummation by Buyer of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part of Buyer,
and no other corporate proceedings on the part of Buyer are necessary to
authorize this Agreement or to consummate the transactions contemplated thereby.
This Agreement has been duly and validly executed and delivered by Buyer and,
assuming the due authorization, execution and delivery by each of the other
parties hereto, constitutes a legal, valid and binding obligation of Buyer
enforceable against it in accordance with its terms.
SECTION 4.4 No Conflict, Required Filings and Consents.
(a) The execution and delivery of this Agreement by Buyer does not, and
the performance of this Agreement by Buyer will not, (i) conflict with or
violate the Articles of Organization or By-Laws of Buyer, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to Buyer
or any of its subsidiaries or by which its or their respective properties are
bound or affected, or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or impair Buyer's or any of its subsidiaries' rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Buyer or
any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Buyer or any of its subsidiaries is a party or by which
Buyer or any of its subsidiaries or its or any of their respective properties
are bound or affected, except in any such case for any such conflicts,
violations, breaches, defaults or other occurrences that could not reasonably be
expected to have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by Buyer does not, and
the performance of this Agreement by Buyer will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, and
Blue Sky Laws, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
have a Material Adverse Effect.
SECTION 4.5 SEC Filings; Financial Statements.
(a) Buyer has filed all forms, reports and documents required to be filed
with the Securities and Exchange Commission (the "SEC") and has heretofore
delivered to the Company, in the form filed with the SEC, (i) its Annual Report
on Form 10-K for the fiscal year ended June 29, 1996 (the "Buyer Form 10-K"),
(iv) all other reports or registration statements filed by Buyer with the SEC
since the date of the filing of the Buyer Form 10-K,
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and (v) all amendments and supplements to all such reports and registration
statements filed by Buyer with the SEC (collectively, the "Buyer SEC Reports").
The Buyer SEC Reports (i) were prepared in all material respects in accordance
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and (ii) did not at the time they were filed (or if amended or superseded by
a filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of Buyer's subsidiaries is required to file any forms, reports
or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Buyer SEC Reports has been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto) and each fairly presents in all material respects the
consolidated financial position of Buyer and its subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE CLOSING
SECTION 5.1 Conduct of Business by the Company Pending the Closing.
Except as specifically contemplated by Section 5.1 of the Company Disclosure
Schedule, the Company and the Sellers covenant and agree that, during the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing, unless Buyer shall otherwise agree
in writing, the Company shall, and the Sellers shall cause the Company to,
conduct its business only in, and the Company shall not, and the Sellers shall
cause the Company not to, take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use all reasonable commercial efforts to preserve substantially intact the
business organization of the Company, to keep available the services of the
present officers, employees and consultants of the Company and to preserve the
present relationships of the Company with customers, suppliers and other persons
with which the Company has business relations. By way of amplification and not
limitation, except as contemplated by this Agreement, the Company shall not, and
the Sellers shall cause the Company not to, during the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Closing, directly or indirectly do, or propose to do, any of
the following without the prior written consent of Buyer:
(a) amend or otherwise change the Articles of Incorporation or By-Laws of
the Company;
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(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company;
(c) sell, pledge, dispose of or encumber any assets (tangible or
intangible) of the Company except for (i) dispositions of obsolete or worthless
assets and (ii) sales of immaterial assets not in excess of $10,000 in the
aggregate;
(d) (i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
(iii) amend the terms or change the period of exercisability of, purchase,
repurchase, redeem or otherwise acquire, any of its securities including without
limitation, shares of Company Common Stock or any option, warrant or right,
directly or indirectly, to acquire shares of Company Common Stock, or propose to
do any of the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any person or, except in the ordinary
course of business consistent with past practice, make any loans or advances;
(iii) enter into or amend any material contract or agreement; (iv) authorize any
capital expenditures or purchase of fixed assets which are, in the aggregate, in
excess of $25,000 for the Company; or (v) enter into or amend any contract,
agreement, commitment or arrangement to effect any of the matters prohibited by
this Section 5.1(e);
(f) increase the compensation payable or to become payable to its officers
or employees, or grant any severance or termination pay to, or enter into any
employment or severance agreement with any director, officer or other employee
of the Company, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current or former directors, officers or
employees, except, in each case, as may be required by law;
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable and collection of accounts receivable);
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(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax liability
or agree to an extension of a statute of limitations;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the Financial Statements or incurred in the ordinary course of business and
consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.1 (a) through (i) above, or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect or prevent the Company from performing or cause
the Company not to perform its covenants hereunder.
SECTION 5.2 No Solicitation.
(a) The Sellers and the Company shall not, and the Sellers shall cause the
Company not to, directly or indirectly, through any officer, director, employee,
representative or agent of the Company or any Seller, (i) solicit, initiate or
encourage the initiation of any inquiries or proposals regarding any merger,
sale of substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving the
Company other than the transactions contemplated by this Agreement (any of the
foregoing inquiries or proposals being referred to herein as an "Acquisition
Proposal"), (ii) engage in negotiations or discussions concerning, or provide
any nonpublic information to any person relating to, any Acquisition Proposal or
(iii) agree to, approve or recommend any Acquisition Proposal.
(b) The Company shall immediately notify Buyer after receipt of any
Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to the Company in
connection with an Acquisition Proposal or for access to the properties, books
or records of the Company by any person or entity that informs the Board of
Directors of the Company that it is considering making, or has made, an
Acquisition Proposal. Such notice to Buyer shall be made orally and in writing.
(c) The Company and the Sellers shall immediately cease and cause to be
terminated any existing discussions or negotiations with any persons (other than
Buyer) conducted heretofore with respect to any of the foregoing. The Company
agrees not to release any third party from the confidentiality provisions of any
confidentiality agreement to which the Company is a party.
(d) The Company shall ensure that the officers, directors, employees,
representatives and agents of the Company and any investment banker or other
advisor or representative retained by the Company are aware of the restrictions
described in this Section 5.2.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Access to Information; Confidentiality. Upon reasonable
notice, the Company shall afford to Buyer's officers, employees, accountants,
counsel and other representatives, reasonable access, during the period from the
date of this Agreement to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, the Company shall
furnish promptly to Buyer all information concerning its business, properties
and personnel as Buyer may reasonably request, and shall make available to Buyer
the appropriate individuals (including attorneys, accountants and other
professionals) for discussion of its business, properties and personnel as Buyer
may reasonably request. Buyer agrees to keep such information confidential in
accordance with the confidentiality agreement dated __________, 1997 (the
"Confidentiality Agreement").
SECTION 6.2 Consents; Approvals. The Company and Buyer shall each use
their best efforts to obtain all consents, waivers, approvals, authorizations or
orders (including, without limitation, all United States governmental and
regulatory rulings and approvals), and the Company and Buyer shall make all
filings (including, without limitation, all filings with United States
governmental or regulatory agencies) required in connection with the
authorization, execution and delivery of this Agreement by the Company and Buyer
and the consummation by them of the transactions contemplated hereby, in each
case as promptly as practicable. The Company and Buyer shall furnish promptly
all information required to be included in any application or other filing to be
made pursuant to the rules and regulations of any United States or foreign
governmental body in connection with the transactions contemplated by this
Agreement.
SECTION 6.3 Notification of Certain Matters. The Company shall give
prompt notice to Buyer, and Buyer shall give prompt notice to the Company, of
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which would be likely to cause any representation or warranty contained in
this Agreement to become materially untrue or inaccurate, or (ii) any failure of
the Company or Buyer, as the case may be, materially to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice; and provided further that failure to give such
notice shall not be treated as a breach of covenant for the purposes of Sections
7.2(a) or 7.3(a) unless the failure to give such notice results in material
prejudice to the other party.
SECTION 6.4 338(h)(10) Election. Sellers shall (i) join the Buyer in
timely making an election under Section 338(h)(10) of the Code (and any
comparable election under state or local Tax law) with respect to the Company
and (ii) cooperate with the Buyer in the completion and timely filing of such
election in accordance with the provisions of Treasury
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Regulation (S) 1.338(h)(10)-1 (or any comparable provisions of state or local
Tax law) or any successor provision. Each party represents that it is qualified
to make such election. Ten days following the Closing, Buyer and Sellers shall
agree upon the fair market value of the assets of the Company. Neither Buyer nor
Sellers (nor any of their respective affiliates) shall take any position on any
Tax return or with any taxing authority that is inconsistent with the agreed
upon fair market values; provided that Buyer and Sellers (and any of their
respective affiliates) may take a tax position consistent with any examination
adjustments made by the IRS or applicable state, local or foreign taxing
authorities.
SECTION 6.5 Further Action/Tax Treatment. Upon the terms and subject to
the conditions hereof each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement.
SECTION 6.6 Public Announcements. Buyer, the Sellers and the Company
shall consult with each other before issuing any press release with respect to
the transaction contemplated by this Agreement and shall not issue any such
press release or make any such public statement without the prior consent of the
other party, which shall not be unreasonably withheld; provided, however, that
Buyer may, without the prior consent of any of the Sellers or the Company, issue
such press release or make such public statement as may upon the advice of
counsel be required by law or the rules and regulations of the Nasdaq National
Market if it has used reasonable efforts to consult with the Sellers and the
Company prior thereto.
SECTION 6.7 Conveyance Taxes. Buyer, the Sellers and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed at or before the Closing.
SECTION 6.8 Stock Options. As soon as practicable after the Closing,
Buyer shall cause to be granted to each Seller stock options to purchase 41,667
shares of Buyer's common stock (such options will include the maximum number of
incentive stock options permissible under the Code with the remaining options
being nonqualified stock options) and to the employees listed on Exhibit 6.8
nonqualified stock options to purchase an aggregate of 75,000 shares of Buyer's
common stock. The stock options will become exercisable in five equal annual
installments beginning on the first anniversary of the date of grant, will have
an exercise price per share equal to the fair market value of Buyer's common
stock on the date of grant, and will be awarded pursuant to, and be subject to
the terms and conditions of, Buyer's 1996 Stock Plan (the nonqualified stock
options will be issued under the acquisition pool
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established under such plan), or in the event that Buyer's rights under this
Agreement are assigned to Renaissance Solutions, Inc. pursuant to Section 10.9,
such options shall be awarded pursuant to the Renaissance Solutions, Inc. 1995
Equity Incentive Plan, copies of which have been made available to the Sellers.
SECTION 6.9 Bonus Plan. As soon as practicable after the Closing, Buyer
shall establish and maintain a bonus plan for the Company in accordance with the
provisions of Exhibit 6.9 hereof.
SECTION 6.10 Distribution of Accounts Receivable. Subject to Section 5.1
and the requirement that the Company have working capital of not less than
$600,000 on the Closing Date, on or prior to the Closing, the Company shall
distribute to the Sellers the accounts receivable of the Company as of August
15, 1997 reflected in the books and records of the Company that are uncollected
at the time of the Closing. The Company agrees to use reasonable efforts after
the Closing to assist the Sellers in the collection of these accounts.
SECTION 6.11 Operations after the Closing. Prior to June 30, 2001, Buyer
shall cause the Company to be operated in a way that will not unreasonably
interfere with the ability of the Company to achieve the Revenue Targets and
EBIT Targets set forth on Exhibit 1.2(c). In particular, except with the prior
written consent of a majority of the Sellers, Buyer shall cause the Company not
to:
(a) liquidate, amalgamate, consolidate with or merge into any other
corporation or entity, or permit another corporation or entity to merge into the
Company or its Subsidiaries, or acquire all or substantially all of the
properties or assets or business of any other person, or consummate any
reorganization or restructuring of the Company or its Subsidiaries, if such
transaction would be material to the Company;
(b) except as contemplated by the preceding clause, sell, lease, transfer
or otherwise dispose of assets material to the business of the Company taken as
a whole to any person or entity; or
(c) change the fiscal year end of the Company to a date other than
December 31.
SECTION 6.12 Intercreditor/Subordination Agreement. Each of the Sellers
agrees that, solely with respect to the Deferred Consideration, upon the request
of any senior lender to the Buyer, each Seller will enter into an
intercreditor/subordination agreement on terms and conditions reasonably
acceptable to the parties thereto.
SECTION 6.13 Audited Financials. Within 90 days after the Closing, the
Sellers shall deliver to Buyer an audited balance sheet of the Company as of
December 31, 1996, together with the related statement of income, cash flows and
stockholders' equity for the period then ended, together with footnotes (the
"Audited Company Financial Statements"), which Audited
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Company Financial Statements shall contain the report of Price Waterhouse LLP
thereon and meet the requirements of Regulation S-X as promulgated by the SEC.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.1 Conditions to Obligation of Each Party to Closing. The
respective obligations of each party to consummate the purchase and sale of the
Shares at the Closing shall be subject to the satisfaction at or prior to the
Closing of the following conditions:
(a) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the purchase and sale of the Shares shall be in effect, nor
shall any proceeding brought by any administrative agency or commission or other
governmental authority or instrumentality, seeking any of the foregoing be
pending; and there shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the sale
of the Shares, which makes the consummation of the sale of the Shares illegal;
and
(b) Governmental Actions. There shall not have been instituted, pending
or threatened any action or proceeding (or any investigation or other inquiry
that might result in such an action or proceeding) by any governmental authority
or administrative agency before any governmental authority, administrative
agency or court of competent jurisdiction, nor shall there be in effect any
judgment, decree or order of any governmental authority, administrative agency
or court of competent jurisdiction, in either case, seeking to prohibit or limit
Buyer from exercising all material rights and privileges pertaining to its
ownership or operation of the Company following the Closing or the ownership or
operation by Buyer or any of its subsidiaries of all or a material portion of
the business or assets of Buyer or any of its subsidiaries, as a result of the
transactions contemplated by this Agreement.
SECTION 7.2 Additional Conditions to Obligations of Buyer. The obligation
of Buyer to purchase the Shares at the Closing is also subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties of
the Company and the Sellers contained in this Agreement shall have been true and
correct in all material respects at and as of the date made, and shall be true
and correct, individually and in the aggregate, in all material respects, as of
the Closing Date with the same effect as though made on and as of the Closing
Date. In addition, all representations and warranties of the Company and the
Sellers that are qualified by materiality or similar words shall have been true
and correct in all respects when made and as of the Closing Date. Buyer shall
have received a certificate to such effect signed by each of the Sellers and on
behalf of the Company by the President and the Chief Financial Officer of the
Company;
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(b) Agreements and Covenants. Each of the Sellers and the Company shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by the
Sellers or the Company at or prior to the Closing, and Buyer shall have received
a certificate to such effect signed by each of the Sellers and on behalf of the
Company by the President and the Chief Financial Officer of the Company;
(c) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made, by the
Sellers or the Company for the due authorization, execution and delivery of this
Agreement and the consummation by it of the transactions contemplated hereby
shall have been obtained and made by the Sellers or the Company;
(d) Opinion of Counsel to the Company. Buyer shall have received an
opinion of Morgan, Lewis & Bockius LLP, counsel to the Company, in form and
substance reasonably satisfactory to Buyer;
(e) Employment Agreements. The Company shall have entered into an
employment agreement with each of Richard K. Dolan, Charles C. Cain and Thomas
A. DiMartino in substantially the form attached hereto as Exhibit 7.2(e);
(f) Noncompetition Agreements. The Company shall have received executed
counterparts of a noncompetition agreement with each of Richard K. Dolan,
Charles C. Cain and Thomas A. DiMartino in substantially the form attached
hereto as Exhibit 7.2(f); and
(g) Cash and Working Capital Certificate. The Company and the Sellers
shall deliver a certificate to the Buyer executed by each of the Sellers and the
President and Chief Financial Officer of the Company setting forth the cash and
working capital available to the Company as of one days prior to the Closing and
the Company shall have not less than $600,000 in working capital as of the
Closing.
SECTION 7.3 Additional Conditions to Obligation of the Sellers. The
obligations of the Sellers to sell the Shares at the Closing are also subject to
the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Buyer contained in this Agreement shall have been true and correct in all
material respects at and as of the date made, and shall be true and correct,
individually and in the aggregate, in all material respects, as of the Closing
Date with the same effect as though made on and as of the Closing Date. In
addition, all representations and warranties of the Buyer that are qualified by
materiality or similar words shall have been true and correct in all respects
when made and as of the Closing Date. The Sellers shall have received a
certificate to such effect signed by the President and the Chief Financial
Officer of the Buyer;
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(b) Agreements and Covenants. Buyer shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing, and
the Sellers shall have received a certificate to such effect signed by the
President and the Chief Financial Officer of the Buyer;
(c) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made, by the
Buyer for the authorization, execution and delivery of this Agreement and the
consummation by them of the transactions contemplated hereby shall have been
obtained and made by the Buyer; and
(d) Opinion of Counsel to Buyer. The Sellers shall have received an
opinion of counsel to the Buyer, in form and substance satisfactory to the
Sellers.
(e) Employment Agreement. The Company shall have executed and delivered
to each of Richard K. Dolan, Charles C. Cain and Thomas A. DiMartino in
substantially the form attached as Exhibit 7.2(e).
ARTICLE VII
TERMINATION
SECTION 8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent duly authorized by the Boards of Directors
of the Buyer and the Company; or
(b) by either Buyer or the Company if the Closing shall not have been
consummated by August 31, 1997 (provided that the right to terminate this
Agreement under this Section 8.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or before such date); or
(c) by either Buyer or the Company if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued a nonappealable final order, decree or ruling or taken any other action
having the effect of permanently restraining, enjoining or otherwise prohibiting
the purchase and sale of the Shares (provided that the right to terminate this
Agreement under this Section 8.1(c) shall not be available to any party who has
not complied with its obligations under Section 6.2 and such noncompliance
materially contributed to the issuance of any such order, decree or ruling or
the taking of such action); or
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(d) by Buyer, (i) if any representation or warranty of the Company or the
Sellers set forth in this Agreement shall be untrue when made, or (ii) upon a
breach of any covenant or agreement on the part of the Sellers or the Company
set forth in this Agreement, such that the conditions set forth in Section
7.2(a) or 7.2(b) would not be satisfied (either (i) or (ii) above being a
"Terminating Breach"), provided, that, if such Terminating Breach is curable
prior to August 31, 1997 by the Sellers or the Company through the exercise of
their or its reasonable best efforts and for so long as the Sellers and the
Company continue to exercise such reasonable best efforts, Buyer may not
terminate this Agreement under this Section 8.1(d); or
(e) by the Sellers or the Company, (i) if any representation or warranty
of Buyer set forth in this Agreement shall be untrue when made, or (ii) upon a
breach by Buyer of any covenant or agreement set forth in this Agreement, such
that the conditions set forth in Section 7.3(a) or 7.3(b) would not be satisfied
(either (i) or (ii) above being a "Terminating Breach"), provided, that, if such
Terminating Breach is curable prior to August 31, 1997 by Buyer through the
exercise of its reasonable best efforts and for so long as Buyer continues to
exercise such reasonable best efforts, neither the Sellers nor the Company may
terminate this Agreement under this Section 8.1(e).
SECTION 8.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.1, all obligations of the parties hereunder
shall terminate without any liability of any party to any other party (other
than with respect to the provisions of all of Articles 8 and 9, and Sections
10.1, 10.2, 10.7 and 10.12, each of which shall survive any such termination);
provided, however, that no termination shall relieve any party from any
liability arising from or relating to breach prior to termination.
SECTION 8.3 Fees and Expenses. All fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, whether or not the Closing occurs;
provided that the fees and expenses of the Company incurred in connection with
this Agreement and the transaction contemplated hereby shall be deemed to be
expenses of the Sellers.
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ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Survival of Representations and Warranties.
(a) The representations and warranties of the Sellers made in this
Agreement and in the documents and certificates delivered in connection herewith
shall survive the Closing for a period of two years from the Closing Date,
provided, however, that (i) the representations and warranties contained in
Sections 2.4, 2.5, 3.1, 3.2 and 3.4 shall survive indefinitely and (ii) the
representations and warranties that relate to Taxes, including without
limitation the representations and warranties set forth in Section 3.14, shall
survive until the expiration of the applicable statutes of limitations for such
Taxes (including any extensions thereof), provided, further, that
representations and warranties with respect to which a claim for indemnification
is made within the applicable survival period shall survive, solely with respect
to such claim, until such claim is finally determined and paid.
(b) The representations and warranties of the Buyer made in this Agreement
and in the documents and certificates delivered in connection herewith shall
survive the Closing for a period of two years following the Closing Date,
provided, however, that representations and warranties with respect to which a
claim for indemnification is made within such two year period shall survive
until such claim is finally determined and paid.
(c) No claim for indemnification may be made with respect to a
representation and warranty after the expiration of the applicable survival
period, other than claims based on fraud.
SECTION 9.2 Indemnification by the Sellers. Each Seller, jointly and
severally, (each in his capacity as an indemnifying party, an "Indemnifying
Party") covenants and agrees that he will indemnify, defend, protect, and hold
harmless the Buyer and the Company and each of their respective subsidiaries and
affiliates (each in its capacity as an indemnified party, an "Indemnitee") at
all times from and after the date of this Agreement from and against all claims,
damages, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) (collectively "Damages") incurred
by such Indemnitee as a result of or incident to:
(a) any breach of any representation or warranty of the Sellers set forth
herein or in any certificate or other document delivered in connection herewith
(as each such representation or warranty would read if all qualifications as to
materiality were deleted therefrom) and any misrepresentation in connection with
this Agreement or the transactions contemplated hereby;
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(b) any breach or nonfulfillment by the Sellers or the Company of, or any
noncompliance by the Sellers or the Company with, any covenant, agreement, or
obligation contained herein or in any certificate or other document delivered in
connection herewith;
(c) any Taxes of any kind relating to or arising in connection with the
transfer of the Shares to the Buyer; and
(d) without limiting the foregoing provisions, any violation prior to the
Closing by the Company or any predecessor of the Company of any Environmental
Law and the presence, emanation, migration, disposal, release or threatened
release prior to the Closing of any oil or other petroleum products or hazardous
materials or substances on, within, or to or from any of the properties
presently or previously owned or leased by the Company, or any predecessor of
the Company.
SECTION 9.3 Indemnification by the Buyer. The Buyer (in its capacity as
an indemnifying party, an "Indemnifying Party") covenants and agrees that it
will indemnify, defend, protect and hold harmless each of the Sellers (each in
his capacity as an indemnified party, an "Indemnitee") at all times from and
after the date of this Agreement from and against all Damages incurred by such
Indemnitee as a result of or incident to (a) any breach of any representation or
warranty of the Buyer set forth herein or in any certificate or other document
delivered in connection herewith (as each such representation or warranty would
read if all qualifications as to materiality were deleted therefrom) and any
misrepresentation in connection with this Agreement or the transactions
contemplated hereby; and (b) any breach or nonfulfillment by the Buyer of, or
noncompliance by the Buyer with, any covenant, agreement or obligation contained
herein or in any certificate or other document delivered in connection herewith.
SECTION 9.4 Third Person Claims. Promptly after an Indemnitee has
received notice of or has knowledge of any claim by a person not a party to this
Agreement ("Third Person") or the commencement of any action or proceeding by a
Third Person, the Indemnitee shall give the Indemnifying Party written notice of
such claim or the commencement of such action or proceeding; provided, however,
that the failure to give such notice will not effect the Indemnitees' right to
indemnification hereunder with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. If the Indemnifying Party notifies the Indemnitee
within 30 days from the receipt of the foregoing notice that he wishes to defend
against the claim by the Third Person, then the Indemnifying Party shall have
the right to assume and control the defense of the claim by appropriate
proceedings with counsel reasonably acceptable to Indemnitee. The Indemnitee
may participate in the defense, at its sole expense of any such claim for which
the Indemnifying Party shall have assumed the defense pursuant to the preceding
sentence, provided that counsel for the Indemnifying Party shall act as lead
counsel in all matters pertaining to the defense or settlement of such claims,
suit or proceedings; provided, however, that Indemnitee shall control the
defense of any claim or proceeding that in Indemnitee's reasonable judgment
could have a material and adverse effect on Indemnitee's business apart
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from the payment of money damages. The Indemnitee shall be entitled to
indemnification for the reasonable fees and expenses of its counsel for any
period during which the Indemnifying Party has not assumed the defense of any
claim. Whether or not the Indemnifying Party shall have assumed the defense of
any claim, neither the Indemnitee nor the Indemnifying Party shall make any
settlement with respect to any such claim, suit or proceeding without the prior
consent of the other, which consent shall not be unreasonably withheld or
delayed. It is understood and agreed that in situations where failure to settle
a claim expeditiously could have an adverse effect on the party wishing to
settle, the failure of a party controlling the defense to act upon a request for
consent to such settlement within five business days of receipt of notice
thereof shall be deemed to constitute consent to such settlement for purposes of
this Article 9.
SECTION 9.5 Limitations on Indemnification. No Indemnified Party shall be
entitled to indemnification pursuant to the provisions of Sections 9.2(a),
9.2(d) or 9.3(a) until the aggregate amount of Damages incurred by such person
or persons with respect to such Sections exceeds $150,000, in which event such
persons shall be entitled to indemnification for the entire aggregate cumulative
amount of all Damages; provided, however, that in the event of any inaccuracies
in the certificate to be delivered pursuant to Section 7.2(g), Buyer shall be
entitled to the entirety of any Damages related thereto. In no event shall
Sellers be liable in the aggregate for amounts in excess of the Purchase Price.
SECTION 9.6 Method of Payment. All claims for indemnification shall be
payable in cash; provided, however, that if the Buyer reasonably believes that
it has suffered, or with reasonable certainty will suffer, Damages for which it
would be entitled to indemnification pursuant to this Agreement, Buyer may, at
its sole option and by notice in writing to the Sellers, elect to withhold
payment of an amount equal to a reasonably estimated amount of such Damages from
amounts owing by the Buyer to the Sellers under the provisions of Section 1.2(b)
on a pro rata basis.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Survival, Etc.
(a) The agreements set forth in Article 9 and Section 8.3 shall survive
independently.
(b) Any disclosure made with reference to one or more sections of the
Seller Disclosure Schedule or the Buyer Disclosure Schedule shall be deemed
disclosed only with respect to such section or sections.
SECTION 10.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or
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sent by electronic transmission, with confirmation received, to the telecopy
numbers specified below (or at such other address or telecopy number for a party
as shall be specified by like notice):
(a) If to the Buyer:
The Registry, Inc.
189 Wells Avenue
Newton, MA 02159
Attention: General Counsel
Telephone No.: (617) 527-6886
Telecopier No.: (617) 527-6999
With a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attention: Keith F. Higgins, Esq.
Telephone No.: (617) 951-7000
Telecopier No.: (617) 951-7050
(b) If to the Sellers, at such persons address shown on the signature page
hereto and if to the Company:
Eligibility Management Systems, Inc.
Bank One Center
111 Monument Circle
Indianapolis, Indiana 46204
Attention: President
Telephone No.: ( )
Telecopier No: ( )
With a copy to:
Morgan, Lewis & Bockius
One Oxford Centre
301 Grant Street, 32nd Floor
Pittsburgh, Pennsylvania 15219-6401
Attention: David A. Gerson, Esq.
Telephone No.: (412) 560-3300
Telecopier No.: (412) 412-560-3399
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SECTION 10.3 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliates" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person; including, without limitation, any partnership
or joint venture in which the first mentioned person (either alone, or through
or together with any other subsidiary) has, directly or indirectly, an interest
of 5% or more;
(b) "business day" means any day other than a day on which banks in The
Commonwealth of Massachusetts are required or authorized to be closed;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and
(e) "subsidiary" or "subsidiaries" of the Company, Buyer or any other
person means any corporation, partnership, joint venture or other legal entity
of which the Company, the Surviving Corporation, Buyer or such other person, as
the case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity.
SECTION 10.4 Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 10.5 Waiver. At any time prior to the Closing, any party hereto
may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party or parties to be
bound thereby.
SECTION 10.6 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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SECTION 10.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
SECTION 10.8 Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
SECTION 10.9 Assignment. This Agreement shall not be assigned by operation
of law or otherwise, except that Buyer may assign all or any of its rights
hereunder to any wholly-owned subsidiary of the Buyer provided that no such
assignment shall relieve the Buyer of its obligations hereunder.
SECTION 10.10 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation.
SECTION 10.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 10.12 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of The Commonwealth of Massachusetts
without giving effect to the conflict of laws principles thereof.
SECTION 10.13 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the Buyer, the Company and the Sellers have caused this
Agreement to be executed as of the date first written above.
THE REGISTRY INC.
By: /s/ Richard L. Bugley
-----------------------
Richard L. Bugley
General Counsel
ELIGIBILITY MANAGEMENT SYSTEMS, INC.
By: /s/ Thomas A. DiMartino
--------------------------
Thomas A. DiMartino
President
/s/ Richard K. Dolan
-----------------------
Richard K. Dolan
No. of Shares of Common Stock: 10
Address:
/s/ Charles C. Cain
----------------------
Charles C. Cain
No. of Shares of Common Stock: 10
Address:
/s/ Thomas A. DiMartino
--------------------------
Thomas A. DiMartino
No. of Shares of Common Stock: 10
Address:
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