<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------------------------------
Date of Report (Date of earliest event reported): NOVEMBER 13, 1997
-----------------
ASI SOLUTIONS INCORPORATED
(Exact name of Registrant as specified in charter)
DELAWARE 000-22309 13-3903237
- ---------------------------- ------------------------ --------------------
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
780 THIRD AVENUE, NEW YORK, NEW YORK 10017
------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 319-8400
--------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OF ASSETS.
---------------------
On November 13, 1997, ASI Solutions Incorporated ("ASI"), through certain
of its wholly owned direct and indirect subsidiaries (the "McLagan Subsidiaries"
and, together with ASI, the "Company"), acquired substantially all of the assets
and businesses of McLagan Partners Incorporated, an Illinois corporation
("McLagan Partners"), and its related entities McLagan Partners International
Incorporated, an Illinois corporation ("McLagan International"), and McLagan
Partners Asia Incorporated, an Illinois corporation ("McLagan Asia" and,
together with McLagan Partners and McLagan International, "McLagan") pursuant to
three separate Asset Purchase Agreements, copies of which are attached as
exhibits hereto and are expressly incorporated by reference herein (the "Asset
Purchase Agreements").
McLagan, founded in 1966, provides comprehensive compensation research and
consulting services primarily to companies in the financial services and
securities industries. Headquartered in Stamford, Connecticut, McLagan also has
offices in Chicago, London, Tokyo and Hong Kong. ASI, through the McLagan
Subsidiaries, intends to maintain McLagan's current management structure and
operate McLagan consistent with its historical practices. Thus, simultaneously
with the execution of the Asset Purchase Agreements, ASI's wholly-owned
subsidiary McLagan Partners, Inc., a Delaware corporation ("New McLagan"),
entered into employment and non-competition agreements with McLagan's four
primary executive officers, C. Bruce McLagan, F. Samuel Smith, Albertus W. van
den Broek and Michael P. Curran (collectively, the "Executives"), pursuant to
which the Executives agreed to serve as Managing Directors of New McLagan for
initial terms ending on March 31, 2000 (with non-competition periods running for
varying terms thereafter).
The consideration paid by the Company for the assets of McLagan, which was
determined through arm's length negotiations between the parties, included (i)
$15.5 million in cash; (ii) $5 million in subordinated notes bearing interest at
8% per annum and payable in three equal principal installments on each of April
30, 1998, April 30, 1999 and April 30, 2000; and (iii) 50,000 shares of the
common stock, par value $.01 per share, of ASI ("Common Stock"). The Company
also discharged approximately $1 million of McLagan's outstanding liabilities
and agreed to make deferred payments in aggregate amount of $1 million, on April
30, 2000, to certain employees of McLagan; provided that such employees continue
to be employed by the McLagan Subsidiaries as of such date. Simultaneously with
the execution of the Asset Purchase Agreements, the Company also granted stock
options to purchase an aggregate of 300,000 shares of Common Stock under its
1996 Stock Option and Grant Plan to certain employees of the McLagan
Subsidiaries.
Also in connection with the acquisition of McLagan, New McLagan adopted an
Incentive Compensation Plan (the "Plan"), a copy of which is attached as an
exhibit hereto and is expressly incorporated by reference herein. Under the
Plan, the Executives will be entitled to receive from New McLagan, in the form
of cash bonuses, specified percentages of the
2
<PAGE>
Consolidated Operating Income (as defined in the Plan) of the McLagan
Subsidiaries attributable to the assets purchased by the Company pursuant to the
Asset Purchase Agreements for specified periods.
The Company obtained substantially all of the cash portion of the
consideration for the McLagan acquisition from borrowings under its new
revolving credit and term loan credit facility (the "Credit Facility") with a
syndicate of banks led by The Chase Manhattan Bank. Borrowings under the Credit
Facility bear interest at variable rates of interest which are based on (i) the
weighted average rates on certain overnight federal funds transactions, (ii) the
prime rate announced from time to time by The Chase Manhattan Bank or (iii) the
rate per annum of which The Chase Manhattan Bank is offered U.S. dollar deposits
in the interbank eurodollar market. A copy of the Credit Facility is attached as
an exhibit hereto and is expressly incorporated by reference herein.
The assets acquired by the Company pursuant to the Asset Purchase
Agreements consisted primarily of goodwill and other intangible assets. As
such, the Company believes that it did not acquire a material amount of plant,
equipment or other physical property in the acquisition.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
------------------------------------------------------------------
(a) Financial Statements of Businesses Acquired.
-------------------------------------------
The Financial Statements of McLagan Partners Incorporated, McLagan
Partners International Incorporated and McLagan Partners Asia Incorporated
required by this Item will be filed by ASI by amendment of this Current
Report on Form 8-K no later than January 27, 1998.
(b) Pro Forma Financial Information.
-------------------------------
The Pro Forma Financial Information required by this Item will be
filed by ASI by amendment of this Current Report on Form 8-K no later
than January 27, 1998.
3
<PAGE>
<TABLE>
<CAPTION>
(c) Exhibits
--------
<S> <C> <C>
2.1 Asset Purchase Agreement entered into as of November 13, 1997 by and
among McLagan Partners, Inc., McLagan Partners Incorporated and the
holders of all of the outstanding capital stock of McLagan Partners
Incorporated (excluding schedules and exhibits, which ASI
agrees to furnish supplementally to the Commission upon request).
2.2 Asset Purchase Agreement entered into as of November 13, 1997 by and
among McLagan Partners International, Inc., McLagan Partners
International Incorporated and the holders of all of the outstanding
capital stock of McLagan Partners International Incorporated
(excluding schedules and exhibits, which ASI agrees to
furnish supplementally to the Commission upon request).
2.3 Asset Purchase Agreement entered into as of November 13, 1997 by and
among McLagan Partners Asia, Inc., McLagan Partners Asia
Incorporated and the holders of all of the outstanding capital stock
of McLagan Partners Asia Incorporated (excluding schedules and
exhibits, which ASI agrees to furnish supplementally to the
Commission upon request).
99.1 Form of Employment Agreement between McLagan Partners, Inc. and
each of the Executives.
99.2 McLagan Partners, Inc. Incentive Compensation Plan
99.3 Credit Agreement dated as of November 13, 1997 among ASI Solutions
Incorporated, McLagan Partners, Inc., The Chase Manhattan Bank, as
Administrative Agent for the Lenders thereunder, and the other
Lenders identified therein.
99.4 Press release, dated November 14, 1997.
</TABLE>
4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be filed on its behalf by the
undersigned thereunto duly authorized
ASI SOLUTIONS INCORPORATED
Dated: November 24, 1997 By:/s/ Michael J. Mele
-----------------------------
Name: Michael J. Mele
Title: Vice President and Chief Financial
Officer
<PAGE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
MCLAGAN PARTNERS, INC.
AS BUYER
MCLAGAN PARTNERS INCORPORATED
AS SELLER
AND
SELLER'S STOCKHOLDERS
DATED AS OF NOVEMBER 13, 1997
<PAGE>
ASSET PURCHASE AGREEMENT
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
SECTION 1. PURCHASE AND SALE OF ASSETS......................................1
1.1 Sale of Assets.........................................................1
1.2 Excluded Assets........................................................2
1.3 Assumption of Liabilities..............................................3
1.4 Time and Place of Closing..............................................4
1.5 Purchase Price and Payment.............................................5
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND
STOCKHOLDERS.....................................................6
2.1 Making of Representations and Warranties...............................6
2.2 Organization and Qualifications of Seller..............................6
2.3 Subsidiaries...........................................................6
2.4 Capital Stock of Seller; Beneficial Ownership of Seller................6
2.5 Intentionally Omitted..................................................7
2.6 Intentionally Omitted..................................................7
2.7 Authority of the Seller and the Stockholders...........................7
2.8 Real and Personal Property.............................................8
2.9 Financial Statements..................................................10
2.10 Taxes.................................................................12
2.11 Absence of Certain Changes............................................13
2.12 Ordinary Course.......................................................14
2.13 Banking Relations.....................................................14
2.14 Intellectual Property.................................................14
2.15 Contracts.............................................................16
2.16 Litigation............................................................18
2.17 Compliance with Laws..................................................18
2.18 Insurance.............................................................18
2.19 Warranty or Other Claims..............................................18
2.20 Powers of Attorney....................................................18
2.21 Finder's Fee..........................................................18
2.22 Permits; Burdensome Agreements........................................19
2.23 Corporate Records; Copies of Documents................................19
2.24 Transactions with Related Parties.....................................19
2.25 Employee Benefit Programs.............................................19
2.26 Environmental Matters.................................................21
2.27 Directors and Officers................................................22
2.28 Backlog...............................................................22
2.29 Employees; Labor Matters..............................................23
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
2.30 Customers and Suppliers...............................................23
2.31 Hart-Scott-Rodino Matters.............................................23
2.32 Disclosure............................................................24
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER.........................24
3.1 Making of Representations and Warranties..............................24
3.2 Organization of Buyer.................................................24
3.3 Authority of Buyer....................................................24
3.4 Litigation............................................................25
3.5 Finder's Fee..........................................................25
3.6 Hart-Scott-Rodino Matters.............................................25
3.7 Securities and Exchange Commission Filings............................25
SECTION 4. CONDITIONS......................................................26
4.1 Conditions to the Obligations of Buyer................................26
4.2 Conditions to Obligations of the Seller...............................28
SECTION 5. SURVIVAL OF WARRANTIES; RIGHTS, OBLIGATIONS AND ACTIONS
SUBSEQUENT TO CLOSING...........................................30
5.1 Survival of Warranties................................................30
5.2 Payment of Obligations................................................30
5.3 Tax Returns...........................................................30
5.4 Books and Records.....................................................30
5.5 Further Assurances....................................................31
5.6 Allocation of Purchase Price..........................................31
5.7 Hart-Scott-Rodino Filings.............................................31
5.8 Sellers' Employees....................................................31
5.9 Sellers' Benefit Plans................................................31
SECTION 6. INDEMNIFICATION.................................................32
6.1 Indemnification by the Seller and the Stockholders....................32
6.2 Limitations on Indemnification by the Seller and the Stockholders.....33
6.3 Indemnification by Buyer..............................................34
6.4 Limitations on Indemnification by Buyer...............................34
6.5 Notice; Defense of Claims.............................................35
6.6 Satisfaction of Seller and Stockholder Indemnification Obligations....36
SECTION 7. DEFINITIONS.....................................................36
SECTION 8. MISCELLANEOUS...................................................39
8.1 Bulk Sales Law........................................................39
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
8.2 Fees and Expenses.....................................................39
8.3 Governing Law.........................................................40
8.4 Notices...............................................................40
8.5 Entire Agreement......................................................41
8.6 Assignability; Binding Effect.........................................41
8.7 Captions and Gender...................................................41
8.8 Execution in Counterparts.............................................41
8.9 Amendments............................................................41
8.10 Dispute Resolution....................................................41
8.11 Consent to Jurisdiction...............................................42
8.12 Severability..........................................................42
8.13 No Third-Party Beneficiaries..........................................42
8.14 Publicity and Disclosures.............................................42
8.15 Attorneys' Fees.......................................................42
8.16 Intentionally Omitted.................................................43
8.17 Remedies..............................................................43
</TABLE>
(iii)
<PAGE>
SCHEDULES
---------
<TABLE>
<S> <C>
Schedule 1.1 Certain Subject Assets
Schedule 1.2(g) Excluded Personal Property
Schedule 1.3 Assumed Contracts
Schedule 1.5(d) Recipients of Deferred Consideration
Schedule 2.2 Foreign Qualifications
Schedule 2.4(b) Capitalization
Schedule 2.7(a) Liens
Schedule 2.8(b) Leased Real Property
Schedule 2.8(c) Personal Property
Schedule 2.9 Financial Statements
Schedule 2.10 Taxes
Schedule 2.11 Certain Changes
Schedule 2.13 Banking Relations
Schedule 2.14 Intellectual Property Rights
Schedule 2.15 Contracts
Schedule 2.16 Litigation
Schedule 2.17 Compliance with Laws
Schedule 2.18 Insurance
Schedule 2.19 Product Liability
Schedule 2.22 Permits
Schedule 2.24 Transactions with Related Parties
Schedule 2.25 Employee Benefit Programs
Schedule 2.26 Environmental Matters
Schedule 2.27 Directors and Officers
Schedule 2.28 Backlog
Schedule 2.29 Labor Matters
Schedule 2.30 Customers and Suppliers
Schedule 4.1(k) Employees Signing Employment and Non-Competition Agreements
Schedule 4.2(b) Seller Stock Issuances
Schedule 4.2(c) Participants in Incentive Compensation Plan
Schedule 4.2(d) Stock Option Grants
Schedule 5.8 Employees
Schedule 5.9 Maintained Insurance and 401(k) Plans
</TABLE>
(iv)
<PAGE>
EXHIBITS
--------
<TABLE>
<S> <C>
Exhibit A - Stockholders and Stockholdings
Exhibit B - Form of Promissory Note
Exhibit C - Form of Assignment and Assumption Agreement
Exhibit D - Form of Bill of Sale
Exhibit E - Form of Opinion of Cummings & Lockwood
Exhibit F - Form of Employment and Non-Competition Agreement
Exhibit G - Form of Investor Questionnaire
Exhibit H - Form of Incentive Compensation Plan
Exhibit I - Form of Opinion of Goodwin, Procter & Hoar LLP
</TABLE>
v
<PAGE>
ASSET PURCHASE AGREEMENT
AGREEMENT entered into as of November 13, 1997 by and among McLagan
Partners, Inc., a Delaware corporation ("Buyer") and a wholly-owned subsidiary
of ASI Solutions Incorporated ("ASI"), McLagan Partners Incorporated, an
Illinois corporation ("Seller"), and the holders of all of the outstanding
capital stock of Seller, as set forth on Exhibit A hereto (each, a "Stockholder"
---------
and together, the "Stockholders").
W I T N E S S E T H
-------------------
WHEREAS, contemporaneously herewith certain affiliates of Buyer are
entering into separate asset purchase agreements with certain affiliates of the
Seller;
WHEREAS, subject to the terms and conditions hereof, the Seller desires to
sell substantially all of its assets to Buyer; and
WHEREAS, subject to the terms and conditions hereof, Buyer desires to
purchase said assets of the Seller for the consideration specified herein and
the assumption by Buyer of certain liabilities and obligations of the Seller.
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS.
- --------------------------------------
1.1 Sale of Assets. Subject to the provisions of this Agreement, the
--------------
Seller agrees to sell and Buyer agrees to purchase, at the Closing (as defined
in Section 1.4 hereof), all of the properties, assets and businesses of the
Seller of every kind and description, tangible and intangible, real, personal or
mixed, and wherever located, including, without limitation, the following
assets:
(a) All assets (other than Current Assets) shown or reflected on the
Base Balance Sheets (as defined in Section 2.9);
(b) The goodwill of Seller;
(c) All rights under existing leases, contracts, licenses, permits,
sales and purchase agreements, and other agreements and business arrangements
which constitute Assumed Contracts (as defined in Section 1.3);
(d) The exclusive rights to use the name "McLagan Partners
Incorporated," and any translations or derivations thereof;
<PAGE>
(e) Office furniture and furnishings;
(f) Inventory;
(g) Equipment and supplies;
(h) Patents and patent applications, trademarks and trademark
applications, trade names and all other Intellectual Property Rights (as defined
in Section 2.14);
(i) Sales records and customer and vendor lists;
(j) Marketing, advertising and promotional materials; and
(k) Tax returns of Seller and corporate records of Seller relating to
accounts payable, payroll and accounts receivable for periods prior to the
Closing; provided, however, that Seller shall, after the Closing, be afforded
reasonable access thereto.
The assets, properties and businesses of the Seller sold to and purchased
by Buyer under this Agreement are sometimes referred to as the "Subject Assets."
Schedule 1.1 hereto contains a list of the following Subject Assets: (a) those
- ------------
set forth in Section 1.1(a), (b) those set forth in Section 1.1 (e), (c) all
equipment of the Seller and (d) the Seller's customer lists and vendor lists.
1.2 Excluded Assets. Notwithstanding Section 1.1 above, nothing herein
---------------
contained shall operate as a sale, transfer, conveyance or assignment to Buyer
of any of the following assets and property of Seller (the "Excluded Assets"):
(a) Assets and property disposed of since the date of the Base Balance
Sheet in the ordinary course of business and such other assets as have been or
are disposed of pursuant to this Agreement;
(b) Corporate franchise, stock record books, corporate record books
containing minutes of meetings of directors and stockholders and such other
records as have to do exclusively with Seller's organization or stock
capitalization (collectively, the "Corporate Records"); provided, however, that
Seller shall provide Buyer prior to the Closing with true, correct and complete
copies of each of the foregoing;
(c) All Current Assets of Seller as of the Closing Date and all
accounts receivable of Seller on or prior to the date of Closing regardless of
whether or not in accordance with generally accepted accounting principles;
(d) All rights under any loans or other evidence of indebtedness,
other than the Stockholder Loans (as defined below), between Seller, on the one
hand, and any affiliate of
2
<PAGE>
the Seller, on the other hand (the "Intercompany
Loans");
(e) Refunds for taxes paid by Seller before the Closing or for taxes
paid by Seller after the Closing in respect of the period before the Closing;
(f) Security deposits of the Seller, if any;
(g) those items of personal property of the Stockholders set forth on
Schedule 1.2(g);
- ---------------
(h) Any rights which the Seller may have to enforce the obligations of
the Buyer pursuant to this Agreement and the other documents and agreements
contemplated herein; and
(i) Insurance policies and rights and claims thereunder, including
proceeds or cash surrender value; and
(j) Any rights under pension, severance or other plans maintained by
Seller in any country other than the United States.
1.3 Assumption of Liabilities. Upon the sale and purchase of the Subject
-------------------------
Assets, Buyer shall assume and agree to pay or discharge when due in accordance
with their respective terms the following liabilities (the "Liabilities"): (a)
liabilities and obligations incurred by the Seller in connection with certain
loans (the "Stockholder Loans") made by certain Stockholders to the Seller in an
aggregate amount not to exceed One Million Dollars ($1,000,000), and (b) all
liabilities and obligations arising or to be performed after the Closing Date
(as defined in Section 1.4) under those contracts listed on Schedule 1.3 hereto
------------
(the "Assumed Contracts"); provided, however, that except for the Liabilities,
Buyer shall not assume and shall not pay any liability, cost or expense of
Seller, including, without limitation, the following liabilities:
(a) Any liability of Seller relating to, arising out of, or incurred
in connection with, the operation of the businesses of Seller on or prior to the
Closing Date;
(b) Liabilities incurred by the Seller in connection with this
Agreement and the transactions provided for herein, including, without
limitation, counsel and accountants' fees, and expenses pertaining to the
performance by the Seller of its obligations hereunder (except that Buyer shall
pay all fees and expenses of Coopers & Lybrand L.L.P. incurred in connection
with the transactions contemplated by this Agreement);
(c) Liabilities of the Seller pursuant to any Stockholder Loan, to the
extent that the aggregate value of all liabilities under all Stockholder Loans
exceeds One Million Dollars ($1,000,000);
3
<PAGE>
(d) Liabilities of the Seller pursuant to any Intercompany Loan;
(e) Current Liabilities of the Seller as of the Closing Date (other
than the current portion of any Stockholder Loan otherwise assumed hereunder);
(f) Taxes (as defined in Section 2.10 hereof) of the Seller (whether
relating to periods before or after the transactions contemplated in this
Agreement or incurred by the Seller in connection with this Agreement and the
transactions provided for herein or otherwise), including, without limitation,
any liability for (i) Taxes arising in connection with any built-in gain of
Seller or (ii) Taxes arising out of the inclusion of Seller in any group filing
consolidated, combined or unitary tax returns or arising out of any transferee
liability;
(g) Liabilities of Seller with respect to (i) any severance pay,
accrued vacation, accrued and unpaid wages, salaries, commissions, bonuses or
other direct compensation for any services performed for it prior to the Closing
Date or amounts required to be reimbursed to any employees with respect to any
period prior to the Closing Date, (ii) any sickness, disability and other group
insurance premiums or claims incurred by or relating to anyone who does not
become an employee of Buyer, or (iii) any such premiums or claims incurred on or
prior to the Closing by any individual who becomes an employee of Buyer as of
the Closing;
(h) Liabilities of Seller to its dissenting stockholders, if any,
under the Illinois Business Corporation Act;
(i) Liabilities of Seller with respect to any options, warrants,
agreements or convertible or other rights to acquire any shares of its capital
stock of any class;
(j) Liabilities in connection with or relating to all actions, suits,
claims, proceedings, demands, assessments and judgments against the Seller or
any of the Stockholders and all costs, losses, liabilities, damages,
deficiencies and expenses (whether or not arising out of third-party claims),
including, without limitation, interest, penalties, reasonable attorneys' and
accountants' fees and all amounts paid in investigation, defense or settlement
of any of the foregoing; and
(k) Liabilities under pension, severance and other plans maintained by
Seller, or any liabilities of Seller to any current or former employee of Seller
under applicable law, in any country other than the United States.
The liabilities which are not assumed by Buyer under this Agreement are
hereinafter sometimes referred to as the "Excluded Liabilities."
1.4 Time and Place of Closing. The closing of the purchase and sale
-------------------------
provided for in this Agreement (herein called the "Closing") shall be held at
the offices of Goodwin, Procter &
4
<PAGE>
Hoar LLP at 599 Lexington Avenue, New York, New York at 10:00 a.m. (local time)
on November 13, 1997, or at such other place, date or time as may be fixed by
mutual agreement of the parties hereto (the date of the Closing being referred
to herein as the "Closing Date").
1.5 Purchase Price and Payment. In consideration of the sale by the
--------------------------
Seller to Buyer of the Subject Assets, subject to the satisfaction of all of the
conditions contained herein, Buyer agrees that it will ((a) - (e) below being
hereinafter sometimes referred to as the "Purchase Price"):
(a) At the Closing, deliver to Seller Fifteen Million, Two Hundred
Fifty Thousand Dollars ($15,250,000) in cash, to be paid by wire transfer of
immediately available funds;
(b) At the Closing, deliver to Seller a junior subordinated note of
ASI in a principal amount of Five Million Dollars ($5,000,000) (the "Note"),
substantially in the form attached hereto as Exhibit B, which Note shall be
---------
subject to the terms of this Agreement and shall expressly permit Buyer to set-
off the amount of any indemnification payable by Seller or any Stockholder to
Buyer under Section 6 hereof;
(c) At the Closing, discharge all liabilities of the Seller in respect
of the Stockholder Loans; provided that in no event shall the amount of such
liabilities exceed One Million Dollars ($1,000,000) in the aggregate;
(d) Upon satisfaction of the condition set forth in Section 4.1(m),
Buyer shall deliver to the Seller a total of 50,000 shares of Common Stock; and
(e) Subject to the terms and provisions of the Credit Agreement and
the Subordination Agreement, on April 30, 2000, deliver a payment in an
aggregate amount not to exceed One Million Dollars ($1,000,000), to those
individuals, and in those amounts, set forth on Schedule 1.5(e) to whom the
---------------
Seller and the Stockholders have directed Buyer to make such payments; provided,
however, that no payment shall be made pursuant to this Section 1.5(e) to any
recipient named on said Schedule whose full-time employment with Buyer is
terminated prior to the date of such payment as a result of (i) the voluntary
termination of such employment by such recipient or (ii) termination by the
Buyer for "cause" (as defined in the Employment and Non-Competition Agreement
between such recipient and the Buyer or, in the event the recipient is not a
party to an Employment and Non-Competition Agreement, determined in accordance
with the Buyer's past practices) (it being understood that any payment forfeited
by an individual named on said Schedule as a result of such a termination shall
be cancelled in its entirety and shall not be paid to any other individual); and
provided, further, that all payments under this Section 1.5(e) shall be
subordinated to Buyer's indebtedness to The Chase Manhattan Bank or any other
bank or financial institution which is a creditor of the Company (the "Bank"),
and those individuals listed on Schedule 1.5(e) shall execute and deliver to the
---------------
Bank and/or the Buyer a subordination agreement or other documentation
containing those terms and conditions
5
<PAGE>
reasonably requested by the Bank or as may otherwise be necessary to subordinate
the obligations of the Buyer under this Section 1.5(e) to its senior debt. No
person shall be entitled to receive any payment under this Section 1.5(e), and
the Buyer shall not make any payment under such Section 1.5(e) to such person,
unless and until such person shall have executed a counterpart signature page to
the Subordination Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDERS.
- --------------------------------------------------------------------
2.1 Making of Representations and Warranties. As a material inducement to
----------------------------------------
Buyer to enter into this Agreement and consummate the transactions contemplated
hereby, the Seller hereby makes to Buyer the representations and warranties
contained in this Section 2 and the representations and warranties set forth in
Section 2.7(b) are also made severally by each Stockholder with respect to
himself, herself or itself.
2.2 Organization and Qualifications of Seller. The Seller is a
-----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois with full corporate power and authority to own or lease
its properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is currently conducted or
proposed to be conducted. The copies of Seller's Articles of Incorporation, as
amended to date, certified by the Secretary of State of the State of Illinois,
and of Seller's by-laws, as amended to date, certified by the Secretary of
Seller, and heretofore delivered to Buyer's counsel, are complete and correct,
and no amendments thereto are pending or contemplated. The Seller is not in
violation of any term of its Articles of Incorporation or by-laws. The Seller
is duly qualified to do business as a foreign corporation in each of the states
listed in Schedule 2.2, and the Seller is not required to be licensed or
------------
qualified to conduct its business or own its property in any other jurisdiction.
2.3 Subsidiaries. The Seller does not have any subsidiaries nor does the
------------
Seller own any securities issued by any other business organization or
governmental authority, except U.S. Government securities, bank certificates of
deposit and money market accounts acquired as short-term investments in the
ordinary course of its business. The Seller does not own or have any direct or
indirect interest in or control over any corporation, partnership, joint venture
or entity of any kind.
2.4 Capital Stock of Seller; Beneficial Ownership of Seller.
-------------------------------------------------------
(a) The authorized capital stock of Seller consists of 15,000 shares
of common stock, no par value ("Seller Common Stock"), of which 1,200 shares are
duly and validly issued, outstanding, fully paid and non-assessable and of which
13,800 shares are authorized but unissued. There are no outstanding options,
warrants, rights, commitments, preemptive rights or agreements of any kind for
the issuance or sale of, or outstanding securities convertible into or
exchangeable for, any additional shares of capital stock of any class of Seller.
6
<PAGE>
None of Seller's capital stock has been issued in violation of any federal or
state law. There are no voting agreements, trusts, proxies or other agreements,
instruments or undertakings with respect to the voting of Seller's capital stock
to which Seller or any stockholder of Seller is a party.
(b) Each of the stockholders of Seller owns beneficially and of record
the number of shares of Seller Common Stock set forth opposite such
Stockholder's name on Schedule 2.4(b) hereto.
---------------
2.5 Intentionally Omitted.
---------------------
2.6 Intentionally Omitted.
---------------------
2.7 Authority of the Seller and the Stockholders.
--------------------------------------------
(a) The Seller has full right, authority and power to enter into this
Agreement and each agreement, document and instrument to be executed and
delivered by the Seller pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Seller of this Agreement and each such other agreement,
document and instrument have been duly authorized by all necessary action of the
Seller and its stockholders and no other action on the part of the Seller or any
of its stockholders is required in connection therewith. This Agreement and
each agreement, document and instrument executed and delivered by the Seller
pursuant to this Agreement constitutes, or when executed and delivered will
constitute, valid and binding obligations of the Seller enforceable in
accordance with their terms, except as their enforceability may be limited by
bankruptcy or other laws affecting creditors' rights generally or by principles
of equity. The execution, delivery and performance by the Seller of this
Agreement and each such agreement, document and instrument:
(i) does not and will not violate any provision of the Articles
of Incorporation or by-laws of the Seller;
(ii) does not and will not violate any laws of the United States
or any state or other jurisdiction applicable to the Seller or require the
Seller to obtain any approval, consent or waiver of, or make any filing
with, any person or entity (governmental or otherwise) that has not been
obtained or made; and
(iii) does not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a right of
termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which the Seller is a party or by which the property
7
<PAGE>
of the Seller is bound or affected, or result in the creation or imposition
of any mortgage, pledge, lien, security interest or other charge or
encumbrance on any of the Subject Assets, except as specifically identified
on Schedule 2.7(a).
---------------
(b) Each Stockholder has full right, authority, power and capacity to
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by or on his behalf pursuant to this Agreement and to
carry out the transactions contemplated hereby and thereby. This Agreement and
each agreement, document and instrument executed and delivered by any
Stockholder pursuant to this Agreement constitutes, or when executed and
delivered will constitute, valid and binding obligations of such Stockholder
enforceable in accordance with their respective terms, except as their
enforceability may be limited by bankruptcy or other laws affecting creditors'
rights generally or by principles of equity. The execution, delivery and
performance by each Stockholder of this Agreement and each such agreement,
document and instrument:
(i) does not and will not violate any laws of the United States
or any state or other jurisdiction applicable to such Stockholder or
require such Stockholder to obtain any approval, consent or waiver of, or
make any filing with, any person or entity (governmental or otherwise) that
has not been obtained or made; and
(ii) does not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a right of
termination of, any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which such Stockholder is a party or by which the
property of such Stockholder is bound or affected, or result in the
creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the Subject Assets.
2.8 Real and Personal Property.
--------------------------
(a) Owned Real Property. The Seller hereby represents and warrants
-------------------
that it does not own any real property.
(b) Leased Real Property. All of the real property leased by the
--------------------
Seller as tenant or lessee is identified on Schedule 2.8(b) (collectively
---------------
referred to herein as the "Leased Real Property"). The Seller hereby makes the
following representations and warranties with respect to the Leased Real
Property:
(i) Leases. The copies of the leases of the Leased Real Property
------
(collectively, the "Leases") delivered by Seller to Buyer and the
information with respect to each of the Leases set forth on Schedule 2.8(b)
---------------
is complete, accurate, true and correct. With respect to each of the
Leases, except as set forth on Schedule 2.8(b):
---------------
8
<PAGE>
(A) each of the Leases is in full force and effect and
has not been modified, amended or altered, in writing or otherwise;
(B) to the knowledge of the Seller, all material
obligations of the landlord or lessor under the Leases which have
accrued have been performed, and to the knowledge of the Seller, no
landlord or lessor is in default under any Lease;
(C) all material obligations of the tenant or lessee under
the Leases which have accrued have been performed, the Seller is not
in default under any Lease, and no circumstance presently exists
which, with notice or the passage of time, or both, would give rise to
a default by the Seller; and
(D) the Seller has obtained the consent of each landlord or
lessor under any Leases whose consent is required to the assignment or
transfer of the Leased Real Property to Buyer, and such transfer will
not give any landlord or lessor under any Lease any remedy, including,
without limitation, any right to declare a default under any Lease.
(ii) Title and Description. The Seller holds a good, clear,
---------------------
marketable, valid and enforceable leasehold interest in the Leased Real
Property pursuant to the Leases, subject only to the right of reversion of
the landlord or lessor under the Leases, free and clear of all other prior
or subordinate interests, including, without limitation, mortgages, deeds
of trust, ground leases, leases, subleases, assessments, tenancies, claims,
covenants, conditions, restrictions, easements, judgments or other
encumbrances or matters affecting title, and free of encroachments onto or
off of the Leased Real Property, except for (x) easements, covenants,
restrictions and similar encumbrances that do not and could not interfere
with the use of the Leased Real Property as currently used and improved,
and (y) minor encroachments that do not and could not adversely affect the
value or use of the Leased Real Property as currently used and improved and
that could be removed without material cost ((x) and (y) are collectively
referred to as "Permitted Encumbrances"), and except for matters set forth
on Schedule 2.8(b).
---------------
(iii) Condition. Except as set forth on Schedule 2.8(b), to the
--------- ---------------
knowledge of the Seller, there are no material defects in the physical
condition of any improvements constituting a part of the Leased Real
Property, including, without limitation, structural elements, mechanical
systems, roofs or parking and loading areas, and all of such improvements
are in reasonable working condition and repair, have been maintained in
accordance with Seller's reasonable obligations under the Leases and are
free from infestation by rodents or insects. Except as set forth on
Schedule 2.8(b), to the knowledge of the Seller, none of the Leased Real
---------------
Property located in the United States of America is subject to special
flood or mudslide hazards or within the 100 year flood plain. To the
knowledge of the Seller, all water, sewer, gas, electric, telephone,
9
<PAGE>
drainage and other utilities required by law or necessary for the current
or planned operation of the Leased Real Property have been installed and
connected pursuant to valid permits, and are sufficient to service the
Leased Real Property.
(iv) Compliance with Law; Government Approvals. The Seller has
-----------------------------------------
not received notice from any governmental authority of any violation of any
law, ordinance, regulation, license, permit or authorization issued with
respect to any of the Leased Real Property that has not been corrected
heretofore, and, to the knowledge of the Seller, no such violation now
exists which could have an adverse effect on the operation or value of any
of the Leased Real Property. To the knowledge of the Seller, all
improvements constituting a part of the Leased Real Property are in
compliance in all respects with all applicable laws, ordinances,
regulations, licenses, permits and authorizations, and to the knowledge of
the Seller there are presently in effect all licenses, permits and
authorizations required by law, ordinance, or regulation. To the knowledge
of the Seller, there is at least the minimum access required by applicable
subdivision or similar law to the Leased Real Property. The Seller has not
received notice of any pending or threatened real estate tax deficiency or
reassessment or condemnation of all or any portion of any of the Leased
Real Property.
(c) Personal Property. A list of Seller's material machinery,
-----------------
equipment and other tangible personal property is contained on Schedule 2.8(c).
---------------
Except as specifically disclosed in Schedule 1.1 or in the Base Balance Sheet
------------
(as defined in Section 2.9), the Seller has good and marketable title to all of
its personal property. None of such personal property or assets is subject to
any mortgage, pledge, lien, conditional sale agreement, security agreement,
encumbrance or other charge except as specifically disclosed in said Schedule or
in the Base Balance Sheet. The Base Balance Sheet as submitted to the Buyer by
the Seller and restated by Coopers & Lybrand L.L.P., independent public
accountants ("C&L"), in accordance with generally accepted accounting principles
("GAAP") reflects all personal property of the Seller as of the dates thereof
required to be reflected thereon, and the Subject Assets are sufficient assets
for Buyer to continue the business of the Seller as presently conducted by the
Seller. Except as otherwise specified in Schedule 2.8(c), to the knowledge of
---------------
the Seller, all leasehold improvements, furnishings, machinery and equipment of
the Seller are in good repair (subject to ordinary wear and tear), have been
well maintained, and substantially comply with all applicable laws, ordinances
and regulations, and such machinery and equipment is in good working order.
Except as set forth on Schedule 2.8(c), the Seller does not know of any pending
---------------
or threatened change of any such laws, ordinances or regulations which could
adversely affect the Seller or its business.
2.9 Financial Statements.
--------------------
(a) The Seller has delivered to Buyer the following financial
statements, copies of which are attached hereto as Schedule 2.9:
------------
10
<PAGE>
(i) Unaudited balance sheets of the Seller as of December
31, 1994, December 31, 1995, and December 31, 1996, and statements of
income, retained earnings and cash flows for the three fiscal years then
ended, certified by the Seller's chief financial officer or treasurer. The
unaudited balance sheet of the Seller as of December 31, 1996 is sometimes
referred to herein as the "Base Balance Sheet."
(ii) Summarized financial information of the Seller for its
fiscal years ending December 31, 1995, and December 31, 1996, audited and
certified by C&L.
(iii) Unaudited balance sheet of the Seller as of September
30, 1997 (the "Interim Balance Sheet") and statements of income, retained
earnings and cash flows for the period then ended, certified by the
Seller's chief financial officer or treasurer. The Base Balance Sheet and
the Interim Balance Sheet are sometimes referred to herein as the
"Financial Statements."
The Financial Statements (as submitted to the Buyer by the Seller and
restated by C&L in accordance with GAAP) are complete and correct in all
material respects, and present fairly in all material respects the
financial condition of the Seller at the dates of said Financial Statements
and the results of its operations and its cash flows for the periods
covered thereby (subject, in the case of unaudited financial statements, to
normal year-end adjustments).
(b) Except as disclosed on Schedule 2.9, as of the date of the Base
------------
Balance Sheet, the Seller did not have any liabilities of any nature, whether
accrued, absolute, contingent or otherwise, asserted or unasserted, known or
unknown (including without limitation liabilities as guarantor or otherwise with
respect to obligations of others, or liabilities for taxes due or then accrued
or to become due or contingent or potential liabilities relating to activities
of the Seller or the conduct of its businesses prior to the date of the Base
Balance Sheet regardless of whether claims in respect thereof had been asserted
as of such date), except liabilities stated or adequately reserved against on
the Base Balance Sheet or immaterial liabilities incurred in the ordinary course
of the Seller's business which are not required to be reflected in the Base
Balance Sheet (as submitted to the Buyer by the Seller and restated by C&L in
accordance with GAAP) or the notes thereto.
(c) Except as disclosed on Schedule 2.9, as of the date hereof, the
------------
Seller does not have any liabilities of any nature, whether accrued, absolute,
contingent or otherwise, asserted or unasserted, known or unknown (including
without limitation liabilities as guarantor or otherwise with respect to
obligations or others, or liabilities for taxes due or accrued or to become due
or contingent or potential liabilities relating to activities of the Seller or
the conduct of its business prior to the date hereof, regardless of whether
claims in respect thereof have been asserted as of the date hereof), except
liabilities (i) stated or adequately reserved against on the Base Balance Sheet
or the Interim Balance Sheet (as submitted to the Buyer by the Seller and
restated by C&L in accordance with GAAP), or (ii) disclosed herein or reflected
on Schedule
--------
11
<PAGE>
2.9(c) hereto or (iii) incurred after September 30, 1997 in the ordinary
- ------
course of business by the Seller and consistent with the terms of this
Agreement.
2.10 Taxes.
-----
(a) The Seller has in accordance with applicable law filed all
federal, state, local and foreign tax returns required to be filed by it through
the date hereof, and all such returns correctly and accurately set forth the
amount of any taxes relating to the applicable period (the "Tax Returns"). A
list of all federal, state, local and foreign income tax returns filed with
respect to the Seller for taxable periods ended on or after December 31, 1994,
is set forth on Schedule 2.10 attached hereto, and said Schedule indicates those
-------------
returns that have been audited or currently are the subject of an audit. The
Seller has delivered to Buyer correct and complete copies of all Tax Returns
listed on said Schedule.
(b) All federal, state, local, foreign, and other taxes, including,
without limitation, income taxes, estimated taxes, alternative minimum taxes,
excise taxes, sales taxes, use taxes, value-added taxes, gross receipts taxes,
franchise taxes, capital stock taxes, employment and payroll-related taxes,
withholding taxes, stamp taxes, transfer taxes, windfall profit taxes,
environmental taxes and property taxes, whether or not measured in whole or in
part by net income, and all deficiencies, or other additions to tax, interest,
fines and penalties owed by it (collectively, "Taxes"), required to be paid by
it through the date hereof whether disputed or not have been paid.
(c) Neither the Internal Revenue Service ("IRS") nor any other
governmental authority is now asserting or, to the knowledge of the Seller,
threatening to assert against the Seller any deficiency or claim for additional
Taxes. No claim has ever been made by an authority in a jurisdiction where the
Seller does not file reports and returns that the Seller is or may be subject to
taxation by that jurisdiction. There are no security interests on any of the
assets of the Seller that arose in connection with any failure (or alleged
failure) to pay any Taxes. The Seller has never entered into a closing
agreement pursuant to Section 7121 of the Code.
(d) Except as set forth on Schedule 2.10, since December 31, 1994,
-------------
there has not been any audit of the tax return filed by Seller, no audit of any
tax return of the Seller is in progress, and the Seller has not been notified by
any tax authority that any such audit is contemplated or pending. Except as set
forth on Schedule 2.10, no extension of time with respect to any date on which a
-------------
tax return was or is to be filed by the Seller is in force, and no waiver or
agreement by the Seller is in force for the extension of time for the assessment
or payment of any Taxes.
(e) Except as disclosed on Schedule 2.10, the Seller has not ever been
-------------
(and the Seller has not ever had any liability for unpaid Taxes because it once
was) a member of an
12
<PAGE>
"affiliated group" (as defined in Section 1504(a) of the Code). Except as set
forth on Schedule 2.10, the Seller has not ever filed, and the Seller has not
-------------
ever been required to file, a consolidated, combined or unitary tax return with
any other entity. The Seller does not own and the Seller has never owned a
direct or indirect interest in any trust, partnership, corporation or other
entity and therefore Buyer is not acquiring from the Seller an interest in any
such entity. Except as set forth in Schedule 2.10, the Seller is a party to any
-------------
tax sharing agreement.
(f) The Seller is not a "foreign person" within the meaning of Section
1445 of the Code and Treasury Regulations Section 1.1445-2.
(g) For purposes of this Agreement, all references to Sections of the
Code shall include any predecessor provisions to such Sections and any similar
provisions of federal, state, local or foreign law.
2.11 Absence of Certain Changes. Except as disclosed on Schedule 2.11,
-------------------------- -------------
since the date of the Base Balance Sheet there has not been:
(a) Any change in the financial condition, properties, assets,
liabilities, business or operations of the Seller which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has been materially adverse with respect to the Seller;
(b) Any contingent liability incurred by the Seller as guarantor or
otherwise with respect to the obligations of others or any cancellation of any
material debt or claim owing to, or waiver of any material right of, the Seller;
(c) Any mortgage, encumbrance or lien placed on any of the properties
of the Seller which remains in existence on the date hereof, except liens for
taxes not yet due and payable;
(d) Any obligation or liability of any nature incurred by the Seller,
whether accrued, absolute, contingent or otherwise, asserted or unasserted,
known or unknown (including without limitation liabilities for Taxes due or to
become due or contingent or potential liabilities relating to products or
services provided by the Seller or the conduct of the Seller's business since
the date of the Base Balance Sheet regardless of whether claims in respect
thereof have been asserted), other than obligations and liabilities incurred in
the ordinary course of business consistent with the terms of this Agreement (it
being understood that product or service liability claims shall not be deemed to
be incurred in the ordinary course of business);
(e) Any purchase, sale or other disposition, or any agreement or other
arrangement for the purchase, sale or other disposition, of any of the
properties or assets of the Seller other than in the ordinary course of
business;
13
<PAGE>
(f) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or business
of the Seller;
(g) Any labor trouble or claim of unfair labor practices involving the
Seller; any change in the compensation payable or to become payable by the
Seller to any of its officers, employees, agents or independent contractors
other than normal merit increases in accordance with its usual practices, or,
except for bonuses or other arrangements to be paid by Seller from the proceeds
of this transaction, any bonus payment or arrangement made to or with any of
such officers, employees, agents or independent contractors;
(h) Any change with respect to the officers or management of the
Seller;
(i) Any payment or discharge of a material lien or liability of the
Seller except in the ordinary course of business;
(j) Any obligation or liability incurred by the Seller to any of its
officers, directors, stockholders or employees, or any loans or advances made by
the Seller to any of its officers, directors, stockholders or employees, except
normal compensation and expense allowances payable to officers or employees;
(k) Any change in accounting methods or practices, credit practices or
collection policies used by the Seller;
(l) Any other transaction entered into by the Seller other than
transactions in the ordinary course of business and transactions contemplated by
this Agreement; or
(m) Any agreement or understanding, whether in writing or otherwise,
for the Seller to take any of the actions specified in paragraphs (a) through
(l) above.
2.12 Ordinary Course. Since the date of the Base Balance Sheet, the Seller
---------------
has conducted its business only in the ordinary course and consistently with its
prior practices, except for transactions contemplated by this Agreement.
2.13 Banking Relations. All of the arrangements which the Seller has with
-----------------
any banking institution are completely and accurately described on Schedule
--------
2.13, indicating with respect to each of such arrangements the type of
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the person or persons authorized in respect thereof.
2.14 Intellectual Property.
---------------------
(a) Except as described on Schedule 2.14, the Seller has sufficient
-------------
ownership
14
<PAGE>
of, or sufficient license to use, all Intellectual Property Rights including,
without limitation, patent, copyright, trade secret, trademark, or other
proprietary rights used or to be used in its business as presently conducted or
contemplated. The Seller's rights in all Intellectual Property Rights set forth
on Schedule 2.14 are freely transferable. There are no claims of conflict or
-------------
infringement of any other person pertaining to any of such Intellectual Property
Rights and no proceedings have been instituted, or are pending or threatened,
which challenge the rights of the Seller in respect thereof.
(b) All patents, patent applications, trademarks, trademark
applications and registrations and registered copyrights which are owned by or
licensed to the Seller or used or to be used by the Seller in its business as
presently conducted or contemplated, and all other Intellectual Property Rights
which are material to the business or operations of the Seller, are listed on
Schedule 2.14. All of such patents, patent applications, trademark
- -------------
registrations, trademark applications and registered copyrights have been duly
registered in, filed in or issued by the United States Patent and Trademark
Office, the United States Register of Copyrights, or the corresponding offices
of other jurisdictions as identified on said Schedule, and have been properly
maintained and renewed in accordance with all applicable provisions of law and
administrative regulations of the United States and each such jurisdiction.
(c) All licenses or other agreements under which the Seller is granted
Intellectual Property Rights are listed on Schedule 2.14. All of said licenses
-------------
or other agreements are in full force and effect, there is no material default
by any party thereto, and, except as set forth on Schedule 2.14, all of the
-------------
Seller's rights thereunder are freely assignable. To the knowledge of the
Seller, the licensors under said licenses and other agreements have and had all
requisite power and authority to grant the rights purported to be conferred
thereby. True and complete copies of all such licenses or other agreements, and
any amendments thereto, have been provided to Buyer.
(d) All licenses or other agreements under which the Seller has
granted to others any Intellectual Property Rights owned or licensed by the
Seller are listed on Schedule 2.14. All of said licenses or other agreements
-------------
are in full force and effect, there is no material default by any party thereto,
and, except as set forth on Schedule 2.14, all of the Seller's rights thereunder
-------------
are freely assignable. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been provided to Buyer.
(e) To the knowledge of the Seller, the Seller has not granted to any
third party any right to manufacture, reproduce, distribute, market or exploit
any of the Seller's products, services or Intellectual Property Rights or any
adaptations, translations, or derivative works based on the Seller's products,
services or Intellectual Property Rights or any portion thereof. To the
knowledge of the Seller, the Seller has at all times used commercially
reasonable efforts to protect its trade secrets or other Intellectual Property
Rights and has not disclosed or otherwise dealt with such items in such a manner
as to cause the loss of such trade secrets or other Intellectual Property Rights
by release thereof into the public domain. To the
15
<PAGE>
knowledge of the Seller, the Seller has at all times used commercially
reasonable efforts to protect the confidentiality of all of its other
confidential and proprietary information and that of third parties which is or
has been in its possession.
(f) To the knowledge of the Seller, the present and contemplated
business, activities and products of the Seller do not infringe any Intellectual
Property Rights of any other person. No proceeding charging the Seller with
infringement of any adversely held Intellectual Property Rights has been filed
or has been threatened to be filed. To the Seller's knowledge, there exists no
unexpired patent or patent application which includes claims that would be
infringed by or otherwise adversely affect the products, activities or business
of the Seller. To the knowledge of the Seller, the Seller is not making
unauthorized use of any confidential information or trade secrets of any person,
including without limitation any former employer of any past or present employee
of the Seller. Except as set forth on Schedule 2.14, the Seller does not have
-------------
and, to the knowledge of the Seller, none of its employees have, any agreements
or arrangements with any persons other than the Seller related to confidential
information or trade secrets of such persons or restricting any such employee's
ability to engage in business activities of any nature. The activities of the
Seller's employees on behalf of the Seller do not violate any such agreements or
arrangements known to the Seller which any such employees have with other
persons.
As used herein, the term "Intellectual Property Rights" shall mean all
intellectual property rights, including, without limitation, all of the
registered rights set forth on Schedule 2.14 and all patents, patent
-------------
applications, patent rights, trademarks, trademark applications, trade names,
service marks, service mark applications, copyrights, copyright applications,
computer programs and other computer software, inventions, designs, samples,
specifications, schematics, know-how, trade secrets, proprietary processes and
formulae, including production technology and processes, all source and object
code, algorithms, promotional materials, customer lists, supplier and dealer
lists and marketing research, and all documentation and media constituting,
describing or relating to the foregoing, including without limitation, manuals,
memoranda and records. Schedule 2.14 contains a list and brief description of
-------------
all Intellectual Property Rights (other than with respect to "off the shelf"
software used by the Seller or any subsidiary of the Seller that is generally
commercially available) owned by or registered in the name of the Seller or any
subsidiary of the Seller or of which the Seller or any subsidiary of the Seller
is the licensor or a licensee of a material right or in which the Seller or any
subsidiary of the Seller has any material right and, in each case, a brief
description of the nature of the right.
2.15 Contracts. Except for contracts, commitments, plans, agreements and
---------
licenses described on Schedule 2.15 (true and complete copies of which have been
-------------
delivered to Buyer), the Seller is not a party to or subject to:
(a) any plan or contract providing for bonuses, pensions, options,
stock purchases, deferred compensation, retirement payments, profit sharing,
collective bargaining
16
<PAGE>
or the like, or any contract or agreement with any labor union;
(b) any employment contract or contract for services which requires
the payment of more than $50,000 annually or which is not terminable within 30
days by the Seller without liability for any penalty or severance payment;
(c) any contract or agreement for the purchase of any commodity,
material or equipment except purchase orders in the ordinary course for less
than $5,000 each, such orders not exceeding $20,000 in the aggregate;
(d) any other contracts or agreements creating any obligations of the
Seller of $25,000 or more with respect to any such contract or agreement not
specifically disclosed elsewhere under this Agreement;
(e) any contract or agreement providing for the purchase of all or
substantially all of its requirements of a particular product from a supplier;
(f) any contract or agreement involving more than $25,000 which by its
terms does not terminate or is not terminable without penalty by the Seller or
any successor or assign within one year after the date hereof;
(g) any contract or agreement for the sale or lease of its products
not made in the ordinary course of business;
(h) any contract with any sales agent or distributor of products of
the Seller;
(i) any contract containing covenants limiting the freedom of the
Seller to compete in any line of business or with any person or entity;
(j) any contract or agreement for the purchase of any fixed asset for
a price in excess of $5,000 whether or not such purchase is in the ordinary
course of business;
(k) any license agreement (as licensor or licensee);
(l) any indenture, mortgage, promissory note, loan agreement, guaranty
or other agreement or commitment for the borrowing of money; or
(m) any contract or agreement with any officer, employee, director or
stockholder of the Seller or with any persons or organizations controlled by or
affiliated with any of them.
17
<PAGE>
The Seller is not in default of any material provision under any such
contracts, commitments, plans, agreements or licenses described in said
Schedule, and Seller does not have knowledge of conditions or facts which with
notice or passage of time, or both, would constitute such a default.
2.16 Litigation. Schedule 2.16 hereto lists all currently pending
---------- -------------
litigation and governmental or administrative proceedings or investigations to
which the Seller is a party. Except for matters described on Schedule 2.16,
-------------
there is no litigation or governmental or administrative proceeding or
investigation pending or, to the knowledge of the Seller, threatened against the
Seller or any affiliate of the Seller which may have any adverse effect on the
Seller's properties, assets, prospects, financial condition or business or which
would prevent or hinder the consummation of the transactions contemplated by
this Agreement. With respect to each matter set forth therein, Schedule 2.16
-------------
sets forth a description of the matter, the forum (if any) in which it is being
conducted, the parties thereto and the type and amount of relief sought.
2.17 Compliance with Laws. Except as set forth on Schedule 2.17, to the
-------------------- -------------
knowledge of the Seller, the Seller is in compliance in all material respects
with all applicable statutes, ordinances, orders, judgments, decrees and rules
and regulations promulgated by any federal, state, municipal or other
governmental authority which apply to the Seller or to the conduct of its
business, and the Seller has not received any notice of a violation or alleged
violation of any such statute, ordinance, order, rule or regulation.
2.18 Insurance. The physical properties and assets of the Seller are
---------
insured to the extent disclosed on Schedule 2.18 and all insurance policies and
-------------
arrangements of the Seller are disclosed on said Schedule. To the knowledge of
the Seller, said insurance policies and arrangements are in full force and
effect, all premiums with respect thereto are currently paid, and the Seller is
in compliance in all material respects with the terms thereof. To the knowledge
of the Seller, said insurance is adequate and customary for the business engaged
in by the Seller and is sufficient for compliance by the Seller with all
requirements of law and all agreements and leases to which the Seller is a
party.
2.19 Warranty or Other Claims. Except as disclosed on Schedule 2.19, to
------------------------ -------------
the knowledge of the Seller, there are no existing or threatened product
liability, warranty or other similar claims, or any facts upon which a material
claim of such nature could be based, against the Seller for services which are
defective or fail to meet any service warranties. No claim has been asserted
against the Seller for renegotiation or price redetermination of any business
transaction, and there are no facts upon which any such claim could be based.
2.20 Powers of Attorney. Neither the Seller nor any Stockholder has
------------------
granted any powers of attorney which are presently outstanding.
2.21 Finder's Fee. Neither the Seller nor any Stockholder has incurred or
------------
become liable for any broker's commission or finder's fee relating to or in
connection with the
18
<PAGE>
transactions contemplated by this Agreement.
2.22 Permits; Burdensome Agreements. Schedule 2.22 lists all permits,
------------------------------ -------------
registrations, licenses, franchises, certifications and other approvals
(collectively, the "Approvals") required from federal, state or local
authorities in order for the Seller to conduct its business. The Seller has
obtained all such Approvals, which are valid and in full force and effect, and
is operating in compliance therewith. Such Approvals include, but are not
limited to, those required under federal, state or local statutes, ordinances,
orders, requirements, rules, regulations, or laws pertaining to environmental
protection, public health and safety, worker health and safety, buildings,
highways or zoning. Except as disclosed on Schedule 2.22 or in any other
-------------
Schedule hereto, the Seller is not subject to or bound by any agreement,
arrangement, judgment, decree or order which may materially and adversely affect
its business or prospects, its condition, financial or otherwise, or any of its
assets or properties.
2.23 Corporate Records; Copies of Documents. The business records and the
--------------------------------------
corporate records of the Seller, as delivered to Buyer pursuant to Sections
1.1(l) and 1.2(b), respectively, are either the originals of such documents or
are true, correct and complete copies of the originals of such documents.
2.24 Transactions with Related Parties. Except as set forth on Schedule
--------------------------------- --------
2.24 hereto, neither the Seller nor any stockholder, officer, supervisory
- ----
employee or director of the Seller or, to the knowledge of the Seller, any of
their respective spouses or family members owns directly or indirectly on an
individual or joint basis any material interest in, or serves as an officer or
director or in another similar capacity of, any competitor or supplier of the
Seller or any organization which has a material contract or arrangement with the
Seller.
2.25 Employee Benefit Programs.
-------------------------
(a) Schedule 2.25 lists every Employee Program (as defined below) that
-------------
has been maintained (as defined below) by the Seller at any time during the
three-year period ending on the Closing Date.
(b) Each Employee Program which has ever been maintained by the Seller
and which has at any time been intended to qualify under Section 401(a) or
501(c)(9) of the Code has received a favorable determination or approval letter
from the IRS regarding its qualification under such section and has, in fact,
been continuously qualified under the applicable section of the Code since the
effective date of such Employee Program. No event or omission has occurred
which would cause any such Employee Program to lose its qualification under the
applicable Code section.
(c) The Seller does not know, and has no reason to know, of any
failure of any party to comply with any laws applicable to the Employee Programs
that have been maintained by the Seller. With respect to any Employee Program
ever maintained by the Seller,
19
<PAGE>
there has occurred no "prohibited transaction," as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Section
4975 of the Code, or breach of any duty under ERISA or other applicable law
(including, without limitation, any health care continuation requirements or any
other tax law requirements, or conditions to favorable tax treatment, applicable
to such plan), which could result, directly or indirectly, in any taxes,
penalties or other liability to Buyer. No litigation, arbitration, or
governmental administrative proceeding (or investigation) or other proceeding
(other than those relating to routine claims for benefits) is pending or
threatened with respect to any such Employee Program.
(d) Neither the Seller nor any Affiliate (as defined below) (i) has
ever maintained any Employee Program which has been subject to Title IV of ERISA
(including, but not limited to, any Multi-employer Plan (as defined below)) or
(ii) has ever provided health care or any other non-pension benefits to any
employees after their employment is terminated (other than as required by Part 6
of Subtitle B of Title I of ERISA) or has ever promised to provide such post-
termination benefits.
(e) With respect to each Employee Program maintained by the Seller
within the three years preceding the Closing, complete and correct copies of the
following documents (if applicable to such Employee Program) have previously
been delivered to Buyer: (i) all documents embodying or governing such Employee
Program, and any funding medium for the Employee Program (including, without
limitation, trust agreements) as they may have been amended; (ii) the most
recent IRS determination or approval letter with respect to such Employee
Program under Code Section 401 or 501(c)(9), and any applications for
determination or approval subsequently filed with the IRS; (iii) the three most
recently filed IRS Forms 5500, with all applicable schedules and accountants'
opinions attached thereto; (iv) the summary plan description for such Employee
Program (or other descriptions of such Employee Program provided to employees)
and all modifications thereto; (v) any insurance policy (including any fiduciary
liability insurance policy) related to such Employee Program; (vi) any documents
evidencing any loan to an Employee Program that is a leveraged employee stock
ownership plan; and (vii) all other materials reasonably necessary for Buyer to
perform any of its responsibilities with respect to any Employee Program
subsequent to the Closing (including, without limitation, health care
continuation requirements).
(f) For purposes of this section:
(i) "Employee Program" means (A) all employee benefit plans
within the meaning of ERISA Section 3(3), including, but not limited to,
multiple employer welfare arrangements (within the meaning of ERISA Section
3(4)), plans to which more than one unaffiliated employer contributes and
employee benefit plans (such as foreign or excess benefit plans) which are
not subject to ERISA; and (B) all stock or cash option plans, restricted
stock plans, bonus or incentive award plans, severance pay policies or
agreements, deferred compensation agreements, supplemental income
arrangements,
20
<PAGE>
vacation plans, and all other employee benefit plans, agreements, and
arrangements not described in (A) above. In the case of an Employee Program
funded through an organization described in Code Section 501(c)(9), each
reference to such Employee Program shall include a reference to such
organization.
(ii) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides (or has promised to provide) benefits
under such Employee Program, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under such Employee
Program, or if such Employee Program provides benefits to or otherwise
covers employees of such entity, or their spouses, dependents, or
beneficiaries.
(iii) An entity is an "Affiliate" of the Seller if it would have
ever been considered a single employer with such Seller under ERISA Section
4001(b) or part of the same "controlled group" as such Seller for purposes
of ERISA Section 302(d)(8)(C).
(iv) "Multi-employer Plan" means a (pension or non-pension)
employee benefit plan to which more than one employer contributes and which
is maintained pursuant to one or more collective bargaining agreements.
2.26 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 2.26, (i) the Seller has not ever
-------------
generated, transported, used, stored, treated, disposed of, or managed any
Hazardous Waste (as defined below); (ii) to the knowledge of the Seller, no
Hazardous Material (as defined below) has ever been or is threatened to be
spilled, released, or disposed of at any site presently or formerly owned,
operated, leased, or used by the Seller, or, to the knowledge of the Seller, has
ever been located in the soil or groundwater at any such site; (iii) to the
knowledge of the Seller, no Hazardous Material has ever been transported from
any site presently or formerly owned, operated, leased, or used by the Seller
for treatment, storage, or disposal at any other place; (iv) to the knowledge of
the Seller, the Seller does not presently own, operate, lease, or use, nor has
the Seller previously owned, operated, leased, or used any site on which
underground storage tanks are or were located; and (v) no lien has ever been
imposed by any governmental agency on any property, facility, machinery, or
equipment owned, operated, leased, or used by the Seller in connection with the
presence of any Hazardous Material.
(b) Except as set forth on Schedule 2.26, (i) the Seller does not have
-------------
any liability under, nor has the Seller ever violated, any Environmental Law (as
defined below); (ii) to the knowledge of the Seller, the Seller, any property
owned, operated, leased, or used by the Seller, and any facilities and
operations thereon are presently in compliance with all applicable Environmental
Laws; (iii) the Seller has not ever entered into or been subject to any
judgment, consent decree, compliance order, or administrative order with respect
to any environmental or
21
<PAGE>
health and safety matter or received any request for information, notice, demand
letter, administrative inquiry, or formal or informal complaint or claim with
respect to any environmental or health and safety matter or the enforcement of
any Environmental Law; and (iv) the Seller does not have any knowledge or reason
to know that any of the items enumerated in clause (iii) of this subsection will
be forthcoming.
(c) Except as set forth on Schedule 2.26 hereto, to the knowledge of
-------------
the Sellers, no site owned, operated, leased, or used by the Seller contains any
asbestos or asbestos-containing material, any polychlorinated biphenyls (PCBs)
or equipment containing PCBs, or any urea formaldehyde foam insulation.
(d) The Seller has provided to Buyer copies of all documents, records,
and information known or available to the Seller concerning any environmental or
health and safety matter relevant to the Seller, whether generated by the Seller
or others, including, without limitation, environmental audits, environmental
risk assessments, site assessments, documentation regarding off-site disposal of
Hazardous Materials, spill control plans, and reports, correspondence, permits,
licenses, approvals, consents, and other authorizations related to environmental
or health and safety matters issued by any governmental agency.
(e) For purposes of this Section 2.26, (i) "Hazardous Material" shall
mean and include any hazardous waste, hazardous material, hazardous substance,
petroleum product, oil, toxic substance, pollutant, contaminant, or other
substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law; (ii) "Hazardous
Waste" shall mean and include any hazardous waste as defined or regulated under
any Environmental Law; (iii) "Environmental Law" shall mean any environmental or
health and safety-related law, regulation, rule, ordinance, or by-law at the
foreign, federal, state, or local level, whether existing as of the date hereof,
previously enforced, or subsequently enacted; and (iv) "Seller" shall mean and
include the Seller and all Affiliates of the Seller for whose conduct the Seller
is responsible under any Environmental Law.
2.27 Directors and Officers.
----------------------
(a) Schedule 2.27 contains a true and complete list of all current
-------------
directors and officers of the Seller. In addition, Schedule 2.27 contains a
-------------
list of all managers, employees and consultants of the Seller who, individually,
have received or are scheduled to receive compensation from the Seller for the
fiscal year ending December 31, 1997, in excess of $50,000. In each case such
Schedule includes the current job title and aggregate annual compensation of
each such individual.
2.28 Backlog. As of the date hereof, the Seller has a backlog of firm
-------
orders for the sale of products or services, for which revenues have not been
recognized by the Seller, as set forth in Schedule 2.28.
-------------
22
<PAGE>
2.29 Employees; Labor Matters. The Seller employs a total of approximately
------------------------
45 full-time employees and 2 part-time employees and generally enjoy good
employer-employee relationships. The Seller is not delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed for it to the date hereof or
amounts required to be reimbursed to such employees. Upon termination of the
employment of any of said employees, neither the Seller nor Buyer will by reason
of the acquisition transaction or anything done prior to the Closing be liable
to any of said employees for so-called "severance pay" or any other payments,
except as set forth on Schedule 2.29. The Seller does not have any policy,
-------------
practice, plan or program of paying severance pay or any form of severance
compensation in connection with the termination of employment of its employees,
except as set forth in said Schedule. The Seller is in compliance in all
material respects with all applicable laws and regulations respecting labor,
employment, fair employment practices, work place safety and health, terms and
conditions of employment, and wages and hours. There are no charges of
employment discrimination or unfair labor practices, nor are there any strikes,
slowdowns, stoppages of work, or any other concerted interference with normal
operations existing, pending or, to the knowledge of the Seller, threatened
against or involving the Seller. No question concerning representation exists
respecting any group of employees of the Seller. There are no grievances,
complaints or charges that have been filed against any Seller under any dispute
resolution procedure (including, but not limited to, any proceedings under any
dispute resolution procedure under any collective bargaining agreement) that
might have an adverse effect on the Seller or the conduct of its business and no
arbitration or similar proceeding is pending and no claim therefor has been
asserted. No collective bargaining agreement is in effect or is currently being
or is about to be negotiated by the Seller. The Seller has not received any
information to indicate that any of its employment policies or practices is
currently being audited or investigated by any federal, state or local
government agency. To the knowledge of the Seller, the Seller is, and at all
times since November 6, 1986, has been, in compliance with the requirements of
the Immigration Reform Control Act of 1986.
2.30 Customers and Suppliers. Schedule 2.30 sets forth any customer who
----------------------- -------------
accounts for more than $100,000 of the consolidated sales of the Sellers for the
twelve months ended December 31, 1996, or the twelve months ended as of the date
of the Base Balance Sheet (collectively, the "Customers"). Schedule 2.30 also
-------------
contains a true and complete list of the suppliers of the Seller to whom during
the twelve months ended December 31, 1996, the Seller made payments aggregating
$25,000 or more showing, with respect to each, the name, address and dollar
volume involved (the "Suppliers"). The relationships of the Seller with its
Customers and Suppliers are good commercial working relationships. Except as
set forth on Schedule 2.30, no Customer or Supplier of the Seller has canceled,
-------------
materially modified, or otherwise terminated its relationship with the Seller,
or has during said period decreased materially its usage or purchase of the
services or products of the Seller or the services, supplies or materials
furnished to the Seller, nor does any Customer or Supplier have, to the
knowledge of the Seller, any plan or intention to do any of the foregoing.
2.31 Hart-Scott-Rodino Matters. Neither the Seller on a consolidated basis
-------------------------
with
23
<PAGE>
McLagan Partners International Incorporated, an Illinois corporation, and
McLagan Partners Asia Incorporated, an Illinois corporation, nor the "ultimate
parent entities" (as such term is defined in the Hart-Scott-Rodino Anti-Trust
Improvement Act of 1976, as amended (the "HSR Act")) of the Seller, on a
consolidated basis, had annual net sales (as stated on the last regularly
prepared annual statement of income and expense for such persons or entities) or
total assets (as stated on the last regularly prepared balance sheet for such
persons or entities) of One Hundred Million Dollars ($100,000,000) or more, as
calculated in accordance with the HSR Act and the rules and regulations
promulgated thereunder.
2.32 Disclosure. The representations, warranties and statements contained
----------
in this Agreement and in the certificates, exhibits and schedules delivered to
Buyer by the Seller or Stockholder pursuant to this Agreement do not contain any
untrue statement of a material fact, and, when taken together, do not omit to
state a material fact required to be stated therein or necessary in order to
make such representations, warranties or statements not misleading in light of
the circumstances under which they were made.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
----------------------------------------------------
3.1 Making of Representations and Warranties. As a material inducement to
----------------------------------------
the Seller and the Stockholders to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer makes to the Seller and the Stockholders
the representations and warranties contained in this Section 3.
3.2 Organization of Buyer. Buyer is a corporation duly organized, validly
---------------------
existing and in good standing under the laws of the State of Delaware with full
corporate power to own or lease its properties and to conduct its business in
the manner and in the places where such properties are owned or leased or such
business is conducted by it. Buyer is duly qualified to do business as a
foreign corporation in each jurisdiction in which it is required to be so
qualified except to the extent that any failure to be so qualified would not
have a material adverse effect on the Buyer.
3.3 Authority of Buyer. Buyer has full right, authority and power to
------------------
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by Buyer pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Buyer of this Agreement and each such other agreement, document
and instrument have been, or as of the Closing shall have been, duly authorized
by all necessary corporate action of Buyer and no other action on the part of
Buyer is required in connection therewith. This Agreement and each other
agreement, document and instrument executed and delivered by Buyer pursuant to
this Agreement constitute, or when executed and delivered will constitute, valid
and binding obligations of Buyer enforceable in accordance with their terms.
Following the approval of Buyer's Board of Directors, the execution, delivery
and performance by Buyer of this Agreement and each such agreement, document and
instrument:
24
<PAGE>
(a) does not and will not violate any provision of the Certificate of
Incorporation or by-laws of Buyer;
(b) does not and will not violate any laws of the United States or of
any state or any other jurisdiction applicable to Buyer or require Buyer to
obtain any approval, consent or waiver of, or make any filing with, any person
or entity (governmental or otherwise) which has not been obtained or made; and
(c) does not and will not result in a breach of, constitute a default
under, accelerate any obligation under, or give rise to a right of termination
of any indenture, loan or credit agreement, or any other agreement, mortgage,
lease, permit, order, judgment or decree to which Buyer is a party and which is
material to the business and financial condition of Buyer and its parent and
affiliated organizations on a consolidated basis.
3.4 Litigation. There is no litigation or governmental or administrative
----------
proceeding or investigation pending or, to its knowledge, threatened against
Buyer which would prevent or hinder the consummation of the transactions
contemplated by this Agreement.
3.5 Finder's Fee. Buyer has not incurred or become liable for any
------------
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
3.6 Hart-Scott-Rodino Matters. Neither the Buyer nor the "ultimate parent
-------------------------
entity" (as such term is defined in the HSR Act) of the Buyer had annual net
sales (as stated on the last regularly prepared annual statement of income and
expense for the Buyer or such ultimate parent entity) or total assets (as stated
on the last regularly prepared balance sheet for the Buyer or such ultimate
parent entity) of One Hundred Million Dollars ($100,000,000) or more, as
calculated in accordance with the HSR Act and the rules and regulations
promulgated thereunder.
3.7 Securities and Exchange Commission Filings. ASI has filed all
------------------------------------------
required forms, reports and documents with the Securities and Exchange
Commission since April 9, 1997 (each, a "Commission Report" and collectively,
the "Commission Reports"), all of which were prepared in accordance with the
applicable requirements of the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, as applicable, in all material
respects. Except to the extent, if any, as may have been appropriately
disclosed in a Commission Report filed subsequent thereto and prior to the date
hereof, as of their respective dates, the Commission Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
25
<PAGE>
SECTION 4 CONDITIONS.
----------------------
4.1 Conditions to the Obligations of Buyer. The obligations of Buyer to
--------------------------------------
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) Satisfaction of Conditions. The representations and warranties of
--------------------------
the Seller and the Stockholders contained in this Agreement shall be true and
correct on and as of the Closing Date; each of the conditions specified in this
Section 4.1 shall have been satisfied or waived in writing by the Buyer; and on
the Closing Date a certificate to such effect executed on behalf of the Seller
and the Stockholders, as appropriate, shall be delivered to the Buyer.
(b) Transfer of Subject Assets. The Seller shall deliver or cause to
--------------------------
be delivered to Buyer (i) an Assignment and Assumption Agreement substantially
in the form of Exhibit C hereto and (ii) a Bill of Sale substantially in the
---------
form of Exhibit D hereto transferring to Buyer good and marketable title to all
---------
the Subject Assets.
(c) Delivery of Records and Contracts. Seller shall deliver or cause
---------------------------------
to be delivered to Buyer all of the Assumed Contracts, with such assignments
thereof and consents to assignments as are necessary to assure Buyer of the full
benefit of the same. Seller shall also deliver to Buyer at the Closing all of
its business records, tax returns, books and other data relating to their
respective assets, businesses and operations (except Corporate Records excluded
under Section 1.2(b) as to which only copies need be delivered in accordance
with such Section), and Seller shall take all requisite steps to put Buyer in
actual possession and operating control of the assets and businesses of Sellers.
(d) Approval of Buyer's Counsel. All actions, proceedings,
---------------------------
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this Agreement shall have been approved by Goodwin, Procter & Hoar LLP as
counsel for Buyer, and such counsel shall have received on behalf of Buyer such
other certificates, opinions, and documents in form satisfactory to such counsel
as Buyer may reasonably request from the Seller or the Stockholders to evidence
compliance with the terms and conditions hereof.
(e) Opinion of Counsel. Buyer shall have received from Cummings &
------------------
Lockwood, counsel for the Seller and Stockholders, an opinion, dated as of the
Closing Date, in the form attached hereto as Exhibit E.
---------
(f) No Litigation. There shall have been no determination by Buyer,
-------------
acting in good faith, that the consummation of the transactions contemplated by
this Agreement has become inadvisable or impracticable by reason of the
institution or threat by any person or any federal, state or other governmental
authority of litigation, proceedings or other action against Buyer, the Seller
or any Stockholder or any material adverse change in the laws or regulations
26
<PAGE>
applicable to any Seller.
(g) Hart-Scott-Rodino. All required filings under the HSR Act ("HSR
-----------------
Filings") shall have been completed and all applicable time limitations under
such Act shall have expired without a request for further information by the
relevant federal authorities under such Act, or in the event of such a request
for further information, the expiration of all applicable time limitations under
the Act shall have occurred without the objection of such federal authorities.
(h) Due Diligence and Disclosure Schedules. Buyer, in its sole
--------------------------------------
discretion, shall be satisfied, with the results of its legal, accounting,
business and other due diligence review of the Seller and the Subject Assets.
Buyer, in its sole discretion, shall, be satisfied with the form and substance
of the Disclosure Schedules to this Agreement which shall have been delivered to
Buyer by the Seller on or before Closing.
(i) Financing. ASI and Buyer shall have secured senior financing from
---------
a bank or other financial institution satisfactory to ASI and Buyer on terms and
conditions satisfactory to ASI and Buyer in their sole discretion and in amounts
sufficient to provide all of the consideration for the acquisition transaction
contemplated hereby plus adequate working capital for the acquired businesses.
(j) Consents. The Seller shall have made all filings with and
--------
notifications of governmental authorities, regulatory agencies and other
entities required to be made by the Seller in connection with the execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of the Seller by Buyer
subsequent to the Closing; and Seller and Buyer shall have received all
authorizations, waivers, consents and permits, in form and substance reasonably
satisfactory to Buyer, from all third parties, including, without limitation,
applicable governmental authorities, regulatory agencies, lessors, lenders and
contract parties, required to permit the continuation of the businesses of the
Seller by Buyer and the consummation of the transactions contemplated by this
Agreement, and in connection with the transfer of the Subject Assets or the
Seller's contracts, permits, leases, licenses and franchises, to avoid a breach,
default, termination, acceleration or modification of any indenture, loan or
credit agreement or any other agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award as a result of, or in connection with, the
execution and performance of this Agreement.
(k) Employment/Non-Competition Agreements. Each of the individuals
-------------------------------------
named on Schedule 4.1(k) hereto shall have executed and delivered to Buyer an
---------------
Employment and Non-Competition Agreement in substantially the form of Exhibit F
---------
attached hereto.
(l) Subordination. The Seller, the Stockholders and each individual
-------------
named on Schedule 1.5(e) hereto shall have executed and delivered to the Bank
---------------
and/or the Buyer a
27
<PAGE>
subordination agreement or other documentation containing those terms and
conditions reasonably requested by the Bank or as may otherwise be necessary to
subordinate the obligations of the Buyer pursuant to the Note and with respect
to any and all payments to be made by the Buyer pursuant to Section 1.5(e)
hereof to its senior debt.
(m) Investor Questionnaires. The Seller shall have executed and
-----------------------
delivered to Buyer a Prospective Investor Questionnaire in substantially the
form of Exhibit G attached hereto. It is hereby acknowledged and agreed by the
---------
parties that Buyer shall not deliver the Seller Shares (as defined below) until
Buyer has received such Investor Questionnaires from the Seller.
(n) Acquisition Audit. Buyer shall have received a satisfactory audit
-----------------
report from C&L with respect to the financial statements and financial condition
of the Seller which report shall indicate financial performance and financial
condition that is satisfactory to Buyer.
(o) Good Standing. At or prior to the Closing, Buyer shall have
-------------
received from the Seller a certificate of good standing from the appropriate
authority in the States of Illinois and Connecticut.
(p) Board of Directors Approval. The Board of Directors of the Buyer
---------------------------
shall have approved, ratified and affirmed the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
4.2 Conditions to Obligations of the Seller. The obligations of the
---------------------------------------
Seller to consummate this Agreement and the transactions contemplated hereby are
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) Satisfaction of Conditions. The representations and warranties of
--------------------------
the Buyer contained in this Agreement shall be true and correct on and as of the
Closing Date; each of the conditions specified in this Section 4.2 shall have
been satisfied or waived in writing by the Seller; and on the Closing Date a
certificate to such effect executed on behalf of the Buyer shall be delivered to
the Seller.
(b) Seller Shares. On the Closing Date, Buyer shall issue, 50,000
-------------
shares of Common Stock (the "Seller Shares") to the Seller. The parties hereto
hereby acknowledge that such Seller Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), or any other federal or state
securities law and that such Seller Shares may not be offered, sold,
transferred, hypothecated or otherwise assigned except pursuant to (i) a
registration statement with respect to such securities which is effective under
the Act or (ii) an available exemption from registration under such Act relating
to the disposition of securities (including, under certain circumstances, the
"safe harbor" provisions of Rule 144 promulgated by the Securities and Exchange
Commission pursuant to the Act). The parties hereto hereby
28
<PAGE>
agree that the Seller distribute the Seller Shares to such persons and in such
denominations as may be mutually agreeable to Buyer and Seller; provided that
such Seller Shares may be so distributed without registration under applicable
federal and state securities law.
(c) Incentive Compensation Plan. On or before the Closing Date,
---------------------------
Buyer's Board of Directors shall have approved an Incentive Compensation Plan
for the benefit of the participants identified on Schedule 4.2(c) hereto
---------------
substantially in the form of Exhibit H hereto (the "Incentive Plan").
---------
(d) Stock Options. On the Closing Date, Buyer shall issue to the
-------------
individuals set forth on Schedule 4.2(d) hereto options to purchase the number
---------------
of shares of Common Stock set forth opposite the names of such individuals on
such Schedule (200,000 shares in the aggregate) and shall have granted to
Michael Curran options to purchase 100,000 shares of Common Stock. Such options
shall be granted with an exercise price per share equal to the closing price of
the Common Stock on the Nasdaq National Market on the Closing Date and shall be
subject to the terms and conditions of the ASI Solutions Incorporated 1996 Stock
Option and Grant Plan.
(e) Assignment and Assumption Agreement. At the Closing, Buyer shall
-----------------------------------
deliver or cause to be delivered to Seller an Assignment and Assumption
Agreement in substantially the form of Exhibit C hereto.
---------
(f) Approval of Seller's and Stockholders' Counsel. All actions,
----------------------------------------------
proceedings, instruments and documents required to carry out this Agreement and
the transactions contemplated hereby and all related legal matters contemplated
by this agreement shall have been approved by Cummings & Lockwood, as counsel
for the Seller and Stockholders, and such counsel shall have received on behalf
of the Seller and the Stockholders such other certificates, opinions and
documents in form satisfactory to such counsel as the Seller and Stockholders
may reasonably require from Buyer to evidence compliance with the terms and
conditions hereof.
(g) No Litigation. There shall have been no determination by the
-------------
Seller or Stockholders, acting in good faith, that the consummation of the
transactions contemplated by this Agreement has become inadvisable or
impracticable by reason of the institution or threat by any person or any
federal, state or other governmental authority of material litigation,
proceedings or other action against Buyer, the Seller or any Stockholder.
(h) Employment/Non-Competition Agreements. Buyer shall have executed
-------------------------------------
and delivered to each individual named on Schedule 4.1(h) hereto an Employment
---------------
and Non-Competition Agreement in substantially the form of Exhibit F attached
---------
hereto.
(i) Opinion of Counsel. The Seller and the Stockholders shall have
------------------
received from Goodwin, Procter & Hoar LLP, counsel for the Buyer, an opinion,
dated as of the Closing Date, in the form attached hereto as Exhibit I.
---------
29
<PAGE>
(j) Consents. Buyer shall have made all filings with and
--------
notifications of governmental authorities, regulatory agencies and other
entities required to be made by Buyer in connection with the execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of the Seller by Buyer
subsequent to the Closing; and Buyer shall have received all authorizations,
waivers, consents and permits, in form and substance reasonably satisfactory to
Seller, from all third parties, including, without limitation, applicable
governmental authorities, regulatory agencies, lessors, lenders and contract
parties, required to permit the continuation of the businesses of the Seller by
Buyer and the consummation of the transactions contemplated by this Agreement.
(k) Payment of Purchase Price. Buyer shall have delivered to Seller
-------------------------
(i) Fifteen Million, Two Hundred Fifty Thousand Dollars ($15,250,000) in cash,
(ii) the Note, in a principal amount of Five Million Dollars ($5,000,000), and
(iii) Buyer shall have discharged all liabilities of the Seller in respect of
the Stockholder Loans (provided that such liabilities shall not exceed One
Million Dollars ($1,000,000) in the aggregate), all in accordance with Section
1.5 hereof.
(l) Exhibits. Buyer and Seller shall have mutually agreed to the
--------
form, term and provisions of each of the Exhibits referred to herein.
SECTION 5. SURVIVAL OF WARRANTIES; RIGHTS, OBLIGATIONS AND ACTIONS SUBSEQUENT TO
- --------------------------------------------------------------------------------
CLOSING.
-------
5.1 Survival of Warranties. Each of the representations, warranties,
----------------------
agreements, covenants and obligations herein or in any schedule, exhibit,
certificate or financial statement delivered by any party to the other party
incident to the transactions contemplated hereby are material, shall be deemed
to have been relied upon by the other party and shall survive the Closing
regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto; provided, however, that, as more fully set
forth in Section 6 hereof, such representations and warranties shall expire on
the same dates as and to the extent that the rights to indemnification with
respect thereto under Section 6 shall expire.
5.2 Payment of Obligations. Subsequent to the Closing, the Seller shall
----------------------
pay all of the Excluded Liabilities in the ordinary course of business as they
become due.
5.3 Tax Returns. After the Closing, the Seller, with the approval of
-----------
Buyer and in accordance with applicable law, shall (i) promptly prepare and file
on or before the due date or any extension thereof, all federal, state and local
tax returns required to be filed by it with respect to taxable periods of the
Seller that include any period ending on or before the Closing and (ii) pay all
Taxes of the Seller attributable to periods ending on or before the Closing
Date.
5.4 Books and Records. After the Closing, Buyer shall afford to Seller
-----------------
and Stockholders and their respective accountants and attorneys, for the purpose
of preparing such
30
<PAGE>
tax returns of the Seller or Stockholders as may be required after the Closing,
reasonable access to the books and records of Seller delivered to Buyer under
Section 4.1(b) and shall permit the Seller or any Stockholder, at its or his
expense, to make extracts and copies therefrom.
5.5 Further Assurances. Seller from time to time after the Closing at the
------------------
request of Buyer and without further consideration shall execute and deliver
further instruments of transfer and assignment and take such other action as
Buyer may reasonably request to more effectively transfer and assign to, and
vest in, Buyer each of the Subject Assets. Seller shall cooperate with Buyer to
permit Buyer to enjoy their respective ratings and benefits under the workman's
compensation laws and unemployment compensation laws of applicable
jurisdictions, to the extent permitted by such laws. Nothing herein shall be
deemed a waiver by Buyer of its right to receive at the Closing an effective
assignment of each of the leases, contracts, commitments or rights of Seller as
otherwise set forth in this Agreement.
5.6 Allocation of Purchase Price. Within thirty (30) days of the Closing,
----------------------------
Buyer shall allocate the Purchase Price (and all other capitalized costs) among
the Subject Assets. Such allocation shall be binding upon Buyer, Seller and
each Stockholder for all purposes (including financial accounting purposes,
financial and regulatory reporting purposes and tax purposes) unless the Seller
shall notify Buyer, within thirty (30) days of their receipt of notice of
Buyer's allocation hereunder, that they disagree with such allocation by Buyer.
In the event of such a disagreement, the parties shall submit the allocation of
the Purchase Price (and all other capitalized costs) among the Subject Assets to
an accounting firm of nationally recognized standing mutually acceptable to
Buyer, on one hand, and the Seller on the other. Such firm shall deliver its
allocation of the Purchase Price (and all other capitalized costs) among the
Subject Assets to the parties as soon as practicable, and such allocation shall
be binding upon Buyer, the Seller and each Stockholder for all purposes
(including financial accounting purposes, financial and regulatory reporting
purposes and tax purposes). All Purchase Price allocations hereunder shall be
made in accordance with the provisions of Section 1060 of the Code. Buyer and
the Seller also each agree to file IRS Form 8594 consistently with the foregoing
and in accordance with Section 1060 of the Code.
5.7 Hart-Scott-Rodino Filings. Buyer shall cooperate with Seller and
-------------------------
Stockholders in connection with all required HSR Filings and shall furnish all
follow-up information required in connection therewith. Buyer shall have the
primary responsibility with respect to the preparation and filing of the HSR
Filings.
5.8 Sellers' Employees. After the Closing, Buyer will make offers of
------------------
employment to each of the employees of the Seller named on Schedule 5.8 hereto
------------
under terms and conditions comparable to those under which Sellers currently
employ such employees.
5.9 Sellers' Benefit Plans. At the Closing, to the extent permitted under
----------------------
Seller's medical, long-term disability and life insurance plans identified on
Schedule 5.9 (the "Seller
- ------------
31
<PAGE>
Insurance Plans"), Buyer shall assume all such plans. To the extent Buyer is
unable to assume the Seller Insurance Plans in accordance with their terms,
Buyer shall, not more than forty-five (45) days after the Closing Date,
establish and maintain insurance plans which provide coverage and/or benefits
corresponding in all material respects to the Seller Insurance Plans. The
insurance plans so established by Buyer shall be for the benefit of the
Stockholders and the employees named on Schedule 5.8 and their respective
------------
spouses and dependent children and shall provide coverage with no pre-existing
condition exclusions and no waiting periods. At the time of the Closing, Buyer
shall establish a 401(k) plan corresponding in all material respects to the
Seller's 401(k) plan which shall be for the benefit of the Stockholders and the
employees named on Schedule 5.8 and shall allow participation without any
------------
waiting period. At any time after March 31, 2000, the Buyer may, in its sole
discretion, terminate any plan assumed or established pursuant to this Section
5.9.
5.10 Business Relations. During the period from the Closing Date until
------------------
the date which is ninety (90) days thereafter, the Buyer may conduct, in
coordination with the Seller, personal interviews with the Seller's Customers
and Suppliers in order to confirm that such Customers and Suppliers intend to
continue their respective current levels of business with Sellers.
SECTION 6. INDEMNIFICATION.
- --------------------------
6.1 Indemnification by the Seller and the Stockholders. The Seller and
--------------------------------------------------
each Stockholder jointly and severally agree subsequent to the Closing to
indemnify and hold Buyer and its respective subsidiaries and affiliates and
persons serving as officers, directors, partners or employees thereof
(individually a "Buyer Indemnified Party" and collectively the "Buyer
Indemnified Parties") harmless from and against any damages, liabilities,
losses, taxes, fines, penalties, costs, and expenses (including, without
limitation, reasonable fees of counsel and accountants) of any kind or nature
whatsoever (whether or not arising out of third-party claims and including all
amounts paid in investigation, defense or settlement of the foregoing) which may
be sustained or suffered by any of them arising out of or based upon any of the
following matters:
(a) fraud, intentional misrepresentation or a deliberate or wilful
breach by the Seller or any Stockholder of any representation, warranty or
covenant under this Agreement or in any certificate, schedule or exhibit
delivered as part of or pursuant to this Agreement;
(b) any other breach of any representation or warranty made by the
Seller or any Stockholder in this Agreement, or in any certificate, schedule or
exhibit delivered by or on behalf of the Seller or any Stockholder as part of or
pursuant to this Agreement, or any third-party claim, action or proceeding
asserted or instituted or arising out of any matter or thing covered by such
representations or warranties (collectively, "Buyer Warranty Claims");
(c) any breach of any covenant or agreement made by or on behalf of
the
32
<PAGE>
Seller or any Stockholder in this Agreement, or in any certificate, schedule or
exhibit delivered by or on behalf of the Seller or any Stockholder as part of or
pursuant to this Agreement; and
(d) all claims, liabilities and obligations in connection with,
arising out of or otherwise relating to any of the Excluded Liabilities.
The rights of Buyer Indemnified Parties to recover indemnification in
respect of any occurrence referred to in clauses (c) or (d) of this Section 6.1
shall not be limited by the fact that such occurrence may not constitute an
inaccuracy in or breach of any representation, warranty or agreement referred to
in clauses (a) or (b) of this Section 6.1.
6.2 Limitations on Indemnification by the Seller and the Stockholders.
-----------------------------------------------------------------
The right of Buyer Indemnified Parties to indemnification under Section 6.1
shall be subject to the following provisions:
(a) No indemnification shall be payable to any Buyer Indemnified Party
in respect of Buyer Warranty Claims (other than any such claim relating to title
to the Subject Assets), unless the total of all claims for indemnification
pursuant to Section 6.1, when aggregated with all claims made under Section 6.1
of (i) that certain asset purchase agreement, dated as of November 13, 1997 by
and between McLagan Partners International, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Buyer and McLagan Partners International
Incorporated, an Illinois corporation, and certain other parties named therein
and (ii) that certain asset purchase agreement, dated November 13, 1997, by and
between McLagan Partners Asia, Inc., a Delaware corporation and a wholly-owned
subsidiary of the Buyer, and McLagan Partners Asia Incorporated, an Illinois
corporation, and certain other parties named therein (the asset purchase
agreements referred to in clauses (i) and (ii) are sometimes referred to herein
as the "Affiliate Agreements"), shall exceed $50,000 in the aggregate, whereupon
the full amount of such claims shall be recoverable in accordance with the terms
hereof;
(b) The indemnification obligations of the Seller with respect to
Buyer Warranty Claims (other than any such claim relating to Excluded
Liabilities or title to the Subject Assets), and of the Stockholders with
respect to all claims, shall be limited to Buyer's right to set off and apply
the amount of such claims against any and all amounts outstanding under the Note
whether or not then due and payable.
(c) Indemnification with respect to Buyer Warranty Claims shall expire
on April 30, 2000 (the "Indemnification Cut-Off Date"); provided, however, that
the limitation of this Section 6.2(c) shall not apply to Buyer Warranty Claims
involving fraud, intentional misrepresentation or title to the Subject Assets,
for which the period for making such claims shall expire on the date on which
the applicable statute of limitations relating thereto terminates; provided,
--------
further, however, that with respect only to DeMinimis Claims the Indemnification
- ------- -------
Cut-Off Date shall be the date which is ninety (90) days after the Closing Date.
If prior to the relevant date of expiration a specific state of facts shall have
become known which may
33
<PAGE>
constitute or give rise to any Buyer Warranty Claim as to which indemnity may be
payable and a Buyer Indemnified Party shall have given notice of such facts to
the Seller or any Stockholder, then the right to indemnification with respect
thereto shall remain in effect without regard to when such matter shall have
been finally determined and disposed of, according to the date on which notice
of the applicable claim is given; and
(d) The limitations set forth herein with respect to Buyer Warranty
Claims shall not limit the rights of any Buyer Indemnified Party with respect to
any other claims arising under the provisions of Section 6.1.
6.3 Indemnification by Buyer. Buyer agrees to indemnify and hold the
------------------------
Seller and their respective affiliates and persons serving as officers,
directors or employees thereof and the Stockholders (individually a "Seller
Indemnified Party" and collectively the "Seller Indemnified Parties") harmless
from and against any damages, liabilities, losses, taxes, fines, penalties,
costs, and expenses (including, without limitation, reasonable fees of counsel
and accountants) of any kind or nature whatsoever (whether or not arising out of
third-party claims and including all amounts paid in investigation, defense or
settlement of the foregoing) which may be sustained or suffered by any of them
arising out of or based upon any of the following matters:
(a) fraud, intentional misrepresentation or a deliberate or wilful
breach by Buyer of any representation, warranty or covenant under this Agreement
or in any certificate, schedule or exhibit delivered as part of or pursuant to
this Agreement;
(b) any other breach of any representation or warranty made by Buyer
in this Agreement or in any certificate, schedule or exhibit delivered pursuant
hereto, or any Warranty Claim;
(c) any breach of any covenant or agreement made by or on behalf of
Buyer in this Agreement, or in any certificate, schedule or exhibit delivered by
or on behalf of Buyer as part of or pursuant to this Agreement; or
(d) any failure by Buyer to perform and discharge any of the Assumed
Liabilities as set forth in this Agreement.
The rights of Seller Indemnified Parties to recover indemnification in
respect of any occurrence referred to in clauses (c) or (d) of this Section 6.3
shall not be limited by the fact that such occurrence may not constitute an
inaccuracy in or breach of any representation, warranty or agreement referred to
in clauses (a) or (b) of this Section 6.3.
6.4 Limitations on Indemnification by Buyer. The right of Seller
---------------------------------------
Indemnified Parties to indemnification under Section 6.3 shall be subject to the
following provisions:
(a) No indemnification shall be payable to any Seller Indemnified
Party in
34
<PAGE>
respect of any breach of any representation or warranty made by Buyer in this
Agreement, or in any certificate, schedule or exhibit delivered by or on behalf
of Buyer as part of or pursuant to this Agreement, or any third-party claim,
action or proceeding asserted or instituted or arising out of any matter or
thing covered by such representations or warranties (collectively, "Seller
Warranty Claims"), unless the total of all claims for indemnification pursuant
to Section 6.3 when aggregated with all claims made under Section 6.3 of the
Affiliate Agreements shall exceed $50,000 in the aggregate, whereupon the full
amount of such claims shall be recoverable in accordance with the terms hereof;
(b) Indemnification with respect to Seller Warranty Claims shall
expire on the Indemnification Cut-Off Date; provided, however, that the
limitation of this clause (i) shall not apply to Seller Warranty Claims
involving fraud or intentional misrepresentation, for which the period for
making such claims shall expire on the date on which the applicable statute of
limitations relating thereto terminates. If prior to the relevant date of
expiration a specific state of facts shall have become known which may
constitute or give rise to any Seller Warranty Claim as to which indemnity may
be payable and a Seller Indemnified Party shall have given notice of such facts
to Buyer, then the right to indemnification with respect thereto shall remain in
effect without regard to when such matter shall have been finally determined and
disposed of, according to the date on which notice of the applicable claim is
given; and
(c) The limitations herein with respect to Seller Warranty Claims
shall not limit the rights of any Seller Indemnified Party with respect to any
other claims arising under provisions of Section 6.3.
6.5 Notice; Defense of Claims. An indemnified party may make claims for
-------------------------
indemnification hereunder by giving written notice thereof to the indemnifying
party within the period in which indemnification claims may be made hereunder.
If indemnification is sought for a claim or liability asserted by a third party,
the indemnified party shall give written notice thereof to the indemnifying
party promptly after it receives notice of the claim or liability being
asserted, but the failure to do so shall not relieve the indemnifying party from
any liability except to the extent that it is prejudiced by the failure or delay
in giving such notice. Such notice shall summarize the bases for the claim for
indemnification and any claim or liability being asserted by a third party.
Within twenty (20) days after receiving such notice the indemnifying party shall
give written notice to the indemnified party stating whether it disputes the
claim for indemnification and whether it will defend against any third party
claim or liability at its own cost and expense. If the indemnifying party fails
to give notice that it disputes an indemnification claim within twenty (20) days
after receipt of notice thereof, it shall be deemed to have accepted and agreed
to the claim, which shall become immediately due and payable. The indemnifying
party shall be entitled to direct the defense against a third party claim or
liability with counsel selected by it (subject to the consent of the indemnified
party, which consent shall not be unreasonably withheld) as long as the
indemnifying party conducts a good faith and diligent defense. The indemnified
party shall at all times have the right to fully participate in the defense of a
third party claim or liability at its own expense directly or through
35
<PAGE>
counsel; provided, however, that if the named parties to the action or
proceeding include both the indemnifying party and the indemnified party and the
indemnified party is advised that representation of both parties by the same
counsel would be inappropriate under applicable standards of professional
conduct, the indemnified party may engage separate counsel at the expense of the
indemnifying party. If no such notice of intent to dispute and defend a third
party claim or liability is given by the indemnifying party, or if such good
faith and diligent defense is not being or ceases to be conducted by the
indemnifying party, the indemnified party shall have the right, at the expense
of the indemnifying party, to undertake the defense of such claim or liability
(with counsel selected by the indemnified party), and to compromise or settle
it, exercising reasonable business judgment. If the third party claim or
liability is one that by its nature cannot be defended solely by the
indemnifying party, then the indemnified party shall make available such
information and assistance as the indemnifying party may reasonably request and
shall cooperate with the indemnifying party in such defense, at the expense of
the indemnifying party.
6.6 Satisfaction of Seller and Stockholder Indemnification Obligations.
------------------------------------------------------------------
In order to satisfy the indemnification obligations of the Seller and the
Stockholders pursuant to Section 6.1 above, a Buyer Indemnified Party shall have
the right to set off and apply the amount of such indemnification claims against
any and all amounts then outstanding under the Note (whether or not then due and
payable).
SECTION 7. DEFINITIONS.
- ----------------------
As used in this Agreement, unless the context otherwise explicitly
requires, the following terms shall have the meanings set forth below:
"Advisor" shall have the meaning set forth in Section 8.10.
"Affiliate" shall have the meaning set forth in Section 2.25.
"Approvals" shall have the meaning set forth in Section 2.22.
"Assumed Contracts" shall have the meaning set forth in Section 1.3.
"Bank" shall have the meaning set forth in Section 1.5.
"Base Balance Sheets" shall have the meaning set forth in Section 2.9(a).
"Buyer" shall have the meaning set forth in the preamble.
"Buyer Indemnified Party" or "Buyer Indemnified Parties" shall have the
respective meanings set forth in Section 6.1.
36
<PAGE>
"Buyer Warranty Claims" shall have the meaning set forth in Section 6.1(b).
"CPR Rules" shall have the meaning set forth in Section 8.10.
"Closing" shall have the meaning set forth in Section 1.4.
"Closing Date" shall have the meaning set forth in Section 1.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission Report" and "Commission Reports" shall have the respective
meanings set forth in Section 3.7.
"Common Stock" shall mean the common stock, par value $.01 per share, of
ASI.
"Corporate Records" shall have the meaning set forth in Section 1.2(b).
"Credit Agreement" shall mean that certain Credit Agreement, dated as of
November 13, 1997, by and among, ASI, the Buyer, The Chase Manhattan Bank and
certain other parties named therein.
"Current Assets" as of any date shall mean the consolidated current assets
of the Seller as of such date determined in accordance with generally accepted
accounting principles, consistently applied.
"Current Liabilities" as of any date shall mean the consolidated current
liabilities of the Seller as of such date determined in accordance with
generally accepted accounting principles, consistently applied.
"Customers" shall have the meaning set forth in Section 2.30.
"DeMinimis Claims" shall mean Buyer Warranty Claims (other than any such
claim relating to title to the Subject Assets) which are each in an amount not
in excess of $1,000 and which, in the aggregate, are in an amount not in excess
of $5,000.
"ERISA" shall have the meaning set forth in Section 2.25(c).
"Employee Program" shall have the meaning set forth in Section 2.25.
"Environmental Law" shall have the meaning set forth in Section 2.26.
"Excluded Assets" shall have the meaning set forth in Section 1.2.
37
<PAGE>
"Excluded Liabilities" shall have the meaning set forth in Section 1.3.
"Financial Statements" shall have the meaning set forth in Section 2.9(a).
"HSR Act" shall have the meaning set forth in Section 2.31.
"HSR Filings" shall have the meaning set forth in Section 4.1(f).
"Hazardous Material" shall have the meaning set forth in Section 2.26.
"Hazardous Waste" shall have the meaning set forth in Section 2.26.
"IRS" shall have the meaning set forth in Section 2.10.
"Incentive Plan" shall have the meaning set forth in Section 4.2(b).
"Indemnification Cut-Off Date" shall have the meaning set forth in Section
6.2(c).
"Intellectual Property Rights" shall have the meaning set forth in Section
2.14.
"Intercompany Loans" shall have the meaning set forth in Section 1.2(d).
"Interim Balance Sheets" shall have the meaning set forth in Section
2.9(a).
"Leases" shall have the meaning set forth in Section 2.8(b).
"Leased Real Property" shall have the meaning set forth in Section 2.8(b).
"Liabilities" shall have the meaning set forth in Section 1.3.
"Multi-employer Plan" shall have the meaning set forth in Section 2.25.
"Notes" shall have the meaning set forth in Section 1.5(c).
"PCBs" shall have the meaning set forth in Section 2.26(c).
"Permitted Encumbrances" shall have the meaning set forth in Section
2.8(b).
"Person" shall mean any natural person or any corporation, partnership,
association, trust, unincorporated organization or governmental agency or
bureau.
"Purchase Price" shall have the meaning set forth in Section 1.5.
38
<PAGE>
"Seller Shares" shall have the meaning set forth in Section 4.2(b).
"Seller" shall have the meaning set forth in the preamble.
"Seller Common Stock" shall have the meaning set forth in Section 2.4(a).
"Seller Indemnified Party" and "Seller Indemnified Parties" shall have the
respective meanings set forth in Section 6.3.
"Seller Warranty Claims" shall have the meaning set forth in Section
6.4(a).
"Stockholder" and "Stockholders" shall have the respective meanings set
forth in the preamble.
"Subject Assets" shall have the meaning set forth in Section 1.1.
"Subordination Agreement" shall mean that certain Intercreditor and
Subordination Agreement, dated November 13, 1997, by and among ASI, Buyer, The
Chase Manhattan Bank and certain other parties named therein.
"Suppliers" shall have the meaning set forth in Section 2.30.
"Taxes" shall have the meaning set forth in Section 2.10.
"Tax Returns" shall have the meaning set forth in Section 2.10.
SECTION 8. MISCELLANEOUS.
- ------------------------
8.1 Bulk Sales Law. Buyer waives compliance by the Seller with the
--------------
provisions of any applicable bulk sales, fraudulent conveyance or other law for
the protection of creditors in connection with the transfer of the Subject
Assets under this Agreement.
8.2 Fees and Expenses.
-----------------
(a) Each of the parties will bear its own expenses in connection with
the negotiation and the consummation of the transactions contemplated by this
Agreement, and no expenses of the Seller or any Stockholder relating in any way
to the purchase and sale of the Subject Assets hereunder and the transactions
contemplated hereby, including without limitation legal, accounting or other
professional expenses, shall be charged to or paid by Buyer or included in any
of the Liabilities.
(b) Seller will pay all costs incurred, whether at or subsequent to
the Closing,
39
<PAGE>
in connection with the transfer of the Subject Assets to Buyer as contemplated
by this Agreement, including without limitation, all sales, use, excise, real
property and other transfer taxes and charges applicable to such transfer; all
recording charges and fees applicable to the recordation of deeds and mortgages
and other instruments of transfer; and all costs of obtaining or transferring
permits, registrations, applications and other tangible and intangible
properties. Buyer will pay all premiums, charges and costs of obtaining and
providing surveys, appraisals, UCC and title searches and title insurance for
the benefit of Buyer with respect to the Subject Assets.
(c) In the event that the parties are required to make HSR Filings,
the Buyer, on one hand, and the Seller, on the other, shall share the filing
fees relating thereto equally.
8.3 Governing Law. This Agreement shall be construed under and governed
-------------
by the internal laws of the State of Connecticut without regard to its conflict
of laws provisions.
8.4 Notices. Any notice, request, demand or other communication required
-------
or permitted hereunder shall be in writing and shall be deemed to have been
given if delivered or sent by facsimile transmission, upon receipt, or if sent
by registered or certified mail, upon the sooner of the date on which receipt is
acknowledged or the expiration of three days after deposit in United States post
office facilities properly addressed with postage prepaid. All notices to a
party will be sent to the addresses set forth below or to such other address or
person as such party may designate by notice to each other party hereunder:
TO BUYER: ASI Solutions Incorporated
- -------- 780 Third Avenue
New York, NY 10017
Attn: Bernard F. Reynolds
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: David F. Dietz, P.C.
TO SELLER AND McLagan Partners Incorporated
- ------------- 4 Stamford Plaza
STOCKHOLDERS: Suite 400
- ------------ 107 Elm Street
Stamford, CT 06901
Attn: President
40
<PAGE>
With a copy to: Cummings & Lockwood
Four Stamford Plaza
P.O. Box 120
107 Elm Street
Stamford, CT 06904-0120
Attn: Thomas J. Freed, Esq.
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
8.5 Entire Agreement. This Agreement, including the schedules and
----------------
exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such schedules and exhibits or in such
other writings; and all inducements to the making of this Agreement relied upon
by either party hereto have been expressed herein or in such schedules or
exhibits or in such other writings.
8.6 Assignability; Binding Effect. After the Closing, Buyer's rights and
-----------------------------
obligations hereunder shall be freely assignable including, without limitation,
pursuant to the grant of a security interest herein to the Buyer's rights
hereunder to The Chase Manhattan Bank, as the administrative agent for certain
senior lenders to ASI and the Buyer. This Agreement may not be assigned by the
Seller or any Stockholder without the prior written consent of Buyer. This
Agreement shall be binding upon and enforceable by, and shall inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.
8.7 Captions and Gender. The captions in this Agreement are for
-------------------
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
8.8 Execution in Counterparts. For the convenience of the parties and to
-------------------------
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
8.9 Amendments. This Agreement may not be amended or modified, nor may
----------
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by each party hereto, or in the case of a
waiver, the party waiving compliance.
8.10 Dispute Resolution. Any dispute arising out of or relating to this
------------------
Agreement or the breach, termination or validity hereof shall be finally settled
by arbitration conducted
41
<PAGE>
expeditiously in accordance with the Center for Public Resources Rules for
Nonadministered Arbitration of Business Disputes (the "CPR Rules"). The Center
for Public Resources shall appoint a neutral advisor from its National CPR Panel
having appropriate experience in the matters that are the subject of the dispute
(the "Advisor"). The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. (S)(S)1-16, and judgment upon the award rendered by
the Advisor may be entered by any court having jurisdiction thereof. The place
of arbitration shall be New York, New York.
Such proceedings shall be administered by the Advisor in accordance with
the CPR Rules as he/she deems appropriate, however, such proceedings shall be
guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be accomplished
within forty-five (45) days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the Advisor which shall consist of a summary
presentation by each side of not more than three hours; such hearings to take
place on one or two days at a maximum; and
(d) decision to be rendered not more than ten (10) days following
such hearings.
8.11 Consent to Jurisdiction. Solely for the purpose of allowing a party
-----------------------
to enforce its rights pursuant to Section 8.10, each of the parties hereby
consents to personal jurisdiction, service of process and venue in the federal
or state courts of New York.
8.12 Severability. The parties hereto agree that, in the event that any
------------
provision of this Agreement or the application of any such provision to any
party is held by a court of competent jurisdiction to by contrary to law, the
provision in question shall be construed so as to be lawful and the remaining
provisions of this Agreement shall remain in full force and effect.
8.13 No Third-Party Beneficiaries. This Agreement is intended solely for
----------------------------
the benefit of the parties hereto. Neither this Agreement nor any of the
transactions contemplated hereby shall be deemed to create or enlarge any rights
in any Person not a party hereto.
8.14 Publicity and Disclosures. Neither the Seller nor any Stockholder
-------------------------
shall make any press release or other public announcement (written, oral or
otherwise) in respect of this Agreement or the transactions contemplated herein
without the prior written consent of Buyer.
8.15 Attorneys' Fees. In the event of any dispute hereunder between the
---------------
parties hereto, the prevailing party in any litigation or arbitration instituted
hereunder shall be entitled
42
<PAGE>
to recover from the other its costs and expenses thereof, including,
specifically, its reasonable attorneys' fees.
8.16 Intentionally Omitted.
---------------------
8.17 Remedies. Each of the parties to this Agreement acknowledges and
--------
agrees that remedies at law may be inadequate with respect to any breach of any
provision of this Agreement. The provisions of Section 8.10 notwithstanding,
each of the parties hereto shall be entitled to enforce the terms and provisions
of this Agreement by a decree of specific performance or injunctive relief
requiring the fulfillment of obligations under this Agreement in addition to all
other remedies provided hereunder or available to the parties at law or in
equity.
8.18 ASI Guaranty. Subject to the provisions of that certain Intercreditor
------------
and Subordination Agreement, dated as of November 13, 1997 (the "Subordination
Agreement"), by and between ASI, The Chase Manhattan Bank and certain other
parties named therein, ASI by its signature below, hereby unconditionally
guarantees the payment or fulfillment when due of all obligations of the Buyer
now or hereafter existing under this Agreement and each Exhibit to this
Agreement to which the Buyer is or becomes a party (the "Obligations"). The
obligations of the undersigned under this guaranty are independent of the
Obligations, and a separate action or actions may be brought and prosecuted
against the undersigned to enforce this guaranty, irrespective of whether any
action is brought against Buyer or whether Buyer is joined in such action. This
guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Obligations is rescinded or must otherwise
be returned by a recipient upon the insolvency, bankruptcy or reorganization of
Buyer or for any other reason, all as though such payment had not been made.
43
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
BUYER:
-----
McLAGAN PARTNERS, INC.
By: /s/ Bernard F. Reynolds
------------------------------------------
Name: Bernard F. Reynolds
Title: President
SELLER:
------
McLAGAN PARTNERS INCORPORATED
By: /s/ Albertus W. van den Broek
------------------------------------------
Name: Albertus W. van den Broek
Title: Executive Vice President
STOCKHOLDERS:
------------
/s/ C. Bruce McLagan
----------------------------------------------
C. Bruce McLagan
/s/ F. Samuel Smith
----------------------------------------------
F. Samuel Smith
/s/ Albertus W. van den Broek
----------------------------------------------
Albertus W. van den Broek
<PAGE>
/s/ Donald B. Shackelford
----------------------------------------------
Donald B. Shackelford
/s/ Byram E. Dickes
----------------------------------------------
Byram E. Dickes
For the purposes of Section 8.18 only
ASI SOLUTIONS INCORPORATED
By: /s/ Bernard F. Reynolds
------------------------------------------
Name: Bernard F. Reynolds
Title: Chief Executive Officer
<PAGE>
EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
by and among
MCLAGAN PARTNERS INTERNATIONAL, INC.
AS BUYER
MCLAGAN PARTNERS INTERNATIONAL INCORPORATED
AS SELLER
and
SELLER'S STOCKHOLDERS
DATED AS OF NOVEMBER 13, 1997
<PAGE>
ASSET PURCHASE AGREEMENT
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. PURCHASE AND SALE OF ASSETS........................................... 1
- ---------- ---------------------------
1.1 Sale of Assets...................................................................... 1
--------------
1.2 Excluded Assets..................................................................... 2
---------------
1.3 Assumption of Liabilities........................................................... 3
-------------------------
1.4 Time and Place of Closing........................................................... 4
-------------------------
1.5 Purchase Price and Payment.......................................................... 5
--------------------------
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND
- ---------- --------------------------------------------
STOCKHOLDERS.......................................................... 5
------------
2.1 Making of Representations and Warranties............................................ 5
----------------------------------------
2.2 Organization and Qualifications of Seller........................................... 5
-----------------------------------------
2.3 Subsidiaries........................................................................ 5
------------
2.5 Capital Stock of Seller; Beneficial Ownership of Seller............................. 5
-------------------------------------------------------
2.6 Intentionally Omitted............................................................... 6
---------------------
2.7 Authority of the Seller and the Stockholders........................................ 6
--------------------------------------------
2.8 Real and Personal Property.......................................................... 7
--------------------------
2.9 Financial Statements................................................................ 9
--------------------
2.10 Taxes...............................................................................11
-----
2.11 Absence of Certain Changes..........................................................12
--------------------------
2.12 Ordinary Course.....................................................................13
---------------
2.13 Banking Relations...................................................................13
-----------------
2.14 Intellectual Property...............................................................13
---------------------
2.15 Contracts...........................................................................15
---------
2.16 Litigation..........................................................................17
----------
2.17 Compliance with Laws................................................................17
--------------------
2.18 Insurance...........................................................................17
---------
2.19 Warranty or Other Claims............................................................17
------------------------
2.20 Powers of Attorney..................................................................17
------------------
2.21 Finder's Fee........................................................................17
------------
2.22 Permits; Burdensome Agreements......................................................17
------------------------------
2.23 Corporate Records; Copies of Documents..............................................18
--------------------------------------
2.24 Transactions with Related Parties...................................................18
---------------------------------
2.25 Employee Benefit Programs...........................................................18
-------------------------
2.26 Environmental Matters...............................................................20
---------------------
2.27 Directors and Officers..............................................................21
----------------------
2.28 Backlog.............................................................................21
-------
2.29 Employees; Labor Matters............................................................21
------------------------
2.30 Customers and Suppliers.............................................................22
-----------------------
</TABLE>
(i)
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
2.31 Hart-Scott-Rodino Matters...........................................................22
-------------------------
2.32 Disclosure..........................................................................23
----------
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER.........................................23
- ---------- ---------------------------------------
3.1 Making of Representations and Warranties............................................23
----------------------------------------
3.2 Organization of Buyer...............................................................23
---------------------
3.3 Authority of Buyer..................................................................23
------------------
3.4 Litigation..........................................................................24
----------
3.5 Finder's Fee........................................................................24
------------
3.6 Hart-Scott-Rodino Matters...........................................................24
-------------------------
3.7 Securities and Exchange Commission Filings..........................................24
------------------------------------------
SECTION 4. CONDITIONS......................................................................24
- ---------- ----------
4.1 Conditions to the Obligations of Buyer..............................................24
--------------------------------------
4.2 Conditions to Obligations of the Seller.............................................26
---------------------------------------
SECTION 5. SURVIVAL OF WARRANTIES; RIGHTS, OBLIGATIONS AND ACTIONS
- ---------- -------------------------------------------------------
SUBSEQUENT TO CLOSING...........................................................28
---------------------
5.1 Survival of Warranties..............................................................28
----------------------
5.2 Payment of Obligations..............................................................28
----------------------
5.3 Tax Returns.........................................................................28
-----------
5.4 Books and Records...................................................................28
-----------------
5.5 Further Assurances..................................................................28
------------------
5.6 Allocation of Purchase Price........................................................29
----------------------------
5.7 Hart-Scott-Rodino Filings...........................................................29
-------------------------
5.8 Sellers' Employees..................................................................29
------------------
5.9 Intentionally Omitted...............................................................29
---------------------
SECTION 6. INDEMNIFICATION.................................................................30
- ---------- ---------------
6.1 Indemnification by the Seller and the Stockholders..................................30
--------------------------------------------------
6.2 Limitations on Indemnification by the Seller and the Stockholders...................30
-----------------------------------------------------------------
6.3 Indemnification by Buyer............................................................31
------------------------
6.4 Limitations on Indemnification by Buyer.............................................32
---------------------------------------
6.5 Notice; Defense of Claims...........................................................33
-------------------------
6.6 Satisfaction of Seller and Stockholder Indemnification Obligations..................33
------------------------------------------------------------------
SECTION 7. DEFINITIONS.....................................................................34
- ---------- -----------
SECTION 8. MISCELLANEOUS...................................................................36
- ---------- -------------
8.1 Bulk Sales Law......................................................................36
--------------
</TABLE>
(ii)
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
8.2 Fees and Expenses...................................................................37
-----------------
8.3 Governing Law.......................................................................37
-------------
8.4 Notices.............................................................................37
-------
8.5 Entire Agreement....................................................................38
----------------
8.6 Assignability; Binding Effect.......................................................38
-----------------------------
8.7 Captions and Gender.................................................................38
------------------
8.8 Execution in Counterparts...........................................................39
-------------------------
8.9 Amendments..........................................................................39
----------
8.10 Dispute Resolution..................................................................39
------------------
8.11 Consent to Jurisdiction.............................................................39
-----------------------
8.12 Severability........................................................................39
------------
8.13 No Third-Party Beneficiaries........................................................40
----------------------------
8.14 Publicity and Disclosures...........................................................40
-------------------------
8.15 Attorneys' Fees.....................................................................40
---------------
8.16 Intentionally Omitted...............................................................40
---------------------
8.17 Remedies............................................................................40
--------
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES
---------
<S> <C>
Schedule 1.1 Certain Subject Assets
Schedule 1.2(g) Excluded Personal Property
Schedule 1.3 Assumed Contracts
Schedule 2.2 Foreign Qualifications
Schedule 2.5(b) Capitalization
Schedule 2.7(a) Liens
Schedule 2.8(b) Leased Real Property
Schedule 2.8(c) Personal Property
Schedule 2.9 Financial Statements
Schedule 2.10 Taxes
Schedule 2.11 Certain Changes
Schedule 2.13 Banking Relations
Schedule 2.14 Intellectual Property Rights
Schedule 2.15 Contracts
Schedule 2.16 Litigation
Schedule 2.17 Compliance with Laws
Schedule 2.18 Insurance
Schedule 2.19 Product Liability
Schedule 2.22 Permits
Schedule 2.24 Transactions with Related Parties
Schedule 2.25 Employee Benefit Programs
Schedule 2.26 Environmental Matters
Schedule 2.27 Directors and Officers
Schedule 2.28 Backlog
Schedule 2.29 Labor Matters
Schedule 2.30 Customers and Suppliers
Schedule 4.1(k) Employees Signing Employment and Non-Competition Agreements
Schedule 4.2(b) Seller Stock Issuances
Schedule 4.2(c) Participants in Incentive Compensation Plan
Schedule 4.2(d) Intentionally Omitted
Schedule 5.8 Employees
Schedule 5.9 Intentionally Omitted
</TABLE>
(iv)
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
--------
<S> <C>
Exhibit A - Stockholders and Stockholdings
Exhibit B - Intentionally Omitted
Exhibit C - Form of Assignment and Assumption Agreement
Exhibit D - Form of Bill of Sale
Exhibit E - Form of Opinion of Cummings & Lockwood
Exhibit F - Intentionally Omitted
Exhibit G - Intentionally Omitted
Exhibit H - Intentionally Omitted
Exhibit I - Form of Opinion of Goodwin, Procter & Hoar LLP
</TABLE>
(v)
<PAGE>
ASSET PURCHASE AGREEMENT
AGREEMENT entered into as of November 13, 1997 by and among McLagan
Partners International, Inc., a Delaware corporation ("Buyer") and a wholly-
owned subsidiary of McLagan Partners, Inc., a Delaware corporation ("New
McLagan") which is a wholly-owned subsidiary of ASI Solutions Incorporated
("ASI"), McLagan Partners Incorporated, an Illinois corporation ("Seller"), and
the holders of all of the outstanding capital stock of Seller, as set forth on
Exhibit A hereto (each, a "Stockholder" and together, the "Stockholders").
- ---------
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, contemporaneously herewith certain affiliates of Buyer are
entering into separate asset purchase agreements with certain affiliates of the
Seller;
WHEREAS, subject to the terms and conditions hereof, the Seller desires to
sell substantially all of its assets to Buyer; and
WHEREAS, subject to the terms and conditions hereof, Buyer desires to
purchase said assets of the Seller for the consideration specified herein and
the assumption by Buyer of certain liabilities and obligations of the Seller.
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS.
- ---------------------------------------
1.1 Sale of Assets. Subject to the provisions of this Agreement, the
--------------
Seller agrees to sell and Buyer agrees to purchase, at the Closing (as defined
in Section 1.4 hereof), all of the properties, assets and businesses of the
Seller of every kind and description, tangible and intangible, real, personal or
mixed, and wherever located, including, without limitation, the following
assets:
(a) All assets (other than Current Assets) shown or reflected on
the Base Balance Sheets (as defined in Section 2.9);
(b) The goodwill of Seller;
(c) All rights under existing leases, contracts, licenses,
permits, sales and purchase agreements, and other agreements and business
arrangements which constitute Assumed Contracts (as defined in Section 1.3);
<PAGE>
(d) The exclusive rights to use the name "McLagan Partners
International Incorporated," and any translations or derivations thereof;
(e) Office furniture and furnishings;
(f) Inventory;
(g) Equipment and supplies;
(h) Patents and patent applications, trademarks and trademark
applications, trade names and all other Intellectual Property Rights (as defined
in Section 2.14);
(i) Sales records and customer and vendor lists;
(j) Marketing, advertising and promotional materials; and
(k) Tax returns of Seller and corporate records of Seller relating
to accounts payable, payroll and accounts receivable for periods prior to the
Closing; provided, however, that Seller shall, after the Closing, be afforded
reasonable access thereto.
The assets, properties and businesses of the Seller sold to and purchased
by Buyer under this Agreement are sometimes referred to as the "Subject Assets."
Schedule 1.1 hereto contains a list of the following Subject Assets: (a) those
- ------------
set forth in Section 1.1(a), (b) those set forth in Section 1.1 (e), (c) all
equipment of the Seller and (d) the Seller's customer lists and vendor lists.
1.2 Excluded Assets. Notwithstanding Section 1.1 above, nothing herein
---------------
contained shall operate as a sale, transfer, conveyance or assignment to Buyer
of any of the following assets and property of Seller (the "Excluded Assets"):
(a) Assets and property disposed of since the date of the Base
Balance Sheet in the ordinary course of business and such other assets as have
been or are disposed of pursuant to this Agreement;
(b) Corporate franchise, stock record books, corporate record
books containing minutes of meetings of directors and stockholders and such
other records as have to do exclusively with Seller's organization or stock
capitalization (collectively, the "Corporate Records"); provided, however, that
Seller shall provide Buyer prior to the Closing with true, correct and complete
copies of each of the foregoing;
(c) All Current Assets of Seller as of the Closing Date and all
accounts receivable of Seller on or prior to the date of Closing regardless of
whether or not in accordance with generally accepted accounting principles;
2
<PAGE>
(d) All rights under any loans or other evidence of indebtedness,
other than the Stockholder Loans (as defined below), between Seller, on the one
hand, and any affiliate of the Seller, on the other hand (the "Intercompany
Loans");
(e) Refunds for taxes paid by Seller before the Closing or for
taxes paid by Seller after the Closing in respect of the period before the
Closing;
(f) Security deposits of the Seller, if any;
(g) those items of personal property of the Stockholders set forth
on Schedule 1.2(g);
---------------
(h) Any rights which the Seller may have to enforce the
obligations of the Buyer pursuant to this Agreement and the other documents and
agreements contemplated herein; and
(i) Insurance policies and rights and claims thereunder, including
proceeds or cash surrender value; and
(j) Any rights under pension, severance or other plans maintained
by Seller in any country other than the United States.
1.3 Assumption of Liabilities. Upon the sale and purchase of the Subject
-------------------------
Assets, Buyer shall assume and agree to pay or discharge when due in accordance
with their respective terms the following liabilities (the "Liabilities"): all
liabilities and obligations arising or to be performed after the Closing Date
(as defined in Section 1.4) under those contracts listed on Schedule 1.3 hereto
------------
(the "Assumed Contracts"); provided, however, that except for the Liabilities,
Buyer shall not assume and shall not pay any liability, cost or expense of
Seller, including, without limitation, the following liabilities:
(a) Any liability of Seller relating to, arising out of, or
incurred in connection with, the operation of the businesses of Seller on or
prior to the Closing Date;
(b) Liabilities incurred by the Seller in connection with this
Agreement and the transactions provided for herein, including, without
limitation, counsel and accountants' fees, and expenses pertaining to the
performance by the Seller of its obligations hereunder (except that Buyer shall
pay all fees and expenses of Coopers & Lybrand L.L.P. incurred in connection
with the transactions contemplated by this Agreement);
(c) Intentionally Omitted.
---------------------
(d) Liabilities of the Seller pursuant to any Intercompany Loan;
3
<PAGE>
(e) Current Liabilities of the Seller as of the Closing Date;
(f) Taxes (as defined in Section 2.10 hereof) of the Seller
(whether relating to periods before or after the transactions contemplated in
this Agreement or incurred by the Seller in connection with this Agreement and
the transactions provided for herein or otherwise), including, without
limitation, any liability for (i) Taxes arising in connection with any built-in
gain of Seller or (ii) Taxes arising out of the inclusion of Seller in any group
filing consolidated, combined or unitary tax returns or arising out of any
transferee liability;
(g) Liabilities of Seller with respect to (i) any severance pay,
accrued vacation, accrued and unpaid wages, salaries, commissions, bonuses or
other direct compensation for any services performed for it prior to the Closing
Date or amounts required to be reimbursed to any employees with respect to any
period prior to the Closing Date, (ii) any sickness, disability and other group
insurance premiums or claims incurred by or relating to anyone who does not
become an employee of Buyer, or (iii) any such premiums or claims incurred on or
prior to the Closing by any individual who becomes an employee of Buyer as of
the Closing;
(h) Liabilities of Seller to its dissenting stockholders, if any,
under the Illinois Business Corporation Act;
(i) Liabilities of Seller with respect to any options, warrants,
agreements or convertible or other rights to acquire any shares of its capital
stock of any class;
(j) Liabilities in connection with or relating to all actions,
suits, claims, proceedings, demands, assessments and judgments against the
Seller or any of the Stockholders and all costs, losses, liabilities, damages,
deficiencies and expenses (whether or not arising out of third-party claims),
including, without limitation, interest, penalties, reasonable attorneys' and
accountants' fees and all amounts paid in investigation, defense or settlement
of any of the foregoing; and
(k) Liabilities under pension, severance and other plans
maintained by Seller, or any liabilities of Seller to any current or former
employee of Seller under applicable law, in any country other than the United
States.
The liabilities which are not assumed by Buyer under this Agreement are
hereinafter sometimes referred to as the "Excluded Liabilities."
1.4 Time and Place of Closing. The closing of the purchase and sale
-------------------------
provided for in this Agreement (herein called the "Closing") shall be held at
the offices of Goodwin, Procter & Hoar LLP at 599 Lexington Avenue, New York,
New York at 10:00 a.m. (local time) on November 13, 1997, or at such other
place, date or time as may be fixed by mutual agreement of the parties hereto
(the date of the Closing being referred to herein as the "Closing Date").
4
<PAGE>
1.5 Purchase Price and Payment. In consideration of the sale by the
--------------------------
Seller to Buyer of the Subject Assets, subject to the satisfaction of all of the
conditions contained herein, Buyer will, at the Closing:
(a) Deliver to Seller One Hundred Fifty Thousand Dollars
($150,000) in cash, to be paid by wire transfer of immediately available funds
(the "Purchase Price").
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDERS.
- ---------------------------------------------------------------------
2.1 Making of Representations and Warranties. As a material inducement
----------------------------------------
to Buyer to enter into this Agreement and consummate the transactions
contemplated hereby, the Seller hereby makes to Buyer the representations and
warranties contained in this Section 2 and the representations and warranties
set forth in Section 2.7(b) are also made severally by each Stockholder with
respect to himself, herself or itself.
2.2 Organization and Qualifications of Seller. The Seller is a
-----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois with full corporate power and authority to own or lease
its properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is currently conducted or
proposed to be conducted. The copies of Seller's Articles of Incorporation, as
amended to date, certified by the Secretary of State of the State of Illinois,
and of Seller's by-laws, as amended to date, certified by the Secretary of
Seller, and heretofore delivered to Buyer's counsel, are complete and correct,
and no amendments thereto are pending or contemplated. The Seller is not in
violation of any term of its Articles of Incorporation or by-laws. The Seller is
duly qualified to do business as a foreign corporation in each of the states
listed in Schedule 2.2, and the Seller is not required to be licensed or
------------
qualified to conduct its business or own its property in any other jurisdiction.
2.3 Subsidiaries. The Seller does not have any subsidiaries nor does the
------------
Seller own any securities issued by any other business organization or
governmental authority, except U.S. Government securities, bank certificates of
deposit and money market accounts acquired as short-term investments in the
ordinary course of its business. The Seller does not own or have any direct or
indirect interest in or control over any corporation, partnership, joint venture
or entity of any kind.
2.4 Intentionally Omitted.
---------------------
2.5 Capital Stock of Seller; Beneficial Ownership of Seller.
-------------------------------------------------------
(a) The authorized capital stock of Seller consists of 15,000
shares of common stock, no par value ("Seller Common Stock"), of which 1,200
shares are duly and
5
<PAGE>
validly issued, outstanding, fully paid and non-assessable and of which 13,800
shares are authorized but unissued. There are no outstanding options, warrants,
rights, commitments, preemptive rights or agreements of any kind for the
issuance or sale of, or outstanding securities convertible into or exchangeable
for, any additional shares of capital stock of any class of Seller. None of
Seller's capital stock has been issued in violation of any federal or state law.
There are no voting agreements, trusts, proxies or other agreements, instruments
or undertakings with respect to the voting of Seller's capital stock to which
Seller or any stockholder of Seller is a party.
(b) Each of the stockholders of Seller owns beneficially and of
record the number of shares of Seller Common Stock set forth opposite such
Stockholder's name on Schedule 2.5(b) hereto.
---------------
2.6 Intentionally Omitted.
---------------------
2.7 Authority of the Seller and the Stockholders.
--------------------------------------------
(a) The Seller has full right, authority and power to enter into
this Agreement and each agreement, document and instrument to be executed and
delivered by the Seller pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Seller of this Agreement and each such other agreement,
document and instrument have been duly authorized by all necessary action of the
Seller and its stockholders and no other action on the part of the Seller or any
of its stockholders is required in connection therewith. This Agreement and each
agreement, document and instrument executed and delivered by the Seller pursuant
to this Agreement constitutes, or when executed and delivered will constitute,
valid and binding obligations of the Seller enforceable in accordance with their
terms, except as their enforceability may be limited by bankruptcy or other laws
affecting creditors' rights generally or by principles of equity. The execution,
delivery and performance by the Seller of this Agreement and each such
agreement, document and instrument:
(i) does not and will not violate any provision of the
Articles of Incorporation or by-laws of the Seller;
(ii) does not and will not violate any laws of the United
States or any state or other jurisdiction applicable to the Seller or
require the Seller to obtain any approval, consent or waiver of, or make
any filing with, any person or entity (governmental or otherwise) that has
not been obtained or made; and
(iii) does not and will not result in a breach of, constitute
a default under, accelerate any obligation under, or give rise to a right
of termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree,
6
<PAGE>
determination or arbitration award to which the Seller is a party or by
which the property of the Seller is bound or affected, or result in the
creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the Subject Assets, except as
specifically identified on Schedule 2.7(a).
---------------
(b) Each Stockholder has full right, authority, power and capacity
to enter into this Agreement and each agreement, document and instrument to be
executed and delivered by or on his behalf pursuant to this Agreement and to
carry out the transactions contemplated hereby and thereby. This Agreement and
each agreement, document and instrument executed and delivered by any
Stockholder pursuant to this Agreement constitutes, or when executed and
delivered will constitute, valid and binding obligations of such Stockholder
enforceable in accordance with their respective terms, except as their
enforceability may be limited by bankruptcy or other laws affecting creditors'
rights generally or by principles of equity. The execution, delivery and
performance by each Stockholder of this Agreement and each such agreement,
document and instrument:
(i) does not and will not violate any laws of the United
States or any state or other jurisdiction applicable to such Stockholder or
require such Stockholder to obtain any approval, consent or waiver of, or
make any filing with, any person or entity (governmental or otherwise) that
has not been obtained or made; and
(ii) does not and will not result in a breach of, constitute
a default under, accelerate any obligation under, or give rise to a right
of termination of, any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which such Stockholder is a party or by which the
property of such Stockholder is bound or affected, or result in the
creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the Subject Assets.
2.8 Real and Personal Property.
--------------------------
(a) Owned Real Property. The Seller hereby represents and warrants
-------------------
that it does not own any real property.
(b) Leased Real Property. All of the real property leased by the
--------------------
Seller as tenant or lessee is identified on Schedule 2.8(b) (collectively
---------------
referred to herein as the "Leased Real Property"). The Seller hereby makes the
following representations and warranties with respect to the Leased Real
Property:
(i) Leases. The copies of the leases of the Leased Real
------
Property (collectively, the "Leases") delivered by Seller to Buyer and the
information with respect to each of the Leases set forth on Schedule 2.8(b)
---------------
is complete, accurate, true and correct.
7
<PAGE>
With respect to each of the Leases, except as set forth on Schedule 2.8(b):
---------------
(A) each of the Leases is in full force and effect and
has not been modified, amended or altered, in writing or otherwise;
(B) to the knowledge of the Seller, all material
obligations of the landlord or lessor under the Leases which have
accrued have been performed, and to the knowledge of the Seller, no
landlord or lessor is in default under any Lease;
(C) all material obligations of the tenant or lessee
under the Leases which have accrued have been performed, the Seller
is not in default under any Lease, and no circumstance presently
exists which, with notice or the passage of time, or both, would
give rise to a default by the Seller; and
(D) the Seller has obtained the consent of each
landlord or lessor under any Leases whose consent is required to the
assignment or transfer of the Leased Real Property to Buyer, and
such transfer will not give any landlord or lessor under any Lease
any remedy, including, without limitation, any right to declare a
default under any Lease.
(ii) Title and Description. The Seller holds a good, clear,
---------------------
marketable, valid and enforceable leasehold interest in the Leased Real
Property pursuant to the Leases, subject only to the right of reversion of
the landlord or lessor under the Leases, free and clear of all other prior
or subordinate interests, including, without limitation, mortgages, deeds
of trust, ground leases, leases, subleases, assessments, tenancies, claims,
covenants, conditions, restrictions, easements, judgments or other
encumbrances or matters affecting title, and free of encroachments onto or
off of the Leased Real Property, except for (x) easements, covenants,
restrictions and similar encumbrances that do not and could not interfere
with the use of the Leased Real Property as currently used and improved,
and (y) minor encroachments that do not and could not adversely affect the
value or use of the Leased Real Property as currently used and improved and
that could be removed without material cost ((x) and (y) are collectively
referred to as "Permitted Encumbrances"), and except for matters set forth
on Schedule 2.8(b).
---------------
(iii) Condition. Except as set forth on Schedule 2.8(b), to
--------- ---------------
the knowledge of the Seller, there are no material defects in the physical
condition of any improvements constituting a part of the Leased Real
Property, including, without limitation, structural elements, mechanical
systems, roofs or parking and loading areas, and all of such improvements
are in reasonable working condition and repair, have been maintained in
accordance with Seller's reasonable obligations under the Leases and are
free from infestation by rodents or insects. Except as set forth on
Schedule 2.8(b), to the knowledge of the Seller, none of the Leased Real
---------------
Property located in the United States of
8
<PAGE>
America is subject to special flood or mudslide hazards or within the 100
year flood plain. To the knowledge of the Seller, all water, sewer, gas,
electric, telephone, drainage and other utilities required by law or
necessary for the current or planned operation of the Leased Real Property
have been installed and connected pursuant to valid permits, and are
sufficient to service the Leased Real Property.
(iv) Compliance with Law; Government Approvals. The Seller
-----------------------------------------
has not received notice from any governmental authority of any violation of
any law, ordinance, regulation, license, permit or authorization issued
with respect to any of the Leased Real Property that has not been corrected
heretofore, and, to the knowledge of the Seller, no such violation now
exists which could have an adverse effect on the operation or value of any
of the Leased Real Property. To the knowledge of the Seller, all
improvements constituting a part of the Leased Real Property are in
compliance in all respects with all applicable laws, ordinances,
regulations, licenses, permits and authorizations, and to the knowledge of
the Seller there are presently in effect all licenses, permits and
authorizations required by law, ordinance, or regulation. To the knowledge
of the Seller, there is at least the minimum access required by applicable
subdivision or similar law to the Leased Real Property. The Seller has not
received notice of any pending or threatened real estate tax deficiency or
reassessment or condemnation of all or any portion of any of the Leased
Real Property.
(c) Personal Property. A list of Seller's material machinery,
-----------------
equipment and other tangible personal property is contained on Schedule 2.8(c).
---------------
Except as specifically disclosed in Schedule 1.1 or in the Base Balance Sheet
------------
(as defined in Section 2.9), the Seller has good and marketable title to all of
its personal property. None of such personal property or assets is subject to
any mortgage, pledge, lien, conditional sale agreement, security agreement,
encumbrance or other charge except as specifically disclosed in said Schedule or
in the Base Balance Sheet. The Base Balance Sheet as submitted to the Buyer by
the Seller and restated by Coopers & Lybrand L.L.P., independent public
accountants ("C&L"), in accordance with generally accepted accounting principles
("GAAP") reflects all personal property of the Seller as of the dates thereof
required to be reflected thereon, and the Subject Assets are sufficient assets
for Buyer to continue the business of the Seller as presently conducted by the
Seller. Except as otherwise specified in Schedule 2.8(c), to the knowledge of
---------------
the Seller, all leasehold improvements, furnishings, machinery and equipment of
the Seller are in good repair (subject to ordinary wear and tear), have been
well maintained, and substantially comply with all applicable laws, ordinances
and regulations, and such machinery and equipment is in good working order.
Except as set forth on Schedule 2.8(c), the Seller does not know of any pending
---------------
or threatened change of any such laws, ordinances or regulations which could
adversely affect Seller or its business.
2.9 Financial Statements.
--------------------
(a) The Seller has delivered to Buyer the following financial
statements,
9
<PAGE>
copies of which are attached hereto as Schedule 2.9:
------------
(i) Unaudited balance sheets of the Seller as of December
31, 1994, December 31, 1995, and December 31, 1996, and statements of
income, retained earnings and cash flows for the three fiscal years then
ended, certified by the Seller's chief financial officer or treasurer. The
unaudited balance sheet of the Seller as of December 31, 1996 is sometimes
referred to herein as the "Base Balance Sheet."
(ii) Summarized financial information of the Seller for its
fiscal years ending December 31, 1995, and December 31, 1996, audited and
certified by C&L.
(iii) Unaudited balance sheet of the Seller as of June 30,
1997 (the "Interim Balance Sheet") and statements of income, retained
earnings and cash flows for the period then ended, certified by the
Seller's chief financial officer or treasurer. The Base Balance Sheet and
the Interim Balance Sheet are sometimes referred to herein as the
"Financial Statements."
The Financial Statements (as submitted to the Buyer by the Seller and
restated by C&L in accordance with GAAP) are complete and correct in all
material respects, and present fairly in all material respects the
financial condition of the Seller at the dates of said Financial Statements
and the results of its operations and its cash flows for the periods
covered thereby (subject, in the case of unaudited financial statements, to
normal year-end adjustments).
(b) Except as disclosed on Schedule 2.9, as of the date of the
------------
Base Balance Sheet, the Seller did not have any liabilities of any nature,
whether accrued, absolute, contingent or otherwise, asserted or unasserted,
known or unknown (including without limitation liabilities as guarantor or
otherwise with respect to obligations of others, or liabilities for taxes due or
then accrued or to become due or contingent or potential liabilities relating to
activities of the Seller or the conduct of its business prior to the date of the
Base Balance Sheet regardless of whether claims in respect thereof had been
asserted as of such date), except liabilities stated or adequately reserved
against on the Base Balance Sheet or immaterial liabilities incurred in the
ordinary course of the Seller's business which are not required to be reflected
in the Base Balance Sheet (as submitted to the Buyer by the Seller and restated
by C&L in accordance with GAAP) or the notes thereto.
(c) Except as disclosed on Schedule 2.9, as of the date hereof,
------------
the Seller does not have any liabilities of any nature, whether accrued,
absolute, contingent or otherwise, asserted or unasserted, known or unknown
(including without limitation liabilities as guarantor or otherwise with respect
to obligations or others, or liabilities for taxes due or accrued or to become
due or contingent or potential liabilities relating to activities of the Seller
or the conduct of its business prior to the date hereof, regardless of whether
claims in respect thereof have been asserted as of the date hereof), except
liabilities (i) stated or adequately reserved against on the
10
<PAGE>
Base Balance Sheet or the Interim Balance Sheet (as submitted to the Buyer by
the Seller and restated by C&L in accordance with GAAP), or (ii) disclosed
herein or reflected on Schedule 2.9(c) hereto or (iii) incurred after June 30,
---------------
1997 in the ordinary course of business by the Seller and consistent with the
terms of this Agreement.
2.10 Taxes.
-----
(a) The Seller has in accordance with applicable law filed all
federal, state, local and foreign tax returns required to be filed by it through
the date hereof, and all such returns correctly and accurately set forth the
amount of any taxes relating to the applicable period (the "Tax Returns"). A
list of all federal, state, local and foreign income tax returns filed with
respect to the Seller for taxable periods ended on or after December 31, 1994,
is set forth on Schedule 2.10 attached hereto, and said Schedule indicates those
-------------
returns that have been audited or currently are the subject of an audit. The
Seller has delivered to Buyer correct and complete copies of all Tax Returns
listed on said Schedule.
(b) All federal, state, local, foreign, and other taxes,
including, without limitation, income taxes, estimated taxes, alternative
minimum taxes, excise taxes, sales taxes, use taxes, value-added taxes, gross
receipts taxes, franchise taxes, capital stock taxes, employment and payroll-
related taxes, withholding taxes, stamp taxes, transfer taxes, windfall profit
taxes, environmental taxes and property taxes, whether or not measured in whole
or in part by net income, and all deficiencies, or other additions to tax,
interest, fines and penalties owed by it (collectively, "Taxes"), required to be
paid by it through the date hereof whether disputed or not have been paid.
(c) Neither the Internal Revenue Service ("IRS") nor any other
governmental authority is now asserting or, to the knowledge of the Seller,
threatening to assert against the Seller any deficiency or claim for additional
Taxes. No claim has ever been made by an authority in a jurisdiction where the
Seller does not file reports and returns that the Seller is or may be subject to
taxation by that jurisdiction. There are no security interests on any of the
assets of the Seller that arose in connection with any failure (or alleged
failure) to pay any Taxes. The Seller has never entered into a closing
agreement pursuant to Section 7121 of the Code.
(d) Except as set forth on Schedule 2.10, since December 31, 1994,
-------------
there has not been any audit of any tax return filed by the Seller, no audit of
any tax return of the Seller is in progress, and the Seller has not been
notified by any tax authority that any such audit is contemplated or pending.
Except as set forth on Schedule 2.10, no extension of time with respect to any
-------------
date on which a tax return was or is to be filed by the Seller is in force, and
no waiver or agreement by the Seller is in force for the extension of time for
the assessment or payment of any Taxes.
(e) Except as disclosed on Schedule 2.10, the Seller has not ever
-------------
been (and
11
<PAGE>
the Seller has not ever had any liability for unpaid Taxes because it once was)
a member of an "affiliated group" (as defined in Section 1504(a) of the Code).
---------------
Except as set forth on Schedule 2.10, the Seller has not ever filed, and the
Seller has not ever been required to file, a consolidated, combined or unitary
tax return with any other entity. The Seller does not own and the Seller has
never owned a direct or indirect interest in any trust, partnership, corporation
or other entity and therefore Buyer is not acquiring from the Seller an interest
in any such entity. Except as set forth in Schedule 2.10, the Seller is a party
-------------
to any tax sharing agreement.
(f) The Seller is not a "foreign person" within the meaning of
Section 1445 of the Code and Treasury Regulations Section 1.1445-2.
(g) For purposes of this Agreement, all references to Sections of
the Code shall include any predecessor provisions to such Sections and any
similar provisions of federal, state, local or foreign law.
2.11 Absence of Certain Changes. Except as disclosed on Schedule 2.11,
-------------------------- -------------
since the date of the Base Balance Sheet there has not been:
(a) Any change in the financial condition, properties, assets,
liabilities, business or operations of the Seller which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has been materially adverse with respect to the Seller;
(b) Any contingent liability incurred by the Seller as guarantor
or otherwise with respect to the obligations of others or any cancellation of
any material debt or claim owing to, or waiver of any material right of, the
Seller;
(c) Any mortgage, encumbrance or lien placed on any of the
properties of the Seller which remains in existence on the date hereof, except
liens for taxes not yet due and payable;
(d) Any obligation or liability of any nature incurred by the
Seller, whether accrued, absolute, contingent or otherwise, asserted or
unasserted, known or unknown (including without limitation liabilities for Taxes
due or to become due or contingent or potential liabilities relating to products
or services provided by the Seller or the conduct of the Seller's business since
the date of the Base Balance Sheet regardless of whether claims in respect
thereof have been asserted), other than obligations and liabilities incurred in
the ordinary course of business consistent with the terms of this Agreement (it
being understood that product or service liability claims shall not be deemed to
be incurred in the ordinary course of business);
(e) Any purchase, sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of the Seller other than in the ordinary course of
business;
12
<PAGE>
(f) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or business
of the Seller;
(g) Any labor trouble or claim of unfair labor practices involving
the Seller; any change in the compensation payable or to become payable by the
Seller to any of its officers, employees, agents or independent contractors
other than normal merit increases in accordance with its usual practices, or,
except for bonuses or other arrangements to be paid by Seller from the proceeds
of this transaction, any bonus payment or arrangement made to or with any of
such officers, employees, agents or independent contractors;
(h) Any change with respect to the officers or management of the
Seller;
(i) Any payment or discharge of a material lien or liability of
the Seller except in the ordinary course of business;
(j) Any obligation or liability incurred by the Seller to any of
its officers, directors, stockholders or employees, or any loans or advances
made by the Seller to any of its officers, directors, stockholders or employees,
except normal compensation and expense allowances payable to officers or
employees;
(k) Any change in accounting methods or practices, credit
practices or collection policies used by the Seller;
(l) Any other transaction entered into by the Seller other than
transactions in the ordinary course of business and transactions contemplated by
this Agreement; or
(m) Any agreement or understanding, whether in writing or
otherwise, for the Seller to take any of the actions specified in paragraphs (a)
through (l) above.
2.12 Ordinary Course. Since the date of the Base Balance Sheet, the
---------------
Seller has conducted its business only in the ordinary course and consistently
with its prior practices, except for transactions contemplated by this
Agreement.
2.13 Banking Relations. All of the arrangements which the Seller has with
-----------------
any banking institution are completely and accurately described on Schedule
--------
2.13, indicating with respect to each of such arrangements the type of
- ----
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the person or persons authorized in respect thereof.
2.14 Intellectual Property.
---------------------
(a) Except as described on Schedule 2.14, the Seller has
-------------
sufficient ownership of, or sufficient license to use, all Intellectual Property
Rights including, without limitation,
13
<PAGE>
patent, copyright, trade secret, trademark, or other proprietary rights used or
to be used in its business as presently conducted or contemplated. The Seller's
rights in all Intellectual Property Rights set forth on Schedule 2.14 are freely
-------------
transferable. There are no claims of conflict or infringement of any other
person pertaining to any of such Intellectual Property Rights and no proceedings
have been instituted, or are pending or threatened, which challenge the rights
of the Seller in respect thereof.
(b) All patents, patent applications, trademarks, trademark
applications and registrations and registered copyrights which are owned by or
licensed to the Seller or used or to be used by the Seller in its business as
presently conducted or contemplated, and all other Intellectual Property Rights
which are material to the business or operations of the Seller, are listed on
Schedule 2.14. All of such patents, patent applications, trademark
- -------------
registrations, trademark applications and registered copyrights have been duly
registered in, filed in or issued by the United States Patent and Trademark
Office, the United States Register of Copyrights, or the corresponding offices
of other jurisdictions as identified on said Schedule, and have been properly
maintained and renewed in accordance with all applicable provisions of law and
administrative regulations of the United States and each such jurisdiction.
(c) All licenses or other agreements under which the Seller is
granted Intellectual Property Rights are listed on Schedule 2.14. All of said
-------------
licenses or other agreements are in full force and effect, there is no material
default by any party thereto, and, except as set forth on Schedule 2.14, all of
-------------
the Seller's rights thereunder are freely assignable. To the knowledge of the
Seller, the licensors under said licenses and other agreements have and had all
requisite power and authority to grant the rights purported to be conferred
thereby. True and complete copies of all such licenses or other agreements, and
any amendments thereto, have been provided to Buyer.
(d) All licenses or other agreements under which the Seller has
granted to others any Intellectual Property Rights owned or licensed by the
Seller are listed on Schedule 2.14. All of said licenses or other agreements
-------------
are in full force and effect, there is no material default by any party thereto,
and, except as set forth on Schedule 2.14, all of the Seller's rights thereunder
-------------
are freely assignable. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been provided to Buyer.
(e) To the knowledge of the Seller, the Seller has not granted to
any third party any right to manufacture, reproduce, distribute, market or
exploit any of the Seller's products, services or Intellectual Property Rights
or any adaptations, translations, or derivative works based on the Seller's
products, services or Intellectual Property Rights or any portion thereof. To
the knowledge of the Seller, the Seller has at all times used commercially
reasonable efforts to protect its trade secrets or other Intellectual Property
Rights and has not disclosed or otherwise dealt with such items in such a manner
as to cause the loss of such trade secrets or other Intellectual Property Rights
by release thereof into the public domain. To the knowledge of the Seller, the
Seller has at all times used commercially reasonable efforts to
14
<PAGE>
protect the confidentiality of all of its other confidential and proprietary
information and that of third parties which is or has been in its possession.
(f) To the knowledge of the Seller, the present and contemplated
business, activities and products of the Seller do not infringe any Intellectual
Property Rights of any other person. No proceeding charging the Seller with
infringement of any adversely held Intellectual Property Rights has been filed
or has been threatened to be filed. To the Seller's knowledge, there exists no
unexpired patent or patent application which includes claims that would be
infringed by or otherwise adversely affect the products, activities or business
of the Seller. To the knowledge of the Seller, the Seller is not making
unauthorized use of any confidential information or trade secrets of any person,
including without limitation any former employer of any past or present employee
of the Seller. Except as set forth on Schedule 2.14, the Seller does not have
-------------
and, to the knowledge of the Seller, none of its employees have, any agreements
or arrangements with any persons other than the Seller related to confidential
information or trade secrets of such persons or restricting any such employee's
ability to engage in business activities of any nature. The activities of the
Seller's employees on behalf of the Seller do not violate any such agreements or
arrangements known to the Seller which any such employees have with other
persons.
As used herein, the term "Intellectual Property Rights" shall mean all
intellectual property rights, including, without limitation, all of the
registered rights set forth on Schedule 2.14 and all patents, patent
-------------
applications, patent rights, trademarks, trademark applications, trade names,
service marks, service mark applications, copyrights, copyright applications,
computer programs and other computer software, inventions, designs, samples,
specifications, schematics, know-how, trade secrets, proprietary processes and
formulae, including production technology and processes, all source and object
code, algorithms, promotional materials, customer lists, supplier and dealer
lists and marketing research, and all documentation and media constituting,
describing or relating to the foregoing, including without limitation, manuals,
memoranda and records. Schedule 2.14 contains a list and brief description of
-------------
all Intellectual Property Rights (other than with respect to "off the shelf"
software used by the Seller or any subsidiary of the Seller that is generally
commercially available) owned by or registered in the name of the Seller or any
subsidiary of the Seller or of which the Seller or any subsidiary of the Seller
is the licensor or a licensee of a material right or in which the Seller or any
subsidiary of the Seller has any material right and, in each case, a brief
description of the nature of the right.
2.15 Contracts. Except for contracts, commitments, plans, agreements and
---------
licenses described on Schedule 2.15 (true and complete copies of which have been
-------------
delivered to Buyer), the Seller is not a party to or subject to:
(a) any plan or contract providing for bonuses, pensions, options,
stock purchases, deferred compensation, retirement payments, profit sharing,
collective bargaining or the like, or any contract or agreement with any labor
union;
15
<PAGE>
(b) any employment contract or contract for services which
requires the payment of more than $50,000 annually or which is not terminable
within 30 days by the Seller without liability for any penalty or severance
payment;
(c) any contract or agreement for the purchase of any commodity,
material or equipment except purchase orders in the ordinary course for less
than $5,000 each, such orders not exceeding $20,000 in the aggregate;
(d) any other contracts or agreements creating any obligations of
the Seller of $25,000 or more with respect to any such contract or agreement not
specifically disclosed elsewhere under this Agreement;
(e) any contract or agreement providing for the purchase of all or
substantially all of its requirements of a particular product from a supplier;
(f) any contract or agreement involving more than $25,000 which by
its terms does not terminate or is not terminable without penalty by the Seller
or any successor or assign within one year after the date hereof;
(g) any contract or agreement for the sale or lease of its
products not made in the ordinary course of business;
(h) any contract with any sales agent or distributor of products
of the Seller;
(i) any contract containing covenants limiting the freedom of the
Seller to compete in any line of business or with any person or entity;
(j) any contract or agreement for the purchase of any fixed asset
for a price in excess of $5,000 whether or not such purchase is in the ordinary
course of business;
(k) any license agreement (as licensor or licensee);
(l) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money; or
(m) any contract or agreement with any officer, employee, director
or stockholder of the Seller or with any persons or organizations controlled by
or affiliated with any of them.
The Seller is not in default of any material provision under any such
contracts, commitments, plans, agreements or licenses described in said
Schedule, and Seller does not have knowledge of conditions or facts which with
notice or passage of time, or both, would constitute such a default.
16
<PAGE>
2.16 Litigation. Schedule 2.16 hereto lists all currently pending
---------- -------------
litigation and governmental or administrative proceedings or investigations to
which the Seller is a party. Except for matters described on Schedule 2.16,
-------------
there is no litigation or governmental or administrative proceeding or
investigation pending or, to the knowledge of the Seller, threatened against the
Seller or any affiliate of the Seller which may have any adverse effect on the
Seller's properties, assets, prospects, financial condition or business or which
would prevent or hinder the consummation of the transactions contemplated by
this Agreement. With respect to each matter set forth therein, Schedule 2.16
-------------
sets forth a description of the matter, the forum (if any) in which it is being
conducted, the parties thereto and the type and amount of relief sought.
2.17 Compliance with Laws. Except as set forth on Schedule 2.17, to the
-------------------- -------------
knowledge of the Seller, the Seller is in compliance in all material respects
with all applicable statutes, ordinances, orders, judgments, decrees and rules
and regulations promulgated by any federal, state, municipal or other
governmental authority which apply to the Seller or to the conduct of its
business, and the Seller has not received any notice of a violation or alleged
violation of any such statute, ordinance, order, rule or regulation.
2.18 Insurance. The physical properties and assets of the Seller are
---------
insured to the extent disclosed on Schedule 2.18 and all insurance policies and
-------------
arrangements of the Seller are disclosed on said Schedule. To the knowledge of
the Seller, said insurance policies and arrangements are in full force and
effect, all premiums with respect thereto are currently paid, and the Seller is
in compliance in all material respects with the terms thereof. To the knowledge
of the Seller, said insurance is adequate and customary for the business engaged
in by the Seller and is sufficient for compliance by the Seller with all
requirements of law and all agreements and leases to which the Seller is a
party.
2.19 Warranty or Other Claims. Except as disclosed on Schedule 2.19, to
------------------------ -------------
the knowledge of the Seller, there are no existing or threatened product
liability, warranty or other similar claims, or any facts upon which a material
claim of such nature could be based, against the Seller for services which are
defective or fail to meet any service warranties. No claim has been asserted
against the Seller for renegotiation or price redetermination of any business
transaction, and there are no facts upon which any such claim could be based.
2.20 Powers of Attorney. Neither the Seller nor any Stockholder has
------------------
granted any powers of attorney which are presently outstanding.
2.21 Finder's Fee. Neither the Seller nor any Stockholder has incurred or
------------
become liable for any broker's commission or finder's fee relating to or in
connection with the transactions contemplated by this Agreement.
2.22 Permits; Burdensome Agreements. Schedule 2.22 lists all permits,
------------------------------ -------------
registrations, licenses, franchises, certifications and other approvals
(collectively, the "Approvals") required from federal, state or local
authorities in order for the Seller to conduct its business. The Seller
17
<PAGE>
has obtained all such Approvals, which are valid and in full force and effect,
and is operating in compliance therewith. Such Approvals include, but are not
limited to, those required under federal, state or local statutes, ordinances,
orders, requirements, rules, regulations, or laws pertaining to environmental
protection, public health and safety, worker health and safety, buildings,
highways or zoning. Except as disclosed on Schedule 2.22 or in any other
-------------
Schedule hereto, the Seller is not subject to or bound by any agreement,
arrangement, judgment, decree or order which may materially and adversely affect
its business or prospects, its condition, financial or otherwise, or any of its
assets or properties.
2.23 Corporate Records; Copies of Documents. The business records and the
--------------------------------------
corporate records of the Seller, as delivered to Buyer pursuant to Sections
1.1(l) and 1.2(b), respectively, are either the originals of such documents or
are true, correct and complete copies of the originals of such documents.
2.24 Transactions with Related Parties. Except as set forth on Schedule
--------------------------------- --------
2.24 hereto, neither the Seller nor any stockholder, officer, supervisory
- ----
employee or director of the Seller or, to the knowledge of the Seller, any of
their respective spouses or family members owns directly or indirectly on an
individual or joint basis any material interest in, or serves as an officer or
director or in another similar capacity of, any competitor or supplier of the
Seller or any organization which has a material contract or arrangement with the
Seller.
2.25 Employee Benefit Programs.
-------------------------
(a) Schedule 2.25 lists every Employee Program (as defined below)
-------------
that has been maintained (as defined below) by the Seller at any time during the
three-year period ending on the Closing Date.
(b) Each Employee Program which has ever been maintained by the
Seller and which has at any time been intended to qualify under Section 401(a)
or 501(c)(9) of the Code has received a favorable determination or approval
letter from the IRS regarding its qualification under such section and has, in
fact, been continuously qualified under the applicable section of the Code since
the effective date of such Employee Program. No event or omission has occurred
which would cause any such Employee Program to lose its qualification under the
applicable Code section.
(c) The Seller does not know, and has no reason to know, of any
failure of any party to comply with any laws applicable to the Employee Programs
that have been maintained by the Seller. With respect to any Employee Program
ever maintained by the Seller, there has occurred no "prohibited transaction,"
as defined in Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or Section 4975 of the Code, or breach of any duty
under ERISA or other applicable law (including, without limitation, any health
care continuation requirements or any other tax law requirements, or conditions
to favorable tax treatment, applicable to such plan), which could result,
directly or indirectly, in
18
<PAGE>
any taxes, penalties or other liability to Buyer. No litigation, arbitration, or
governmental administrative proceeding (or investigation) or other proceeding
(other than those relating to routine claims for benefits) is pending or
threatened with respect to any such Employee Program.
(d) Neither the Seller nor any Affiliate (as defined below) (i) has
ever maintained any Employee Program which has been subject to Title IV of ERISA
(including, but not limited to, any Multi-employer Plan (as defined below)) or
(ii) has ever provided health care or any other non-pension benefits to any
employees after their employment is terminated (other than as required by Part 6
of Subtitle B of Title I of ERISA) or has ever promised to provide such post-
termination benefits.
(e) With respect to each Employee Program maintained by the Seller
within the three years preceding the Closing, complete and correct copies of the
following documents (if applicable to such Employee Program) have previously
been delivered to Buyer: (i) all documents embodying or governing such Employee
Program, and any funding medium for the Employee Program (including, without
limitation, trust agreements) as they may have been amended; (ii) the most
recent IRS determination or approval letter with respect to such Employee
Program under Code Section 401 or 501(c)(9), and any applications for
determination or approval subsequently filed with the IRS; (iii) the three most
recently filed IRS Forms 5500, with all applicable schedules and accountants'
opinions attached thereto; (iv) the summary plan description for such Employee
Program (or other descriptions of such Employee Program provided to employees)
and all modifications thereto; (v) any insurance policy (including any fiduciary
liability insurance policy) related to such Employee Program; (vi) any documents
evidencing any loan to an Employee Program that is a leveraged employee stock
ownership plan; and (vii) all other materials reasonably necessary for Buyer to
perform any of its responsibilities with respect to any Employee Program
subsequent to the Closing (including, without limitation, health care
continuation requirements).
(f) For purposes of this section:
(i) "Employee Program" means (A) all employee benefit plans
within the meaning of ERISA Section 3(3), including, but not limited to,
multiple employer welfare arrangements (within the meaning of ERISA Section
3(4)), plans to which more than one unaffiliated employer contributes and
employee benefit plans (such as foreign or excess benefit plans) which are
not subject to ERISA; and (B) all stock or cash option plans, restricted
stock plans, bonus or incentive award plans, severance pay policies or
agreements, deferred compensation agreements, supplemental income
arrangements, vacation plans, and all other employee benefit plans,
agreements, and arrangements not described in (A) above. In the case of an
Employee Program funded through an organization described in Code Section
501(c)(9), each reference to such Employee Program shall include a
reference to such organization.
19
<PAGE>
(ii) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides (or has promised to provide) benefits
under such Employee Program, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under such Employee
Program, or if such Employee Program provides benefits to or otherwise
covers employees of such entity, or their spouses, dependents, or
beneficiaries.
(iii) An entity is an "Affiliate" of the Seller if it would have
ever been considered a single employer with such Seller under ERISA Section
4001(b) or part of the same "controlled group" as such Seller for purposes
of ERISA Section 302(d)(8)(C).
(iv) "Multi-employer Plan" means a (pension or non-pension)
employee benefit plan to which more than one employer contributes and which
is maintained pursuant to one or more collective bargaining agreements.
2.26 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 2.26, (i) the Seller has not ever
-------------
generated, transported, used, stored, treated, disposed of, or managed any
Hazardous Waste (as defined below); (ii) to the knowledge of the Seller, no
Hazardous Material (as defined below) has ever been or is threatened to be
spilled, released, or disposed of at any site presently or formerly owned,
operated, leased, or used by the Seller, or, to the knowledge of the Seller, has
ever been located in the soil or groundwater at any such site; (iii) to the
knowledge of the Seller, no Hazardous Material has ever been transported from
any site presently or formerly owned, operated, leased, or used by the Seller
for treatment, storage, or disposal at any other place; (iv) to the knowledge of
the Seller, the Seller does not presently own, operate, lease, or use, nor has
the Seller previously owned, operated, leased, or used any site on which
underground storage tanks are or were located; and (v) no lien has ever been
imposed by any governmental agency on any property, facility, machinery, or
equipment owned, operated, leased, or used by the Seller in connection with the
presence of any Hazardous Material.
(b) Except as set forth on Schedule 2.26, (i) the Seller does not have
-------------
any liability under, nor has the Seller ever violated, any Environmental Law (as
defined below); (ii) to the knowledge of the Seller, the Seller, any property
owned, operated, leased, or used by the Seller, and any facilities and
operations thereon are presently in compliance with all applicable Environmental
Laws; (iii) the Seller has not ever entered into or been subject to any
judgment, consent decree, compliance order, or administrative order with respect
to any environmental or health and safety matter or received any request for
information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law; and (iv) the Seller
does not have any knowledge or reason to know that any of the items enumerated
in clause (iii) of this subsection will be forthcoming.
20
<PAGE>
(c) Except as set forth on Schedule 2.26 hereto, to the knowledge of
-------------
the Sellers, no site owned, operated, leased, or used by the Seller contains any
asbestos or asbestos-containing material, any polychlorinated biphenyls (PCBs)
or equipment containing PCBs, or any urea formaldehyde foam insulation.
(d) The Seller has provided to Buyer copies of all documents, records,
and information known or available to the Seller concerning any environmental or
health and safety matter relevant to the Seller, whether generated by the Seller
or others, including, without limitation, environmental audits, environmental
risk assessments, site assessments, documentation regarding off-site disposal of
Hazardous Materials, spill control plans, and reports, correspondence, permits,
licenses, approvals, consents, and other authorizations related to environmental
or health and safety matters issued by any governmental agency.
(e) For purposes of this Section 2.26, (i) "Hazardous Material" shall
mean and include any hazardous waste, hazardous material, hazardous substance,
petroleum product, oil, toxic substance, pollutant, contaminant, or other
substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law; (ii) "Hazardous
Waste" shall mean and include any hazardous waste as defined or regulated under
any Environmental Law; (iii) "Environmental Law" shall mean any environmental or
health and safety-related law, regulation, rule, ordinance, or by-law at the
foreign, federal, state, or local level, whether existing as of the date hereof,
previously enforced, or subsequently enacted; and (iv) "Seller" shall mean and
include the Seller and all Affiliates of the Seller for whose conduct the Seller
is responsible under any Environmental Law.
2.27 Directors and Officers.
----------------------
(a) Schedule 2.27 contains a true and complete list of all current
-------------
directors and officers of the Seller. In addition, Schedule 2.27 contains a
-------------
list of all managers, employees and consultants of the Seller who, individually,
have received or are scheduled to receive compensation from the Seller for the
fiscal year ending December 31, 1997, in excess of $50,000. In each case such
Schedule includes the current job title and aggregate annual compensation of
each such individual.
2.28 Backlog. As of the date hereof, the Seller has a backlog of firm
-------
orders for the sale of products or services, for which revenues have not been
recognized by the Seller, as set forth in Schedule 2.28.
-------------
2.29 Employees; Labor Matters. The Seller employs a total of approximately
------------------------
12 full-time employees and 0 part-time employees and generally enjoy good
employer-employee relationships. The Seller is not delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed for it to the date hereof or
amounts required to be reimbursed to such employees. Upon termination of
21
<PAGE>
the employment of any of said employees, neither the Seller nor Buyer will by
reason of the acquisition transaction or anything done prior to the Closing be
liable to any of said employees for so-called "severance pay" or any other
payments, except as set forth on Schedule 2.29. The Seller does not have any
-------------
policy, practice, plan or program of paying severance pay or any form of
severance compensation in connection with the termination of employment of its
employees, except as set forth in said Schedule. The Seller is in compliance in
all material respects with all applicable laws and regulations respecting labor,
employment, fair employment practices, work place safety and health, terms and
conditions of employment, and wages and hours. There are no charges of
employment discrimination or unfair labor practices, nor are there any strikes,
slowdowns, stoppages of work, or any other concerted interference with normal
operations existing, pending or, to the knowledge of the Seller, threatened
against or involving the Seller. No question concerning representation exists
respecting any group of employees of the Seller. There are no grievances,
complaints or charges that have been filed against any Seller under any dispute
resolution procedure (including, but not limited to, any proceedings under any
dispute resolution procedure under any collective bargaining agreement) that
might have an adverse effect on the Seller or the conduct of its business and no
arbitration or similar proceeding is pending and no claim therefor has been
asserted. No collective bargaining agreement is in effect or is currently being
or is about to be negotiated by the Seller. The Seller has not received any
information to indicate that any of its employment policies or practices is
currently being audited or investigated by any federal, state or local
government agency. To the knowledge of the Seller, the Seller is, and at all
times since November 6, 1986, has been, in compliance with the requirements of
the Immigration Reform Control Act of 1986.
2.30 Customers and Suppliers. Schedule 2.30 sets forth any customer who
----------------------- -------------
accounts for more than $100,000 of the consolidated sales of the Sellers for the
twelve months ended December 31, 1996, or the twelve months ended as of the date
of the Base Balance Sheet (collectively, the "Customers"). Schedule 2.30 also
-------------
contains a true and complete list of the suppliers of the Seller to whom during
the twelve months ended December 31, 1996, the Seller made payments aggregating
$25,000 or more showing, with respect to each, the name, address and dollar
volume involved (the "Suppliers"). The relationships of the Seller with its
Customers and Suppliers are good commercial working relationships. Except as
set forth on Schedule 2.30, no Customer or Supplier of the Seller has canceled,
-------------
materially modified, or otherwise terminated its relationship with the Seller,
or has during said period decreased materially its usage or purchase of the
services or products of the Seller or the services, supplies or materials
furnished to the Seller, nor does any Customer or Supplier have, to the
knowledge of the Seller, any plan or intention to do any of the foregoing.
2.31 Hart-Scott-Rodino Matters. Neither the Seller on a consolidated basis
-------------------------
with McLagan Partners International Incorporated, an Illinois corporation, and
McLagan Partners Asia Incorporated, an Illinois corporation, nor the "ultimate
parent entities" (as such term is defined in the Hart-Scott-Rodino Anti-Trust
Improvement Act of 1976, as amended (the "HSR Act")) of the Seller, on a
consolidated basis, had annual net sales (as stated on the last regularly
prepared annual statement of income and expense for such persons or entities) or
total assets (as
22
<PAGE>
stated on the last regularly prepared balance sheet for such persons or
entities) of One Hundred Million Dollars ($100,000,000) or more, as calculated
in accordance with the HSR Act and the rules and regulations promulgated
thereunder.
2.32 Disclosure. The representations, warranties and statements contained
----------
in this Agreement and in the certificates, exhibits and schedules delivered to
Buyer by the Seller or Stockholder pursuant to this Agreement do not contain any
untrue statement of a material fact, and, when taken together, do not omit to
state a material fact required to be stated therein or necessary in order to
make such representations, warranties or statements not misleading in light of
the circumstances under which they were made.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
- ---------------------------------------------------
3.1 Making of Representations and Warranties. As a material inducement to
----------------------------------------
the Seller and the Stockholders to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer makes to the Seller and the
Stockholders, the representations and warranties contained in this Section 3.
3.2 Organization of Buyer. Buyer is a corporation duly organized, validly
---------------------
existing and in good standing under the laws of the State of Delaware with full
corporate power to own or lease its properties and to conduct its business in
the manner and in the places where such properties are owned or leased or such
business is conducted by it. Buyer is duly qualified to do business as a
foreign corporation in each jurisdiction in which it is required to be so
qualified except to the extent that any failure to be so qualified would not
have a material adverse effect on the Buyer.
3.3 Authority of Buyer. Buyer has full right, authority and power to
------------------
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by Buyer pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Buyer of this Agreement and each such other agreement, document
and instrument have been, or as of the Closing shall have been, duly authorized
by all necessary corporate action of Buyer and no other action on the part of
Buyer is required in connection therewith. This Agreement and each other
agreement, document and instrument executed and delivered by Buyer pursuant to
this Agreement constitute, or when executed and delivered will constitute, valid
and binding obligations of Buyer enforceable in accordance with their terms.
Following the approval of Buyer's Board of Directors, the execution, delivery
and performance by Buyer of this Agreement and each such agreement, document and
instrument:
(a) does not and will not violate any provision of the Certificate of
Incorporation or by-laws of Buyer;
(b) does not and will not violate any laws of the United States or of
any state
23
<PAGE>
or any other jurisdiction applicable to Buyer or require Buyer to obtain any
approval, consent or waiver of, or make any filing with, any person or entity
(governmental or otherwise) which has not been obtained or made; and
(c) does not and will not result in a breach of, constitute a default
under, accelerate any obligation under, or give rise to a right of termination
of any indenture, loan or credit agreement, or any other agreement, mortgage,
lease, permit, order, judgment or decree to which Buyer is a party and which is
material to the business and financial condition of Buyer and its parent and
affiliated organizations on a consolidated basis.
3.4 Litigation. There is no litigation or governmental or administrative
----------
proceeding or investigation pending or, to its knowledge, threatened against
Buyer which would prevent or hinder the consummation of the transactions
contemplated by this Agreement.
3.5 Finder's Fee. Buyer has not incurred or become liable for any
------------
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
3.6 Hart-Scott-Rodino Matters. Neither the Buyer nor the "ultimate parent
-------------------------
entity" (as such term is defined in the HSR Act) of the Buyer had annual net
sales (as stated on the last regularly prepared annual statement of income and
expense for the Buyer or such ultimate parent entity) or total assets (as stated
on the last regularly prepared balance sheet for the Buyer or such ultimate
parent entity) of One Hundred Million Dollars ($100,000,000) or more, as
calculated in accordance with the HSR Act and the rules and regulations
promulgated thereunder.
3.7 Securities and Exchange Commission Filings. Intentionally Omitted.
------------------------------------------ ---------------------
SECTION 4. CONDITIONS.
- ---------------------
4.1 Conditions to the Obligations of Buyer. The obligations of Buyer to
--------------------------------------
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) Satisfaction of Conditions. The representations and warranties of
--------------------------
the Seller and the Stockholders contained in this Agreement shall be true and
correct on and as of the Closing Date; each of the conditions specified in this
Section 4.1 shall have been satisfied or waived in writing by the Buyer; and on
the Closing Date a certificate to such effect executed on behalf of the Seller
and the Stockholders, as appropriate, shall be delivered to the Buyer.
(b) Transfer of Subject Assets. The Seller shall deliver or cause to
--------------------------
be delivered to Buyer (i) an Assignment and Assumption Agreement substantially
in the form of Exhibit C hereto and (ii) a Bill of Sale substantially in the
---------
form of Exhibit D hereto transferring
---------
24
<PAGE>
to Buyer good and marketable title to all the Subject Assets.
(c) Delivery of Records and Contracts. Seller shall deliver or cause
---------------------------------
to be delivered to Buyer all of the Assumed Contracts, with such assignments
thereof and consents to assignments as are necessary to assure Buyer of the full
benefit of the same. Seller shall also deliver to Buyer at the Closing all of
its business records, tax returns, books and other data relating to their
respective assets, businesses and operations (except Corporate Records excluded
under Section 1.2(b) as to which only copies need be delivered in accordance
with such Section), and Seller shall take all requisite steps to put Buyer in
actual possession and operating control of the assets and businesses of Sellers.
(d) Approval of Buyer's Counsel. All actions, proceedings,
---------------------------
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this Agreement shall have been approved by Goodwin, Procter & Hoar LLP as
counsel for Buyer, and such counsel shall have received on behalf of Buyer such
other certificates, opinions, and documents in form satisfactory to such counsel
as Buyer may reasonably request from the Seller or the Stockholders to evidence
compliance with the terms and conditions hereof.
(e) Opinion of Counsel. Buyer shall have received from Cummings &
------------------
Lockwood, counsel for the Seller and Stockholders, an opinion, dated as of the
Closing Date, in the form attached hereto as Exhibit E.
---------
(f) No Litigation. There shall have been no determination by Buyer,
-------------
acting in good faith, that the consummation of the transactions contemplated by
this Agreement has become inadvisable or impracticable by reason of the
institution or threat by any person or any federal, state or other governmental
authority of litigation, proceedings or other action against Buyer, the Seller
or any Stockholder or any material adverse change in the laws or regulations
applicable to any Seller.
(g) Hart-Scott-Rodino. All required filings under the HSR Act ("HSR
-----------------
Filings") shall have been completed and all applicable time limitations under
such Act shall have expired without a request for further information by the
relevant federal authorities under such Act, or in the event of such a request
for further information, the expiration of all applicable time limitations under
the Act shall have occurred without the objection of such federal authorities.
(h) Due Diligence and Disclosure Schedules. Buyer, in its sole
--------------------------------------
discretion, shall be satisfied, with the results of its legal, accounting,
business and other due diligence review of the Seller and the Subject Assets.
Buyer, in its sole discretion, shall, be satisfied with the form and substance
of the Disclosure Schedules to this Agreement which shall have been delivered to
Buyer by the Seller on or before Closing.
25
<PAGE>
(i) Financing. ASI and New McLagan shall have secured senior
---------
financing from a bank or other financial institution satisfactory to ASI and New
McLagan on terms and conditions satisfactory to ASI and New McLagan in their
sole discretion and in amounts sufficient to provide all of the consideration
for the acquisition transaction contemplated hereby plus adequate working
capital for the acquired businesses.
(j) Consents. The Seller shall have made all filings with and
--------
notifications of governmental authorities, regulatory agencies and other
entities required to be made by the Seller in connection with the execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of the Seller by Buyer
subsequent to the Closing; and Seller and Buyer shall have received all
authorizations, waivers, consents and permits, in form and substance reasonably
satisfactory to Buyer, from all third parties, including, without limitation,
applicable governmental authorities, regulatory agencies, lessors, lenders and
contract parties, required to permit the continuation of the businesses of the
Seller by Buyer and the consummation of the transactions contemplated by this
Agreement, and in connection with the transfer of the Subject Assets or the
Seller's contracts, permits, leases, licenses and franchises, to avoid a breach,
default, termination, acceleration or modification of any indenture, loan or
credit agreement or any other agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award as a result of, or in connection with, the
execution and performance of this Agreement.
(k) Intentionally Omitted.
---------------------
(l) Intentionally Omitted.
---------------------
(m) Intentionally Omitted.
---------------------
(n) Acquisition Audit. Buyer shall have received a satisfactory audit
-----------------
report from C&L with respect to the financial statements and financial condition
of the Seller which report shall indicate financial performance and financial
condition that is satisfactory to Buyer.
(o) Good Standing. At or prior to the Closing, Buyer shall have
-------------
received from the Seller a certificate of good standing from the appropriate
authority in the States of Illinois and Connecticut.
(p) Board of Directors Approval. The Board of Directors of the Buyer
---------------------------
shall have approved, ratified and affirmed the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
4.2 Conditions to Obligations of the Seller. The obligations of the
---------------------------------------
Seller to consummate this Agreement and the transactions contemplated hereby are
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
26
<PAGE>
(a) Satisfaction of Conditions. The representations and warranties of
--------------------------
the Buyer contained in this Agreement shall be true and correct on and as of the
Closing Date; each of the conditions specified in this Section 4.2 shall have
been satisfied or waived in writing by the Seller; and on the Closing Date a
certificate to such effect executed on behalf of the Buyer shall be delivered to
the Seller.
(b) Intentionally Omitted.
---------------------
(c) Intentionally Omitted.
---------------------
(d) Intentionally Omitted.
---------------------
(e) Assignment and Assumption Agreement. At the Closing, Buyer shall
-----------------------------------
deliver or cause to be delivered to Seller an Assignment and Assumption
Agreement in substantially the form of Exhibit C hereto.
---------
(f) Approval of Seller's and Stockholders' Counsel. All actions,
----------------------------------------------
proceedings, instruments and documents required to carry out this Agreement and
the transactions contemplated hereby and all related legal matters contemplated
by this agreement shall have been approved by Cummings & Lockwood, as counsel
for the Seller and Stockholders, and such counsel shall have received on behalf
of the Seller and the Stockholders such other certificates, opinions and
documents in form satisfactory to such counsel as the Seller and Stockholders
may reasonably require from Buyer to evidence compliance with the terms and
conditions hereof.
(g) No Litigation. There shall have been no determination by the
-------------
Seller or Stockholders, acting in good faith, that the consummation of the
transactions contemplated by this Agreement has become inadvisable or
impracticable by reason of the institution or threat by any person or any
federal, state or other governmental authority of material litigation,
proceedings or other action against Buyer, the Seller or any Stockholder.
(h) Employment/Non-Competition Agreements. Buyer shall have executed
-------------------------------------
and delivered to each individual named on Schedule 4.1(h) hereto an Employment
---------------
and Non-Competition Agreement in substantially the form of Exhibit F attached
---------
hereto.
(i) Opinion of Counsel. The Seller and the Stockholders shall have
------------------
received from Goodwin, Procter & Hoar LLP, counsel for the Buyer, an opinion,
dated as of the Closing Date, in the form attached hereto as Exhibit I.
---------
(j) Consents. Buyer shall have made all filings with and
--------
notifications of governmental authorities, regulatory agencies and other
entities required to be made by Buyer in connection with the execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of the Seller by
27
<PAGE>
Buyer subsequent to the Closing; and Buyer shall have received all
authorizations, waivers, consents and permits, in form and substance reasonably
satisfactory to Seller, from all third parties, including, without limitation,
applicable governmental authorities, regulatory agencies, lessors, lenders and
contract parties, required to permit the continuation of the business of the
Seller by Buyer and the consummation of the transactions contemplated by this
Agreement.
(k) Payment of Purchase Price. Buyer shall have delivered to Seller
-------------------------
One Hundred Fifty Thousand Dollars ($150,000) in cash in accordance with Section
1.5 hereof.
(l) Exhibits. Buyer and Seller shall have mutually agreed to the
--------
form, term and provisions of each of the Exhibits referred to herein.
SECTION 5. SURVIVAL OF WARRANTIES; RIGHTS, OBLIGATIONS AND ACTIONS SUBSEQUENT
------------------------------------------------------------------
TO CLOSING.
----------
5.1 Survival of Warranties. Each of the representations, warranties,
----------------------
agreements, covenants and obligations herein or in any schedule, exhibit,
certificate or financial statement delivered by any party to the other party
incident to the transactions contemplated hereby are material, shall be deemed
to have been relied upon by the other party and shall survive the Closing
regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto; provided, however, that, as more fully set
forth in Section 6 hereof, such representations and warranties shall expire on
the same dates as and to the extent that the rights to indemnification with
respect thereto under Section 6 shall expire.
5.2 Payment of Obligations. Subsequent to the Closing, the Seller shall
----------------------
pay all of the Excluded Liabilities in the ordinary course of business as they
become due.
5.3 Tax Returns. After the Closing, the Seller, with the approval of
-----------
Buyer and in accordance with applicable law, shall (i) promptly prepare and file
on or before the due date or any extension thereof, all federal, state and local
tax returns required to be filed by it with respect to taxable periods of the
Seller that include any period ending on or before the Closing and (ii) pay all
Taxes of the Seller attributable to periods ending on or before the Closing
Date.
5.4 Books and Records. After the Closing, Buyer shall afford to Seller
-----------------
and Stockholders and their respective accountants and attorneys, for the purpose
of preparing such tax returns of the Seller or Stockholders as may be required
after the Closing, reasonable access to the books and records of Seller
delivered to Buyer under Section 4.1(b) and shall permit the Seller or any
Stockholder, at its or his expense, to make extracts and copies therefrom.
5.5 Further Assurances. Seller from time to time after the Closing at
------------------
the request of Buyer and without further consideration shall execute and deliver
further instruments of transfer and assignment and take such other action as
Buyer may reasonably request to more effectively
28
<PAGE>
transfer and assign to, and vest in, Buyer each of the Subject Assets. Seller
shall cooperate with Buyer to permit Buyer to enjoy their respective ratings and
benefits under the workman's compensation laws and unemployment compensation
laws of applicable jurisdictions, to the extent permitted by such laws. Nothing
herein shall be deemed a waiver by Buyer of its right to receive at the Closing
an effective assignment of each of the leases, contracts, commitments or rights
of Seller as otherwise set forth in this Agreement.
5.6 Allocation of Purchase Price. Within thirty (30) days of the Closing,
----------------------------
Buyer shall allocate the Purchase Price (and all other capitalized costs) among
the Subject Assets. Such allocation shall be binding upon Buyer, Seller and each
Stockholder for all purposes (including financial accounting purposes, financial
and regulatory reporting purposes and tax purposes) unless the Seller shall
notify Buyer, within thirty (30) days of their receipt of notice of Buyer's
allocation hereunder, that they disagree with such allocation by Buyer. In the
event of such a disagreement, the parties shall submit the allocation of the
Purchase Price (and all other capitalized costs) among the Subject Assets to an
accounting firm of nationally recognized standing mutually acceptable to Buyer,
on one hand, and the Seller on the other. Such firm shall deliver its allocation
of the Purchase Price (and all other capitalized costs) among the Subject Assets
to the parties as soon as practicable, and such allocation shall be binding upon
Buyer, the Seller and each Stockholder for all purposes (including financial
accounting purposes, financial and regulatory reporting purposes and tax
purposes). All Purchase Price allocations hereunder shall be made in accordance
with the provisions of Section 1060 of the Code. Buyer and the Seller also each
agree to file IRS Form 8594 consistently with the foregoing and in accordance
with Section 1060 of the Code.
5.7 Hart-Scott-Rodino Filings. Buyer shall cooperate with Seller and
-------------------------
Stockholders in connection with all required HSR Filings and shall furnish all
follow-up information required in connection therewith. Buyer shall have the
primary responsibility with respect to the preparation and filing of the HSR
Filings.
5.8 Sellers' Employees. After the Closing, Buyer will make offers of
------------------
employment to each of the employees of the Seller named on Schedule 5.8 hereto
------------
under terms and conditions comparable to those under which Sellers currently
employ such employees.
5.9 Intentionally Omitted.
---------------------
5.10 Business Relations. During the period from the Closing Date until the
------------------
date which is ninety (90) days thereafter, the Buyer may conduct, in
coordination with the Seller, personal interviews with the Seller's Customers
and Suppliers in order to confirm that such Customers and Suppliers intend to
continue their respective current levels of business with Sellers.
29
<PAGE>
SECTION 6. INDEMNIFICATION.
--------------------------
6.1 Indemnification by the Seller and the Stockholders. The Seller and
--------------------------------------------------
each Stockholder jointly and severally agree subsequent to the Closing to
indemnify and hold Buyer and its respective subsidiaries and affiliates and
persons serving as officers, directors, partners or employees thereof
(individually a "Buyer Indemnified Party" and collectively the "Buyer
Indemnified Parties") harmless from and against any damages, liabilities,
losses, taxes, fines, penalties, costs, and expenses (including, without
limitation, reasonable fees of counsel and accountants) of any kind or nature
whatsoever (whether or not arising out of third-party claims and including all
amounts paid in investigation, defense or settlement of the foregoing) which may
be sustained or suffered by any of them arising out of or based upon any of the
following matters:
(a) fraud, intentional misrepresentation or a deliberate or wilful
breach by the Seller or any Stockholder of any representation, warranty or
covenant under this Agreement or in any certificate, schedule or exhibit
delivered as part of or pursuant to this Agreement;
(b) any other breach of any representation or warranty made by the
Seller or any Stockholder in this Agreement, or in any certificate, schedule or
exhibit delivered by or on behalf of the Seller or any Stockholder as part of or
pursuant to this Agreement, or any third-party claim, action or proceeding
asserted or instituted or arising out of any matter or thing covered by such
representations or warranties (collectively, "Buyer Warranty Claims");
(c) any breach of any covenant or agreement made by or on behalf of
the Seller or any Stockholder in this Agreement, or in any certificate, schedule
or exhibit delivered by or on behalf of the Seller or any Stockholder as part of
or pursuant to this Agreement; and
(d) all claims, liabilities and obligations in connection with,
arising out of or otherwise relating to any of the Excluded Liabilities.
The rights of Buyer Indemnified Parties to recover indemnification in
respect of any occurrence referred to in clauses (c) or (d) of this Section 6.1
shall not be limited by the fact that such occurrence may not constitute an
inaccuracy in or breach of any representation, warranty or agreement referred to
in clauses (a) or (b) of this Section 6.1.
6.2 Limitations on Indemnification by the Seller and the Stockholders.
-----------------------------------------------------------------
The right of Buyer Indemnified Parties to indemnification under Section 6.1
shall be subject to the following provisions:
(a) No indemnification shall be payable to any Buyer Indemnified Party
in respect of Buyer Warranty Claims (other than any such claim relating to title
to the Subject Assets), unless the total of all claims for indemnification
pursuant to Section 6.1, when aggregated with all claims made under Section 6.1
of (i) that certain asset purchase agreement,
30
<PAGE>
dated as of November 13, 1997 by and between McLagan Partners, Inc., a Delaware
corporation and the parent corporation of the Buyer and McLagan Partners
Incorporated, an Illinois corporation, and certain other parties named therein
and (ii) that certain asset purchase agreement, dated November 13, 1997, by and
between McLagan Partners Asia, Inc., a Delaware corporation and a sister
corporation of the Buyer, and McLagan Partners Asia Incorporated, an Illinois
corporation, and certain other parties named therein (the asset purchase
agreements referred to in clauses (i) and (ii) are sometimes referred to herein
as the "Affiliate Agreements"), shall exceed $50,000 in the aggregate, whereupon
the full amount of such claims shall be recoverable in accordance with the terms
hereof;
(b) The indemnification obligations of the Seller with respect to
Buyer Warranty Claims (other than any such claim relating to Excluded
Liabilities or title to the Subject Assets), and of the Stockholders with
respect to all claims, shall be limited to Buyer's right to set off and apply
the amount of such claims against any and all amounts outstanding under that
certain Promissory Note in the original principal amount of $5,000,000 issued by
ASI for the benefit of New McLagan (the "Note"), whether or not then due and
payable.
(c) Indemnification with respect to Buyer Warranty Claims shall expire
on April 30, 2000 (the "Indemnification Cut-Off Date"); provided, however, that
the limitation of this Section 6.2(c) shall not apply to Buyer Warranty Claims
involving fraud, intentional misrepresentation or title to the Subject Assets,
for which the period for making such claims shall expire on the date on which
the applicable statute of limitations relating thereto terminates; provided,
--------
further, however, that with respect only to DeMinimis Claims the Indemnification
- ------- -------
Cut-Off Date shall be the date which is ninety (90) days after the Closing Date.
If prior to the relevant date of expiration a specific state of facts shall have
become known which may constitute or give rise to any Buyer Warranty Claim as to
which indemnity may be payable and a Buyer Indemnified Party shall have given
notice of such facts to the Seller or any Stockholder, then the right to
indemnification with respect thereto shall remain in effect without regard to
when such matter shall have been finally determined and disposed of, according
to the date on which notice of the applicable claim is given; and
(d) The limitations set forth herein with respect to Buyer Warranty
Claims shall not limit the rights of any Buyer Indemnified Party with respect to
any other claims arising under the provisions of Section 6.1.
6.3 Indemnification by Buyer. Buyer agrees to indemnify and hold the
------------------------
Seller and their respective affiliates and persons serving as officers,
directors or employees thereof and the Stockholders (individually a "Seller
Indemnified Party" and collectively the "Seller Indemnified Parties") harmless
from and against any damages, liabilities, losses, taxes, fines, penalties,
costs, and expenses (including, without limitation, reasonable fees of counsel
and accountants) of any kind or nature whatsoever (whether or not arising out of
third-party claims and including all amounts paid in investigation, defense or
settlement of the foregoing) which may be sustained
31
<PAGE>
or suffered by any of them arising out of or based upon any of the following
matters:
(a) fraud, intentional misrepresentation or a deliberate or wilful
breach by Buyer of any representation, warranty or covenant under this Agreement
or in any certificate, schedule or exhibit delivered as part of or pursuant to
this Agreement;
(b) any other breach of any representation or warranty made by Buyer
in this Agreement or in any certificate, schedule or exhibit delivered pursuant
hereto, or any Warranty Claim;
(c) any breach of any covenant or agreement made by or on behalf of
Buyer in this Agreement, or in any certificate, schedule or exhibit delivered by
or on behalf of Buyer as part of or pursuant to this Agreement; or
(d) any failure by Buyer to perform and discharge any of the Assumed
Liabilities as set forth in this Agreement.
The rights of Seller Indemnified Parties to recover indemnification in
respect of any occurrence referred to in clauses (c) or (d) of this Section 6.3
shall not be limited by the fact that such occurrence may not constitute an
inaccuracy in or breach of any representation, warranty or agreement referred to
in clauses (a) or (b) of this Section 6.3.
6.4 Limitations on Indemnification by Buyer. The right of Seller
---------------------------------------
Indemnified Parties to indemnification under Section 6.3 shall be subject to the
following provisions:
(a) No indemnification shall be payable to any Seller Indemnified
Party in respect of any breach of any representation or warranty made by Buyer
in this Agreement, or in any certificate, schedule or exhibit delivered by or on
behalf of Buyer as part of or pursuant to this Agreement, or any third-party
claim, action or proceeding asserted or instituted or arising out of any matter
or thing covered by such representations or warranties (collectively, "Seller
Warranty Claims"), unless the total of all claims for indemnification pursuant
to Section 6.3, when aggregated with all claims made under Section 6.3 of the
Affiliate Agreements, shall exceed $50,000 in the aggregate, whereupon the full
amount of such claims shall be recoverable in accordance with the terms hereof;
(b) Indemnification with respect to Seller Warranty Claims shall
expire on the Indemnification Cut-Off Date; provided, however, that the
limitation of this clause (i) shall not apply to Seller Warranty Claims
involving fraud or intentional misrepresentation, for which the period for
making such claims shall expire on the date on which the applicable statute of
limitations relating thereto terminates. If prior to the relevant date of
expiration a specific state of facts shall have become known which may
constitute or give rise to any Seller Warranty Claim as to which indemnity may
be payable and a Seller Indemnified Party shall have given notice of such facts
to Buyer, then the right to indemnification with respect thereto shall remain
32
<PAGE>
in effect without regard to when such matter shall have been finally determined
and disposed of, according to the date on which notice of the applicable claim
is given; and
(c) The limitations herein with respect to Seller Warranty Claims
shall not limit the rights of any Seller Indemnified Party with respect to any
other claims arising under provisions of Section 6.3.
6.5 Notice; Defense of Claims. An indemnified party may make claims for
-------------------------
indemnification hereunder by giving written notice thereof to the indemnifying
party within the period in which indemnification claims may be made hereunder.
If indemnification is sought for a claim or liability asserted by a third party,
the indemnified party shall give written notice thereof to the indemnifying
party promptly after it receives notice of the claim or liability being
asserted, but the failure to do so shall not relieve the indemnifying party from
any liability except to the extent that it is prejudiced by the failure or delay
in giving such notice. Such notice shall summarize the bases for the claim for
indemnification and any claim or liability being asserted by a third party.
Within twenty (20) days after receiving such notice the indemnifying party shall
give written notice to the indemnified party stating whether it disputes the
claim for indemnification and whether it will defend against any third party
claim or liability at its own cost and expense. If the indemnifying party fails
to give notice that it disputes an indemnification claim within twenty (20) days
after receipt of notice thereof, it shall be deemed to have accepted and agreed
to the claim, which shall become immediately due and payable. The indemnifying
party shall be entitled to direct the defense against a third party claim or
liability with counsel selected by it (subject to the consent of the indemnified
party, which consent shall not be unreasonably withheld) as long as the
indemnifying party conducts a good faith and diligent defense. The indemnified
party shall at all times have the right to fully participate in the defense of a
third party claim or liability at its own expense directly or through counsel;
provided, however, that if the named parties to the action or proceeding include
both the indemnifying party and the indemnified party and the indemnified party
is advised that representation of both parties by the same counsel would be
inappropriate under applicable standards of professional conduct, the
indemnified party may engage separate counsel at the expense of the indemnifying
party. If no such notice of intent to dispute and defend a third party claim or
liability is given by the indemnifying party, or if such good faith and diligent
defense is not being or ceases to be conducted by the indemnifying party, the
indemnified party shall have the right, at the expense of the indemnifying
party, to undertake the defense of such claim or liability (with counsel
selected by the indemnified party), and to compromise or settle it, exercising
reasonable business judgment. If the third party claim or liability is one that
by its nature cannot be defended solely by the indemnifying party, then the
indemnified party shall make available such information and assistance as the
indemnifying party may reasonably request and shall cooperate with the
indemnifying party in such defense, at the expense of the indemnifying party.
6.6 Satisfaction of Seller and Stockholder Indemnification Obligations.
------------------------------------------------------------------
In order to satisfy the indemnification obligations of the Seller and the
Stockholders pursuant to Section 6.1
33
<PAGE>
above, a Buyer Indemnified Party shall have the right to set off and apply the
amount of such indemnification claims against any and all amounts then
outstanding under the Note (whether or not then due and payable).
SECTION 7. DEFINITIONS.
-----------------------
As used in this Agreement, unless the context otherwise explicitly
requires, the following terms shall have the meanings set forth below:
"Advisor" shall have the meaning set forth in Section 8.10.
"Affiliate" shall have the meaning set forth in Section 2.25.
"Approvals" shall have the meaning set forth in Section 2.22.
"Assumed Contracts" shall have the meaning set forth in Section 1.3.
"Bank" shall have the meaning set forth in Section 1.5.
"Base Balance Sheets" shall have the meaning set forth in Section 2.9(a).
"Buyer" shall have the meaning set forth in the preamble.
"Buyer Indemnified Party" or "Buyer Indemnified Parties" shall have the
respective meanings set forth in Section 6.1.
"Buyer Warranty Claims" shall have the meaning set forth in Section 6.1(b).
"CPR Rules" shall have the meaning set forth in Section 8.10.
"Closing" shall have the meaning set forth in Section 1.4.
"Closing Date" shall have the meaning set forth in Section 1.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the common stock, par value $.01 per share, of
ASI.
"Corporate Records" shall have the meaning set forth in Section 1.2(b).
"Current Assets" as of any date shall mean the consolidated current assets
of the Seller as of such date determined in accordance with generally accepted
accounting principles,
34
<PAGE>
consistently applied.
"Current Liabilities" as of any date shall mean the consolidated current
liabilities of the Seller as of such date determined in accordance with
generally accepted accounting principles, consistently applied.
"Customers" shall have the meaning set forth in Section 2.30.
"DeMinimis Claims" shall mean Buyer Warranty Claims (other than any such
claim relating to title to the Subject Assets) which are each in an amount not
in excess of $1,000 and which, in the aggregate, are in an amount not in excess
of $5,000.
"ERISA" shall have the meaning set forth in Section 2.25(c).
"Employee Program" shall have the meaning set forth in Section 2.25.
"Environmental Law" shall have the meaning set forth in Section 2.26.
"Excluded Assets" shall have the meaning set forth in Section 1.2.
"Excluded Liabilities" shall have the meaning set forth in Section 1.3.
"Financial Statements" shall have the meaning set forth in Section 2.9(a).
"HSR Act" shall have the meaning set forth in Section 2.31.
"HSR Filings" shall have the meaning set forth in Section 4.1(f).
"Hazardous Material" shall have the meaning set forth in Section 2.26.
"Hazardous Waste" shall have the meaning set forth in Section 2.26.
"IRS" shall have the meaning set forth in Section 2.10.
"Incentive Plan" shall have the meaning set forth in Section 4.2(b).
"Indemnification Cut-Off Date" shall have the meaning set forth in Section
6.2(c).
"Intellectual Property Rights" shall have the meaning set forth in Section
2.14.
"Intercompany Loans" shall have the meaning set forth in Section 1.2(d).
"Interim Balance Sheets" shall have the meaning set forth in Section
2.9(a).
35
<PAGE>
"Leases" shall have the meaning set forth in Section 2.8(b).
"Leased Real Property" shall have the meaning set forth in Section 2.8(b).
"Liabilities" shall have the meaning set forth in Section 1.3.
"Multi-employer Plan" shall have the meaning set forth in Section 2.25.
"Note" shall have the meaning set forth in Section 6.2(b).
"PCBs" shall have the meaning set forth in Section 2.26(c).
"Permitted Encumbrances" shall have the meaning set forth in Section
2.8(b).
"Person" shall mean any natural person or any corporation, partnership,
association, trust, unincorporated organization or governmental agency or
bureau.
"Purchase Price" shall have the meaning set forth in Section 1.5.
"Seller" shall have the meaning set forth in the preamble.
"Seller Common Stock" shall have the meaning set forth in Section 2.5(a).
"Seller Indemnified Party" and "Seller Indemnified Parties" shall have the
respective meanings set forth in Section 6.3.
"Seller Warranty Claims" shall have the meaning set forth in Section
6.4(a).
"Stockholder" and "Stockholders" shall have the respective meanings set
forth in the preamble.
"Subject Assets" shall have the meaning set forth in Section 1.1.
"Suppliers" shall have the meaning set forth in Section 2.30.
"Taxes" shall have the meaning set forth in Section 2.10.
"Tax Returns" shall have the meaning set forth in Section 2.10.
SECTION 8. MISCELLANEOUS.
------------------------
8.1 Bulk Sales Law. Buyer waives compliance by the Seller with the
--------------
provisions of
36
<PAGE>
any applicable bulk sales, fraudulent conveyance or other law for the protection
of creditors in connection with the transfer of the Subject Assets under this
Agreement.
8.2 Fees and Expenses.
-----------------
(a) Each of the parties will bear its own expenses in connection with
the negotiation and the consummation of the transactions contemplated by this
Agreement, and no expenses of the Seller or any Stockholder relating in any way
to the purchase and sale of the Subject Assets hereunder and the transactions
contemplated hereby, including without limitation legal, accounting or other
professional expenses, shall be charged to or paid by Buyer or included in any
of the Liabilities.
(b) Seller will pay all costs incurred, whether at or subsequent to
the Closing, in connection with the transfer of the Subject Assets to Buyer as
contemplated by this Agreement, including without limitation, all sales, use,
excise, real property and other transfer taxes and charges applicable to such
transfer; all recording charges and fees applicable to the recordation of deeds
and mortgages and other instruments of transfer; and all costs of obtaining or
transferring permits, registrations, applications and other tangible and
intangible properties. Buyer will pay all premiums, charges and costs of
obtaining and providing surveys, appraisals, UCC and title searches and title
insurance for the benefit of Buyer with respect to the Subject Assets.
(c) In the event that the parties are required to make HSR Filings,
the Buyer, on one hand, and the Seller, on the other, shall share the filing
fees relating thereto equally.
8.3 Governing Law. This Agreement shall be construed under and governed
-------------
by the internal laws of the State of Connecticut without regard to its conflict
of laws provisions.
8.4 Notices. Any notice, request, demand or other communication required
-------
or permitted hereunder shall be in writing and shall be deemed to have been
given if delivered or sent by facsimile transmission, upon receipt, or if sent
by registered or certified mail, upon the sooner of the date on which receipt is
acknowledged or the expiration of three days after deposit in United States post
office facilities properly addressed with postage prepaid. All notices to a
party will be sent to the addresses set forth below or to such other address or
person as such party may designate by notice to each other party hereunder:
TO BUYER: ASI Solutions Incorporated
- -------- 780 Third Avenue
New York, NY 10017
Attn: Bernard F. Reynolds
37
<PAGE>
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: David F. Dietz, P.C.
TO SELLERS AND McLagan Partners International Incorporated
- -------------- 4 Stamford Plaza
STOCKHOLDERS: Suite 400
- ------------ 107 Elm Street
Stamford, CT 06901
Attn: President
With a copy to: Cummings & Lockwood
Four Stamford Plaza
P.O. Box 120
107 Elm Street
Stamford, CT 06904-0120
Attn: Thomas J. Freed, Esq.
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
8.5 Entire Agreement. This Agreement, including the schedules and
----------------
exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such schedules and exhibits or in such
other writings; and all inducements to the making of this Agreement relied upon
by either party hereto have been expressed herein or in such schedules or
exhibits or in such other writings.
8.6 Assignability; Binding Effect. After the Closing, Buyer's rights and
-----------------------------
obligations hereunder shall be freely assignable including, without limitation,
pursuant to the grant of a security interest herein to the Buyer's rights
hereunder to The Chase Manhattan Bank, as the administrative agent for certain
senior lenders to ASI and New McLagan. This Agreement may not be assigned by
the Seller or any Stockholder without the prior written consent of Buyer. This
Agreement shall be binding upon and enforceable by, and shall inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.
8.7 Captions and Gender. The captions in this Agreement are for
-------------------
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
38
<PAGE>
8.8 Execution in Counterparts. For the convenience of the parties and to
-------------------------
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
8.9 Amendments. This Agreement may not be amended or modified, nor may
----------
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by each party hereto, or in the case of a
waiver, the party waiving compliance.
8.1 Dispute Resolution. Any dispute arising out of or relating to this
------------------
Agreement or the breach, termination or validity hereof shall be finally settled
by arbitration conducted expeditiously in accordance with the Center for Public
Resources Rules for Nonadministered Arbitration of Business Disputes (the "CPR
Rules"). The Center for Public Resources shall appoint a neutral advisor from
its National CPR Panel having appropriate experience in the matters that are the
subject of the dispute (the "Advisor"). The arbitration shall be governed by
the United States Arbitration Act, 9 U.S.C. (S)(S)1-16, and judgment upon the
award rendered by the Advisor may be entered by any court having jurisdiction
thereof. The place of arbitration shall be New York, New York.
Such proceedings shall be administered by the Advisor in accordance with
the CPR Rules as he/she deems appropriate, however, such proceedings shall be
guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be accomplished
within forty-five (45) days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the Advisor which shall consist of a summary
presentation by each side of not more than three hours; such hearings to take
place on one or two days at a maximum; and
(d) decision to be rendered not more than ten (10) days following such
hearings.
8.11 Consent to Jurisdiction. Solely for the purpose of allowing a party
-----------------------
to enforce its rights pursuant to Section 8.10, each of the parties hereby
consents to personal jurisdiction, service of process and venue in the federal
or state courts of New York.
8.12 Severability. The parties hereto agree that, in the event that any
------------
provision of this Agreement or the application of any such provision to any
party is held by a court of competent jurisdiction to by contrary to law, the
provision in question shall be construed so as to be lawful and the remaining
provisions of this Agreement shall remain in full force and effect.
39
<PAGE>
8.13 No Third-Party Beneficiaries. This Agreement is intended solely for
----------------------------
the benefit of the parties hereto. Neither this Agreement nor any of the
transactions contemplated hereby shall be deemed to create or enlarge any rights
in any Person not a party hereto.
8.14 Publicity and Disclosures. Neither the Seller nor any Stockholder
-------------------------
shall make any press release or other public announcement (written, oral or
otherwise) in respect of this Agreement or the transactions contemplated herein
without the prior written consent of Buyer.
8.15 Attorneys' Fees. In the event of any dispute hereunder between the
---------------
parties hereto, the prevailing party in any litigation or arbitration instituted
hereunder shall be entitled to recover from the other its costs and expenses
thereof, including, specifically, its reasonable attorneys' fees.
8.16 Intentionally Omitted.
---------------------
8.17 Remedies. Each of the parties to this Agreement acknowledges and
--------
agrees that remedies at law may be inadequate with respect to any breach of any
provision of this Agreement. The provisions of Section 8.10 notwithstanding,
each of the parties hereto shall be entitled to enforce the terms and provisions
of this Agreement by a decree of specific performance or injunctive relief
requiring the fulfillment of obligations under this Agreement in addition to all
other remedies provided hereunder or available to the parties at law or in
equity.
8.18 ASI Guaranty. Subject to the provisions of that certain Intercreditor
------------
and Subordination Agreement, dated as of November 13, 1997 (the "Subordination
Agreement"), by and between ASI, The Chase Manhattan Bank and certain other
parties named therein, ASI by its signature below, hereby unconditionally
guarantees the payment or fulfillment when due of all obligations of the Buyer
now or hereafter existing under this Agreement and each Exhibit to this
Agreement to which the Buyer is or becomes a party (the "Obligations"). The
obligations of the undersigned under this guaranty are independent of the
Obligations, and a separate action or actions may be brought and prosecuted
against the undersigned to enforce this guaranty, irrespective of whether any
action is brought against Buyer or whether Buyer is joined in such action. This
guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Obligations is rescinded or must otherwise
be returned by a recipient upon the insolvency, bankruptcy or reorganization of
Buyer or for any other reason, all as though such payment had not been made.
40
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
BUYER:
-----
McLAGAN PARTNERS
INTERNATIONAL, INC.
By:/s/ Bernard F. Reynolds
-----------------------
Name: Bernard F. Reynolds
Title: President
SELLER:
------
McLAGAN PARTNERS INTERNATIONAL
INCORPORATED
By:/s/ Albertus W. van den Broek
-----------------------------
Name: Albertus W. van den Broek
Title: Secretary
STOCKHOLDERS:
------------
/s/ C. Bruce McLagan
--------------------
C. Bruce McLagan
/s/ F. Samuel Smith
-------------------
F. Samuel Smith
/s/ Albertus W. van den Broek
-----------------------------
Albertus W. van den Broek
/s/ Donald B. Shackelford
-------------------------
Donald B. Shackelford
<PAGE>
/s/ Byram E. Dickes
-------------------
Byram E. Dickes
For the purposes of Section 8.18 only
ASI SOLUTIONS INCORPORATED
By: /s/ Bernard F. Reynolds
-----------------------
Name: Bernard F. Reynolds
Title: Chief Executive Officer
<PAGE>
EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
BY AND AMONG
MCLAGAN PARTNERS ASIA, INC.
AS BUYER
MCLAGAN PARTNERS ASIA INCORPORATED
AS SELLER
AND
SELLER'S STOCKHOLDERS
DATED AS OF NOVEMBER 13, 1997
<PAGE>
ASSET PURCHASE AGREEMENT
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. PURCHASE AND SALE OF ASSETS............................... 1
- ---------- ---------------------------
1.1 Sale of Assets............................................... 1
--------------
1.2 Excluded Assets.............................................. 2
---------------
1.3 Assumption of Liabilities.................................... 3
-------------------------
1.4 Time and Place of Closing.................................... 4
-------------------------
1.5 Purchase Price and Payment................................... 5
--------------------------
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND
- ---------- --------------------------------------------
STOCKHOLDERS.............................................. 5
------------
2.1 Making of Representations and Warranties..................... 5
----------------------------------------
2.2 Organization and Qualifications of Seller.................... 5
-----------------------------------------
2.3 Subsidiaries................................................. 5
------------
2.6 Capital Stock of Seller; Beneficial Ownership of Seller...... 6
-------------------------------------------------------
2.7 Authority of the Seller and the Stockholders................. 6
--------------------------------------------
2.8 Real and Personal Property................................... 7
--------------------------
2.9 Financial Statements......................................... 10
--------------------
2.10 Taxes........................................................ 11
-----
2.11 Absence of Certain Changes................................... 12
--------------------------
2.12 Ordinary Course.............................................. 13
---------------
2.13 Banking Relations............................................ 13
-----------------
2.14 Intellectual Property........................................ 14
---------------------
2.15 Contracts.................................................... 15
---------
2.16 Litigation................................................... 17
----------
2.17 Compliance with Laws......................................... 17
--------------------
2.18 Insurance.................................................... 17
---------
2.19 Warranty or Other Claims..................................... 17
------------------------
2.20 Powers of Attorney........................................... 17
------------------
2.21 Finder's Fee................................................. 17
------------
2.22 Permits; Burdensome Agreements............................... 18
------------------------------
2.23 Corporate Records; Copies of Documents....................... 18
--------------------------------------
2.24 Transactions with Related Parties............................ 18
---------------------------------
2.25 Employee Benefit Programs.................................... 18
-------------------------
2.26 Environmental Matters........................................ 20
---------------------
2.27 Directors and Officers....................................... 21
----------------------
2.28 Backlog...................................................... 21
-------
2.29 Employees; Labor Matters..................................... 22
------------------------
2.30 Customers and Suppliers...................................... 22
-----------------------
2.31 Hart-Scott-Rodino Matters.................................... 22
-------------------------
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
2.32 Disclosure................................................... 23
----------
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER................... 23
- ---------- ---------------------------------------
3.1 Making of Representations and Warranties..................... 23
----------------------------------------
3.2 Organization of Buyer........................................ 23
---------------------
3.3 Authority of Buyer........................................... 23
------------------
3.4 Litigation................................................... 24
----------
3.5 Finder's Fee................................................. 24
------------
3.6 Hart-Scott-Rodino Matters.................................... 24
-------------------------
3.7 Intentionally Omitted........................................ 24
---------------------
SECTION 4. CONDITIONS................................................ 24
- ---------- ----------
4.1 Conditions to the Obligations of Buyer....................... 24
--------------------------------------
4.2 Conditions to Obligations of the Seller...................... 27
---------------------------------------
SECTION 5. SURVIVAL OF WARRANTIES; RIGHTS, OBLIGATIONS AND ACTIONS
- ---------- -------------------------------------------------------
SUBSEQUENT TO CLOSING..................................... 28
----------------------
5.1 Survival of Warranties....................................... 28
----------------------
5.2 Payment of Obligations....................................... 28
----------------------
5.3 Tax Returns.................................................. 28
-----------
5.4 Books and Records............................................ 28
-----------------
5.5 Further Assurances........................................... 28
------------------
5.6 Allocation of Purchase Price................................. 29
----------------------------
5.7 Hart-Scott-Rodino Filings.................................... 29
-------------------------
5.8 Sellers' Employees........................................... 29
------------------
5.9 Intentionally Omitted........................................ 29
----------------------
SECTION 6. INDEMNIFICATION........................................... 30
- ---------- ---------------
6.1 Indemnification by the Seller and the Stockholders........... 30
--------------------------------------------------
6.2 Limitations on Indemnification by the Seller and the
----------------------------------------------------
Stockholders................................................. 30
------------
6.3 Indemnification by Buyer..................................... 31
------------------------
6.4 Limitations on Indemnification by Buyer...................... 32
---------------------------------------
6.5 Notice; Defense of Claims.................................... 33
-------------------------
6.6 Satisfaction of Seller and Stockholder Indemnification
------------------------------------------------------
Obligations.................................................. 33
-----------
SECTION 7. DEFINITIONS............................................... 34
SECTION 8. MISCELLANEOUS............................................. 37
- ---------- -------------
8.1 Bulk Sales Law............................................... 37
--------------
8.2 Fees and Expenses............................................ 37
-----------------
8.3 Governing Law................................................ 37
-------------
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.4 Notices...................................................... 37
-------
8.5 Entire Agreement............................................. 38
----------------
8.6 Assignability; Binding Effect................................ 38
-----------------------------
8.7 Captions and Gender.......................................... 38
-------------------
8.8 Execution in Counterparts.................................... 39
-------------------------
8.9 Amendments................................................... 39
----------
8.10 Dispute Resolution........................................... 39
------------------
8.11 Consent to Jurisdiction...................................... 39
-----------------------
8.12 Severability................................................. 39
------------
8.13 No Third-Party Beneficiaries................................. 40
----------------------------
8.14 Publicity and Disclosures.................................... 40
-------------------------
8.15 Attorneys' Fees.............................................. 40
---------------
8.16 Intentionally Omitted........................................ 40
---------------------
8.17 Remedies..................................................... 40
--------
</TABLE>
(iii)
<PAGE>
SCHEDULES
---------
Schedule 1.1 Certain Subject Assets
Schedule 1.2(g) Excluded Personal Property
Schedule 1.3 Assumed Contracts
Schedule 2.2 Foreign Qualifications
Schedule 2.6(b) Capitalization
Schedule 2.7(a) Liens
Schedule 2.8(b) Leased Real Property
Schedule 2.8(c) Personal Property
Schedule 2.9 Financial Statements
Schedule 2.10 Taxes
Schedule 2.11 Certain Changes
Schedule 2.13 Banking Relations
Schedule 2.14 Intellectual Property Rights
Schedule 2.15 Contracts
Schedule 2.16 Litigation
Schedule 2.17 Compliance with Laws
Schedule 2.18 Insurance
Schedule 2.19 Product Liability
Schedule 2.22 Permits
Schedule 2.24 Transactions with Related Parties
Schedule 2.25 Employee Benefit Programs
Schedule 2.26 Environmental Matters
Schedule 2.27 Directors and Officers
Schedule 2.28 Backlog
Schedule 2.29 Labor Matters
Schedule 2.30 Customers and Suppliers
Schedule 4.1(k) Employees Signing Employment and Non-Competition Agreements
Schedule 4.2(b) Intentionally Omitted
Schedule 4.2(c) Intentionally Omitted
Schedule 4.2(d) Intentionally Omitted
Schedule 5.8 Employees
Schedule 5.9 Intentionally Omitted
(iv)
<PAGE>
EXHIBITS
--------
Exhibit A - Stockholders and Stockholdings
Exhibit B - Intentionally Omitted
Exhibit C - Form of Assignment and Assumption Agreement
Exhibit D - Form of Bill of Sale
Exhibit E - Form of Opinion of Cummings & Lockwood
Exhibit F - Intentionally Omitted
Exhibit G - Intentionally Omitted
Exhibit H - Intentionally Omitted
Exhibit I - Form of Opinion of Goodwin, Procter & Hoar LLP
(v)
<PAGE>
ASSET PURCHASE AGREEMENT
AGREEMENT entered into as of November 13, 1997 by and among McLagan
Partners Asia, Inc., a Delaware corporation ("Buyer") and a wholly-owned
subsidiary of McLagan Partners, Inc., a Delaware corporation ("New McLagan")
which is a wholly-owned subsidiary of ASI Solutions Incorporated ("ASI"),
McLagan Partners Asia Incorporated, an Illinois corporation ("Seller"), and the
holders of all of the outstanding capital stock of Seller, as set forth on
Exhibit A hereto (each, a "Stockholder" and together, the "Stockholders").
- ---------
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, contemporaneously herewith certain affiliates of Buyer are
entering into separate asset purchase agreements with certain affiliates of the
Seller;
WHEREAS, subject to the terms and conditions hereof, the Seller desires to
sell substantially all of its respective assets to Buyer; and
WHEREAS, subject to the terms and conditions hereof, Buyer desires to
purchase said assets of the Seller for the consideration specified herein and
the assumption by Buyer of certain liabilities and obligations of the Seller.
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS.
- ---------------------------------------
1.1 Sale of Assets. Subject to the provisions of this Agreement, the
--------------
Seller agrees to sell and Buyer agrees to purchase, at the Closing (as defined
in Section 1.4 hereof), all of the properties, assets and businesses of the
Seller of every kind and description, tangible and intangible, real, personal or
mixed, and wherever located, including, without limitation, the following
assets:
(a) All assets (other than Current Assets) shown or reflected on the
Base Balance Sheets (as defined in Section 2.9);
(b) The goodwill of the Seller;
(c) All rights under existing leases, contracts, licenses, permits,
sales and purchase agreements, and other agreements and business arrangements
which constitute Assumed Contracts (as defined in Section 1.3);
<PAGE>
(d) The exclusive rights to use the name "McLagan Partners Asia
Incorporated," and any translations or derivations thereof;
(e) Office furniture and furnishings;
(f) Inventory;
(g) Equipment and supplies;
(h) Patents and patent applications, trademarks and trademark
applications, trade names and all other Intellectual Property Rights (as defined
in Section 2.14);
(i) Sales records and customer and vendor lists;
(j) Marketing, advertising and promotional materials; and
(k) Tax returns of Seller and corporate records of Seller relating to
accounts payable, payroll and accounts receivable for periods prior to the
Closing; provided, however, that Seller shall, after the Closing, be afforded
reasonable access thereto.
The assets, properties and businesses of the Seller sold to and purchased
by Buyer under this Agreement are sometimes referred to as the "Subject Assets."
Schedule 1.1 hereto contains a list of the following Subject Assets: (a) those
- ------------
set forth in Section 1.1(a), (b) those set forth in Section 1.1 (e), (c) all
equipment of the Seller and (d) the Seller's customer lists and vendor lists.
1.2 Excluded Assets. Notwithstanding Section 1.1 above, nothing herein
---------------
contained shall operate as a sale, transfer, conveyance or assignment to Buyer
of any of the following assets and property of Seller (the "Excluded Assets"):
(a) Assets and property disposed of since the date of the Base
Balance Sheet in the ordinary course of business and such other assets as have
been or are disposed of pursuant to this Agreement;
(b) Corporate franchise, stock record books, corporate record books
containing minutes of meetings of directors and stockholders and such other
records as have to do exclusively with Seller's organization or stock
capitalization (collectively, the "Corporate Records"); provided, however, that
Seller shall provide Buyer prior to the Closing with true, correct and complete
copies of each of the foregoing;
(c) All Current Assets of Seller as of the Closing Date and all
accounts receivable of Seller on or prior to the date of Closing regardless of
whether or not in accordance with generally accepted accounting principles;
2
<PAGE>
(d) All rights under any loans or other evidence of indebtedness,
other than the Stockholder Loans (as defined below), between Seller, on the one
hand, and any affiliate of the Seller, on the other hand (the "Intercompany
Loans");
(e) Refunds for taxes paid by Seller before the Closing or for taxes
paid by Seller after the Closing in respect of the period before the Closing;
(f) Security deposits of the Seller, if any;
(g) those items of personal property of the Stockholders set forth on
Schedule 1.2(g);
- ---------------
(h) Any rights which the Seller may have to enforce the obligations
of the Buyer pursuant to this Agreement and the other documents and agreements
contemplated herein; and
(i) Insurance policies and rights and claims thereunder, including
proceeds or cash surrender value; and
(j) Any rights under pension, severance or other plans maintained by
Seller in any country other than the United States.
1.3 Assumption of Liabilities. Upon the sale and purchase of the Subject
-------------------------
Assets, Buyer shall assume and agree to pay or discharge when due in accordance
with their respective terms the following liabilities (the "Liabilities"): all
liabilities and obligations arising or to be performed after the Closing Date
(as defined in Section 1.4) under those contracts listed on Schedule 1.3 hereto
------------
(the "Assumed Contracts"); provided, however, that except for the Liabilities,
Buyer shall not assume and shall not pay any liability, cost or expense of
Seller, including, without limitation, the following liabilities:
(a) Any liability of Seller relating to, arising out of, or incurred
in connection with, the operation of the businesses of Seller on or prior to the
Closing Date;
(b) Liabilities incurred by the Seller in connection with this
Agreement and the transactions provided for herein, including, without
limitation, counsel and accountants' fees, and expenses pertaining to the
performance by the Seller of its obligations hereunder (except that Buyer shall
pay all fees and expenses of Coopers & Lybrand L.L.P. incurred in connection
with the transactions contemplated by this Agreement);
(c) Intentionally Omitted
(d) Liabilities of the Seller pursuant to any Intercompany Loan;
3
<PAGE>
(e) Current Liabilities of the Seller as of the Closing Date;
(f) Taxes (as defined in Section 2.10 hereof) of the Seller (whether
relating to periods before or after the transactions contemplated in this
Agreement or incurred by the Seller in connection with this Agreement and the
transactions provided for herein or otherwise), including, without limitation,
any liability for (i) Taxes arising in connection with any built-in gain of
Seller or (ii) Taxes arising out of the inclusion of Seller in any group filing
consolidated, combined or unitary tax returns or arising out of any transferee
liability;
(g) Liabilities of Seller with respect to (i) any severance pay,
accrued vacation, accrued and unpaid wages, salaries, commissions, bonuses or
other direct compensation for any services performed for it prior to the Closing
Date or amounts required to be reimbursed to any employees with respect to any
period prior to the Closing Date, (ii) any sickness, disability and other group
insurance premiums or claims incurred by or relating to anyone who does not
become an employee of Buyer, or (iii) any such premiums or claims incurred on or
prior to the Closing by any individual who becomes an employee of Buyer as of
the Closing;
(h) Liabilities of Seller to its dissenting stockholders, if any,
under the Illinois Business Corporation Act;
(i) Liabilities of Seller with respect to any options, warrants,
agreements or convertible or other rights to acquire any shares of its capital
stock of any class;
(j) Liabilities in connection with or relating to all actions, suits,
claims, proceedings, demands, assessments and judgments against the Seller or
any of the Stockholders and all costs, losses, liabilities, damages,
deficiencies and expenses (whether or not arising out of third-party claims),
including, without limitation, interest, penalties, reasonable attorneys' and
accountants' fees and all amounts paid in investigation, defense or settlement
of any of the foregoing; and
(k) Liabilities under pension, severance and other plans maintained
by Seller, or any liabilities of Seller to any current or former employee of
Seller under applicable law, in any country other than the United States.
The liabilities which are not assumed by Buyer under this Agreement are
hereinafter sometimes referred to as the "Excluded Liabilities."
1.4 Time and Place of Closing. The closing of the purchase and sale
-------------------------
provided for in this Agreement (herein called the "Closing") shall be held at
the offices of Goodwin, Procter & Hoar LLP at 599 Lexington Avenue, New York,
New York at 10:00 a.m. (local time) on November 13, 1997, or at such other
place, date or time as may be fixed by mutual agreement of the parties hereto
(the date of the Closing being referred to herein as the "Closing Date").
4
<PAGE>
1.5 Purchase Price and Payment. In consideration of the sale by the
--------------------------
Seller to Buyer of the Subject Assets, subject to the satisfaction of all of the
conditions contained herein, Buyer will at the Closing:
(a) Deliver to Seller One Hundred Thousand Dollars ($100,000) in
cash, to be paid by wire transfer of immediately available funds (the "Purchase
Price").
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDERS.
- ---------------------------------------------------------------------
2.1 Making of Representations and Warranties. As a material inducement to
----------------------------------------
Buyer to enter into this Agreement and consummate the transactions contemplated
hereby, the Seller hereby makes to Buyer the representations and warranties
contained in this Section 2 and the representations and warranties set forth in
Section 2.7(b) are also made severally by each Stockholder with respect to
himself, herself or itself.
2.2 Organization and Qualifications of Seller. The Seller is a
-----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois with full corporate power and authority to own or lease
its properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is currently conducted or
proposed to be conducted. The copies of Seller's Articles of Incorporation, as
amended to date, certified by the Secretary of State of the State of Illinois,
and of Seller's by-laws, as amended to date, certified by the Secretary of
Seller, and heretofore delivered to Buyer's counsel, are complete and correct,
and no amendments thereto are pending or contemplated. The Seller is not in
violation of any term of its Articles of Incorporation or by-laws. The Seller
is duly qualified to do business as a foreign corporation in each of the states
listed in Schedule 2.2, and the Seller is not required to be licensed or
------------
qualified to conduct its business or own its property in any other jurisdiction.
2.3 Subsidiaries. The Seller does not have any subsidiaries nor does the
------------
Seller own any securities issued by any other business organization or
governmental authority, except U.S. Government securities, bank certificates of
deposit and money market accounts acquired as short-term investments in the
ordinary course of its business. The Seller does not own or have any direct or
indirect interest in or control over any corporation, partnership, joint venture
or entity of any kind.
2.4 Intentionally Omitted.
------------- -------
2.5 Intentionally Omitted.
------------- -------
5
<PAGE>
2.6 Capital Stock of Seller; Beneficial Ownership of Seller.
-------------------------------------------------------
(a) The authorized capital stock of Seller consists of 15,000 shares
of common stock, no par value ("Seller Common Stock"), of which 1,200 shares are
duly and validly issued, outstanding, fully paid and non-assessable and of which
13,800 shares are authorized but unissued. There are no outstanding options,
warrants, rights, commitments, preemptive rights or agreements of any kind for
the issuance or sale of, or outstanding securities convertible into or
exchangeable for, any additional shares of capital stock of any class of Seller.
None of Seller's capital stock has been issued in violation of any federal or
state law. There are no voting agreements, trusts, proxies or other agreements,
instruments or undertakings with respect to the voting of Seller's capital stock
to which Seller or any stockholder of Seller is a party.
(b) Each of the stockholders of Seller owns beneficially and of
record the number of shares of Seller Common Stock set forth opposite such
Stockholder's name on Schedule 2.6(b) hereto.
---------------
2.7 Authority of the Seller and the Stockholders.
--------------------------------------------
(a) The Seller has full right, authority and power to enter into this
Agreement and each agreement, document and instrument to be executed and
delivered by the Seller pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Seller of this Agreement and each such other agreement,
document and instrument have been duly authorized by all necessary action of the
Seller and its stockholders and no other action on the part of the Seller or any
of its stockholders is required in connection therewith. This Agreement and
each agreement, document and instrument executed and delivered by the Seller
pursuant to this Agreement constitutes, or when executed and delivered will
constitute, valid and binding obligations of the Seller enforceable in
accordance with their terms, except as their enforceability may be limited by
bankruptcy or other laws affecting creditors' rights generally or by principles
of equity. The execution, delivery and performance by the Seller of this
Agreement and each such agreement, document and instrument:
(i) does not and will not violate any provision of the
Articles of Incorporation or by-laws of the Seller;
(ii) does not and will not violate any laws of the United
States or any state or other jurisdiction applicable to the Seller or
require the Seller to obtain any approval, consent or waiver of, or make
any filing with, any person or entity (governmental or otherwise) that has
not been obtained or made; and
6
<PAGE>
(iii) does not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a right of
termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which the Seller is a party or by which the property
of the Seller is bound or affected, or result in the creation or imposition
of any mortgage, pledge, lien, security interest or other charge or
encumbrance on any of the Subject Assets, except as specifically identified
on Schedule 2.7(a).
---------------
(b) Each Stockholder has full right, authority, power and capacity to
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by or on his behalf pursuant to this Agreement and to
carry out the transactions contemplated hereby and thereby. This Agreement and
each agreement, document and instrument executed and delivered by any
Stockholder pursuant to this Agreement constitutes, or when executed and
delivered will constitute, valid and binding obligations of such Stockholder
enforceable in accordance with their respective terms, except as their
enforceability may be limited by bankruptcy or other laws affecting creditors'
rights generally or by principles of equity. The execution, delivery and
performance by each Stockholder of this Agreement and each such agreement,
document and instrument:
(i) does not and will not violate any laws of the United
States or any state or other jurisdiction applicable to such Stockholder or
require such Stockholder to obtain any approval, consent or waiver of, or
make any filing with, any person or entity (governmental or otherwise) that
has not been obtained or made; and
(ii) does not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a right of
termination of, any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which such Stockholder is a party or by which the
property of such Stockholder is bound or affected, or result in the
creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the Subject Assets.
2.8 Real and Personal Property.
--------------------------
(a) Owned Real Property. The Seller hereby represents and warrants
-------------------
that it does not own any real property.
(b) Leased Real Property. All of the real property leased by the
--------------------
Seller as tenant or lessee is identified on Schedule 2.8(b) (collectively
---------------
referred to herein as the "Leased Real Property"). The Seller hereby makes the
following representations and warranties with respect to the Leased Real
Property:
7
<PAGE>
(i) Leases. The copies of the leases of the Leased Real
------
Property (collectively, the "Leases") delivered by Seller to Buyer and the
information with respect to each of the Leases set forth on Schedule 2.8(b)
---------------
is complete, accurate, true and correct. With respect to each of the
Leases, except as set forth on Schedule 2.8(b):
---------------
(A) each of the Leases is in full force and effect and
has not been modified, amended or altered, in writing or otherwise;
(B) to the knowledge of the Seller, all material
obligations of the landlord or lessor under the Leases which have
accrued have been performed, and to the knowledge of the Seller, no
landlord or lessor is in default under any Lease;
(C) all material obligations of the tenant or lessee
under the Leases which have accrued have been performed, the Seller is
not in default under any Lease, and no circumstance presently exists
which, with notice or the passage of time, or both, would give rise to
a default by the Seller; and
(D) the Seller has obtained the consent of each landlord
or lessor under any Leases whose consent is required to the assignment
or transfer of the Leased Real Property to Buyer, and such transfer
will not give any landlord or lessor under any Lease any remedy,
including, without limitation, any right to declare a default under
any Lease.
(ii) Title and Description. The Seller holds a good, clear,
---------------------
marketable, valid and enforceable leasehold interest in the Leased Real
Property pursuant to the Leases, subject only to the right of reversion of
the landlord or lessor under the Leases, free and clear of all other prior
or subordinate interests, including, without limitation, mortgages, deeds
of trust, ground leases, leases, subleases, assessments, tenancies, claims,
covenants, conditions, restrictions, easements, judgments or other
encumbrances or matters affecting title, and free of encroachments onto or
off of the Leased Real Property, except for (x) easements, covenants,
restrictions and similar encumbrances that do not and could not interfere
with the use of the Leased Real Property as currently used and improved,
and (y) minor encroachments that do not and could not adversely affect the
value or use of the Leased Real Property as currently used and improved and
that could be removed without material cost ((x) and (y) are collectively
referred to as "Permitted Encumbrances"), and except for matters set forth
on Schedule 2.8(b).
---------------
(iii) Condition. Except as set forth on Schedule 2.8(b), to the
--------- ---------------
knowledge of the Seller, there are no material defects in the physical
condition of any improvements constituting a part of the Leased Real
Property, including, without limitation, structural elements, mechanical
systems, roofs or parking and loading areas, and all of such improvements
are in reasonable working condition and repair, have been
8
<PAGE>
maintained in accordance with Seller's reasonable obligations under the
Leases and are free from infestation by rodents or insects. Except as set
forth on Schedule 2.8(b), to the knowledge of the Seller, none of the
---------------
Leased Real Property located in the United States of America is subject to
special flood or mudslide hazards or within the 100 year flood plain. To
the knowledge of the Seller, all water, sewer, gas, electric, telephone,
drainage and other utilities required by law or necessary for the current
or planned operation of the Leased Real Property have been installed and
connected pursuant to valid permits, and are sufficient to service the
Leased Real Property.
(iv) Compliance with Law; Government Approvals. The Seller has
-----------------------------------------
not received notice from any governmental authority of any violation of any
law, ordinance, regulation, license, permit or authorization issued with
respect to any of the Leased Real Property that has not been corrected
heretofore, and, to the knowledge of the Seller, no such violation now
exists which could have an adverse effect on the operation or value of any
of the Leased Real Property. To the knowledge of the Seller, all
improvements constituting a part of the Leased Real Property are in
compliance in all respects with all applicable laws, ordinances,
regulations, licenses, permits and authorizations, and to the knowledge of
the Seller there are presently in effect all licenses, permits and
authorizations required by law, ordinance, or regulation. To the knowledge
of the Seller, there is at least the minimum access required by applicable
subdivision or similar law to the Leased Real Property. The Seller has not
received notice of any pending or threatened real estate tax deficiency or
reassessment or condemnation of all or any portion of any of the Leased
Real Property.
(c) Personal Property. A list of Seller's material machinery,
-----------------
equipment and other tangible personal property is contained on Schedule 2.8(c).
---------------
Except as specifically disclosed in Schedule 1.1 or in the Base Balance Sheet
------------
(as defined in Section 2.9), the Seller has good and marketable title to all of
its personal property. None of such personal property or assets is subject to
any mortgage, pledge, lien, conditional sale agreement, security agreement,
encumbrance or other charge except as specifically disclosed in said Schedule or
in the Base Balance Sheet. The Base Balance Sheet as submitted to the Buyer by
the Seller and restated by Coopers & Lybrand L.L.P., independent public
accountants ("C&L"), in accordance with generally accepted accounting principles
("GAAP") reflects all personal property of the Seller as of the dates thereof
required to be reflected thereon, and the Subject Assets are sufficient assets
for Buyer to continue the business of the Seller as presently conducted by the
Seller. Except as otherwise specified in Schedule 2.8(c), to the knowledge of
---------------
the Seller, all leasehold improvements, furnishings, machinery and equipment of
the Seller are in good repair (subject to ordinary wear and tear), have been
well maintained, and substantially comply with all applicable laws, ordinances
and regulations, and such machinery and equipment is in good working order.
Except as set forth on Schedule 2.8(c), the Seller does not know of any pending
---------------
or threatened change of any such laws, ordinances or regulations which could
adversely affect the Seller or its business.
9
<PAGE>
2.9 Financial Statements.
--------------------
(a) The Seller has delivered to Buyer the following financial
statements, copies of which are attached hereto as Schedule 2.9:
------------
(i) Unaudited balance sheets of the Seller as of December 31,
1994, December 31, 1995, and December 31, 1996, and statements of income,
retained earnings and cash flows for the three fiscal years then ended,
certified by the Seller's chief financial officer or treasurer. The
unaudited balance sheet of the Seller as of December 31, 1996 is sometimes
referred to herein as the "Base Balance Sheet."
(ii) Summarized financial information of the Seller for its
fiscal years ending December 31, 1995, and December 31, 1996, audited and
certified by C&L.
(iii) Unaudited balance sheet of the Seller as of June 30, 1997
(the "Interim Balance Sheet") and statements of income, retained earnings
and cash flows for the period then ended, certified by the Seller's chief
financial officer or treasurer. The Base Balance Sheet and the Interim
Balance Sheet are sometimes referred to herein as the "Financial
Statements."
The Financial Statements (as submitted to the Buyer by the Seller and
restated by C&L in accordance with GAAP) are complete and correct in all
material respects, and present fairly in all material respects the
financial condition of the Seller at the dates of said Financial Statements
and the results of its operations and its cash flows for the periods
covered thereby (subject, in the case of unaudited financial statements, to
normal year-end adjustments).
(b) Except as disclosed on Schedule 2.9, as of the date of the Base
------------
Balance Sheet, the Seller did not have any liabilities of any nature, whether
accrued, absolute, contingent or otherwise, asserted or unasserted, known or
unknown (including without limitation liabilities as guarantor or otherwise with
respect to obligations of others, or liabilities for taxes due or then accrued
or to become due or contingent or potential liabilities relating to activities
of the Seller or the conduct of its business prior to the date of the Base
Balance Sheet regardless of whether claims in respect thereof had been asserted
as of such date), except liabilities stated or adequately reserved against on
the Base Balance Sheet or immaterial liabilities incurred in the ordinary course
of the Seller's business which are not required to be reflected in the Base
Balance Sheet (as submitted to the Buyer by the Seller and restated by C&L in
accordance with GAAP) or the notes thereto.
(c) Except as disclosed on Schedule 2.9, as of the date hereof, the
------------
Seller does not have any liabilities of any nature, whether accrued, absolute,
contingent or otherwise, asserted or unasserted, known or unknown (including
without limitation liabilities as guarantor or otherwise with respect to
obligations or others, or liabilities for taxes due or accrued or to
10
<PAGE>
become due or contingent or potential liabilities relating to activities of the
Seller or the conduct of its businesses prior to the date hereof, regardless of
whether claims in respect thereof have been asserted as of the date hereof),
except liabilities (i) stated or adequately reserved against on the Base Balance
Sheet or the Interim Balance Sheet (as submitted to the Buyer by the Seller and
restated by C&L in accordance with GAAP), or (ii) disclosed herein or reflected
on Schedule 2.9(c) hereto or (iii) incurred after June 30, 1997 in the ordinary
---------------
course of business by the Seller and consistent with the terms of this
Agreement.
2.10 Taxes.
-----
(a) The Seller has in accordance with applicable law filed all
federal, state, local and foreign tax returns required to be filed by it through
the date hereof, and all such returns correctly and accurately set forth the
amount of any taxes relating to the applicable period (the "Tax Returns"). A
list of all federal, state, local and foreign income tax returns filed with
respect to the Seller for taxable periods ended on or after December 31, 1994,
is set forth on Schedule 2.10 attached hereto, and said Schedule indicates those
-------------
returns that have been audited or currently are the subject of an audit. The
Seller has delivered to Buyer correct and complete copies of all Tax Returns
listed on said Schedule.
(b) All federal, state, local, foreign, and other taxes, including,
without limitation, income taxes, estimated taxes, alternative minimum taxes,
excise taxes, sales taxes, use taxes, value-added taxes, gross receipts taxes,
franchise taxes, capital stock taxes, employment and payroll-related taxes,
withholding taxes, stamp taxes, transfer taxes, windfall profit taxes,
environmental taxes and property taxes, whether or not measured in whole or in
part by net income, and all deficiencies, or other additions to tax, interest,
fines and penalties owed by it (collectively, "Taxes"), required to be paid by
it through the date hereof whether disputed or not have been paid.
(c) Neither the Internal Revenue Service ("IRS") nor any other
governmental authority is now asserting or, to the knowledge of the Seller,
threatening to assert against the Seller any deficiency or claim for additional
Taxes. No claim has ever been made by an authority in a jurisdiction where the
Seller does not file reports and returns that the Seller is or may be subject to
taxation by that jurisdiction. There are no security interests on any of the
assets of the Seller that arose in connection with any failure (or alleged
failure) to pay any Taxes. The Seller has never entered into a closing
agreement pursuant to Section 7121 of the Code.
(d) Except as set forth on Schedule 2.10, since December 31, 1994,
-------------
there has not been any audit of any tax return filed by the Seller, no audit of
any tax return of the Seller is in progress, and the Seller has not been
notified by any tax authority that any such audit is contemplated or pending.
Except as set forth on Schedule 2.10, no extension of time with respect to any
-------------
date on which a tax return was or is to be filed by the Seller is in force, and
no waiver or agreement by the Seller is in force for the extension of time for
the assessment or
11
<PAGE>
payment of any Taxes.
(e) Except as disclosed on Schedule 2.10, the Seller has not ever
-------------
been (and the Seller has not ever had any liability for unpaid Taxes because it
once was) a member of an "affiliated group" (as defined in Section 1504(a) of
the Code). Except as set forth on Schedule 2.10, the Seller has not ever filed,
-------------
and the Seller has not ever been required to file, a consolidated, combined or
unitary tax return with any other entity. The Seller does not own and the
Seller has never owned a direct or indirect interest in any trust, partnership,
corporation or other entity and therefore Buyer is not acquiring from the Seller
an interest in any such entity. Except as set forth in Schedule 2.10, the Seller
-------------
is a party to any tax sharing agreement.
(f) The Seller is not a "foreign person" within the meaning of
Section 1445 of the Code and Treasury Regulations Section 1.1445-2.
(g) For purposes of this Agreement, all references to Sections of the
Code shall include any predecessor provisions to such Sections and any similar
provisions of federal, state, local or foreign law.
2.11 Absence of Certain Changes. Except as disclosed on Schedule 2.11,
-------------------------- -------------
since the date of the Base Balance Sheet there has not been:
(a) Any change in the financial condition, properties, assets,
liabilities, business or operations of the Seller which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has been materially adverse with respect to the Seller;
(b) Any contingent liability incurred by the Seller as guarantor or
otherwise with respect to the obligations of others or any cancellation of any
material debt or claim owing to, or waiver of any material right of, the Seller;
(c) Any mortgage, encumbrance or lien placed on any of the properties
of the Seller which remains in existence on the date hereof, except liens for
taxes not yet due and payable;
(d) Any obligation or liability of any nature incurred by the Seller,
whether accrued, absolute, contingent or otherwise, asserted or unasserted,
known or unknown (including without limitation liabilities for Taxes due or to
become due or contingent or potential liabilities relating to products or
services provided by the Seller or the conduct of the Seller's business since
the date of the Base Balance Sheet regardless of whether claims in respect
thereof have been asserted), other than obligations and liabilities incurred in
the ordinary course of business consistent with the terms of this Agreement (it
being understood that product or service liability claims shall not be deemed to
be incurred in the ordinary course of business);
12
<PAGE>
(e) Any purchase, sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of the Seller other than in the ordinary course of
business;
(f) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or business
of the Seller;
(g) Any labor trouble or claim of unfair labor practices involving
the Seller; any change in the compensation payable or to become payable by the
Seller to any of its officers, employees, agents or independent contractors
other than normal merit increases in accordance with its usual practices, or,
except for bonuses or other arrangements to be paid by Seller from the proceeds
of this transaction, any bonus payment or arrangement made to or with any of
such officers, employees, agents or independent contractors;
(h) Any change with respect to the officers or management of the
Seller;
(i) Any payment or discharge of a material lien or liability of the
Seller except in the ordinary course of business;
(j) Any obligation or liability incurred by the Seller to any of its
officers, directors, stockholders or employees, or any loans or advances made by
the Seller to any of its officers, directors, stockholders or employees, except
normal compensation and expense allowances payable to officers or employees;
(k) Any change in accounting methods or practices, credit practices
or collection policies used by the Seller;
(l) Any other transaction entered into by the Seller other than
transactions in the ordinary course of business and transactions contemplated by
this Agreement; or
(m) Any agreement or understanding, whether in writing or otherwise,
for the Seller to take any of the actions specified in paragraphs (a) through
(l) above.
2.12 Ordinary Course. Since the date of the Base Balance Sheet, the Seller
---------------
has conducted its business only in the ordinary course and consistently with its
prior practices, except for transactions contemplated by this Agreement.
2.13 Banking Relations. All of the arrangements which the Seller has with
-----------------
any banking institution are completely and accurately described on Schedule
--------
2.13, indicating with respect to each of such arrangements the type of
- ----
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the person or persons authorized in respect thereof.
13
<PAGE>
2.14 Intellectual Property.
---------------------
(a) Except as described on Schedule 2.14, the Seller has sufficient
-------------
ownership of, or sufficient license to use, all Intellectual Property Rights
including, without limitation, patent, copyright, trade secret, trademark, or
other proprietary rights used or to be used in its business as presently
conducted or contemplated. The Seller's rights in all Intellectual Property
Rights set forth on Schedule 2.14 are freely transferable. There are no claims
-------------
of conflict or infringement of any other person pertaining to any of such
Intellectual Property Rights and no proceedings have been instituted, or are
pending or threatened, which challenge the rights of the Seller in respect
thereof.
(b) All patents, patent applications, trademarks, trademark
applications and registrations and registered copyrights which are owned by or
licensed to the Seller or used or to be used by the Seller in its business as
presently conducted or contemplated, and all other Intellectual Property Rights
which are material to the business or operations of the Seller, are listed on
Schedule 2.14. All of such patents, patent applications, trademark
- -------------
registrations, trademark applications and registered copyrights have been duly
registered in, filed in or issued by the United States Patent and Trademark
Office, the United States Register of Copyrights, or the corresponding offices
of other jurisdictions as identified on said Schedule, and have been properly
maintained and renewed in accordance with all applicable provisions of law and
administrative regulations of the United States and each such jurisdiction.
(c) All licenses or other agreements under which the Seller is
granted Intellectual Property Rights are listed on Schedule 2.14. All of said
-------------
licenses or other agreements are in full force and effect, there is no material
default by any party thereto, and, except as set forth on Schedule 2.14, all of
-------------
the Seller's rights thereunder are freely assignable. To the knowledge of the
Seller, the licensors under said licenses and other agreements have and had all
requisite power and authority to grant the rights purported to be conferred
thereby. True and complete copies of all such licenses or other agreements, and
any amendments thereto, have been provided to Buyer.
(d) All licenses or other agreements under which the Seller has
granted to others any Intellectual Property Rights owned or licensed by the
Seller are listed on Schedule 2.14. All of said licenses or other agreements
-------------
are in full force and effect, there is no material default by any party thereto,
and, except as set forth on Schedule 2.14, all of the Seller's rights thereunder
-------------
are freely assignable. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been provided to Buyer.
(e) To the knowledge of the Seller, the Seller has not granted to any
third party any right to manufacture, reproduce, distribute, market or exploit
any of the Seller's products, services or Intellectual Property Rights or any
adaptations, translations, or derivative works based on the Seller's products,
services or Intellectual Property Rights or any portion thereof. To the
knowledge of the Seller, the Seller has at all times used commercially
14
<PAGE>
reasonable efforts to protect its trade secrets or other Intellectual Property
Rights and has not disclosed or otherwise dealt with such items in such a manner
as to cause the loss of such trade secrets or other Intellectual Property Rights
by release thereof into the public domain. To the knowledge of the Seller, the
Seller has at all times used commercially reasonable efforts to protect the
confidentiality of all of its other confidential and proprietary information and
that of third parties which is or has been in its possession.
(f) To the knowledge of the Seller, the present and contemplated
business, activities and products of the Seller do not infringe any Intellectual
Property Rights of any other person. No proceeding charging the Seller with
infringement of any adversely held Intellectual Property Rights has been filed
or has been threatened to be filed. To the Seller's knowledge, there exists no
unexpired patent or patent application which includes claims that would be
infringed by or otherwise adversely affect the products, activities or business
of the Seller. To the knowledge of the Seller, the Seller is not making
unauthorized use of any confidential information or trade secrets of any person,
including without limitation any former employer of any past or present employee
of the Seller. Except as set forth on Schedule 2.14, the Seller does not have
-------------
and, to the knowledge of the Seller, none of its employees have, any agreements
or arrangements with any persons other than the Seller related to confidential
information or trade secrets of such persons or restricting any such employee's
ability to engage in business activities of any nature. The activities of the
Seller's employees on behalf of the Seller do not violate any such agreements or
arrangements known to the Seller which any such employees have with other
persons.
As used herein, the term "Intellectual Property Rights" shall mean all
intellectual property rights, including, without limitation, all of the
registered rights set forth on Schedule 2.14 and all patents, patent
-------------
applications, patent rights, trademarks, trademark applications, trade names,
service marks, service mark applications, copyrights, copyright applications,
computer programs and other computer software, inventions, designs, samples,
specifications, schematics, know-how, trade secrets, proprietary processes and
formulae, including production technology and processes, all source and object
code, algorithms, promotional materials, customer lists, supplier and dealer
lists and marketing research, and all documentation and media constituting,
describing or relating to the foregoing, including without limitation, manuals,
memoranda and records. Schedule 2.14 contains a list and brief description of
-------------
all Intellectual Property Rights (other than with respect to "off the shelf"
software used by the Seller or any subsidiary of the Seller that is generally
commercially available) owned by or registered in the name of the Seller or any
subsidiary of the Seller or of which the Seller or any subsidiary of the Seller
is the licensor or a licensee of a material right or in which the Seller or any
subsidiary of the Seller has any material right and, in each case, a brief
description of the nature of the right.
2.15 Contracts. Except for contracts, commitments, plans, agreements and
---------
licenses described on Schedule 2.15 (true and complete copies of which have been
-------------
delivered to Buyer), the Seller is not a party to or subject to:
15
<PAGE>
(a) any plan or contract providing for bonuses, pensions, options,
stock purchases, deferred compensation, retirement payments, profit sharing,
collective bargaining or the like, or any contract or agreement with any labor
union;
(b) any employment contract or contract for services which requires
the payment of more than $50,000 annually or which is not terminable within 30
days by the Seller without liability for any penalty or severance payment;
(c) any contract or agreement for the purchase of any commodity,
material or equipment except purchase orders in the ordinary course for less
than $5,000 each, such orders not exceeding $20,000 in the aggregate;
(d) any other contracts or agreements creating any obligations of the
Seller of $25,000 or more with respect to any such contract or agreement not
specifically disclosed elsewhere under this Agreement;
(e) any contract or agreement providing for the purchase of all or
substantially all of its requirements of a particular product from a supplier;
(f) any contract or agreement involving more than $25,000 which by
its terms does not terminate or is not terminable without penalty by the Seller
or any successor or assign within one year after the date hereof;
(g) any contract or agreement for the sale or lease of its products
not made in the ordinary course of business;
(h) any contract with any sales agent or distributor of products of
the Seller;
(i) any contract containing covenants limiting the freedom of the
Seller to compete in any line of business or with any person or entity;
(j) any contract or agreement for the purchase of any fixed asset for
a price in excess of $5,000 whether or not such purchase is in the ordinary
course of business;
(k) any license agreement (as licensor or licensee);
(l) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money; or
(m) any contract or agreement with any officer, employee, director or
stockholder of the Seller or with any persons or organizations controlled by or
affiliated with any of them.
16
<PAGE>
The Seller is not in default of any material provision under any such
contracts, commitments, plans, agreements or licenses described in said
Schedule, and Seller does not have knowledge of conditions or facts which with
notice or passage of time, or both, would constitute such a default.
2.16 Litigation. Schedule 2.16 hereto lists all currently pending
---------- -------------
litigation and governmental or administrative proceedings or investigations to
which the Seller is a party. Except for matters described on Schedule 2.16,
-------------
there is no litigation or governmental or administrative proceeding or
investigation pending or, to the knowledge of the Seller, threatened against the
Seller or any affiliate of the Seller which may have any adverse effect on the
Seller's properties, assets, prospects, financial condition or business or which
would prevent or hinder the consummation of the transactions contemplated by
this Agreement. With respect to each matter set forth therein, Schedule 2.16
-------------
sets forth a description of the matter, the forum (if any) in which it is being
conducted, the parties thereto and the type and amount of relief sought.
2.17 Compliance with Laws. Except as set forth on Schedule 2.17, to the
-------------------- -------------
knowledge of the Seller, the Seller is in compliance in all material respects
with all applicable statutes, ordinances, orders, judgments, decrees and rules
and regulations promulgated by any federal, state, municipal or other
governmental authority which apply to the Seller or to the conduct of its
business, and the Seller has not received any notice of a violation or alleged
violation of any such statute, ordinance, order, rule or regulation.
2.18 Insurance. The physical properties and assets of the Seller are
---------
insured to the extent disclosed on Schedule 2.18 and all insurance policies and
-------------
arrangements of the Seller are disclosed on said Schedule. To the knowledge of
the Seller, said insurance policies and arrangements are in full force and
effect, all premiums with respect thereto are currently paid, and the Seller is
in compliance in all material respects with the terms thereof. To the knowledge
of the Seller, said insurance is adequate and customary for the business engaged
in by the Seller and is sufficient for compliance by the Seller with all
requirements of law and all agreements and leases to which the Seller is a
party.
2.19 Warranty or Other Claims. Except as disclosed on Schedule 2.19, to
------------------------ -------------
the knowledge of the Seller, there are no existing or threatened product
liability, warranty or other similar claims, or any facts upon which a material
claim of such nature could be based, against the Seller for services which are
defective or fail to meet any service warranties. No claim has been asserted
against the Seller for renegotiation or price redetermination of any business
transaction, and there are no facts upon which any such claim could be based.
2.20 Powers of Attorney. Neither the Seller nor any Stockholder has
------------------
granted any powers of attorney which are presently outstanding.
2.21 Finder's Fee. Neither the Seller nor any Stockholder has incurred or
------------
become liable for any broker's commission or finder's fee relating to or in
connection with the
17
<PAGE>
transactions contemplated by this Agreement.
2.22 Permits; Burdensome Agreements. Schedule 2.22 lists all permits,
------------------------------ -------------
registrations, licenses, franchises, certifications and other approvals
(collectively, the "Approvals") required from federal, state or local
authorities in order for the Seller to conduct its business. The Seller has
obtained all such Approvals, which are valid and in full force and effect, and
is operating in compliance therewith. Such Approvals include, but are not
limited to, those required under federal, state or local statutes, ordinances,
orders, requirements, rules, regulations, or laws pertaining to environmental
protection, public health and safety, worker health and safety, buildings,
highways or zoning. Except as disclosed on Schedule 2.22 or in any other
-------------
Schedule hereto, the Seller is not subject to or bound by any agreement,
arrangement, judgment, decree or order which may materially and adversely affect
its business or prospects, its condition, financial or otherwise, or any of its
assets or properties.
2.23 Corporate Records; Copies of Documents. The business records and the
--------------------------------------
corporate records of the Seller, as delivered to Buyer pursuant to Sections
1.1(l) and 1.2(b), respectively, are either the originals of such documents or
are true, correct and complete copies of the originals of such documents.
2.24 Transactions with Related Parties. Except as set forth on Schedule
--------------------------------- --------
2.24 hereto, neither the Seller nor any stockholder, officer, supervisory
- ----
employee or director of the Seller or, to the knowledge of the Seller, any of
their respective spouses or family members owns directly or indirectly on an
individual or joint basis any material interest in, or serves as an officer or
director or in another similar capacity of, any competitor or supplier of the
Seller or any organization which has a material contract or arrangement with the
Seller.
2.25 Employee Benefit Programs.
-------------------------
(a) Schedule 2.25 lists every Employee Program (as defined below)
-------------
that has been maintained (as defined below) by the Seller at any time during the
three-year period ending on the Closing Date.
(b) Each Employee Program which has ever been maintained by the
Seller and which has at any time been intended to qualify under Section 401(a)
or 501(c)(9) of the Code has received a favorable determination or approval
letter from the IRS regarding its qualification under such section and has, in
fact, been continuously qualified under the applicable section of the Code since
the effective date of such Employee Program. No event or omission has occurred
which would cause any such Employee Program to lose its qualification under the
applicable Code section.
(c) The Seller does not know, and has no reason to know, of any
failure of any party to comply with any laws applicable to the Employee Programs
that have been maintained by the Seller. With respect to any Employee Program
ever maintained by the Seller,
18
<PAGE>
there has occurred no "prohibited transaction," as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Section
4975 of the Code, or breach of any duty under ERISA or other applicable law
(including, without limitation, any health care continuation requirements or any
other tax law requirements, or conditions to favorable tax treatment, applicable
to such plan), which could result, directly or indirectly, in any taxes,
penalties or other liability to Buyer. No litigation, arbitration, or
governmental administrative proceeding (or investigation) or other proceeding
(other than those relating to routine claims for benefits) is pending or
threatened with respect to any such Employee Program.
(d) Neither the Seller nor any Affiliate (as defined below) (i) has
ever maintained any Employee Program which has been subject to Title IV of ERISA
(including, but not limited to, any Multi-employer Plan (as defined below)) or
(ii) has ever provided health care or any other non-pension benefits to any
employees after their employment is terminated (other than as required by Part 6
of Subtitle B of Title I of ERISA) or has ever promised to provide such post-
termination benefits.
(e) With respect to each Employee Program maintained by the Seller
within the three years preceding the Closing, complete and correct copies of the
following documents (if applicable to such Employee Program) have previously
been delivered to Buyer: (i) all documents embodying or governing such Employee
Program, and any funding medium for the Employee Program (including, without
limitation, trust agreements) as they may have been amended; (ii) the most
recent IRS determination or approval letter with respect to such Employee
Program under Code Section 401 or 501(c)(9), and any applications for
determination or approval subsequently filed with the IRS; (iii) the three most
recently filed IRS Forms 5500, with all applicable schedules and accountants'
opinions attached thereto; (iv) the summary plan description for such Employee
Program (or other descriptions of such Employee Program provided to employees)
and all modifications thereto; (v) any insurance policy (including any fiduciary
liability insurance policy) related to such Employee Program; (vi) any documents
evidencing any loan to an Employee Program that is a leveraged employee stock
ownership plan; and (vii) all other materials reasonably necessary for Buyer to
perform any of its responsibilities with respect to any Employee Program
subsequent to the Closing (including, without limitation, health care
continuation requirements).
(f) For purposes of this section:
(i) "Employee Program" means (A) all employee benefit plans
within the meaning of ERISA Section 3(3), including, but not limited to,
multiple employer welfare arrangements (within the meaning of ERISA Section
3(4)), plans to which more than one unaffiliated employer contributes and
employee benefit plans (such as foreign or excess benefit plans) which are
not subject to ERISA; and (B) all stock or cash option plans, restricted
stock plans, bonus or incentive award plans, severance pay policies or
agreements, deferred compensation agreements, supplemental income
arrangements,
19
<PAGE>
vacation plans, and all other employee benefit plans, agreements, and
arrangements not described in (A) above. In the case of an Employee Program
funded through an organization described in Code Section 501(c)(9), each
reference to such Employee Program shall include a reference to such
organization.
(ii) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides (or has promised to provide) benefits
under such Employee Program, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under such Employee
Program, or if such Employee Program provides benefits to or otherwise
covers employees of such entity, or their spouses, dependents, or
beneficiaries.
(iii) An entity is an "Affiliate" of the Seller if it would have
ever been considered a single employer with such Seller under ERISA Section
4001(b) or part of the same "controlled group" as such Seller for purposes
of ERISA Section 302(d)(8)(C).
(iv) "Multi-employer Plan" means a (pension or non-pension)
employee benefit plan to which more than one employer contributes and which
is maintained pursuant to one or more collective bargaining agreements.
2.26 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 2.26, (i) the Seller has not ever
-------------
generated, transported, used, stored, treated, disposed of, or managed any
Hazardous Waste (as defined below); (ii) to the knowledge of the Seller, no
Hazardous Material (as defined below) has ever been or is threatened to be
spilled, released, or disposed of at any site presently or formerly owned,
operated, leased, or used by the Seller, or, to the knowledge of the Seller, has
ever been located in the soil or groundwater at any such site; (iii) to the
knowledge of the Seller, no Hazardous Material has ever been transported from
any site presently or formerly owned, operated, leased, or used by the Seller
for treatment, storage, or disposal at any other place; (iv) to the knowledge of
the Seller, the Seller does not presently own, operate, lease, or use, nor has
the Seller previously owned, operated, leased, or used any site on which
underground storage tanks are or were located; and (v) no lien has ever been
imposed by any governmental agency on any property, facility, machinery, or
equipment owned, operated, leased, or used by the Seller in connection with the
presence of any Hazardous Material.
(b) Except as set forth on Schedule 2.26, (i) the Seller does not
-------------
have any liability under, nor has the Seller ever violated, any Environmental
Law (as defined below); (ii) to the knowledge of the Seller, the Seller, any
property owned, operated, leased, or used by the Seller, and any facilities and
operations thereon are presently in compliance with all applicable Environmental
Laws; (iii) the Seller has not ever entered into or been subject to any
judgment, consent decree, compliance order, or administrative order with respect
to any environmental or
20
<PAGE>
health and safety matter or received any request for information, notice, demand
letter, administrative inquiry, or formal or informal complaint or claim with
respect to any environmental or health and safety matter or the enforcement of
any Environmental Law; and (iv) the Seller does not have any knowledge or reason
to know that any of the items enumerated in clause (iii) of this subsection will
be forthcoming.
(c) Except as set forth on Schedule 2.26 hereto, to the knowledge of
-------------
the Sellers, no site owned, operated, leased, or used by the Seller contains any
asbestos or asbestos-containing material, any polychlorinated biphenyls (PCBs)
or equipment containing PCBs, or any urea formaldehyde foam insulation.
(d) The Seller has provided to Buyer copies of all documents,
records, and information known or available to the Seller concerning any
environmental or health and safety matter relevant to the Seller, whether
generated by the Seller or others, including, without limitation, environmental
audits, environmental risk assessments, site assessments, documentation
regarding off-site disposal of Hazardous Materials, spill control plans, and
reports, correspondence, permits, licenses, approvals, consents, and other
authorizations related to environmental or health and safety matters issued by
any governmental agency.
(e) For purposes of this Section 2.26, (i) "Hazardous Material" shall
mean and include any hazardous waste, hazardous material, hazardous substance,
petroleum product, oil, toxic substance, pollutant, contaminant, or other
substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law; (ii) "Hazardous
Waste" shall mean and include any hazardous waste as defined or regulated under
any Environmental Law; (iii) "Environmental Law" shall mean any environmental or
health and safety-related law, regulation, rule, ordinance, or by-law at the
foreign, federal, state, or local level, whether existing as of the date hereof,
previously enforced, or subsequently enacted; and (iv) "Seller" shall mean and
include the Seller and all Affiliates of the Seller for whose conduct the Seller
is responsible under any Environmental Law.
2.27 Directors and Officers.
----------------------
(a) Schedule 2.27 contains a true and complete list of all current
-------------
directors and officers of the Seller. In addition, Schedule 2.27 contains a
-------------
list of all managers, employees and consultants of the Seller who, individually,
have received or are scheduled to receive compensation from the Seller for the
fiscal year ending December 31, 1997, in excess of $50,000. In each case such
Schedule includes the current job title and aggregate annual compensation of
each such individual.
2.28 Backlog. As of the date hereof, the Seller has a backlog of firm
-------
orders for the sale of products or services, for which revenues have not been
recognized by the Seller, as set forth in Schedule 2.28.
-------------
21
<PAGE>
2.29 Employees; Labor Matters. The Seller employs a total of approximately
------------------------
six (6) full-time employees and no part-time employees and generally enjoy good
employer-employee relationships. The Seller is not delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed for it to the date hereof or
amounts required to be reimbursed to such employees. Upon termination of the
employment of any of said employees, neither the Seller nor Buyer will by reason
of the acquisition transaction or anything done prior to the Closing be liable
to any of said employees for so-called "severance pay" or any other payments,
except as set forth on Schedule 2.29. The Seller does not have any policy,
-------------
practice, plan or program of paying severance pay or any form of severance
compensation in connection with the termination of employment of its employees,
except as set forth in said Schedule. The Seller is in compliance in all
material respects with all applicable laws and regulations respecting labor,
employment, fair employment practices, work place safety and health, terms and
conditions of employment, and wages and hours. There are no charges of
employment discrimination or unfair labor practices, nor are there any strikes,
slowdowns, stoppages of work, or any other concerted interference with normal
operations existing, pending or, to the knowledge of the Seller, threatened
against or involving the Seller. No question concerning representation exists
respecting any group of employees of the Seller. There are no grievances,
complaints or charges that have been filed against any Seller under any dispute
resolution procedure (including, but not limited to, any proceedings under any
dispute resolution procedure under any collective bargaining agreement) that
might have an adverse effect on the Seller or the conduct of its business and no
arbitration or similar proceeding is pending and no claim therefor has been
asserted. No collective bargaining agreement is in effect or is currently being
or is about to be negotiated by the Seller. The Seller has not received any
information to indicate that any of its employment policies or practices is
currently being audited or investigated by any federal, state or local
government agency. To the knowledge of the Seller, the Seller is, and at all
times since November 6, 1986, has been, in compliance with the requirements of
the Immigration Reform Control Act of 1986.
2.30 Customers and Suppliers. Schedule 2.30 sets forth any customer who
----------------------- -------------
accounts for more than $100,000 of the consolidated sales of the Sellers for the
twelve months ended December 31, 1996, or the twelve months ended as of the date
of the Base Balance Sheet (collectively, the "Customers"). Schedule 2.30 also
-------------
contains a true and complete list of the suppliers of the Seller to whom during
the twelve months ended December 31, 1996, the Seller made payments aggregating
$25,000 or more showing, with respect to each, the name, address and dollar
volume involved (the "Suppliers"). The relationships of the Seller with its
Customers and Suppliers are good commercial working relationships. Except as
set forth on Schedule 2.30, no Customer or Supplier of the Seller has canceled,
-------------
materially modified, or otherwise terminated its relationship with the Seller,
or has during said period decreased materially its usage or purchase of the
services or products of the Seller or the services, supplies or materials
furnished to the Seller, nor does any Customer or Supplier have, to the
knowledge of the Seller, any plan or intention to do any of the foregoing.
2.31 Hart-Scott-Rodino Matters. Neither the Seller on a consolidated basis
-------------------------
with
22
<PAGE>
McLagan Partners International Incorporated, an Illinois corporation, and
McLagan Partners Asia Incorporated, an Illinois corporation, nor the "ultimate
parent entities" (as such term is defined in the Hart-Scott-Rodino Anti-Trust
Improvement Act of 1976, as amended (the "HSR Act")) of the Seller, on a
consolidated basis, had annual net sales (as stated on the last regularly
prepared annual statement of income and expense for such persons or entities) or
total assets (as stated on the last regularly prepared balance sheet for such
persons or entities) of One Hundred Million Dollars ($100,000,000) or more, as
calculated in accordance with the HSR Act and the rules and regulations
promulgated thereunder.
2.32 Disclosure. The representations, warranties and statements contained
----------
in this Agreement and in the certificates, exhibits and schedules delivered to
Buyer by the Seller or Stockholder pursuant to this Agreement do not contain any
untrue statement of a material fact, and, when taken together, do not omit to
state a material fact required to be stated therein or necessary in order to
make such representations, warranties or statements not misleading in light of
the circumstances under which they were made.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
- ---------------------------------------------------
3.1 Making of Representations and Warranties. As a material inducement to
----------------------------------------
the Seller and the Stockholders to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer makes to the Seller and the Stockholders
the representations and warranties contained in this Section 3.
3.2 Organization of Buyer. Buyer is a corporation duly organized, validly
---------------------
existing and in good standing under the laws of the State of Delaware with full
corporate power to own or lease its properties and to conduct its business in
the manner and in the places where such properties are owned or leased or such
business is conducted by it. Buyer is duly qualified to do business as a
foreign corporation in each jurisdiction in which it is required to be so
qualified except to the extent that any failure to be so qualified would not
have a material adverse effect on the Buyer.
3.3 Authority of Buyer. Buyer has full right, authority and power to
------------------
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by Buyer pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Buyer of this Agreement and each such other agreement, document
and instrument have been, or as of the Closing shall have been, duly authorized
by all necessary corporate action of Buyer and no other action on the part of
Buyer is required in connection therewith. This Agreement and each other
agreement, document and instrument executed and delivered by Buyer pursuant to
this Agreement constitute, or when executed and delivered will constitute, valid
and binding obligations of Buyer enforceable in accordance with their terms.
Following the approval of Buyer's Board of Directors, the execution, delivery
and performance by Buyer of this Agreement and each such agreement, document and
instrument:
23
<PAGE>
(a) does not and will not violate any provision of the Certificate of
Incorporation or by-laws of Buyer;
(b) does not and will not violate any laws of the United States or of
any state or any other jurisdiction applicable to Buyer or require Buyer to
obtain any approval, consent or waiver of, or make any filing with, any person
or entity (governmental or otherwise) which has not been obtained or made; and
(c) does not and will not result in a breach of, constitute a default
under, accelerate any obligation under, or give rise to a right of termination
of any indenture, loan or credit agreement, or any other agreement, mortgage,
lease, permit, order, judgment or decree to which Buyer is a party and which is
material to the business and financial condition of Buyer and its parent and
affiliated organizations on a consolidated basis.
3.4 Litigation. There is no litigation or governmental or administrative
----------
proceeding or investigation pending or, to its knowledge, threatened against
Buyer which would prevent or hinder the consummation of the transactions
contemplated by this Agreement.
3.5 Finder's Fee. Buyer has not incurred or become liable for any
------------
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
3.6 Hart-Scott-Rodino Matters. Neither the Buyer nor the "ultimate parent
-------------------------
entity" (as such term is defined in the HSR Act) of the Buyer had annual net
sales (as stated on the last regularly prepared annual statement of income and
expense for the Buyer or such ultimate parent entity) or total assets (as stated
on the last regularly prepared balance sheet for the Buyer or such ultimate
parent entity) of One Hundred Million Dollars ($100,000,000) or more, as
calculated in accordance with the HSR Act and the rules and regulations
promulgated thereunder.
3.7 Intentionally Omitted.
------------- -------
SECTION 4. CONDITIONS.
- ---------------------
4.1 Conditions to the Obligations of Buyer. The obligations of Buyer to
--------------------------------------
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) Satisfaction of Conditions. The representations and warranties of
--------------------------
the Seller and the Stockholders contained in this Agreement shall be true and
correct on and as of the Closing Date; each of the conditions specified in this
Section 4.1 shall have been satisfied or waived in writing by the Buyer; and on
the Closing Date a certificate to such effect executed on behalf of the Seller
and the Stockholders, as appropriate, shall be delivered to the Buyer.
24
<PAGE>
(b) Transfer of Subject Assets. The Seller shall deliver or cause to
--------------------------
be delivered to Buyer (i) an Assignment and Assumption Agreement substantially
in the form of Exhibit C hereto and (ii) a Bill of Sale substantially in the
---------
form of Exhibit D hereto transferring to Buyer good and marketable title to all
---------
the Subject Assets.
(c) Delivery of Records and Contracts. Seller shall deliver or cause
---------------------------------
to be delivered to Buyer all of the Assumed Contracts, with such assignments
thereof and consents to assignments as are necessary to assure Buyer of the full
benefit of the same. Seller shall also deliver to Buyer at the Closing all of
its business records, tax returns, books and other data relating to their
respective assets, businesses and operations (except Corporate Records excluded
under Section 1.2(b) as to which only copies need be delivered in accordance
with such Section), and Seller shall take all requisite steps to put Buyer in
actual possession and operating control of the assets and businesses of Sellers.
(d) Approval of Buyer's Counsel. All actions, proceedings,
---------------------------
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this Agreement shall have been approved by Goodwin, Procter & Hoar LLP as
counsel for Buyer, and such counsel shall have received on behalf of Buyer such
other certificates, opinions, and documents in form satisfactory to such counsel
as Buyer may reasonably request from the Seller or the Stockholders to evidence
compliance with the terms and conditions hereof.
(e) Opinion of Counsel. Buyer shall have received from Cummings &
------------------
Lockwood, counsel for the Seller and Stockholders, an opinion, dated as of the
Closing Date, in the form attached hereto as Exhibit E.
---------
(f) No Litigation. There shall have been no determination by Buyer,
-------------
acting in good faith, that the consummation of the transactions contemplated by
this Agreement has become inadvisable or impracticable by reason of the
institution or threat by any person or any federal, state or other governmental
authority of litigation, proceedings or other action against Buyer, any Seller
or any Stockholder or any material adverse change in the laws or regulations
applicable to any Seller.
(g) Hart-Scott-Rodino. All required filings under the HSR Act ("HSR
-----------------
Filings") shall have been completed and all applicable time limitations under
such Act shall have expired without a request for further information by the
relevant federal authorities under such Act, or in the event of such a request
for further information, the expiration of all applicable time limitations under
the Act shall have occurred without the objection of such federal authorities.
(h) Due Diligence and Disclosure Schedules. Buyer, in its sole
--------------------------------------
discretion, shall be satisfied, with the results of its legal, accounting,
business and other due diligence review of the Seller and the Subject Assets.
Buyer, in its sole discretion, shall, be satisfied with
25
<PAGE>
the form and substance of the Disclosure Schedules to this Agreement which shall
have been delivered to Buyer by the Seller on or before Closing.
(i) Financing. ASI and New McLagan shall have secured senior
---------
financing from a bank or other financial institution satisfactory to ASI and New
McLagan on terms and conditions satisfactory to ASI and New McLagan in their
sole discretion and in amounts sufficient to provide all of the consideration
for the acquisition transaction contemplated hereby plus adequate working
capital for the acquired businesses.
(j) Consents. The Seller shall have made all filings with and
--------
notifications of governmental authorities, regulatory agencies and other
entities required to be made by Seller in connection with the execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of the Seller by Buyer
subsequent to the Closing; and Seller and Buyer shall have received all
authorizations, waivers, consents and permits, in form and substance reasonably
satisfactory to Buyer, from all third parties, including, without limitation,
applicable governmental authorities, regulatory agencies, lessors, lenders and
contract parties, required to permit the continuation of the businesses of the
Seller by Buyer and the consummation of the transactions contemplated by this
Agreement, and in connection with the transfer of the Subject Assets or the
Seller's contracts, permits, leases, licenses and franchises, to avoid a breach,
default, termination, acceleration or modification of any indenture, loan or
credit agreement or any other agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award as a result of, or in connection with, the
execution and performance of this Agreement.
(k) Intentionally Omitted.
------------- -------
(l) Intentionally Omitted.
------------- -------
(m) Intentionally Omitted.
------------- -------
(n) Acquisition Audit. Buyer shall have received a satisfactory audit
-----------------
report from C&L with respect to the financial statements and financial condition
of the Seller which report shall indicate financial performance and financial
condition that is satisfactory to Buyer.
(o) Good Standing. At or prior to the Closing, Buyer shall have
-------------
received from the Seller a certificate of good standing from the appropriate
authority in the States of Illinois and Connecticut.
(p) Board of Directors Approval. The Board of Directors of the Buyer
---------------------------
shall have approved, ratified and affirmed the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
26
<PAGE>
4.2 Conditions to Obligations of the Seller. The obligations of the
---------------------------------------
Seller to consummate this Agreement and the transactions contemplated hereby are
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) Satisfaction of Conditions. The representations and warranties of
--------------------------
the Buyer contained in this Agreement shall be true and correct on and as of the
Closing Date; each of the conditions specified in this Section 4.2 shall have
been satisfied or waived in writing by the Seller; and on the Closing Date a
certificate to such effect executed on behalf of the Buyer shall be delivered to
the Seller.
(b) Intentionally Omitted.
------------- -------
(c) Intentionally Omitted.
------------- -------
(d) Intentionally Omitted.
------------- -------
(e) Assignment and Assumption Agreement. At the Closing, Buyer shall
-----------------------------------
deliver or cause to be delivered to Seller an Assignment and Assumption
Agreement in substantially the form of Exhibit C hereto.
---------
(f) Approval of Seller's and Stockholders' Counsel. All actions,
----------------------------------------------
proceedings, instruments and documents required to carry out this Agreement and
the transactions contemplated hereby and all related legal matters contemplated
by this agreement shall have been approved by Cummings & Lockwood, as counsel
for the Seller and Stockholders, and such counsel shall have received on behalf
of the Seller and the Stockholders such other certificates, opinions and
documents in form satisfactory to such counsel as the Seller and Stockholders
may reasonably require from Buyer to evidence compliance with the terms and
conditions hereof.
(g) No Litigation. There shall have been no determination by the
-------------
Seller or Stockholder, acting in good faith, that the consummation of the
transactions contemplated by this Agreement has become inadvisable or
impracticable by reason of the institution or threat by any person or any
federal, state or other governmental authority of material litigation,
proceedings or other action against Buyer, the Seller or any Stockholder.
(h) Intentionally Omitted.
---------------------
(i) Opinion of Counsel. The Seller and the Stockholders shall have
------------------
received from Goodwin, Procter & Hoar LLP, counsel for the Buyer, an opinion,
dated as of the Closing Date, in the form attached hereto as Exhibit I.
---------
(j) Consents. Buyer shall have made all filings with and
--------
notifications of governmental authorities, regulatory agencies and other
entities required to be made by Buyer in connection with the execution and
delivery of this Agreement, the performance of the
27
<PAGE>
transactions contemplated hereby and the continued operation of the business of
the Seller by Buyer subsequent to the Closing; and Buyer shall have received all
authorizations, waivers, consents and permits, in form and substance reasonably
satisfactory to Seller, from all third parties, including, without limitation,
applicable governmental authorities, regulatory agencies, lessors, lenders and
contract parties, required to permit the continuation of the businesses of the
Sellers by Buyer and the consummation of the transactions contemplated by this
Agreement.
(k) Payment of Purchase Price. Buyer shall have delivered to Seller
-------------------------
One Hundred Thousand Dollars ($100,000) in cash, in accordance with Section 1.5
hereof.
(l) Exhibits. Buyer and Seller shall have mutually agreed to the
--------
form, term and provisions of each of the Exhibits referred to herein.
SECTION 5. SURVIVAL OF WARRANTIES; RIGHTS, OBLIGATIONS AND ACTIONS SUBSEQUENT TO
- --------------------------------------------------------------------------------
CLOSING.
-------
5.1 Survival of Warranties. Each of the representations, warranties,
----------------------
agreements, covenants and obligations herein or in any schedule, exhibit,
certificate or financial statement delivered by any party to the other party
incident to the transactions contemplated hereby are material, shall be deemed
to have been relied upon by the other party and shall survive the Closing
regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto; provided, however, that, as more fully set
forth in Section 6 hereof, such representations and warranties shall expire on
the same dates as and to the extent that the rights to indemnification with
respect thereto under Section 6 shall expire.
5.2 Payment of Obligations. Subsequent to the Closing, the Seller shall
----------------------
pay all of the Excluded Liabilities in the ordinary course of business as they
become due.
5.3 Tax Returns. After the Closing, the Seller, with the approval of
-----------
Buyer and in accordance with applicable law, shall (i) promptly prepare and file
on or before the due date or any extension thereof, all federal, state and local
tax returns required to be filed by it with respect to taxable periods of the
Seller that include any period ending on or before the Closing and (ii) pay all
Taxes of the Seller attributable to periods ending on or before the Closing
Date.
5.4 Books and Records. After the Closing, Buyer shall afford to Seller
-----------------
and Stockholders and their respective accountants and attorneys, for the purpose
of preparing such tax returns of the Seller or Stockholders as may be required
after the Closing, reasonable access to the books and records of Seller
delivered to Buyer under Section 4.1(b) and shall permit the Seller or any
Stockholder, at its or his expense, to make extracts and copies therefrom.
5.5 Further Assurances. Seller from time to time after the Closing at the
------------------
request of Buyer and without further consideration shall execute and deliver
further instruments of transfer
28
<PAGE>
and assignment and take such other action as Buyer may reasonably request to
more effectively transfer and assign to, and vest in, Buyer each of the Subject
Assets. Seller shall cooperate with Buyer to permit Buyer to enjoy their
respective ratings and benefits under the workman's compensation laws and
unemployment compensation laws of applicable jurisdictions, to the extent
permitted by such laws. Nothing herein shall be deemed a waiver by Buyer of its
right to receive at the Closing an effective assignment of each of the leases,
contracts, commitments or rights of Seller as otherwise set forth in this
Agreement.
5.6 Allocation of Purchase Price. Within thirty (30) days of the Closing,
----------------------------
Buyer shall allocate the Purchase Price (and all other capitalized costs) among
the Subject Assets. Such allocation shall be binding upon Buyer, Seller and each
Stockholder for all purposes (including financial accounting purposes, financial
and regulatory reporting purposes and tax purposes) unless the Seller shall
notify Buyer, within thirty (30) days of their receipt of notice of Buyer's
allocation hereunder, that they disagree with such allocation by Buyer. In the
event of such a disagreement, the parties shall submit the allocation of the
Purchase Price (and all other capitalized costs) among the Subject Assets to an
accounting firm of nationally recognized standing mutually acceptable to Buyer,
on one hand, and the Seller on the other. Such firm shall deliver its allocation
of the Purchase Price (and all other capitalized costs) among the Subject Assets
to the parties as soon as practicable, and such allocation shall be binding upon
Buyer, the Seller and each Stockholder for all purposes (including financial
accounting purposes, financial and regulatory reporting purposes and tax
purposes). All Purchase Price allocations hereunder shall be made in accordance
with the provisions of Section 1060 of the Code. Buyer and the Seller also each
agree to file IRS Form 8594 consistently with the foregoing and in accordance
with Section 1060 of the Code.
5.7 Hart-Scott-Rodino Filings. Buyer shall cooperate with Seller and
-------------------------
Stockholders in connection with all required HSR Filings and shall furnish all
follow-up information required in connection therewith. Buyer shall have the
primary responsibility with respect to the preparation and filing of the HSR
Filings.
5.8 Sellers' Employees. After the Closing, Buyer will make offers of
------------------
employment to each of the employees of the Seller named on Schedule 5.8 hereto
------------
under terms and conditions comparable to those under which Sellers currently
employ such employees.
5.9 Intentionally Omitted.
------------- -------
5.10 Business Relations. During the period from the Closing Date until the
------------------
date which is ninety (90) days thereafter, the Buyer may conduct, in
coordination with the Seller, personal interviews with the Seller's Customers
and Suppliers in order to confirm that such Customers and Suppliers intend to
continue their respective current levels of business with Sellers.
29
<PAGE>
SECTION 6. INDEMNIFICATION.
- --------------------------
6.1 Indemnification by the Seller and the Stockholders. The Seller and
--------------------------------------------------
each Stockholder jointly and severally agree subsequent to the Closing to
indemnify and hold Buyer and its respective subsidiaries and affiliates and
persons serving as officers, directors, partners or employees thereof
(individually a "Buyer Indemnified Party" and collectively the "Buyer
Indemnified Parties") harmless from and against any damages, liabilities,
losses, taxes, fines, penalties, costs, and expenses (including, without
limitation, reasonable fees of counsel and accountants) of any kind or nature
whatsoever (whether or not arising out of third-party claims and including all
amounts paid in investigation, defense or settlement of the foregoing) which may
be sustained or suffered by any of them arising out of or based upon any of the
following matters:
(a) fraud, intentional misrepresentation or a deliberate or wilful
breach by the Seller or any Stockholder of any representation, warranty or
covenant under this Agreement or in any certificate, schedule or exhibit
delivered as part of or pursuant to this Agreement;
(b) any other breach of any representation or warranty made by the
Seller or any Stockholder in this Agreement, or in any certificate, schedule or
exhibit delivered by or on behalf of the Seller or any Stockholder as part of or
pursuant to this Agreement, or any third-party claim, action or proceeding
asserted or instituted or arising out of any matter or thing covered by such
representations or warranties (collectively, "Buyer Warranty Claims");
(c) any breach of any covenant or agreement made by or on behalf of
the Seller or any Stockholder in this Agreement, or in any certificate, schedule
or exhibit delivered by or on behalf of the Seller or any Stockholder as part of
or pursuant to this Agreement; and
(d) all claims, liabilities and obligations in connection with,
arising out of or otherwise relating to any of the Excluded Liabilities.
The rights of Buyer Indemnified Parties to recover indemnification in
respect of any occurrence referred to in clauses (c) or (d) of this Section 6.1
shall not be limited by the fact that such occurrence may not constitute an
inaccuracy in or breach of any representation, warranty or agreement referred to
in clauses (a) or (b) of this Section 6.1.
6.2 Limitations on Indemnification by the Seller and the Stockholders.
-----------------------------------------------------------------
The right of Buyer Indemnified Parties to indemnification under Section 6.1
shall be subject to the following provisions:
(a) No indemnification shall be payable to any Buyer Indemnified Party
in respect of Buyer Warranty Claims (other than any such claim relating to title
to the Subject Assets), unless the total of all claims for indemnification
pursuant to Section 6.1, when aggregated with all claims made under Section 6.1
of (i) that certain asset purchase agreement,
30
<PAGE>
dated as of November 13, 1997 by and between McLagan Partners, Inc., a Delaware
corporation and the parent corporation of the Buyer and McLagan Partners
Incorporated, an Illinois corporation, and certain other parties named therein
and (ii) that certain asset purchase agreement, dated November 13, 1997, by and
between McLagan Partners International, Inc., a Delaware corporation and a
sister corporation of the Buyer, and McLagan Partners International
Incorporated, an Illinois corporation, and certain other parties named therein
(the asset purchase agreements referred to in clauses (i) and (ii) are sometimes
referred to herein as the "Affiliate Agreements"), shall exceed $50,000 in the
aggregate, whereupon the full amount of such claims shall be recoverable in
accordance with the terms hereof;
(b) The indemnification obligations of the Seller with respect to
Buyer Warranty Claims (other than any such claim relating to Excluded
Liabilities or title to the Subject Assets), and of the Stockholders with
respect to all claims, shall be limited to Buyer's right to set off and apply
the amount of such claims against any and all amounts outstanding under that
certain Promissory Note in the original principal amount of $5,000,000 issued by
ASI for the benefit of New McLagan (the "Note") whether or not then due and
payable.
(c) Indemnification with respect to Buyer Warranty Claims shall expire
on April 30, 2000 (the "Indemnification Cut-Off Date"); provided, however, that
the limitation of this Section 6.2(c) shall not apply to Buyer Warranty Claims
involving fraud, intentional misrepresentation or title to the Subject Assets,
for which the period for making such claims shall expire on the date on which
the applicable statute of limitations relating thereto terminates; provided,
--------
further, however, that with respect only to DeMinimis Claims the Indemnification
- ------- -------
Cut-Off Date shall be the date which is ninety (90) days after the Closing Date.
If prior to the relevant date of expiration a specific state of facts shall have
become known which may constitute or give rise to any Buyer Warranty Claim as to
which indemnity may be payable and a Buyer Indemnified Party shall have given
notice of such facts to the Seller or any Stockholder, then the right to
indemnification with respect thereto shall remain in effect without regard to
when such matter shall have been finally determined and disposed of, according
to the date on which notice of the applicable claim is given; and
(d) The limitations set forth herein with respect to Buyer Warranty
Claims shall not limit the rights of any Buyer Indemnified Party with respect to
any other claims arising under the provisions of Section 6.1.
6.3 Indemnification by Buyer. Buyer agrees to indemnify and hold the
------------------------
Seller and their respective affiliates and persons serving as officers,
directors or employees thereof and the Stockholders (individually a "Seller
Indemnified Party" and collectively the "Seller Indemnified Parties") harmless
from and against any damages, liabilities, losses, taxes, fines, penalties,
costs, and expenses (including, without limitation, reasonable fees of counsel
and accountants) of any kind or nature whatsoever (whether or not arising out of
third-party claims and including all amounts paid in investigation, defense or
settlement of the foregoing) which may be sustained
31
<PAGE>
or suffered by any of them arising out of or based upon any of the following
matters:
(a) fraud, intentional misrepresentation or a deliberate or wilful
breach by Buyer of any representation, warranty or covenant under this Agreement
or in any certificate, schedule or exhibit delivered as part of or pursuant to
this Agreement;
(b) any other breach of any representation or warranty made by Buyer
in this Agreement or in any certificate, schedule or exhibit delivered pursuant
hereto, or any Warranty Claim;
(c) any breach of any covenant or agreement made by or on behalf of
Buyer in this Agreement, or in any certificate, schedule or exhibit delivered by
or on behalf of Buyer as part of or pursuant to this Agreement; or
(d) any failure by Buyer to perform and discharge any of the Assumed
Liabilities as set forth in this Agreement.
The rights of Seller Indemnified Parties to recover indemnification in
respect of any occurrence referred to in clauses (c) or (d) of this Section 6.3
shall not be limited by the fact that such occurrence may not constitute an
inaccuracy in or breach of any representation, warranty or agreement referred to
in clauses (a) or (b) of this Section 6.3.
6.4 Limitations on Indemnification by Buyer. The right of Seller
---------------------------------------
Indemnified Parties to indemnification under Section 6.3 shall be subject to the
following provisions:
(a) No indemnification shall be payable to any Seller Indemnified
Party in respect of any breach of any representation or warranty made by Buyer
in this Agreement, or in any certificate, schedule or exhibit delivered by or on
behalf of Buyer as part of or pursuant to this Agreement, or any third-party
claim, action or proceeding asserted or instituted or arising out of any matter
or thing covered by such representations or warranties (collectively, "Seller
Warranty Claims"), unless the total of all claims for indemnification pursuant
to Section 6.3 when aggregated with all claims made under Section 6.3 of the
Affiliate Agreements shall exceed $50,000 in the aggregate, whereupon the full
amount of such claims shall be recoverable in accordance with the terms hereof;
(b) Indemnification with respect to Seller Warranty Claims shall
expire on the Indemnification Cut-Off Date; provided, however, that the
limitation of this clause (i) shall not apply to Seller Warranty Claims
involving fraud or intentional misrepresentation, for which the period for
making such claims shall expire on the date on which the applicable statute of
limitations relating thereto terminates. If prior to the relevant date of
expiration a specific state of facts shall have become known which may
constitute or give rise to any Seller Warranty Claim as to which indemnity may
be payable and a Seller Indemnified Party shall have given notice of such facts
to Buyer, then the right to indemnification with respect thereto shall remain
32
<PAGE>
in effect without regard to when such matter shall have been finally determined
and disposed of, according to the date on which notice of the applicable claim
is given; and
(c) The limitations herein with respect to Seller Warranty Claims
shall not limit the rights of any Seller Indemnified Party with respect to any
other claims arising under provisions of Section 6.3.
6.5 Notice; Defense of Claims. An indemnified party may make claims for
-------------------------
indemnification hereunder by giving written notice thereof to the indemnifying
party within the period in which indemnification claims may be made hereunder.
If indemnification is sought for a claim or liability asserted by a third party,
the indemnified party shall give written notice thereof to the indemnifying
party promptly after it receives notice of the claim or liability being
asserted, but the failure to do so shall not relieve the indemnifying party from
any liability except to the extent that it is prejudiced by the failure or delay
in giving such notice. Such notice shall summarize the bases for the claim for
indemnification and any claim or liability being asserted by a third party.
Within twenty (20) days after receiving such notice the indemnifying party shall
give written notice to the indemnified party stating whether it disputes the
claim for indemnification and whether it will defend against any third party
claim or liability at its own cost and expense. If the indemnifying party fails
to give notice that it disputes an indemnification claim within twenty (20) days
after receipt of notice thereof, it shall be deemed to have accepted and agreed
to the claim, which shall become immediately due and payable. The indemnifying
party shall be entitled to direct the defense against a third party claim or
liability with counsel selected by it (subject to the consent of the indemnified
party, which consent shall not be unreasonably withheld) as long as the
indemnifying party conducts a good faith and diligent defense. The indemnified
party shall at all times have the right to fully participate in the defense of a
third party claim or liability at its own expense directly or through counsel;
provided, however, that if the named parties to the action or proceeding include
both the indemnifying party and the indemnified party and the indemnified party
is advised that representation of both parties by the same counsel would be
inappropriate under applicable standards of professional conduct, the
indemnified party may engage separate counsel at the expense of the indemnifying
party. If no such notice of intent to dispute and defend a third party claim or
liability is given by the indemnifying party, or if such good faith and diligent
defense is not being or ceases to be conducted by the indemnifying party, the
indemnified party shall have the right, at the expense of the indemnifying
party, to undertake the defense of such claim or liability (with counsel
selected by the indemnified party), and to compromise or settle it, exercising
reasonable business judgment. If the third party claim or liability is one that
by its nature cannot be defended solely by the indemnifying party, then the
indemnified party shall make available such information and assistance as the
indemnifying party may reasonably request and shall cooperate with the
indemnifying party in such defense, at the expense of the indemnifying party.
6.6 Satisfaction of Seller and Stockholder Indemnification Obligations.
------------------------------------------------------------------
In order to satisfy the indemnification obligations of the Seller and the
Stockholders pursuant to Section 6.1
33
<PAGE>
above, a Buyer Indemnified Party shall have the right to set off and apply the
amount of such indemnification claims against any and all amounts then
outstanding under the Note (whether or not then due and payable).
SECTION 7. DEFINITIONS.
- ----------------------
As used in this Agreement, unless the context otherwise explicitly
requires, the following terms shall have the meanings set forth below:
"Advisor" shall have the meaning set forth in Section 8.10.
"Affiliate" shall have the meaning set forth in Section 2.25.
"Approvals" shall have the meaning set forth in Section 2.22.
"Assumed Contracts" shall have the meaning set forth in Section 1.3.
"Bank" shall have the meaning set forth in Section 1.5.
"Base Balance Sheets" shall have the meaning set forth in Section 2.9(a).
"Buyer" shall have the meaning set forth in the preamble.
"Buyer Indemnified Party" or "Buyer Indemnified Parties" shall have the
respective meanings set forth in Section 6.1.
"Buyer Warranty Claims" shall have the meaning set forth in Section 6.1(b).
"CPR Rules" shall have the meaning set forth in Section 8.10.
"Closing" shall have the meaning set forth in Section 1.4.
"Closing Date" shall have the meaning set forth in Section 1.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the common stock, par value $.01 per share, of
ASI.
"Corporate Records" shall have the meaning set forth in Section 1.2(b).
"Current Assets" as of any date shall mean the consolidated current assets
of the Seller as of such date determined in accordance with generally accepted
accounting principles,
34
<PAGE>
consistently applied.
"Current Liabilities" as of any date shall mean the consolidated current
liabilities of the Seller as of such date determined in accordance with
generally accepted accounting principles, consistently applied.
"Customers" shall have the meaning set forth in Section 2.30.
"DeMinimis Claims" shall mean Buyer Warranty Claims (other than any such
claim relating to title to the Subject Assets) which are each in an amount not
in excess of $1,000 and which, in the aggregate, are in an amount not in excess
of $5,000.
"ERISA" shall have the meaning set forth in Section 2.25(c).
"Employee Program" shall have the meaning set forth in Section 2.25.
"Environmental Law" shall have the meaning set forth in Section 2.26.
"Excluded Assets" shall have the meaning set forth in Section 1.2.
"Excluded Liabilities" shall have the meaning set forth in Section 1.3.
"Financial Statements" shall have the meaning set forth in Section 2.9(a).
"HSR Act" shall have the meaning set forth in Section 2.31.
"HSR Filings" shall have the meaning set forth in Section 4.1(f).
"Hazardous Material" shall have the meaning set forth in Section 2.26.
"Hazardous Waste" shall have the meaning set forth in Section 2.26.
"IRS" shall have the meaning set forth in Section 2.10.
"Incentive Plan" shall have the meaning set forth in Section 4.2(b).
"Indemnification Cut-Off Date" shall have the meaning set forth in Section
6.2(c).
"Intellectual Property Rights" shall have the meaning set forth in Section
2.14.
"Intercompany Loans" shall have the meaning set forth in Section 1.2(d).
"Interim Balance Sheets" shall have the meaning set forth in Section
2.9(a).
35
<PAGE>
"Leases" shall have the meaning set forth in Section 2.8(b).
"Leased Real Property" shall have the meaning set forth in Section 2.8(b).
"Liabilities" shall have the meaning set forth in Section 1.3.
"Multi-employer Plan" shall have the meaning set forth in Section 2.25.
"Note" shall have the meaning set forth in Section 6.2(b).
"PCBs" shall have the meaning set forth in Section 2.26(c).
"Permitted Encumbrances" shall have the meaning set forth in Section
2.8(b).
"Person" shall mean any natural person or any corporation, partnership,
association, trust, unincorporated organization or governmental agency or
bureau.
"Purchase Price" shall have the meaning set forth in Section 1.5.
"Seller" shall have the meaning set forth in the preamble.
"Seller Indemnified Party" and "Seller Indemnified Parties" shall have the
respective meanings set forth in Section 6.3.
"Seller Common Stock" shall have the meaning set forth in Section 2.6(a).
"Seller Warranty Claims" shall have the meaning set forth in Section
6.4(a).
"Stockholder" and "Stockholders" shall have the respective meanings set
forth in the preamble.
"Subject Assets" shall have the meaning set forth in Section 1.1.
"Suppliers" shall have the meaning set forth in Section 2.30.
"Taxes" shall have the meaning set forth in Section 2.10.
"Tax Returns" shall have the meaning set forth in Section 2.10.
36
<PAGE>
SECTION 8. MISCELLANEOUS.
- ------------------------
8.1 Bulk Sales Law. Buyer waives compliance by the Seller with the
--------------
provisions of any applicable bulk sales, fraudulent conveyance or other law for
the protection of creditors in connection with the transfer of the Subject
Assets under this Agreement.
8.2 Fees and Expenses.
-----------------
(a) Each of the parties will bear its own expenses in connection with
the negotiation and the consummation of the transactions contemplated by this
Agreement, and no expenses of the Seller or any Stockholder relating in any way
to the purchase and sale of the Subject Assets hereunder and the transactions
contemplated hereby, including without limitation legal, accounting or other
professional expenses, shall be charged to or paid by Buyer or included in any
of the Liabilities.
(b) Seller will pay all costs incurred, whether at or subsequent to
the Closing, in connection with the transfer of the Subject Assets to Buyer as
contemplated by this Agreement, including without limitation, all sales, use,
excise, real property and other transfer taxes and charges applicable to such
transfer; all recording charges and fees applicable to the recordation of deeds
and mortgages and other instruments of transfer; and all costs of obtaining or
transferring permits, registrations, applications and other tangible and
intangible properties. Buyer will pay all premiums, charges and costs of
obtaining and providing surveys, appraisals, UCC and title searches and title
insurance for the benefit of Buyer with respect to the Subject Assets.
(c) In the event that the parties are required to make HSR Filings,
the Buyer, on one hand, and the Seller, on the other, shall share the filing
fees relating thereto equally.
8.3 Governing Law. This Agreement shall be construed under and governed
-------------
by the internal laws of the State of Connecticut without regard to its conflict
of laws provisions.
8.4 Notices. Any notice, request, demand or other communication required
-------
or permitted hereunder shall be in writing and shall be deemed to have been
given if delivered or sent by facsimile transmission, upon receipt, or if sent
by registered or certified mail, upon the sooner of the date on which receipt is
acknowledged or the expiration of three days after deposit in United States post
office facilities properly addressed with postage prepaid. All notices to a
party will be sent to the addresses set forth below or to such other address or
person as such party may designate by notice to each other party hereunder:
TO BUYER: ASI Solutions Incorporated
- --------
780 Third Avenue
New York, NY 10017
Attn: Bernard F. Reynolds
37
<PAGE>
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: David F. Dietz, P.C.
TO SELLER AND McLagan Partners Asia Incorporated
- -------------
STOCKHOLDERS: 4 Stamford Plaza
- ------------
Suite 400
107 Elm Street
Stamford, CT 06901
Attn: President
With a copy to: Cummings & Lockwood
Four Stamford Plaza
P.O. Box 120
107 Elm Street
Stamford, CT 06904-0120
Attn: Thomas J. Freed, Esq.
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
8.5 Entire Agreement. This Agreement, including the schedules and
----------------
exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such schedules and exhibits or in such
other writings; and all inducements to the making of this Agreement relied upon
by either party hereto have been expressed herein or in such schedules or
exhibits or in such other writings.
8.6 Assignability; Binding Effect. After the Closing, Buyer's rights and
-----------------------------
obligations hereunder shall be freely assignable including, without limitation,
pursuant to the grant of a security interest herein to the Buyer's rights
hereunder to The Chase Manhattan Bank, as the administrative agent for certain
senior lenders to ASI and New McLagan. This Agreement may not be assigned by
the Seller or any Stockholder without the prior written consent of Buyer. This
Agreement shall be binding upon and enforceable by, and shall inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.
8.7 Captions and Gender. The captions in this Agreement are for
-------------------
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
38
<PAGE>
8.8 Execution in Counterparts. For the convenience of the parties and to
-------------------------
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
8.9 Amendments. This Agreement may not be amended or modified, nor may
----------
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by each party hereto, or in the case of a
waiver, the party waiving compliance.
8.10 Dispute Resolution. Any dispute arising out of or relating to this
------------------
Agreement or the breach, termination or validity hereof shall be finally settled
by arbitration conducted expeditiously in accordance with the Center for Public
Resources Rules for Nonadministered Arbitration of Business Disputes (the "CPR
Rules"). The Center for Public Resources shall appoint a neutral advisor from
its National CPR Panel having appropriate experience in the matters that are the
subject of the dispute (the "Advisor"). The arbitration shall be governed by
the United States Arbitration Act, 9 U.S.C. (S)(S)1-16, and judgment upon the
award rendered by the Advisor may be entered by any court having jurisdiction
thereof. The place of arbitration shall be New York, New York.
Such proceedings shall be administered by the Advisor in accordance with
the CPR Rules as he/she deems appropriate, however, such proceedings shall be
guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be accomplished
within forty-five (45) days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the Advisor which shall consist of a summary
presentation by each side of not more than three hours; such hearings to take
place on one or two days at a maximum; and
(d) decision to be rendered not more than ten (10) days following such
hearings.
8.11 Consent to Jurisdiction. Solely for the purpose of allowing a party
-----------------------
to enforce its rights pursuant to Section 8.10, each of the parties hereby
consents to personal jurisdiction, service of process and venue in the federal
or state courts of New York.
8.12 Severability. The parties hereto agree that, in the event that any
------------
provision of this Agreement or the application of any such provision to any
party is held by a court of competent jurisdiction to by contrary to law, the
provision in question shall be construed so as to be lawful and the remaining
provisions of this Agreement shall remain in full force and effect.
39
<PAGE>
8.13 No Third-Party Beneficiaries. This Agreement is intended solely for
----------------------------
the benefit of the parties hereto. Neither this Agreement nor any of the
transactions contemplated hereby shall be deemed to create or enlarge any rights
in any Person not a party hereto.
8.14 Publicity and Disclosures. Neither the Seller nor any Stockholder
-------------------------
shall make any press release or other public announcement (written, oral or
otherwise) in respect of this Agreement or the transactions contemplated herein
without the prior written consent of Buyer.
8.15 Attorneys' Fees. In the event of any dispute hereunder between the
---------------
parties hereto, the prevailing party in any litigation or arbitration instituted
hereunder shall be entitled to recover from the other its costs and expenses
thereof, including, specifically, its reasonable attorneys' fees.
8.16 Intentionally Omitted.
---------------------
8.17 Remedies. Each of the parties to this Agreement acknowledges and
--------
agrees that remedies at law may be inadequate with respect to any breach of any
provision of this Agreement. The provisions of Section 8.10 notwithstanding,
each of the parties hereto shall be entitled to enforce the terms and provisions
of this Agreement by a decree of specific performance or injunctive relief
requiring the fulfillment of obligations under this Agreement in addition to all
other remedies provided hereunder or available to the parties at law or in
equity.
8.18 ASI Guaranty. Subject to the provisions of that certain Intercreditor
------------
and Subordination Agreement, dated as of November 13, 1997 (the "Subordination
Agreement"), by and between ASI, The Chase Manhattan Bank and certain other
parties named therein, ASI by its signature below, hereby unconditionally
guarantees the payment or fulfillment when due of all obligations of the Buyer
now or hereafter existing under this Agreement and each Exhibit to this
Agreement to which the Buyer is or becomes a party (the "Obligations"). The
obligations of the undersigned under this guaranty are independent of the
Obligations, and a separate action or actions may be brought and prosecuted
against the undersigned to enforce this guaranty, irrespective of whether any
action is brought against Buyer or whether Buyer is joined in such action. This
guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Obligations is rescinded or must otherwise
be returned by a recipient upon the insolvency, bankruptcy or reorganization of
Buyer or for any other reason, all as though such payment had not been made.
40
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
BUYER:
-----
McLAGAN PARTNERS ASIA, INC.
By:/s/ Bernard F. Reynolds
---------------------------------
Name: Bernard F. Reynolds
Title: President
SELLER:
------
McLAGAN PARTNERS
ASIA INCORPORATED
By:/s/ Albertus W. van den Broek
---------------------------------
Name: Albertus W. van den Broek
Title: Executive Vice President
STOCKHOLDERS:
------------
/s/ C. Bruce McLagan
------------------------------------
C. Bruce McLagan
/s/ F. Samuel Smith
------------------------------------
F. Samuel Smith
/s/ Albertus W. van den Broek
------------------------------------
Albertus W. van den Broek
/s/ Byram E. Dickes
------------------------------------
Byram E. Dickes
41
<PAGE>
/s/ Michael P. Curran
------------------------------------
Michael P. Curran
For the purposes of Section 8.18 only
ASI SOLUTIONS INCORPORATED
By: /s/ Bernard F. Reynolds
--------------------------------
Name: Bernard F. Reynolds
Title: Chief Executive Officer
42
<PAGE>
EXHIBIT 99.1
FORM OF
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This Agreement is made as of November 13, 1997 (the "Effective Date"), by
and between McLagan Partners, Inc., a Delaware corporation (the "Employer") and
______________ (the "Employee").
WHEREAS, the Employer desires to employ the Employee and the Employee
desires to be employed by the Employer;
NOW THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby irrevocably acknowledged, the Employer and the Employee agree as
follows:
1. Employment. The Employer hereby employs the Employee and the Employee
----------
hereby accepts such employment on the terms and conditions set forth in this
Agreement.
2. Capacity. The Employee shall serve the Employer as a Managing
--------
Director. The Employee shall also serve the Employer in such other or
additional offices as the Employee may be requested to serve by the Board of
Directors of the Employer (the "Board of Directors") or the Chief Executive
Officer of the Employer. In such capacity or capacities, the Employee shall
perform such services and duties in connection with the business, affairs and
operations of the Employer as may be assigned or delegated to the Employee from
time to time by or under the authority of the Board of Directors or the Chief
Executive Officer. Notwithstanding anything stated in this Section 2, in no
case shall the Employee be required to serve in an office or perform any service
or duty which is (i) not of a professional level generally consistent with the
position initially held by the Employee, or (ii) not related to the businesses
acquired by the Employer (the "Acquired Business") pursuant to Asset Purchase
Agreements dated as of November 13, 1997 by and among the Employer, the Employee
and other parties named in each such agreements (the "Asset Purchase
Agreements"), as such business is conducted from time to time. In no case shall
the Employee be required to relocate without his consent.
3. Term. Subject to the provisions of Section 6, the term of employment
----
pursuant to this Agreement shall commence on the Effective Date and expire at
11:59 p.m. on March 31, 2000 (the "Initial Term"). At the Employee's option,
the Initial Term may be extended for one year upon the same terms and conditions
(the "Additional Term"). The Initial Term, the Additional Term and any
extensions thereof are hereinafter collectively referred to as the "Term".
4. Compensation and Benefits. The regular compensation and benefits
-------------------------
payable to
1
<PAGE>
the Employee under this Agreement shall be as follows:
4.1 Salary. For all services rendered by the Employee under this
------
Agreement, the Employer shall pay the Employee a salary (the "Salary") at the
annual rate of _________ Dollars ($______), subject to review for increases only
from time to time by the Board of Directors or the Compensation Committee of the
Board of Directors (the "Compensation Committee"). The Salary shall be payable
in periodic installments no less frequently than on a monthly basis.
4.2 Benefits.
--------
(a) Incentive Compensation Plan. The Employee shall be entitled
---------------------------
to incentive compensation pursuant to the terms of the Employer's
Incentive Compensation Plan (the "Incentive Plan") established by the
Board of Directors, a copy of which is attached hereto as Exhibit A.
(b) Other Benefits. The Employee shall also be entitled to
--------------
participate in any employee benefit plans, medical insurance plans,
life insurance plans, disability income plans, retirement plans,
vacation plans, expense reimbursement plans and other benefit plans
which the Employer may from time to time have in effect for all or
most of its employees. Such participation shall be subject to the
terms of the applicable plan documents, generally applicable policies
of the Employer, applicable law and the discretion of the Board of
Directors, the Compensation Committee or any administrative or other
committee provided for in or contemplated by any such plan. The
parties acknowledge and agree that they are parties to the Asset
Purchase Agreements and that pursuant to Section 5.9 of such Asset
Purchase Agreements, the Employer has certain obligations to establish
and maintain certain insurance and employee benefit plans. Except as
provided in the preceding sentence, nothing contained in this
Agreement shall be construed to create any obligation on the part of
the Employer to establish any such plan or to maintain the
effectiveness of any such plan which may be in effect from time to
time.
(c) Taxation of Payments and Benefits. The Employer shall
---------------------------------
undertake to make deductions, withholdings and tax reports with
respect to payments and benefits under this Agreement to the extent
that it reasonably and in good faith believes that it is required to
make such deductions, withholdings and tax reports. Payments under
this Agreement shall be in amounts net of any such deductions or
withholdings. Nothing in this Agreement shall be construed to require
the Employer to make any payments to compensate the Employee for any
adverse tax effect associated with any payments or benefits or for any
deduction or withholding from any payment or benefit.
2
<PAGE>
(d) Exclusivity of Salary and Benefits. The Employee shall not
----------------------------------
be entitled to any payments or benefits for his services as an
employee other than those provided (i) under this Agreement and (ii)
pursuant to the Incentive Plan.
4.3 Vacation. The Employee shall be entitled to receive five (5)
--------
weeks of vacation per year, during which time the Employee's salary shall be
paid in full and all benefits shall accrue.
5. Extent of Service. During the Employee's employment under this
-----------------
Agreement, the Employee shall devote the Employee's full business time, best
efforts and business judgment, skill and knowledge to the advancement of the
Employer's interests and to the discharge of the Employee's duties and
responsibilities under this Agreement. The Employee shall not engage in any
other business activity, except as set forth on Schedule 5 attached hereto or as
may be approved by the Board of Directors; provided that nothing in this
Agreement shall be construed as preventing the Employee from:
(a) investing the Employee's assets in any company or other entity in
a manner not prohibited by Section 7(e) and in such form or manner as shall
not require any material activities on the Employee's part in connection
with the operations or affairs of the companies or other entities in which
such investments are made; or
(b) engaging in religious, charitable or other community or non-
profit activities that do not impair the Employee's ability to fulfill the
Employee's duties and responsibilities under this Agreement.
6. Termination and Termination Benefits. Notwithstanding the provisions
------------------------------------
of Section 3, the Employee's employment under this Agreement shall terminate
under the following circumstances set forth in this Section 6.
(a) Termination by the Employer for Cause. The Employee's employment
-------------------------------------
under this Agreement may be terminated for cause without further liability
on the part of the Employer effective immediately upon (i) a vote of the
Board of Directors and (ii) written notice delivered to the Employee. Only
the following shall constitute "cause" for such termination:
(i) the commission by or indictment of the Employee for (A) a
felony or (B) any misdemeanor involving moral turpitude or
fraud ("indictment," for these purposes, meaning an
indictment, probable cause hearing or any other procedure
pursuant to which an initial determination of probable or
reasonable cause with respect to such offense is made);
(ii) gross negligence, willful misconduct or insubordination of
the
3
<PAGE>
Employee with respect to the Employer or any affiliate of
the Employer, which action continues, in the reasonable
judgment of the Board of Directors, after written notice
and opportunity to cure within thirty (30) days of such
notice is given to the Employee by the Board of Directors;
or
(iii) material breach by the Employee of any of the Employee's
material obligations under this Agreement, which action
continues, in the reasonable judgment of the Board of
Directors, after written notice and opportunity to cure
within thirty (30) days of such notice is given to the
Employee by the Board of Directors.
(b) Disability. If the Employee shall be disabled so as to be unable
----------
to perform the essential functions of the Employee's then existing position
or positions under this Agreement with or without reasonable accommodation,
or a position of comparable professional level to which the Employee has
been reassigned following such disability, the Chief Executive Officer or
the Board of Directors may remove the Employee from any responsibilities
and/or reassign the Employee to another position with the Employer for the
remainder of the Term or during the period of such disability.
Notwithstanding any such removal or reassignment, the Employee shall
continue to receive, for a period of time equal to the lesser of (x) three
(3) months, or (y) the remainder of the Term (the "Disability Period"), (i)
the Employee's full Salary (less any disability pay or sick pay benefits to
which the Employee may be entitled under the Employer's policies) and (ii)
benefits under Section 4 of this Agreement (except to the extent that the
Employee may be ineligible to receive incentive compensation benefits under
the Incentive Plan following the Employee's removal or reassignment).
Should the Employee continue to work for the Employer in any position
beyond the Disability Period, Employee's salary shall be commensurate with
the customary salary of such position. If any question shall arise as to
whether during any period the Employee is disabled so as to be unable to
perform the essential functions of the Employee's then existing position or
positions with or without reasonable accommodation, the Employee may, and
at the request of the Employer shall, submit to the Employer a
certification in reasonable detail by a physician jointly selected by the
Employer and the Employee as to whether the Employee is so disabled or how
long such disability is expected to continue, and such certification shall
for the purposes of this Agreement be conclusive of the issue. The
Employee shall cooperate with any reasonable request of the physician in
connection with such certification. If such question shall arise and the
Employee shall fail to submit such certification, the Employer's
determination of such issue shall be binding on the Employee. Nothing in
this Section 6(d) shall be construed to waive the Employee's rights, if
any, under existing law including, without limitation, the Family and
Medical Leave Act of 1993, 29 U.S.C. (S)2601 et seq. and the Americans with
Disabilities Act, 42 U. S. C. (S)12101 et seq.
4
<PAGE>
(c) Certain Limitations. It is the intention of the Employee and of
-------------------
the Employer that no payments by the Employer to or for the benefit of the
Employee under this Agreement or any other agreement or plan, if any,
pursuant to which the Employee is entitled to receive payments or benefits
shall be nondeductible to the Employer by reason of the operation of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")
relating to parachute payments or any like statutory or regulatory
provision. Accordingly, and notwithstanding any other provision of this
Agreement or any such agreement or plan, if by reason of the operation of
said Section 280G or any like statutory or regulatory provision, any such
payments exceed the amount which can be deducted by the Employer, such
payments shall be reduced to the maximum amount which can be deducted by
the Employer. To the extent that payments exceeding such maximum
deductible amount have been made to or for the benefit of the Employee,
such excess payments shall be refunded to the Employer with interest
thereon at the applicable federal rate determined under Section 1274(d) of
the Code, compounded annually, or at such other rate as may be required in
order that no such payments shall be nondeductible to the Employer by
reason of the operation of said Section 280G or any like statutory or
regulatory provision. To the extent that there is more than one method of
reducing the payments to bring them within the limitations of said Section
280G or any like statutory or regulatory provision, the Employee shall
determine which method shall be followed, provided that if the Employee
fails to make such determination within forty-five (45) days after the
Employer has given notice of the need for such reduction, the Employer may
determine the method of such reduction in its sole discretion.
7. Confidential Information, Intellectual Property, Noncompetition and
-------------------------------------------------------------------
Cooperation.
- -----------
(a) Confidential Information. As used in this Agreement,
------------------------
"Confidential Information" means information belonging to the Employer
which is of value to the Employer in the course of conducting its business
and the disclosure of which could result in a competitive or other
disadvantage to the Employer. Confidential Information includes, without
limitation, financial information, reports and forecasts; inventions,
improvements and other intellectual property; trade secrets; know-how;
designs, samples, specifications, schematics, proprietary processes or
formulae; computer programs and other computer software; market or sales
information or plans; customer lists; and business plans, prospects and
opportunities (such as possible acquisitions or dispositions of businesses
or facilities) which have been discussed or considered by the management of
the Employer. Confidential Information includes information developed by
the Employee in the course of the Employee's employment by the Employer, as
well as other information to which the Employee may have access in
connection with the Employee's employment. Confidential Information also
includes the confidential information of others with which the Employer has
a business relationship. Notwithstanding the foregoing, Confidential
Information does not include information in the public domain, unless such
information is in the public domain due to breach of the Employee's duties
under Section 7(b).
5
<PAGE>
(b) Confidentiality. The Employee understands and agrees that the
---------------
Employee's employment creates a relationship of confidence and trust
between the Employee and the Employer with respect to all Confidential
Information. At all times, both during the Employee's employment with the
Employer and after the Employee's termination, the Employee will keep in
confidence and trust all such Confidential Information, and will not use or
disclose any such Confidential Information without the written consent of
the Employer, except as is necessary in the ordinary course of performing
the Employee's duties for the Employer.
(c) Documents, Records, etc. All documents, records, data,
-----------------------
apparatus, equipment and other physical property, whether or not pertaining
to Confidential Information, which are furnished to the Employee by the
Employer or are produced by the Employee in connection with the Employee's
employment will be and remain the sole property of the Employer. The
Employee will return to the Employer all such materials and property as and
when requested by the Employer. In any event, the Employee will return all
such materials and property immediately upon termination of the Employee's
employment for any reason. The Employee will not retain any such material
or property or any copies thereof after such termination.
(d) Intellectual Property. During the Term, the Employee will
---------------------
disclose to the Employer all ideas, inventions and business plans developed
by him during such period which relate directly or indirectly to the
business of the Employer, including, without limitation, any design, logo,
slogan or campaign or any process, system, operation, product or
improvement which may be patentable or copyrightable. The Employee agrees
that all patents, patent applications, licenses, copyrights (whether or not
registered), trade names, trademarks (whether or not registered), service
marks, advertising campaigns, promotional campaigns, designs, logos,
slogans, business plans and other intellectual property rights developed or
created by the Employee in the course of his employment hereunder, either
individually or in collaboration with others, will be deemed works for hire
and the sole and absolute property of the Employer. The Employee agrees
that, at the Employer's request and expense, he will take all steps
necessary to secure the rights thereto to the Employer by patent,
copyright, trademark registration or otherwise. In the event that the
Employer is unable for any reason whatsoever to secure the signature of the
Employee on any document necessary or appropriate for any of the foregoing
purposes (including renewals, extensions, continuations, divisions or
continuations in part), the Employee hereby irrevocably designates and
appoints the Employer and its duly authorized officers and agents as agents
and attorneys-in-fact to act for and on behalf of the Employee, but only
for the purpose of executing and filing any such document and doing all
other lawfully permitted acts to accomplish the foregoing purposes with the
same legal force and effect as if executed or effected by the Employee.
(e) Noncompetition and Nonsolicitation. During the Term and for a
----------------------------------
period
6
<PAGE>
commencing upon the conclusion of the Term and continuing thereafter until
the later of March 31, 2003 or one year after conclusion of the Term, the
Employee (i) will not, directly or indirectly, whether as owner, part-
owner, partner, shareholder, director, officer, trustee, consultant, agent,
employee, co-venturer or otherwise, engage, participate, assist or invest
in any Competing Business (as hereinafter defined); (ii) will refrain from
directly or indirectly employing, attempting to employ, recruiting or
otherwise soliciting, inducing or influencing any person to leave
employment with the Employer; and (iii) will refrain from soliciting or
encouraging any customer or supplier to terminate or otherwise modify
adversely its business relationship with the Employer. The Employee
understands that the restrictions set forth in this Section 7(e) are
intended to protect the Employer's interest in its Confidential Information
and established employee, customer and supplier relationships and goodwill,
and agrees that such restrictions are reasonable and appropriate for this
purpose. For purposes of this Agreement, the term "Competing Business"
shall mean a business which is competitive with any business which the
Employer or any of its affiliates conducts or prepares to conduct at any
time during the employment of the Employee. Notwithstanding the foregoing,
the Employee may own up to one percent (1 %) of the outstanding stock of a
publicly held corporation which constitutes or is affiliated with a
Competing Business.
(f) Third-Party Agreements and Rights. The Employee hereby confirms
---------------------------------
that the Employee is not bound by the terms of any agreement with any
previous employer or other party which restricts in any way the Employee's
use or disclosure of information or the Employee's engagement in any
business. The Employee represents to the Employer that the Employee's
execution of this Agreement, the Employee's employment with the Employer
and the performance of the Employee's proposed duties for the Employer will
not violate any obligations the Employee may have to any such previous
employer or other party. In the Employee's work for the Employer, the
Employee will not disclose or make use of any information in violation of
any agreements with or rights of any such previous employer or other party,
and the Employee will not bring to the premises of the Employer any copies
or other tangible embodiments of non-public information belonging to or
obtained from any such previous employment or other party.
(g) Litigation and Regulatory Cooperation. During and after the
-------------------------------------
Employee's employment, the Employee shall cooperate fully with the
reasonable requests of the Employer in the defense or prosecution of any
claims or actions now in existence or which may be brought in the future
against or on behalf of the Employer which relate to events or occurrences
that transpired while the Employee was employed by the Employer. The
Employee's full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to
prepare for discovery or trial and to act as a witness on behalf of the
Employer at mutually convenient times. During and after the Employee's
employment, the Employee also shall cooperate fully with the Employer in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to
7
<PAGE>
events or occurrences that transpired while the Employee was employed by
the Employer. The Employer shall reimburse the Employee for any reasonable
out-of-pocket expenses incurred in connection with the Employee's
performance of obligations pursuant to this Section 7(g).
(h) Injunction. The Employee agrees that it would be difficult to
----------
measure any damages caused to the Employer which might result from any
breach by the Employee of the promises set forth in this Section 7, and
that in any event money damages would be an inadequate remedy for any such
breach. Accordingly, subject to Section 8 of this Agreement, the Employee
agrees that if the Employee breaches, or proposes to breach, any portion of
this Agreement, the Employer shall be entitled, in addition to all other
remedies that it may have, to an injunction or other appropriate equitable
relief to restrain any such breach without showing or proving any actual
damage to the Employer.
8. Arbitration of Disputes. Any controversy or claim arising out of or
-----------------------
relating to this Agreement or the breach thereof or otherwise arising out of the
Employee's employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall be settled by arbitration in the City of New York under
the auspices of the American Arbitration Association ("AAA") in accordance with
the Employment Dispute Resolution Rules of the AAA, including, but not limited
to, the rules and procedures applicable to the selection of arbitrators, except
that the arbitrator shall apply the law as established by decisions of the U.S.
Supreme Court, the Court of Appeals for the Second Circuit and the federal and
state courts of New York in deciding the merits of claims and defenses under
federal law or any state or federal anti-discrimination law, and any awards to
the Employee for violation of any anti-discrimination law shall not exceed the
maximum award to which the Employee could be entitled under the applicable (or
most analogous) federal anti-discrimination or civil rights laws. In the event
that any person or entity other than the Employee or the Employer may be a party
with regard to any such controversy or claim, such controversy or claim shall be
submitted to arbitration subject to such other person or entity's agreement.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. This Section 8 shall be specifically enforceable.
Notwithstanding the foregoing, this Section 8 shall not preclude the Employer
from pursuing a court action for the sole purpose of obtaining a temporary
restraining order or preliminary injunction pursuant to Section 7 (h); provided
that any other relief shall be pursued through an arbitration proceeding
pursuant to this Section 8. The prevailing party in any arbitration proceeding
instituted hereunder shall be entitled to recover from the other its costs and
expenses thereof, including, specifically, its reasonable attorneys' fees.
9. Consent to Jurisdiction. To the extent that any court action is
-----------------------
permitted consistent with or to enforce Section 8 of this Agreement, the parties
hereby consent to the jurisdiction of the federal or state courts of New York.
Accordingly, with respect to any such court action, the Employee and the
Employer (a) submit to the personal jurisdiction of such courts; (b) consent to
service of process; and (c) waive any other requirement (whether imposed by
statute, rule of
8
<PAGE>
court, or otherwise) with respect to personal jurisdiction or service of
process.
10. Integration. This Agreement constitutes the entire agreement between
-----------
the parties with respect to the subject matter hereof and supersedes all prior
agreements between the parties with respect to any related subject matter.
11. Assignment; Successors and Assigns, etc. Neither the Employer nor the
---------------------------------------
Employee may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party; provided that the Employer may assign its rights under this Agreement
without the consent of the Employee in the event that the Employer shall effect
a reorganization, consolidate with or merge into any other corporation,
partnership, organization or other entity, or transfer all or substantially all
of its properties or assets to any other corporation, partnership, organization
or other entity. This Agreement shall inure to the benefit of and be binding
upon the Employer and the Employee, their respective successors, executors,
administrators, heirs and permitted assigns.
12. Enforceability. If any portion or provision of this Agreement
--------------
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
13. Waiver. No waiver of any provision hereof shall be effective unless
------
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
14. Notices. Any notices, requests, demands and other communications
-------
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to the
Employee at the last address the Employee has filed in writing with the Employer
or, in the case of the Employer, at its main offices, attention of the Chief
Executive Officer, and shall be effective on the date of delivery in person or
by courier or five (5) days after the date mailed.
15. Amendment. This Agreement may be amended or modified only by a
---------
written instrument signed by the Employee and by a duly authorized
representative of the Employer.
16. Governing Law. This Agreement shall in all respects be governed by
-------------
and construed in accordance with the laws of the State of New York, without
giving effect to the
9
<PAGE>
conflict of laws principles of such State.
17. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute one and the same
document.
10
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the Employer, by
its duly authorized officer, and by the Employee, as of the Effective Date.
McLAGAN PARTNERS, INC.
By:_________________________________________
Name:
Title:
____________________________________________
[Employee]
11
<PAGE>
EXHIBIT 99.2
McLAGAN PARTNERS, INC.
INCENTIVE COMPENSATION PLAN
1. Purpose
This Incentive Compensation Plan (the "Plan") is being adopted in
connection with (i) the acquisition by McLagan Partners, Inc., a Delaware
corporation (the "Company") and a wholly-owned subsidiary of ASI Solutions
Incorporated, a Delaware corporation ("ASI"), of substantially all of the assets
of McLagan Partners Incorporated, an Illinois corporation ("McLagan"), (ii) the
acquisition by McLagan Partners International, Inc. a Delaware corporation ("New
International") and a wholly-owned subsidiary of the Company, of substantially
all of the assets of McLagan Partners International Incorporated, an Illinois
corporation ("McLagan International"), and (iii) the acquisition by McLagan
Partners Asia, Inc., a Delaware corporation ("New Asia" and together with New
International, the "Subsidiaries") and a wholly-owned subsidiary of the Company,
of substantially all of the assets of McLagan Partners Asia Incorporated, an
Illinois corporation ("McLagan Asia" and, together with McLagan and McLagan
International, the "McLagan Entities") pursuant to three separate Asset Purchase
Agreements, each dated as of November 13, 1997, by and among the Company and its
Subsidiaries, respectively, each McLagan Entity, respectively, and all holders
of outstanding capital stock of each of the McLagan Entities (the "Asset
Purchase Agreements"). The Plan, the adoption of which is a condition to the
closing of the transactions contemplated by the Asset Purchase Agreements (the
"Closing"), authorizes the grant of cash incentive awards to the participants
named on Exhibit A hereto (the "Participants"). Additional Participants may be
---------
added to Exhibit A by mutual consent of the Company's Board of Directors and the
---------
Participants. The Plan is being adopted as a performance incentive for the
Participants in connection with the operation by the Company and its
Subsidiaries of the businesses formerly operated by one or more of the McLagan
Entities, which businesses are being purchased by the Company and its
Subsidiaries pursuant to the Asset Purchase Agreements.
2. Awards
Subject to the terms and conditions of the Plan, cash awards shall be made
under the Plan as follows:
(a) As soon as practicable following the expiration of each of (i) the
period from and including the date of the Closing to and including December
31, 1997 ("Period I"), (ii) the period from and including January 1, 1998
to and including March 31, 1999 ("Period II"), and (iii) the period from
and including April 1, 1999 to and including March 31, 2000 ("Period III"),
ASI's Chief Financial Officer shall deliver to the Compensation Committee
of ASI's Board of Directors (the "Compensation
<PAGE>
Committee") an unaudited consolidated statement of income of the Company
and the Subsidiaries for the applicable period, prepared in accordance with
generally accepted accounting principles applied consistently during the
applicable period (except that such statement of income may not contain all
footnotes required by generally accepted accounting principles) (the
"Income Statements" and each, an "Income Statement").
(b) The aggregate amount of cash to be awarded under the Plan with
respect to each period (the "Aggregate Award Amount") shall be determined
based on the income from operations (the "Consolidated Operating Income")
reflected on the Income Statement for the applicable period as follows:
For each of the equations set forth below, "x" equals Consolidated
Operating Income for the pertinent period and "y" equals the Aggregate
Award Amount for such period.
(i) For Period I, the Aggregate Award Amount shall equal
Consolidated Operating Income minus One Million, One Hundred Thousand
Dollars ($1,100,000)
y = x - $1,100,000;
(ii) For Period II, the Aggregate Award Amount shall equal:
(A) if Consolidated Operating Income for Period II is less
than Six Million, Seven Hundred Fifty Thousand Dollars
($6,750,000), then the Aggregate Award Amount for Period II shall
equal Consolidated Operating Income minus Four Million, Five
Hundred Thousand Dollars ($4,500,000)
y = x - $4,500,000; or
(B) if Consolidated Operating Income for Period II is
greater than Six Million, Seven Hundred Fifty Thousand Dollars
($6,750,000), then the Aggregate Award Amount for Period II shall
equal Two Million, Two Hundred Fifty Thousand Dollars ($2,250,000)
plus Sixty Percent (60%) of the sum of Consolidated Operating
Income minus Six Million, Seven Hundred Fifty Thousand Dollars
($6,750,000)
y = [$2,250,000 + (.6) (x - $6,750,000)]; and
2
<PAGE>
(iii) For Period III, the Aggregate Award Amount shall equal:
(A) if Consolidated Operating Income for Period III is less
than Five Million, Four Hundred Thousand Dollars ($5,400,000),
then the Aggregate Award Amount for Period III shall equal
Consolidated Operating Income minus Three Million, Six Hundred
Thousand Dollars ($3,600,000)
y = x - $3,600,000; or
(B) if Consolidated Operating Income for Period III is
greater than Five Million, Four Hundred Thousand Dollars
($5,400,000), then the Aggregate Award Amount for Period III
shall equal One Million, Eight Hundred Thousand Dollars
($1,800,000) plus Sixty Percent (60%) of the sum of Consolidated
Operating Income minus Five Million, Four Hundred Thousand
Dollars ($5,400,000)
y = [$1,800,000 + (.6) (x - $5,400,000)].
(c) It is the intention of the Company, the Subsidiaries, ASI and the
Participants that Consolidated Operating Income for each Period, as set
forth on the Income Statement for such Period, shall be determined by ASI's
Chief Financial Officer on a stand-alone basis for the Company and its
Subsidiaries consistent with the basis on which "operating income" was
determined by the McLagan Entities prior to the Closing. In connection
therewith, for the purposes of this Plan neither the Company nor any
Subsidiary shall attribute any expense or liability to the Company or its
Subsidiaries except for expenses and liabilities (i) arising in connection
with the operation of the businesses formerly operated by one or more of
the McLagan Entities and (ii) which are in the ordinary course of business
or which are in the nature of expenses or liabilities historically incurred
by the McLagan Entities. Without limiting the generality of the foregoing,
it is expressly understood that (i)(x) the salaries and other compensation
(other than incentive compensation hereunder) of the Participants (as set
forth in the Employment and Non-Competition Agreements between each
Participant and the Company) and all compensation payable to other
employees of the Company and (y) reasonable charges for services of a
nature which any McLagan Entity would have incurred (e.g., accounting or
computer services), which are provided to the Company or any Subsidiary by
ASI shall be treated as items of expense in the calculation of Consolidated
Operating Income for each Period and (ii) interest and incentive
compensation payable hereunder to the Participants shall not be treated as
expenses in the calculation of Consolidated Operating Income for each
Period.
3
<PAGE>
(d) The respective portions of the Aggregate Award Amount which shall
be allocated to the various Participants with respect to each Period shall
be made in accordance with Exhibit B attached hereto.
---------
(e) The foregoing notwithstanding, for Periods subsequent to the date
on which any one or more Participants are no longer eligible to receive
incentive compensation hereunder, the Aggregate Award Amount for any such Period
shall be reduced by a percentage equal to the percentage of the Aggregate Award
Amount paid to such ineligible Participants with respect to the immediately
prior Period. For example: Assume that (i) the Aggregate Award Amount for
Period II equals $2,000,000, (ii) a Participant receives an award of $500,000
for such Period, and (iii) such Participant is an ineligible Participant for
Period III, then the Aggregate Award Amount otherwise available for Period III
and any subsequent Period shall be reduced by 25% (500,000/2,000,000).
3. Administration
(a) The Plan shall be administered by the Compensation Committee, as
such committee is constituted from time to time. Action by the
Compensation Committee with respect to the Plan shall require the
affirmative vote of a majority of all of its members.
(b) Subject to the terms and conditions of the Plan, the Compensation
Committee shall have the power:
(i) To construe and interpret the Plan and to establish, amend
and revoke rules and regulations for the administration of the Plan
(including, without limitation, to correct any defect or supply any
omission, or reconcile any inconsistency, in the Plan) in the manner
and to the extent the Compensation Committee shall deem necessary or
expedient to make the Plan fully effective; and
(ii) Generally, to exercise such powers and to perform such acts
as are deemed necessary or expedient to promote the best interests of
ASI, the Company, the Subsidiaries and the Participants with respect
to the Plan.
All decisions and determinations by the Compensation Committee in the
exercise of these powers shall be final and binding upon the Company and the
Participants.
4. Cash Subject To Award
The Compensation Committee shall award to the Participants, with respect to
each of Period I, Period II and Period III, the entire Aggregate Award Amount
for each such Period. Except as otherwise provided in Section 5 below, such
awards shall be distributed by the
4
<PAGE>
Company to the Participants no later than thirty (30) days after the end of the
particular Period. In no event shall the aggregate amount of cash awards made to
the Participants with respect to any Period exceed the Aggregate Award Amount
for such Period.
5
<PAGE>
5. Eligibility
(a) Cash awards under the Plan shall be made solely to the Participants set
forth on Exhibit A, as such Exhibit is amended from time to time by mutual
---------
consent of the Company's Board of Directors and the Participants. No person who
is not an employee of the Company on the last day of any Period (a "Terminated
Participant") shall be entitled to receive any award under the Plan with respect
to such Period, regardless of whether such person is listed as a Participant on
Exhibit A, unless such Terminated Participant's employment with the Company was
- ---------
terminated under circumstances constituting a breach by the Company of the
Employment and Non-Competition Agreement between such Terminated Participant and
the Company, if any. The portion of the Aggregate Award Amount that would
otherwise be payable to a Terminated Participant, but for the termination of his
or her employment, shall be retained by the Company.
(b) Notwithstanding Section 5(a) above, in the event a Participant's
employment with the Company is terminated during any Period as a result of the
Disability (as defined below) or death of such Participant, such Participant (or
his or her estate, if applicable) shall be entitled to receive an award for such
period in an amount equal to the product of the amount which the Participant
would have been entitled to receive had such Participant remained employed for
the entire Period (as determined in accordance Exhibit B) multiplied by a
---------
fraction, the numerator of which shall be the number of days during such Period
that the Participant actually worked for the Company and the denominator of
which shall be the total number of days in such Period. The portion of the
Aggregate Award Amount by which any Participant's award is reduced pursuant to
the preceding sentence shall be retained by the Company.
(c) For purposes of the Plan, a Participant shall be deemed to be
"Disabled" if he or she shall be unable, due to a physical or mental condition,
to perform the essential functions of the Participant's then existing position
or positions with the Company with or without reasonable accommodation. If any
question shall arise as to whether during any Period the Participant is
"Disabled" so as to be unable to perform the essential functions of the
Participant's then existing position or positions with or without reasonable
accommodation, the Participant may, and at the request of the Company shall,
submit to the Company a certification in reasonable detail by a physician
selected by the Company as to whether the Participant is Disabled or how long
such disability is expected to continue, and such certification shall for the
purposes of the Plan be conclusive of the issue. Each Participant shall
cooperate with any reasonable request of the physician in connection with such
certification. If such question shall arise and the Participant shall fail to
submit such certification, the Company's determination of such issue shall be
binding upon the Participant.
6
<PAGE>
6. Taxation Of Awards
------------------
The Company shall undertake to make deductions, withholdings and tax
reports with respect to awards under the Plan to the extent that it reasonably
and in good faith believes that it is required to make such deductions,
withholdings and tax reports. Payments under the Plan shall be in amounts net
of any such deductions or withholdings. Nothing in the Plan shall be construed
to require the Company to make any payments to compensate any Participant for
any adverse tax effect associated with any awards or for any deduction or
withholding from any awards.
7. Certain Tax Limitations
-----------------------
It is the intention of the Company that no awards under the Plan shall be
nondeductible to the Company by reason of the operation of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), relating to parachute
payments or any like statutory or regulatory provision. Accordingly, and
notwithstanding any other provision of the Plan, if by reason of the operation
of said Section 280G or any like statutory or regulatory provision, any awards
exceed the amount which can be deducted by the Company, such awards shall be
reduced to the maximum amount which can be deducted by the Company. To the
extent that awards exceeding such maximum deductible amount have been made to or
for the benefit of any Participant, such excess awards shall be refunded to the
Company with interest thereon at the applicable federal rate determined under
Section 1274(d) of the Code, compounded annually, or at such other rate as may
be required in order that no such awards shall be nondeductible to the Company
by reason of the operation of said Section 280G or any like statutory or
regulatory provision. To the extent that there is more than one method of
reducing the awards to bring them within the limitations of said Section 280G or
any like statutory or regulatory provision, the Participant shall determine
which method shall be followed, provided that if the Participant fails to make
--------
such determination within forty-five (45) days after the Company has given
notice of the need for such reduction, the Company may determine the method of
such reduction in its sole discretion.
8. Amendment of the Plan
---------------------
The Board of Directors of the Company, with the written consent of all of
the Participants, may discontinue or amend the Plan at any time, or from time to
time.
9. Nonexclusivity of the Plan
--------------------------
The adoption of the Plan by the Board of Directors shall not be construed
as creating any limitations on the power of the Board of Directors or the
Compensation Committee to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of cash bonuses or awards
otherwise than under the Plan. The Plan
7
<PAGE>
shall not under any circumstances be deemed to confer upon any Participant or
other employee any right to continued employment with the Company or ASI.
10. Governing Law
The Plan shall be governed by the laws of the state of Connecticut, except
to the extent that such law is preempted by federal law.
11. Effective Date of the Plan; Duration of the Plan
The Plan shall become effective upon the date that it is approved by the
Board of Directors. The Plan shall expire, and no further awards shall be made
under the Plan, after the date on which the awards, if any, with respect to
Period III are made; provided, however, that in the event that any Participant
-------- -------
(each a "Continuing Participant") continues his employment by the Company
pursuant to an extension of that certain Employment Agreement, dated as of
November 13, 1997, by and between the Company and such Continuing Participant,
this Plan shall be continued for a period of one year; the terms and conditions
of this Plan shall remain in full force and effect for such one year period; and
the Aggregate Award Amount for such one year period shall be calculated pursuant
to Section 2(b)(iii) above.
***
Approved By Board of Directors: November 13, 1997
8
<PAGE>
EXHIBIT A
Plan Participants
F. Samuel Smith
C. Bruce McLagan
Albertus van den Broek
Michael P. Curran
9
<PAGE>
EXHIBIT B
Award Percentages
<TABLE>
<CAPTION>
Percentage of Percentage of Percentage of
Period I Aggregate Period II Aggregate Period III Aggregate
Participant Name Award Amount Award Amount Award Amount
- ------------------ ------------------ ------------------- --------------------
<S> <C> <C> <C>
F. Samuel Smith To be determined * *
by the Participants
C. Bruce McLagan
Albertus van den Broek
Michael P. Curran
</TABLE>
*The first $1.2 million for each Period other than Period I will be shared as
follows (collectively, the "Base Amounts"):
<TABLE>
<CAPTION>
<S> <C>
F. Samuel Smith - $250,000
C. Bruce McLagan - $250,000
Albertus van den Broek - $250,000
Michael P. Curran - $450,000
</TABLE>
Thereafter all sums will be determined by mutual agreement of the
Participants. If a Participant is ineligible to receive any portion of the
Aggregate Award Amount an amount equal to (x) $1.8 million multiplied by a
fraction, the numerator of which is the Participant's Base Amount and the
denominator of which is $1.2 million plus (y) all other amounts if any,
allocable to such ineligible Participant will be retained by the Company.
10
<PAGE>
EXHIBIT 99.3
================================================================================
ASI SOLUTIONS INCORPORATED
McLAGAN PARTNERS, INC.
____________________________________________
$20,000,000
CREDIT AGREEMENT
November 13, 1997
____________________________________________
THE CHASE MANHATTAN BANK
as Administrative Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS.................................................. 1
1.1 Defined Terms.................................................. 1
1.2 Other Definitional Provisions.................................. 21
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS.............................. 21
2.1 Revolving Credit Commitments................................... 21
2.2 Procedure for Revolving Credit Borrowing....................... 22
2.3 Commitment Fee................................................. 22
2.4 Termination or Reduction of Commitments........................ 22
2.5 Term Loans..................................................... 23
2.6 Procedure for Term Loan Borrowing.............................. 23
2.7 Repayment of Loans; Evidence of Debt........................... 23
2.8 Optional Prepayments and Mandatory Prepayments................. 24
2.9 Conversion and Continuation Options............................ 27
2.10 Minimum Amounts of Tranches................................... 27
2.11 Interest Rates and Payment Dates.............................. 27
2.12 Computation of Interest and Fees.............................. 28
2.13 Inability to Determine Interest Rate.......................... 28
2.14 Pro Rata Treatment and Payments............................... 29
2.15 Illegality.................................................... 30
2.16 Requirements of Law........................................... 30
2.17 Taxes......................................................... 31
2.18 Indemnity..................................................... 32
2.19 Change of Lending Office...................................... 33
SECTION 3. LETTERS OF CREDIT............................................ 33
3.1 L/C Commitment................................................. 33
3.2 Procedure for Issuance of Letters of Credit.................... 34
3.3 Fees, Commissions and Other Charges............................ 34
3.4 L/C Participations............................................. 34
3.5 Reimbursement Obligation of ASI................................ 35
3.6 Obligations Absolute........................................... 36
3.7 Letter of Credit Payments...................................... 36
3.8 Application.................................................... 36
SECTION 4. REPRESENTATIONS AND WARRANTIES............................... 36
4.1 Financial Condition............................................ 37
4.2 No Change; Solvency............................................ 38
4.3 Corporate Existence; Compliance with Law....................... 38
4.4 Corporate Power; Authorization; Enforceable Obligations........ 38
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.5 No Legal Bar................................................... 39
4.6 No Material Litigation......................................... 39
4.7 No Default..................................................... 39
4.8 Ownership of Property; Liens................................... 39
4.9 Intellectual Property.......................................... 39
4.10 No Burdensome Restrictions.................................... 39
4.11 Taxes......................................................... 39
4.12 Federal Regulations........................................... 40
4.13 ERISA......................................................... 40
4.14 Investment Company Act; Other Regulations..................... 40
4.15 Subsidiaries.................................................. 40
4.16 Purpose of Loans.............................................. 40
4.17 Representations and Warranties Contained in the McLagan
Documentation............................................... 41
4.18 Environmental Matters......................................... 41
SECTION 5. CONDITIONS PRECEDENT......................................... 42
5.1 Conditions to Initial Extensions of Credit..................... 42
5.2 Conditions to Each Extension of Credit......................... 45
SECTION 6. AFFIRMATIVE COVENANTS........................................ 46
6.1 Financial Statements........................................... 46
6.2 Certificates; Other Information................................ 46
6.3 Payment of Obligations......................................... 47
6.4 Conduct of Business and Maintenance of Existence............... 48
6.5 Maintenance of Property; Insurance............................. 48
6.6 Inspection of Property; Books and Records; Discussions; Audits
and Field Examinations....................................... 48
6.7 Notices........................................................ 48
6.8 Environmental Laws............................................. 49
6.9 Interest Rate Protection....................................... 49
6.10 Further Assurances............................................ 50
6.11 Additional Collateral......................................... 50
SECTION 7. NEGATIVE COVENANTS........................................... 51
7.1 Financial Condition Covenants.................................. 51
7.2 Limitation on Indebtedness..................................... 53
7.3 Limitation on Liens............................................ 53
7.4 Limitation on Guarantee Obligations............................ 54
7.5 Limitation on Fundamental Changes.............................. 55
7.6 Limitation on Sale of Assets................................... 55
7.7 Limitation on Dividends........................................ 56
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.8 Limitation on Capital Expenditures............................. 56
7.9 Limitation on Investments, Loans and Advances.................. 56
7.10 Limitation on Optional Payments and Modifications of Debt
Instruments................................................. 56
7.11 Limitation on Transactions with Affiliates.................... 57
7.12 Limitation on Sales and Leasebacks............................ 57
7.13 Limitation on Changes in Fiscal Year.......................... 57
7.14 Limitation on Negative Pledge Clauses......................... 57
7.15 Limitation on Lines of Business............................... 57
7.16 Accounting Practices.......................................... 58
7.17 Employment Agreements......................................... 58
SECTION 8. EVENTS OF DEFAULT............................................ 58
SECTION 9. THE ADMINISTRATIVE AGENT..................................... 61
9.1 Appointment.................................................... 61
9.2 Delegation of Duties........................................... 61
9.3 Exculpatory Provisions......................................... 61
9.4 Reliance by Administrative Agent............................... 62
9.5 Notice of Default.............................................. 62
9.6 Non-Reliance on Administrative Agent and Other Lenders......... 62
9.7 Indemnification................................................ 63
9.8 Administrative Agent in Its Individual Capacity................ 63
9.9 Successor Administrative Agent................................. 63
SECTION 10. MISCELLANEOUS............................................... 64
10.1 Amendments and Waivers........................................ 64
10.2 Notices....................................................... 65
10.3 No Waiver; Cumulative Remedies................................ 65
10.4 Survival of Representations and Warranties.................... 65
10.5 Payment of Expenses and Taxes................................. 66
10.6 Successors and Assigns; Participations and Assignments........ 66
10.7 Adjustments; Set-off.......................................... 68
10.8 Counterparts.................................................. 69
10.9 Severability.................................................. 69
10.10 Integration.................................................. 69
10.11 GOVERNING LAW................................................ 69
10.12 Submission To Jurisdiction; Waivers.......................... 70
10.13 Acknowledgements............................................. 70
10.15 WAIVERS OF JURY TRIAL........................................ 71
</TABLE>
<PAGE>
SCHEDULES
Schedule 1.1(a) Commitments
Schedule 4.2 Certain Payments
Schedule 7.2(d) Indebtedness
Schedule 7.3(f) Liens
Schedule 7.4(a) Guarantee Obligations
Schedule 10.2 Addresses
EXHIBITS
Exhibit A Form of Borrowing Base Certificate
Exhibit B Form of Compliance Certificate
Exhibit C Form Guarantee and Collateral Agreement
Exhibit D Form of Revolving Credit Note
Exhibit E Form of Term Note
Exhibit F Form of Borrowing Certificate
Exhibit G Form of Assignment and Acceptance
<PAGE>
CREDIT AGREEMENT, dated as of November 13, 1997 among ASI SOLUTIONS
INCORPORATED, a Delaware corporation ("ASI"), MCLAGAN PARTNERS, INC., a Delaware
corporation ("McLagan Partners"; together with ASI, the "Borrowers"), the
several banks and other financial institutions from time to time parties to this
Agreement (the "Lenders") and THE CHASE MANHATTAN BANK, a New York banking
corporation, as Administrative Agent (as hereinafter defined) for the Lenders
hereunder.
W I T N E S S E T H :
-------------------
WHEREAS, McLagan Partners, McLagan Partners International, Inc., a
Delaware corporation ("McLagan International"), and McLagan Partners Asia, Inc.,
a Delaware corporation ("McLagan Asia", and together with McLagan Partners and
McLagan International, the "McLagan Buyers"), have entered into Asset Purchase
Agreements, each dated as of November 13, 1997 (collectively, the "Purchase
Agreement"), among ASI, McLagan Partners Incorporated ("Existing McLagan
Partners"), McLagan Partners International ("Existing McLagan International")
and McLagan Partners Asia Incorporated ("McLagan Asia"; together with Existing
McLagan Partners and Existing McLagan International, the "McLagan Sellers")
pursuant to which ASI McLagan Buyers will purchase substantially all of the
assets of the McLagan Sellers (such transaction being referred to herein as the
"McLagan Acquisition");
WHEREAS, in connection with the McLagan Acquisition, each of the
Borrowers has requested that the Lenders extend credit for the purposes of
partially financing the McLagan Acquisition and providing for the working
capital needs of ASI and its Subsidiaries following the McLagan Acquisition; and
WHEREAS, the Lenders are willing to extend credit to each of the
Borrowers, but only on the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
-------------
shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day, (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate
of interest per annum publicly announced from time to time by the
Administrative Agent as its prime rate in effect at its principal
<PAGE>
office in New York City (the Prime Rate not being intended to be the lowest
rate of interest charged by Chase in connection with extensions of credit
to debtors); and "Federal Funds Effective Rate" shall mean, for any day,
the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. Any change in the ABR due to
a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such change
in the Prime Rate or the Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.
"Account Debtor": as to any Account of any Person, any other Person
who is or may become obligated to such Person under, with respect to, or on
account of, such Account.
"Accounts": as to any Person, any right to payment for goods sold or
leased or for services rendered by such Person.
"Acquisition": as to any Person, the acquisition (in a single
transaction or a series of related transactions) by such Person of (a) 100%
of the outstanding Capital Stock of any other Person, (b) all or
substantially all of the assets of any other Person or (c) assets
constituting one or more business units or divisions of any other Person.
"Adjustment Date": the fifth Business Day following receipt by the
Administrative Agent of both (a) the financial statements required to be
delivered pursuant to subsection 6.1(a) or 6.1(b), as the case may be, for
the most recently completed fiscal period and (b) the certificate required
to be delivered pursuant to subsection 6.2(b) with respect to such fiscal
period.
"Administrative Agent": Chase, together with its affiliates, as the
arranger of the Commitments and as the administrative agent for the Lenders
under this Agreement and the other Loan Documents, and any successor agent
appointed pursuant to subsection 9.9.
"Advance Rate": 75%, provided that, the Administrative Agent and the
--------
Required Lenders shall have the right, in their sole discretion, to
periodically modify the Advance Rate based upon the results of examinations
by the Administrative Agent or its designated agent of the Accounts and
related books of ASI and its Subsidiaries.
2
<PAGE>
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
"Aggregate Outstanding Revolving Extensions of Credit": as to any
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Revolving Credit Loans made by such Lender then
outstanding and (b) such Lender's Commitment Percentage of the L/C
Obligations then outstanding.
"Agreement": this Credit Agreement, as amended, modified,
supplemented, extended, renewed or refinanced from time to time.
"Application": an application, in such form as the Issuing Bank may
specify from time to time, requesting the Issuing Bank to open a Letter of
Credit.
"Assessment": Assessment Solutions, Inc., a New York corporation and
wholly owned subsidiary of ASI.
"Assignee": as defined in subsection 10.6(c).
"Available Revolving Credit Commitment": as to any Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's Revolving
Credit Commitment over (b) such Lender's Aggregate Outstanding Revolving
Extensions of Credit.
"Borrowers": as defined in the recitals to this Agreement.
"Borrowing Base": on any date of determination thereof, the product
of the Advance Rate and the aggregate amount of Eligible Accounts of ASI
and its Domestic Subsidiaries on such date of determination. The Borrowing
Base shall be determined by the Administrative Agent in its sole discretion
exercising reasonable judgment from time to time by reference to the most
recent monthly Borrowing Base Certificate delivered initially to the
Administrative Agent pursuant to subsection 5.1(k) and thereafter pursuant
to subsection 5.2(c) or 6.2(d).
"Borrowing Base Certificate": a certificate, substantially in the
form of Exhibit A, or in such other form as the Administrative Agent shall
------- -
from time to time request.
"Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.2 or 2.6 as a date on which either of the Borrowers requests
the Lenders to
3
<PAGE>
make Loans hereunder.
"Business": as defined in subsection 4.18.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close.
"C3": C3 Solutions, Inc., a New York corporation and wholly owned
subsidiary of ASI.
"Capital Expenditure": as defined in subsection 7.8.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Collateral Account": an account established by ASI with the
Administrative Agent and over which the Administrative Agent shall have
exclusive dominion and control.
"Cash Equivalents": (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with maturities of one year or less
from the date of acquisition and overnight bank deposits of any Lender or
of any commercial bank (whether domestic or foreign) having capital and
surplus in excess of $100,000,000, (c) repurchase obligations of any Lender
or of any commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-1 or
its equivalent by S&P or P-1 or its equivalent by Moody's (e) securities
with maturities of one year or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of
which state, commonwealth, territory, political subdivision, taxing
authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's, (f) securities with maturities of one year or less
from the date of acquisition backed by standby letters of credit issued by
any Lender or any commercial bank satisfying the requirements of clause (b)
of this definition or (g) shares of money market mutual or similar funds
with assets of at least $2,500,000,000 which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
4
<PAGE>
"Cash Interest Expense": of any Person for any period, Consolidated
Interest Expense of such Person for such period minus, in each case to the
extent included in determining such Consolidated Interest Expense for such
period, the sum of the following: (a) non-cash expenses for interest
payable in kind and (b) amortization of debt discount and fees.
"Change of Control": shall occur upon the occurrence of any of the
following (i) ASI shall cease to own 100% of the Capital Stock of McLagan
Partners or (ii) any Person or "group" (within the meaning of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended) shall acquire
beneficial ownership of 20% or more of any outstanding class of Capital
Stock of ASI having ordinary voting rights in the election of directors of
ASI or (iii) any two or more of Bernard Reynolds, Seymour Adler and Eli
Salig shall cease to be officers of ASI or any of its Subsidiaries.
"Chase": The Chase Manhattan Bank, a New York banking corporation,
and its successors.
"Closing Date": the date on which the conditions precedent set forth
in subsection 5.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all assets of the Loan Parties, now owned or
hereinafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment": with respect to any Lender, such Lender's Term Loan
Commitment and/or Revolving Credit Commitment, as the case may be;
collectively, as to all the Lenders, the "Commitments".
"Commitment Percentage": as to any Lender at any time, (a) at any
time prior to the termination of the Revolving Credit Commitments, the
percentage which (i) the sum of (A) such Lender's Revolving Credit
Commitment plus (B) the aggregate principal amount of such Lender's Term
----
Loans constitutes of (ii) the sum of (A) the aggregate Revolving Credit
Commitments of all the Lenders and (B) the aggregate principal amount of
Term Loans of all the Lenders then outstanding or (b) at any time after the
termination of the Revolving Credit Commitments, the percentage which (i)
the sum of (A) the aggregate principal amount of such Lender's Loans then
outstanding and (B) such Lender's Commitment Percentage (immediately prior
to the termination of the Revolving Credit Commitments, but after giving
effect to any assignments) of the aggregate amount of L/C Obligations then
outstanding constitutes of (ii) the sum of (A) the aggregate principal
amount of the Loans of all the Lenders then outstanding and (B) the
aggregate amount of L/C Obligations then outstanding.
5
<PAGE>
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with either of the Borrowers within the
meaning of Section 4001 of ERISA or is part of a group which includes
either of the Borrowers and which is treated as a single employer under
Section 414 of the Code.
"Compliance Certificate": a certificate delivered pursuant to
subsection 6.2(b), substantially in the form of Exhibit B hereto.
---------
"Consolidated": when used in connection with any defined term, and
not otherwise defined, means such term as it applies to ASI and its
Subsidiaries on a consolidated basis, after eliminating all intercompany
items.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Current Assets": of any Person, at any date of determination thereof,
all assets of such Person and its Consolidated Subsidiaries which would, in
accordance with GAAP, be classified on a consolidated balance sheet of such
Person and its Consolidated Subsidiaries as current assets at such date of
determination.
"Current Liabilities": of any Person, at any date of determination
thereof, all liabilities of such Person and its Consolidated Subsidiaries
which, in accordance with GAAP, would be classified on a consolidated
balance sheet of such Person and its Consolidated Subsidiaries as current
liabilities at such date of determination.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Subsidiary": any Subsidiary of ASI organized under the laws
of any jurisdiction within the United States.
"EBIT": of any Person for any period, EBITDA of such Person for such
period minus depreciation and amortization expense.
-----
"EBITDA": of any Person for any period, Consolidated Net Income of
such Person for such period plus, without duplication and to the extent
----
deducted in determining such Consolidated Net Income, the sum of (a)
provision for income and franchise tax expense, (b) Consolidated Interest
Expense and (c) depreciation and amortization expense minus, without
-----
duplication and to the extent added in determining
6
<PAGE>
such Consolidated Net Income, (a) any extraordinary gains (including,
whether or not otherwise includable as a separate item in the statement of
such Consolidated Net Income, gains on the sales of assets outside of the
ordinary course of business).
"Eligible Accounts": as to any Person, at a particular date, the
total outstanding balance of Accounts of such Person:
(1) which are bona fide, valid and legally enforceable obligations of
the Account Debtor in respect thereof and arise from the actual sale
and delivery of goods or rendition and acceptance of services in the
ordinary course of business to such Account Debtor;
(2) which are owing from a single Account Debtor (other than Account
Debtors approved by the Administrative Agent and the Required Lenders,
in their sole and absolute discretion) to the extent the Accounts of
such Account Debtor do not constitute greater than 15% of the
aggregate Eligible Accounts at any one time (or 20%, in the case of
Accounts owing by Bell Atlantic);
(3) which do not contravene, or arise from sales which contravene, any
Requirement of Law applicable thereto;
(4) which are payable in full not later than 90 days after the date of
the creation of original invoices related thereto;
(5) which are not subject to any offset, net-out, set-off, deduction,
dispute, counterclaim or defense, and with respect to which no return,
rejection or repossession has occurred (subject to clause (8) below);
(6) which do not represent a consignment sale, guaranteed sale, sale
or return or other similar arrangement;
(7) which are not Accounts relating to sales to employees or
representatives;
(8) which are reduced by any amounts then owing by such Person to the
Account Debtor or obligor in respect of such Accounts, including,
without limitation, any amounts credited or charged back to such
Accounts;
(9) which have been invoiced by such Person and which have not been
past due for more than 90 days after the date of the invoice related
to such Accounts;
(10) with respect to which, the Administrative Agent is, and continues
to be, reasonably satisfied with the credit standing of the Account
Debtor or obligor;
7
<PAGE>
(11) which are not owed by an Account Debtor or obligor which is an
Affiliate or Subsidiary of such Person;
(12) which are not owed by an Account Debtor or obligor which has
taken any of the actions or suffered any of the events of the kind
described in paragraph (f) of Section 8, except to the extent any such
Accounts are entitled to an administrative expense priority under the
Bankruptcy Code;
(13) with respect to which more than 50% of the aggregate amount of
Accounts owed by any Account Debtor or obligor, together with its
Affiliates, to such Person are not more than 90 days past due after
the date of the invoice related to such Accounts;
(14) which are (i) with respect to Accounts owed by any Account Debtor
located in the United States of America, denominated in Dollars and
payable only in Dollars and only in the United States of America and
(ii) with respect to Accounts owed to by any Account Debtor located
outside the United States of America, are (x) denominated in Dollars
and payable only in Dollars and only in the United States of America
and (y) covered by credit insurance assigned to the Administrative
Agent and naming the Administrative Agent as loss payee and otherwise
reasonably satisfactory to the Administrative Agent and the Required
Lenders;
(15) which are owned solely by such Person free and clear of all Liens
or other rights or claims of any other Person (except in favor of the
Administrative Agent for the benefit of the Lenders) and arise from
sales in respect of which all sales, excise or similar taxes have been
paid in full;
(16) which are subject to a perfected first priority security interest
in favor of the Administrative Agent for the benefit of the Lenders
pursuant to the Guarantee and Collateral Agreement;
(17) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any
Governmental Authority, required to be obtained, effected or given in
connection with the execution, delivery and performance of such
Accounts have been duly obtained, effected or given, and are in full
force and effect;
(18) which are not Accounts owed by any Governmental Authority other
than such Accounts as to which all required filings to perfect the
security interest in such Accounts in favor of the Administrative
Agent pursuant to the Guarantee and Collateral Agreement, have been
made, including, without limitation, any filings and/or assignments
required under the Assignment of Claims Act of
8
<PAGE>
1940, as amended;
(19) which, with respect to Accounts owed by any Account Debtor
located outside the United States of America, may be reduced, to the
extent not covered by credit insurance, by an amount, as determined by
the Administrative Agent in its reasonable discretion, equal to any
costs, taxes or other amounts that might be payable in the event the
security interest in such Accounts in favor of the Administrative
Agent was to be enforced;
(20) with respect to which the creditworthiness of the Account Debtor
is satisfactory to the Administrative Agent and the Required Lenders;
(21) which constitute "accounts" within the meaning of the Uniform
Commercial Code of the state in which the chief executive office of
such Person is located; and
(22) which conform in all other respects to the representations and
warranties contained in the Guarantee and Collateral Agreement.
Standards of eligibility may be fixed and revised from time to time by the
Administrative Agent in the Administrative Agent's reasonable judgment with
the consent of or five days' prior notice to ASI, provided that the
--------
Administrative Agent shall not revise the standards of eligibility in a
manner which would increase the outstanding balance of Eligible Accounts at
the time of such revision without the prior written consent of the Required
Lenders. Unless a Default or Event of Default has occurred and is
continuing, the Administrative Agent shall give five days prior written
notice to ASI of any change in the standards of eligibility set forth
above, except for changes relating to the credit standing of the Account
Debtor or obligor on any Account.
"Employment Agreements": collectively, the Employment Agreements
dated as of November 13, 1997 by and between McLagan Partners and each of
Michael P. Curran, Albertus W. van den Broeck, C. Bruce McLagan and F.
Samuel Smith.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
9
<PAGE>
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
Eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
rate at which Chase is offered Dollar deposits at or about 10:00 A.M., New
York City time, two Business Days prior to the beginning of such Interest
Period in the interbank eurodollar market where the eurodollar and foreign
currency and exchange operations in respect of its Eurodollar Loans are
then being conducted for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to the
amount of its Eurodollar Loan to be outstanding during such Interest
Period.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": Eurodollar Loans the then current Interest
Periods with respect to all of which begin on the same date and end on the
same later date (whether or not such Eurodollar Loans shall originally have
been made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time,
--------
or both, or any other condition, has been satisfied.
"Excess Cash Flow": for any fiscal year of ASI, the excess of (a)
EBITDA of ASI for such fiscal year over (b) the sum of (i) to the extent
deducted in determining Consolidated Net Income of ASI for such fiscal
year, the aggregate amount of Cash Interest Expense of ASI for such fiscal
year plus (ii) principal payments actually made in respect of Term Loans or
----
the Subordinated Note during such fiscal year after giving effect to any
reduction in such scheduled principal amortization as a result of voluntary
prepayments), plus (iii) any voluntary prepayments of Term Loans made
----
during such
10
<PAGE>
fiscal year, plus (iv) the aggregate amount of all prepayments of Revolving
----
Credit Loans pursuant to subsection 2.4 as a result of a concurrent
reduction of the Revolving Credit Commitments at the option of ASI by a
like amount during such fiscal year, plus (v) the aggregate amount of
----
income taxes paid in cash during such fiscal year plus (vi) the aggregate
----
amount of all Unfunded Capital Expenditures made in cash during such fiscal
year plus (vii) any decreases in Working Capital during such fiscal year,
----
minus (viii) to the extent subtracted in determining Consolidated Net
-----
Income of ASI for such fiscal year, all items which did not result from a
cash payment by ASI or any of its Subsidiaries during such fiscal year,
minus (ix) any increases in Working Capital during such fiscal year.
-----
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Fixed Charges": of any Person for any period, an amount equal to the
sum of (a) Consolidated Interest Expense of such Person for such period,
(b) cash dividends and distributions in respect of the Capital Stock of
such Person for such period and (c) the aggregate amount of long-term
Indebtedness of such Person and its Subsidiaries classified as the current
portion thereof on the consolidated balance sheet of such Person as at the
last day of such period, in each case as determined on a Consolidated basis
in accordance with GAAP.
"Fleet Credit Agreement": as defined in subsection 5.1(p).
"Fleet Letter of Credit": as defined in subsection 5.1(p).
"Foreign Currency Protection Agreements": as to any Person, all
foreign exchange contracts, currency swap agreements or other similar
agreements or arrangements designed to protect such Person against
fluctuations in currency values.
"Foreign Subsidiary": any Subsidiary of ASI organized under the laws
of any jurisdiction outside the United States of America.
"Funded Debt": of any Person, as of the date of determination, all
Indebtedness of such Person which by its terms matures more than one year
after the date of incurrence thereof, and any such Indebtedness maturing
within one year from such date which is renewable or extendable at the
option of the obligor to a date more than one year from such date and
including, in any event, the Revolving Credit Loans.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
11
<PAGE>
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee": any guarantee made by any Loan Party in connection with
this Agreement, including, without limitation, the Guarantee and Collateral
Agreement.
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by ASI and each of its Domestic
Subsidiaries, substantially in the form of Exhibit C, as the same may be
---------
amended, restated, supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
--------
however, that the term Guarantee Obligation shall not include endorsements
-------
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the applicable
Borrower in good faith.
"Guarantor": any Person delivering a Guarantee pursuant to this
Agreement.
"Indebtedness": of any Person at any date, without duplication, (a)
all
12
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indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities
incurred in the ordinary course of business and payable in accordance with
customary practices), (b) any other indebtedness of such Person which is
evidenced by a note, bond, debenture or similar instrument, (c) all
obligations of such Person under Financing Leases, (d) all obligations of
such Person in respect of acceptances issued or created for the account of
such Person, (e) all obligations of such Person in respect of Foreign
Currency Protection Agreements, Interest Rate Protection Agreements and any
other commodity or other hedging arrangement and (f) all liabilities
secured by any Lien on any property owned by such Person even though such
Person has not assumed or otherwise become liable for the payment thereof.
For purposes of this Agreement, the amount of any Indebtedness referred to
in clause (e) of the preceding sentence shall be the net amounts (including
by offset of amounts payable thereunder), including any net termination
payments, required to be paid to a counterparty rather than any notional
amount with regard to which payments may be calculated.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intercreditor Agreement": the Intercreditor and Subordination
Agreement, dated the date hereof among ASI, McLagan Partners, the
Administrative Agent, Existing McLagan Partners, and certain other Persons
named therein.
"Interest Expense": of any Person for any period the amount of
interest expense, both expensed and capitalized, of such Person and its
Subsidiaries, determined on a Consolidated basis in accordance with GAAP,
for such period on the aggregate principal amount of its Indebtedness.
"Interest Payment Date": (a) as to any ABR Loan, the last Business
Day of each calendar month during which such ABR Loan is outstanding and
(b) as to any Eurodollar Loan, the last day of each calendar month during
which such Eurodollar Loan is outstanding and the last day of such Interest
Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six or, subject to availability to
each Lender, nine or twelve months thereafter, as selected by ASI or
McLagan Partners, as the case may be, in its notice of borrowing or
notice of conversion, as the case may be, given with respect thereto;
and
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<PAGE>
(ii) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar Loan
and ending one, two, three or six or, subject to availability to each
Lender, nine or twelve months thereafter, as selected by ASI or
McLagan Partners, as the case may be, by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the
last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
--------
are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Revolving Credit Termination Date or beyond the date final payment is
due on the Term Loans shall end on the Revolving Credit Termination
Date or such date of final payment, as the case may be;
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of a calendar month; and
(4) ASI shall select Interest Periods so as not to require a
payment or prepayment of any Eurodollar Loan during an Interest Period
for such Loan including, in connection with the payment of any
scheduled principal payment in respect of such Loan.
"Interest Rate Protection Agreement": any interest rate protection
agreement, interest rate future, interest rate option, interest rate cap or
collar or other interest rate hedge arrangement, to or under which ASI or
any of its Subsidiaries is a party or a beneficiary.
"Investments": as defined in subsection 7.9.
"Issuing Bank": Chase, in its capacity as issuer of any Letter of
Credit.
"L/C Commitment": $1,000,000.
14
<PAGE>
"L/C Fee Payment Date": the last Business Day of each calendar
quarter.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters of
Credit which have not then been reimbursed pursuant to subsection 35.
"L/C Participants": the collective reference to all the Lenders
other than the Issuing Bank.
"Letters of Credit": as defined in subsection 31.
"Leverage Ratio": at any time, the ratio of (a) Consolidated Funded
Debt of ASI at such time to (b) Consolidated EBITDA of ASI for the most
recent period of four consecutive fiscal quarters.
"Leverage Ratio Level": as to ASI, the existence of Leverage Ratio
Level I, Leverage Ratio Level II or Leverage Ratio Level III.
"Leverage Ratio Level I": as to ASI, shall exist on an Adjustment
Date if the Leverage Ratio for the period of four consecutive fiscal
quarters ending on the last day of the period covered by the financial
statements relating to such Adjustment Date is greater than 2.50 to 1.00.
"Leverage Ratio Level II": as to ASI, shall exist on an Adjustment
Date if the Leverage Ratio for the period of four consecutive fiscal
quarters ending on the last day of the period covered by the financial
statements relating to such Adjustment Date is less than or equal to 2.50
to 1.00 but greater than or equal to 2.00 to 1.00.
"Leverage Ratio Level III": as to ASI, shall exist on an Adjustment
Date if the Leverage Ratio for the period of four consecutive fiscal
quarters ending on the last day of the period covered by the financial
statements relating to such Adjustment Date is less than 2.00 to 1.00.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Financing Lease having substantially the same economic effect as
any of the foregoing).
"Loan": any Term Loan or Revolving Credit Loan, as the case may be.
15
<PAGE>
"Loan Documents": this Agreement, any Notes, the Applications, the
Guarantees and the Security Documents.
"Loan Parties": ASI, McLagan Partners and each of their direct and
indirect Subsidiaries which is a party to a Loan Document.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of (i) ASI and its Subsidiaries taken as a whole or (ii) McLagan
Partners and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this or any of the other Loan Documents or the rights or
remedies of the Administrative Agent or the Lenders hereunder or
thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"McLagan Acquisition": as defined in the recitals to this Agreement.
"McLagan Buyers": as defined in the recitals to this Agreement.
"McLagan Sellers": as defined in the recitals to this Agreement.
"Moody's": means Moody's Investors Service, Inc., a Delaware
corporation having a principal office at 99 Church Street, New York, New
York 10007, together with any Person succeeding thereto by merger,
consolidation or acquisition of all or substantially all of its assets,
including substantially all of its business of rating securities.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Income": of any Person for any period, the net income of such
Person and its Subsidiaries for such period, determined on a Consolidated
basis in accordance with GAAP.
"Net Proceeds": with respect to any Person, with respect to any
issuance of Capital Stock by such Person, or capital contribution made to
such Person subsequent to the Closing Date the cash proceeds received from
such issuance net of investment banking fees, legal fees, accountants fees,
underwriting discounts and commissions and other customary fees and
expenses and other reasonable and customary costs and
16
<PAGE>
expenses actually incurred in connection therewith.
"Net Worth": of any Person, as of the date of determination, all
items which in conformity with GAAP would be included under shareholders'
equity on a consolidated balance sheet of such Person at such date of
determination.
"Non-Excluded Taxes": as defined in subsection 2.17.
"Notes": the collective reference to the Revolving Credit Notes and
the Term Notes.
"Participant": as defined in subsection 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Permitted Acquisition": any Acquisition, provided that (a) such
--------
Acquisition has been approved by the Board of Directors (or a majority of
holders of the Capital Stock of such Person) of the Person whose Capital
Stock or assets are to be acquired in such Acquisition, (b) no Default or
Event of Default has then occurred and is continuing or would result
therefrom, (c) the purchase price (including assumed indebtedness and the
fair market value of any non-cash consideration) of all such Acquisitions
in the aggregate since the Closing Date does not exceed $2,500,000, and (d)
such Acquisition has been approved by the Required Lenders.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which either of the Borrowers or a
Commonly Controlled Entity is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Properties": as defined in subsection 4.18.
"Proudfoot": Proudfoot Reports, Inc., a New York corporation and
wholly owned subsidiary of ASI.
"Purchase Agreement": as defined in the recitals to this Agreement.
"Register": as defined in subsection 10.6(d).
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<PAGE>
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Reimbursement Obligation": the obligation of ASI to reimburse the
Issuing Bank pursuant to subsection 35 for amounts drawn under Letters of
Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. (S)
2615.
"Required Lenders": at any time, Lenders (including, in any event,
Chase) the Commitment Percentages of which then aggregate at least 51%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer and the president
of ASI or the chief operating officer of ASI or any other officer of ASI
having supervisory responsibility for a principal business function, or,
with respect to financial matters, the chief financial officer of ASI.
"Revolving Credit Applicable Margin": for each Type of Revolving
Credit Loan, the rate per annum set forth under the relevant column heading
below:
ABR Loans Eurodollar Loans
--------- ----------------
0% 3.00%
provided that, from and after the fifth Business Day following receipt by
--------
the Administrative Agent of the audited financial statements of ASI and its
Subsidiaries for the fiscal year ended March 31, 1999 required to be
delivered pursuant to subsection 6.1(a), the Revolving Credit Applicable
Margin for Revolving Credit Loans which are Eurodollar Loans will be
adjusted, on each Adjustment Date, to the Revolving Credit Applicable
Margin set forth on Annex I opposite the Leverage Ratio Level of ASI in
-------
effect on such Adjustment Date, and provided, further, that in the event
-------- -------
that the financial statements required to be delivered pursuant to
subsections 6.1 (a) and (b), as the case may be, hereof, and the related
certificate required to be delivered pursuant to
18
<PAGE>
subsection 6.2 (b), are not delivered when due, then, during the period
from the date upon which such financial statements were required to be
delivered until five Business Days following the date upon which they
actually are delivered, the Revolving Credit Applicable Margin for
Revolving Credit Loans which are Eurodollar Loans shall be 3.00%, and,
provided further, that if any Event of Default shall have occurred and be
-------- -------
continuing on any Adjustment Date, no reduction in the Revolving Credit
Applicable Margin on any Loan which would otherwise become effective on
such Adjustment Date shall become effective unless such Event of Default is
cured or waived prior to the next succeeding Adjustment Date.
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender to make Revolving Credit Loans to, and to issue or participate
in Letters of Credit issued for the account of, ASI hereunder in an
aggregate principal and/or face amount at any one time outstanding not to
exceed the amount set forth opposite such Lender's name on Schedule 1.1(a),
---------------
as such amount may be reduced or adjusted from time to time in accordance
with the provisions of this Agreement.
"Revolving Credit Commitment Period": the period from and including
the date hereof to but not including the Revolving Credit Termination Date
or such earlier date on which the Revolving Credit Commitments shall
terminate as provided herein.
"Revolving Credit Loans": as defined in subsection 2.1.
"Revolving Credit Note": as defined in subsection 2.7(f).
"Revolving Credit Termination Date": the third anniversary of the
Closing Date.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement and all other security documents hereafter delivered
to the Administrative Agent granting a Lien on any asset or assets of any
Person to secure the obligations and liabilities of ASI and its
Subsidiaries hereunder and under any of the other Loan Documents or to
secure any guarantee of any such obligations and liabilities.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": with respect to any Person on a particular date, the
condition that on such date, (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair
salable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts
as they become absolute and matured, (c) such Person does not intend to,
and does not
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<PAGE>
believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (d) such Person is
not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would
constitute an unreasonably small amount of capital.
"S&P": means Standard & Poor's Ratings Group, a New York corporation
having a principal office at 25 Broadway, New York, New York 10004,
together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its business of rating
securities.
"Subordinated Debt": any unsecured Indebtedness of ASI: no part of
the principal of which is required to be paid (whether by way of mandatory
sinking fund, mandatory redemption, mandatory prepayment or otherwise)
prior to the date that is one year after the Term Loan Maturity Date; the
payment of the principal of and interest on which and other obligations of
ASI in respect thereof are subordinated to the prior payment in full of the
principal of and interest (including post-petition interest) on the Loans
and all other obligations and liabilities of ASI to the Administrative
Agent and the Lenders hereunder on terms and conditions approved in writing
by the Required Lenders; and all other terms and conditions of which are
satisfactory in form and substance to the Required Lenders (as evidenced by
their prior written approval thereof).
"Subordinated Employee Payments": as defined in the Intercreditor
Agreement.
"Subordinated Note": as defined in the Intercreditor Agreement.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of ASI.
"T3 Solutions Incorporated": a Delaware corporation and wholly owned
Subsidiary of ASI.
"Term Loan": as defined in subsection 2.5.
"Term Loan Applicable Margin": for each Type of Term Loan, the rate
per annum set forth under the relevant column heading below:
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ABR Loans Eurodollar Loans
--------- ----------------
0.25% 3.25%
provided that, from and after the fifth Business Day following receipt by
--------
the Administrative Agent of the audited financial statements of ASI and its
Subsidiaries for the fiscal year ended March 31, 1999 required to be
delivered pursuant to subsection 6.1(a), the Term Loan Applicable Margin
for Term Loans which are ABR Loans and Eurodollar Loans will be adjusted,
on each Adjustment Date, to the Term Loan Applicable Margin set forth on
Annex I opposite the Leverage Ratio Level of ASI in effect on such
-------
Adjustment Date, and provided, further, that in the event that the
-------- -------
financial statements required to be delivered pursuant to subsection 6.1
(a) and (b), as the case may be, hereof, and the related certificate
required to be delivered pursuant to subsection 6.2(b), are not delivered
when due, then, during the period from the date upon which such financial
statements were required to be delivered until five Business Days following
the date upon which they actually are delivered, the Term Loan Applicable
Margin (a) for Term Loans which are for Eurodollar Loans shall be 3.25% and
(b) for Term Loans which are ABR Loans shall be 0.25%, and, provided
--------
further, that if any Event of Default shall have occurred and be continuing
-------
on any Adjustment Date, no reduction in the Term Loan Applicable Margin on
any Loan which would otherwise become effective on such Adjustment Date
shall become effective unless such Event of Default is cured or waived
prior to the next succeeding Adjustment Date.
"Term Loan Commitment": as to any Lender, the obligation of such
Lender to make Term Loans hereunder in an aggregate principal amount not to
exceed the amount set forth opposite such Lender's name on Schedule 1.1(a),
---------------
as such amount may be reduced or adjusted from time to time in accordance
with the provisions of this Agreement.
"Term Loan Maturity Date": the fifth anniversary of the Closing Date.
"Term Note": as defined in subsection 2.7(f).
"Total Liabilities": of any Person, as of the date of determination,
all liabilities of such Person and its subsidiaries determined on a
Consolidated basis in accordance with GAAP, including all Current
Liabilities and Funded Debt of such Person at such date of determination.
"Transferee": as defined in subsection 10.6(f).
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar
Loan.
"Unfunded Capital Expenditures": for any period, (i) the aggregate
amount of
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Capital Expenditures of ASI and its Subsidiaries for such period minus (ii)
-----
the amount thereof funded with the proceeds of Indebtedness incurred to
finance such Capital Expenditures or financed pursuant to a Financing
Lease, in each case determined on a Consolidated basis in accordance with
GAAP.
" Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"Working Capital": at any date of determination, the sum of (a) all
amounts which would, in conformity with GAAP, be included under current
assets (other than cash and Cash Equivalents) on a balance sheet of ASI and
its Subsidiaries on a Consolidated basis on such date of determination
minus (b) all amounts which would, in conformity with GAAP, be included
-----
under current liabilities on a balance sheet (other than the current
portion of Indebtedness) of ASI and its Subsidiaries on a Consolidated
basis on such date of determination.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Notes or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrowers and their Subsidiaries not defined in subsection 1.1 and accounting
terms partly defined in subsection 1.1, to the extent not defined, shall have
the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms and
----------------------------
conditions hereof, each Lender severally agrees to make revolving credit loans
("Revolving Credit Loans") to ASI from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Commitment Percentage of then outstanding L/C
Obligations, does not exceed the lesser of (i) the amount of such Lender's
Revolving Credit Commitment and (ii) such Lender's
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Commitment Percentage of the Borrowing Base then in effect. During the Revolving
Credit Commitment Period, ASI may use the Revolving Credit Commitments by
borrowing, prepaying and reborrowing the Revolving Credit Loans in whole or in
part all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) ABR Loans, or (iii) a combination thereof, as determined
by ASI and notified to the Administrative Agent in accordance with subsections
2.2 and 2.9, provided that no Revolving Credit Loan shall be made as a
--------
Eurodollar Loan after the day that is one month prior to the Revolving Credit
Termination Date.
2.2 Procedure for Revolving Credit Borrowing. ASI may borrow under
----------------------------------------
the Revolving Credit Commitments during the Revolving Credit Commitment Period
on any Business Day, provided that ASI shall give the Administrative Agent
--------
irrevocable notice (which notice must be received by the Administrative Agent
prior to 10:00 A.M., New York City time, (a) three Business Days prior to the
requested Borrowing Date, if all or any part of the requested Revolving Credit
Loans are to be initially Eurodollar Loans, and one Business Day prior to the
requested Borrowing Date, otherwise), specifying (i) the amount to be borrowed,
(ii) the requested Borrowing Date, (iii) whether the borrowing is to be of
Eurodollar Loans, ABR Loans or a combination thereof and (iv) if the borrowing
is to be entirely or partly of Eurodollar Loans, the respective amounts of each
such Type of Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Revolving Credit Commitments shall be in an
amount equal to (x) in the case of ABR Loans, $500,000 or a whole multiple of
$100,000 in excess thereof (or, if the then Available Revolving Credit
Commitments are less than $500,000, such lesser amount) and (y) in the case of
Eurodollar Loans, $1,500,000 or a whole multiple of $100,000 in excess thereof.
Upon receipt of any such notice from ASI, the Administrative Agent shall
promptly notify each Lender thereof. Each Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent for the
account of ASI at the office of the Administrative Agent specified in subsection
10.2 prior to 11:00 A.M., New York City time, on the Borrowing Date requested by
ASI in funds immediately available to the Administrative Agent. Such borrowing
will then be made available to ASI by the Administrative Agent crediting the
account of ASI on the books of such office with the aggregate of the amounts
made available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent.
2.3 Commitment Fee. ASI agrees to pay to the Administrative Agent
--------------
for the account of each Lender a commitment fee for the period from and
including the first day of the Revolving Credit Commitment Period to the
Revolving Credit Termination Date, computed at the rate of 0.25% per annum on
the average daily amount of the Available Revolving Credit Commitment of such
Lender during the period for which payment is made, payable quarterly in arrears
on the last Business Day of each March, June, September and December and on the
Revolving Credit Termination Date or such earlier date as the Revolving Credit
Commitments
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shall terminate as provided herein, commencing on the first of such dates to
occur after the date hereof.
2.4 Termination or Reduction of Commitments. ASI shall have the
---------------------------------------
right, upon not less than five Business Days' notice to the Administrative
Agent, to terminate the Revolving Credit Commitments or, from time to time, to
reduce the amount of the Revolving Credit Commitments, provided that, after
--------
giving effect thereto and any prepayments of Revolving Credit Loans on such
date, the aggregate principal amount of Revolving Credit Loans then outstanding,
when added to the outstanding L/C Obligations, does not exceed the Revolving
Credit Commitments of the Lenders then in effect. Any such reduction shall be
in an amount equal to $100,000 or a whole multiple thereof and shall reduce
permanently the Revolving Credit Commitments then in effect.
2.5 Term Loans. Subject to the terms and conditions hereof, each
----------
Lender severally agrees to make term loans (each a "Term Loan") to ASI and
McLagan Partners on the Closing Date in an aggregate amount not to exceed the
amount of the Term Loan Commitment of such Lender, provided that, the aggregate
--------
amount of Term Loans made to ASI shall be $3,000,000 and the aggregate amount of
Term Loans made to McLagan Partners shall be $12,000,000. The Term Loans may
from time to time be (a) Eurodollar Loans, (b) ABR Loans or (c) a combination
thereof, as determined by ASI or McLagan Partners, as the case may be, and
notified to the Administrative Agent in accordance with subsections 2.6 and 2.9.
2.6 Procedure for Term Loan Borrowing. ASI and McLagan Partners
---------------------------------
hereby request a Term Loan borrowing on the Closing Date in an amount equal to
the aggregate amount of the Term Loan Commitments of the Lenders. Each Lender
will make the amount of its pro rata share of the Term Loans available to the
Administrative Agent for the account of ASI and McLagan Partners at the office
of the Administrative Agent specified in subsection 10.2 prior to 11:00 A.M.,
New York City time, on the Closing Date in Dollars and in funds immediately
available to the Administrative Agent. The Administrative Agent shall credit
the accounts of ASI and McLagan Partners, as applicable, on the books of such
office of the Administrative Agent by 2:00 P.M., New York City time, on the
Closing Date, with the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.
2.7 Repayment of Loans; Evidence of Debt. (a) ASI hereby
------------------------------------
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Revolving Credit Loan of
such Lender on the Revolving Credit Termination Date (or such earlier date on
which the Revolving Credit Loans become due and payable pursuant to Section 8).
ASI hereby further agrees to pay interest on the unpaid principal amount of the
Revolving Credit Loans from time to time outstanding from the date hereof until
payment in full thereof at the rates per annum, and on the dates set forth in
subsections 2.11 and 2.14.
24
<PAGE>
(b) Each of ASI and McLagan Partners hereby, jointly and severally,
unconditionally promise to pay to the Administrative Agent for the account of
each Lender the principal amount of the Term Loans of such Lender in quarterly
installments during each year set forth below payable on the last day of March,
June, September and December of each such year (with the aggregate amount due in
each such year being equal to the amount set forth below opposite such year and
the installments in each year being equal in amount):
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1998 $1,500,000
1999 2,000,000
2000 3,000,000
2001 4,000,000
2002 4,500,000
</TABLE>
Each of ASI and McLagan Partners, jointly and severally, hereby further agree to
pay interest on the unpaid principal amount of the Term Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in subsections 2.11 and 2.14.
(c) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrowers to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(d) The Administrative Agent shall maintain the Register pursuant to
subsection 10.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Revolving Credit Loan and Term Loan made
hereunder, the Type thereof and each Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to become due and
payable from each of the Borrowers to each Lender hereunder and (iii) both the
amount of any sum received by the Administrative Agent hereunder from each of
the Borrowers and each Lender's share thereof.
(e) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 2.7(c) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
----- -----
obligations of each of the Borrowers therein recorded; provided, however, that
-------- -------
the failure of any Lender or the Administrative Agent to maintain the Register
or any such account, or any error therein, shall not in any manner affect the
obligation of either of the Borrowers to repay (with applicable interest) the
Loans made to such Borrower by such Lender in accordance with the terms of this
Agreement.
(f) Each of the Borrowers agrees that such Borrower will execute and
deliver to
25
<PAGE>
such Lender (i) a promissory note of such Borrower evidencing the Revolving
Credit Loans of such Lender, made to such Borrower, substantially in the form of
Exhibit D with appropriate insertions as to date and principal amount (a
- ---------
"Revolving Credit Note"), and/or (ii) a promissory note of such Borrower
evidencing the Term Loans of such Lender made to such Borrower, substantially in
the form of Exhibit E with appropriate insertions as to date and principal
---------
amount (a "Term Note").
2.8 Optional Prepayments and Mandatory Prepayments. (a) Each of the
----------------------------------------------
Borrowers may on the last day of any Interest Period with respect thereto, in
the case of Eurodollar Loans, or at any time and from time to time, in the case
of ABR Loans, prepay the Loans, in whole or in part, without premium or penalty,
by giving irrevocable notice (which may be by telephone, promptly confirmed in
writing) to the Administrative Agent by 10:00 A.M. on the date of the
prepayment, specifying the date and amount of prepayment and whether the
prepayment is of Term Loans and/or Revolving Credit Loans and of Eurodollar
Loans, ABR Loans or a combination thereof, and, if of a combination thereof, the
amount allocable to each. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. If any such notice is given,
the amount specified in such notice shall be due and payable on the date
specified therein, together with any amounts payable pursuant to subsection 2.18
and, in the case of prepayments of the Term Loans only, accrued interest to such
date on the amount prepaid. Partial prepayments of the Term Loans shall be
applied to the remaining installments of principal thereof in the inverse order
of their scheduled maturities. Amounts prepaid on account of the Term Loans may
not be reborrowed. Partial prepayments shall be in an aggregate principal
amount of $100,000 or a whole multiple of $50,000 in excess thereof, in the case
of any prepayment of Revolving Credit Loans, and $100,000 or a whole multiple of
$50,000 in excess thereof, in the case of prepayment of any Term Loans.
(b) If, at any time during the Commitment Period, the Aggregate
Outstanding Revolving Extensions of Credit of the Lenders exceed the Borrowing
Base then in effect, ASI shall, without notice or demand, immediately prepay the
Revolving Credit Loans in an aggregate principal amount equal to such excess,
together with interest and commitment fees accrued to the date of such payment
or prepayment to the Administrative Agent. To the extent that after giving
effect to any prepayment of any Revolving Credit Loans required by the preceding
sentence, the Aggregate Outstanding Revolving Extensions of Credit at such time
exceed the Borrowing Base at such time, ASI shall, without notice or demand,
immediately deposit in a Cash Collateral Account upon terms reasonably
satisfactory to the Administrative Agent an amount equal to the aggregate then
outstanding L/C Obligations. The Administrative Agent shall apply any cash
deposited in the Cash Collateral Account (to the extent thereof) to pay any
Reimbursement Obligations which become due thereafter, provided that the
--------
Administrative Agent shall release to ASI from time to time such portion of the
amount on deposit in the Cash Collateral Account which is equal to the amount by
which the Borrowing Base at such time plus the amount on deposit in the Cash
Collateral Account exceeds the Aggregate Outstanding Revolving Extensions of
Credit at such time. Unless a Default or
26
<PAGE>
Event of Default shall have occurred and be continuing, the Administrative Agent
shall invest all amounts on deposit in such Cash Collateral Account in Cash
Equivalents designated by ASI and all earnings on such investments shall be for
the benefit of ASI. After the occurrence and during the continuation of an Event
of Default, the Administrative Agent may invest amounts on deposit in such Cash
Collateral Account in such Cash Equivalents as it may determine and all earnings
on such investments shall be held as additional collateral security for the
Obligations (as defined in the Guarantee and Collateral Agreement). The
Administrative Agent shall not be responsible for losses as a result of any
investment of amounts on deposit in such Cash Collateral Account and ASI shall
deposit additional amounts in the Cash Collateral Account equal to the amount of
any such losses upon the realization thereof.
(c) If, with respect to any fiscal year of ASI, commencing with its
fiscal year ending March 31, 1999, ASI and its Consolidated Subsidiaries shall
have Excess Cash Flow for such fiscal year, ASI and McLagan Partners shall
prepay the Term Loans in an aggregate amount equal to 50% of such Excess Cash
Flow, with such prepayment being due and payable on or prior to July 15 of the
fiscal year following the fiscal year in respect of which such payment is made.
(d) Upon any issuance of any Capital Stock by ASI or any capital
contribution made to ASI, ASI and McLagan Partners shall prepay the Term Loans
in an amount equal to the lesser of (i) 50% of the Net Proceeds of such issuance
or capital contribution and (ii) 50% of the then aggregate outstanding principal
amount of Term Loans. Each prepayment made pursuant to this subsection 2.8(d)
shall be made on or before the date which is two Business Days after the date of
receipt of the relevant Net Proceeds.
(e) Prepayments of any of the Term Loans pursuant to subsection
2.8(c) or 2.8(d) shall be applied (i) to first prepay any outstanding Term Loans
which are ABR Loans until all such loans have been prepaid in full and second,
to prepay any Term Loans which are Eurodollar Loans and (ii) in the inverse
order of maturity thereof. All such prepayments shall be accompanied by the
interest accrued on any such prepayment amount through the date of such
prepayment. Notwithstanding the forgoing provisions of this subsection 2.8, if
at any time the mandatory prepayment of Loans pursuant to subsection 2.8(b), (c)
or (d) would result in ASI's incurring breakage costs under subsection 2.18 as a
result of Eurodollar Loans being prepaid other than on the last day of an
Interest Period applicable thereto (the "Affected Eurodollar Loans"), then ASI
may in its sole discretion, so long as no Default or Event of Default shall have
then occurred and be continuing, initially deposit a portion (up to 100%) of the
amounts that otherwise would have been paid in respect of the Affected
Eurodollar Loans with the Administrative Agent (which deposit must be equal in
amount to the amount of the Affected Eurodollar Loans not immediately prepaid)
in a Cash Collateral Account to be held as security for all amounts owing to the
Administrative Agent and the Lenders in connection with this Agreement or any
other Loan Document, with such cash collateral to be directly applied by the
Administrative Agent to prepay the relevant Affected Eurodollar Loans on the
last day of the Interest Periods applicable thereto (or such earlier date or
dates as shall be requested by
27
<PAGE>
ASI or as shall be determined by the Administrative Agent at any time after the
occurrence and during the continuation of a Default or Event of Default).
Notwithstanding anything to the contrary contained in the immediately preceding
sentence, all amounts deposited in such Cash Collateral Account pursuant to the
immediately preceding sentence shall be held for the sole benefit of the Lenders
whose Loans would otherwise have been immediately prepaid with the amounts
deposited, and, upon the taking of any action by the Administrative Agent or the
Lenders pursuant to the remedial provisions of Section 8, any amounts held as
cash collateral pursuant to this subsection 2.8(e) shall, subject to the
requirements of applicable law, be immediately applied to prepay such Loans.
Unless a Default or Event of Default shall have occurred and be continuing, the
Administrative Agent shall invest all amounts on deposit in such Cash Collateral
Account in Cash Equivalents designated by ASI and all earnings on such
investments shall be for the benefit of ASI. After the occurrence and during the
continuation of an Event of Default, the Administrative Agent may invest amounts
on deposit in such Cash Collateral Account in such cash Equivalents as it may
determine and all the earnings on such investments shall be held as additional
collateral security for the Obligations (as defined in the Guarantee and
Collateral Agreement). The Administrative Agent shall not be responsible for
losses as a result of any investment of amounts on deposit in such Cash
Collateral Account and ASI shall deposit additional amounts in the Cash
Collateral Account equal to the amount of any such losses upon the realization
thereof.
2.9 Conversion and Continuation Options. (a) Each of the Borrowers
-----------------------------------
may elect from time to time to convert its Eurodollar Loans to ABR Loans, by
giving the Administrative Agent at least two Business Days' prior irrevocable
notice of such election, provided that any such conversion of Eurodollar Loans
--------
may only be made on the last day of an Interest Period with respect thereto.
Each of the Borrowers may elect from time to time to convert its ABR Loans to
Eurodollar Loans by giving the Administrative Agent at least three Business
Days' prior irrevocable notice of such election. Any such notice of conversion
to Eurodollar Loans shall specify the length of the initial Interest Period or
Interest Periods therefor. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. All or any part of outstanding
Eurodollar Loans and ABR Loans may be converted as provided herein, provided
--------
that (i) no Loan may be converted into a Eurodollar Loan when any Event of
Default has occurred and is continuing and the Administrative Agent has or the
Required Lenders have determined that such a conversion is not appropriate and
(ii) no Loan may be converted into a Eurodollar Loan after the date that is one
month prior to the Revolving Credit Termination Date (in the case of conversions
of Revolving Credit Loans) or the date of the final installment of principal of
the Term Loans (in the case of conversions of Term Loans).
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the applicable
Borrower giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection 1.1,
of the length of the next Interest Period to be applicable to such Loans,
provided that no Eurodollar Loan may be continued as such (i) when any Event of
- --------
Default has occurred and is continuing and the Administrative Agent has or the
Required
28
<PAGE>
Lenders have determined that such a continuation is not appropriate or (ii)
after the date that is one month prior to the Revolving Credit Termination Date
(in the case of continuations of Revolving Credit Loans) or the date of the
final installment of principal of the Term Loans (in the case of continuations
of Term Loans) and provided, further, that if the applicable Borrower shall fail
-------- -------
to give such notice or if such continuation is not permitted such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period.
2.10 Minimum Amounts of Tranches. All borrowings, conversions and
---------------------------
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, no more than five Eurodollar Tranches in
respect of Term Loans still be outstanding at any one time.
2.11 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
--------------------------------
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus (i) in the case of Eurodollar Loans which are Revolving Credit Loans, the
Revolving Credit Applicable Margin or (ii) in the case of Eurodollar Loans which
are Term Loans, the Term Loan Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to
the ABR plus (i) in the case of ABR Loans which are Revolving Credit Loans, the
Revolving Credit Applicable Margin or (ii) in the case of ABR Loans which are
Term Loans, the Term Loan Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, (iii) any commitment fee or (iv) any other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Loans and any such overdue
interest, commitment fee or other amount shall bear interest at a rate per annum
which is (x) in the case of principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this subsection plus
3% or (y) in the case of any such overdue interest, commitment fee or other
amount, the rate described in paragraph (b) of this subsection plus 3%, in each
case from the date of such non-payment until such overdue principal, interest,
commitment fee or other amount is paid in full (as well after as before
judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this
--------
subsection shall be payable from time to time on demand.
(e) Upon the occurrence and during the continuance of an Event of
Default, the Required Lenders shall have the right to require that the principal
of any Loan then outstanding shall bear interest ar a rate per annum which is
the rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this subsection plus 3%.
29
<PAGE>
2.12 Computation of Interest and Fees. (a) Commitment fees and
--------------------------------
interest shall be calculated on the basis of a 360-day year for the actual days
elapsed. The Administrative Agent shall as soon as practicable notify the
Borrowers and the Lenders of each determination of a Eurodollar Rate. Any
change in the interest rate on a Loan resulting from a change in the ABR or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify the Borrowers and the Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrowers and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of either of the Borrowers, deliver
to the Borrowers a statement showing the quotations used by the Administrative
Agent in determining any interest rate pursuant to subsection 2.11(a).
2.13 Inability to Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon each of the Borrowers)
that, by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from any
Lender that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such
Lender (as conclusively certified by such Lenders) of making or maintaining
their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrowers and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans, requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans, shall be
continued as ABR Loans and (z) any outstanding Eurodollar Loans that were to
have been continued as such on such first day shall be converted on such day to
ABR Loans. Until such notice has been withdrawn by the Administrative Agent, no
further Eurodollar Loans, as the case may be, shall be made or continued as
such, nor shall either of the Borrowers have the right to convert Loans to
Eurodollar Loans, as the case may be.
2.14 Pro Rata Treatment and Payments. (a) Each borrowing by each of
-------------------------------
the Borrowers from the Lenders hereunder, each payment by each of the Borrowers
on account of any commitment fee hereunder and any reduction of the Revolving
Credit Commitments or the Term Loan Commitments shall be made pro rata according
--------
to the Lenders' Commitment Percentages. Each payment (including each
prepayment) by each of the Borrowers on account
30
<PAGE>
of principal of and interest on the Loans shall be made pro rata according to
--------
the respective outstanding principal amounts of the Revolving Credit Loans or
Term Loans, as the case may be, then held by the Lenders. All payments
(including prepayments) to be made by each of the Borrowers hereunder, whether
on account of principal, interest, fees or otherwise, shall be made without set
off or counterclaim and shall be made prior to 12:00 Noon, New York City time,
on the due date thereof to the Administrative Agent, for the account of the
Lenders, at the Administrative Agent's office specified in subsection 10.2
hereof, in Dollars and in immediately available funds. The Administrative Agent
shall distribute such payments to the Lenders promptly upon receipt in like
funds as received. If any payment hereunder becomes due and payable on a day
other than a Business Day, such payment shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the applicable
Borrower a corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Administrative Agent. A certificate of the Administrative Agent submitted
to any Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Lender's share of such
borrowing is not made available to the Administrative Agent by such Lender
within three Business Days of such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to ABR Loans hereunder, on demand, from the applicable
Borrower. The failure of any Lender to make any extension of credit required to
be made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments of the Lenders are several and no Lender shall be
- --------
responsible for any other Lender's failure to make any extension of credit as
required.
2.15 Illegality. Notwithstanding any other provision herein, if the
----------
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert ABR Loans to Eurodollar Loans shall forthwith be cancelled and (b) such
Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to ABR Loans on the respective last days of the then current
Interest Periods with respect to such Loans or within such earlier period as
required by law. If any such conversion of a Eurodollar Loan occurs on a day
which is not the last day of the then current Interest Period with respect
thereto, the relevant Borrower shall pay to such Lender
31
<PAGE>
such amounts, if any, as may be required pursuant to subsection 2.18.
2.16 Requirements of Law. (a) If the adoption of or any change in
-------------------
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note, any Letter of Credit, any
Application or any Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for Non-
Excluded Taxes covered by subsection 2.17 and changes in the rate of tax on
the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the relevant Borrower shall promptly pay such
Lender such additional amount or amounts as will compensate such Lender for such
increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under any Letters of Credit to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, the relevant
Borrower shall promptly pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the relevant Borrower
(with a copy to the
32
<PAGE>
Administrative Agent) of the event by reason of which it has become so entitled.
A certificate as to any additional amounts payable pursuant to this subsection
submitted by such Lender to the relevant Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
2.17 Taxes. (a) All payments made by each of the Borrowers under
-----
this Agreement and any Notes shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on the Administrative Agent or any
Lender as a result of a present or former connection between the Administrative
Agent or such Lender and the jurisdiction of the Governmental Authority imposing
such tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from the Administrative Agent or
such Lender having executed, delivered or performed its obligations or received
a payment under, or enforced, this Agreement or any Note). If any such non-
excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Administrative Agent or any Lender hereunder or under any Note,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrowers shall not be required to
-------- -------
increase any such amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this subsection. Whenever any
Non-Excluded Taxes are payable by either of the Borrowers, as promptly as
possible thereafter such Borrower shall send to the Administrative Agent for its
own account or for the account of such Lender, as the case may be, a certified
copy of an original official receipt received by such Borrower showing payment
thereof. If either of the Borrowers fails to pay any Non-Excluded Taxes when
due to the appropriate taxing authority or fails to remit to the Administrative
Agent the required receipts or other required documentary evidence, such
Borrower shall indemnify the Administrative Agent and the Lenders for any
incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) deliver to each of the Borrowers and the Administrative
Agent (A) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224,
33
<PAGE>
or successor applicable form, as the case may be, and (B) an Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as the case
may be;
(ii) deliver to each of the Borrowers and the Administrative
Agent two further copies of any such form or certification on or before the
date that any such form or certification expires or becomes obsolete and
after the occurrence of any event requiring a change in the most recent
form previously delivered by it to such Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by such
Borrowers or the Administrative Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrowers and the
Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. Each Person that shall become a Lender or a
Participant pursuant to subsection 10.6 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms and statements
required pursuant to this subsection, provided that in the case of a Participant
such Participant shall furnish all such required forms and statements to the
Lender from which the related participation shall have been purchased.
2.18 Indemnity. Each of the Borrowers agrees to indemnify each Lender
---------
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by such Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after such
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by such Borrower in making any
prepayment of a Eurodollar Loan after such Borrower has given a notice thereof
in accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an Interest
Period with respect thereto. Such indemnification may include an amount equal to
the excess, if any, of (i) the amount of interest which would have accrued on
the amount so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of such Interest Period (or, in the case of a failure
to borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Loans provided for herein (excluding, however, the Applicable Margin
included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender
34
<PAGE>
on such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. This covenant shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
2.19 Change of Lending Office. Each Lender agrees that if it makes
------------------------
any demand for payment under subsection 2.16 or 2.17(a), or if any adoption or
change of the type described in subsection 2.15 shall occur with respect to it,
it will use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its sole discretion) to designate a
different lending office if the making of such a designation would reduce or
obviate the need for the Borrowers to make payments under subsection 2.16 or
2.17(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 2.15.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
--------------
the Issuing Bank, in reliance on the agreements of the other Lenders set forth
in subsection 34, agrees to issue letters of credit ("Letters of Credit") for
-----------------
the account of ASI on any Business Day during the Revolving Credit Commitment
Period in such form as may be approved from time to time by the Issuing Bank;
provided that the Issuing Bank shall have no obligation to issue any Letter of
- --------
Credit if, after giving effect to such issuance, (i) the L/C Obligations would
exceed the L/C Commitment or (ii the Available Revolving Credit Commitments of
the Lenders would be less than zero or (ii the sum of the outstanding L/C
Obligations and the aggregate outstanding principal amount of Revolving Credit
Loans at such time would exceed the Borrowing Base then in effect.
(b) Each Letter of Credit shall:
(i) be denominated in Dollars and shall be a standby letter of
credit issued to support obligations of ASI, contingent or otherwise, in
respect of leases of real property.
(ii) expire no later than five Business Days prior to the Revolving
Credit Termination Date.
(c) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(d) The Issuing Bank shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
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3.2 Procedure for Issuance of Letters of Credit. ASI may from time
-------------------------------------------
to time request that the Issuing Bank issue a Letter of Credit by delivering to
the Issuing Bank at its address for notices specified herein an Application
therefor, completed to the satisfaction of the Issuing Bank, and such other
certificates, documents and other papers and information as the Issuing Bank may
request. Upon receipt of any Application, the Issuing Bank will process such
Application and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its customary
procedures and shall promptly issue the Letter of Credit requested thereby (but
in no event shall the Issuing Bank be required to issue any Letter of Credit
earlier than three Business Days after its receipt of the Application therefor
and all such other certificates, documents and other papers and information
relating thereto) by issuing the original of such Letter of Credit to the
beneficiary thereof or as otherwise may be agreed by the Issuing Bank and ASI.
The Issuing Bank shall furnish a copy of such Letter of Credit to ASI promptly
following the issuance thereof.
3.3 Fees, Commissions and Other Charges. (a) ASI shall pay to the
-----------------------------------
Administrative Agent, for the account of the Issuing Bank and the L/C
Participants, a letter of credit commission with respect to each Letter of
Credit, computed for the period from the date of such payment to the date upon
which the next such payment is due hereunder at the rate of 1.50% per annum,
calculated on the basis of a 360 day year, of the aggregate amount available to
be drawn under such Letter of Credit on the date on which such fee is
calculated. Such commissions shall be payable in advance on the date of
issuance of each Letter of Credit and on each L/C Fee Payment Date to occur
thereafter and shall be nonrefundable.
(b) In addition to the foregoing fees and commissions, ASI shall pay
or reimburse the Issuing Bank for such normal and customary costs and expenses
as are incurred or charged by the Issuing Bank in issuing, effecting payment
under, amending or otherwise administering any Letter of Credit.
(c) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Bank and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection.
3.4 L/C Participations. (a) The Issuing Bank irrevocably agrees to
------------------
grant and hereby grants to each L/C Participant, and, to induce the Issuing Bank
to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Bank, on
the terms and conditions hereinafter stated, for such L/C Participant's own
account and risk an undivided interest equal to such L/C Participant's
Commitment Percentage in the Issuing Bank's obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Bank thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Bank that, if a draft is paid under any Letter of Credit
for which the Issuing Bank is not reimbursed in full by ASI in accordance with
the terms of this Agreement, such L/C Participant shall pay to the Issuing Bank
upon demand at the Issuing Bank's address for notices
36
<PAGE>
specified herein an amount equal to such L/C Participant's Commitment Percentage
of the amount of such draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Bank pursuant to subsection 34 in respect of any unreimbursed portion of
any payment made by the Issuing Bank under any Letter of Credit is paid to the
Issuing Bank within three Business Days after the date such payment is due, such
L/C Participant shall pay to the Issuing Bank on demand an amount equal to the
product of (i) such amount, times (ii the daily average Federal Funds Effective
Rate, as quoted by the Issuing Bank, during the period from and including the
date such payment is required to the date on which such payment is immediately
available to the Issuing Bank, times (ii a fraction the numerator of which is
the number of days that elapse during such period and the denominator of which
is 360. If any such amount required to be paid by any L/C Participant pursuant
to subsection 34 is not in fact made available to the Issuing Bank by such L/C
Participant within three Business Days after the date such payment is due, the
Issuing Bank shall be entitled to recover from such L/C Participant, on demand,
such amount with interest thereon calculated from such due date at the rate per
annum applicable to ABR Loans hereunder. A certificate of the Issuing Bank
submitted to any L/C Participant with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Bank has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with subsection 34, the Issuing Bank
receives any payment related to such Letter of Credit (whether directly from ASI
or otherwise, including proceeds of collateral applied thereto by the Issuing
Bank), or any payment of interest on account thereof, the Issuing Bank will
distribute to such L/C Participant its pro rata share thereof; provided,
--------
however, that in the event that any such payment received by the Issuing Bank
- -------
shall be required to be returned by the Issuing Bank, such L/C Participant shall
return to the Issuing Bank the portion thereof previously distributed by the
Issuing Bank to it.
3.5 Reimbursement Obligation of ASI. (a) ASI agrees to reimburse the
-------------------------------
Issuing Bank on each date on which the Issuing Bank notifies ASI of the date and
amount of a draft presented under any Letter of Credit and paid by the Issuing
Bank for the amount of (i) such draft so paid and (ii any taxes, fees, charges
or other costs or expenses incurred by the Issuing Bank in connection with such
payment. Each such payment shall be made to the Issuing Bank at its address for
notices specified herein in lawful money of the United States of America and in
immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid
by ASI under this subsection from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until payment in full at the
rate which would be payable on any outstanding ABR Loans which were then
overdue.
37
<PAGE>
3.6 Obligations Absolute. (a) ASI's obligations under this Section
--------------------
3 shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which ASI may
have or have had against the Issuing Bank or any beneficiary of a Letter of
Credit.
(b) ASI also agrees with the Issuing Bank that the Issuing Bank shall
not be responsible for, and ASI's Reimbursement Obligations under subsection 35
shall not be affected by, among other things, (i) the validity or genuineness of
documents or of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or (ii any dispute between or
among ASI and any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or (ii any claims whatsoever of
ASI against any beneficiary of such Letter of Credit or any such transferee.
(c) The Issuing Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Bank's gross negligence or willful
misconduct.
(d) ASI agrees that any action taken or omitted by the Issuing Bank
under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Commercial
Code of the State of New York, shall be binding on ASI and shall not result in
any liability of the Issuing Bank to ASI.
3.7 Letter of Credit Payments. If any draft shall be presented for
-------------------------
payment under any Letter of Credit, the Issuing Bank shall promptly notify ASI
of the date and amount thereof. The responsibility of the Issuing Bank to ASI in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.
3.8 Application. To the extent that any provision of any Application
-----------
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, each of the Borrowers hereby, jointly and severally, represents and
warrants to the Administrative Agent and each Lender (except that the
representations and warranties in subsections 4.1 and 4.15 are
38
<PAGE>
made solely by ASI) that:
4.1 Financial Condition. (a) The audited consolidated and
-------------------
consolidating balance sheet of ASI and its consolidated Subsidiaries as at March
31, 1997 and the related consolidated and consolidating statements of income and
of cash flows for the fiscal year ended on such date, reported on by Coopers &
Lybrand, copies of which have heretofore been furnished to each Lender, are
complete and correct and present fairly the consolidated and consolidating
financial condition of ASI and its Consolidated Subsidiaries as at such date,
and the consolidated results of their operations and their consolidated and
consolidating cash flows for the fiscal year then ended. The unaudited
consolidated and consolidating balance sheet of ASI and its consolidated
Subsidiaries as at June 30, 1997 and the related unaudited consolidated and
consolidating statements of income and of cash flows for the three-month period
ended on such date, certified by a Responsible Officer, copies of which have
heretofore been furnished to each Lender, are complete and correct and present
fairly the consolidated and consolidating financial condition of ASI and its
Consolidated Subsidiaries as at such date, and the consolidated and
consolidating results of their operations and their consolidated and
consolidating cash flows for the three-month period then ended (subject to
normal year-end audit adjustments and the absence of certain notes). All such
financial statements, including the related schedules and notes thereto, have
been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants or Responsible Officer,
as the case may be, and as disclosed therein). Neither ASI nor any of its
Consolidated Subsidiaries had, at the date of the most recent balance sheet
referred to above, any material Guarantee Obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction, which is not reflected in the foregoing statements
or in the notes thereto. During the period from March 31, 1997 to and including
the date hereof there has been no sale, transfer or other disposition by ASI or
any of its consolidated Subsidiaries of any material part of its business or
property and no purchase or other acquisition of any business or property
(including any capital stock of any other Person) material in relation to the
consolidated and consolidating financial condition of ASI and its consolidated
Subsidiaries at March 31, 1997.
(b) The pro forma consolidated and consolidating balance sheet of ASI
and its Consolidated Subsidiaries as of a date satisfactory to the Lenders are
complete and correct and present fairly the consolidated and consolidating pro
forma financial condition of ASI and its Consolidated Subsidiaries as at such
date after giving effect, on a pro forma basis, to (i) the McLagan Acquisition,
(ii) the financing thereof and (iii) the payment of related fees and expenses,
as if such events had occurred on such date. Such balance sheet was prepared
based on good faith assumptions and on the best information available to ASI as
of the date of delivery thereof and fairly presents on a pro forma basis the
--- -----
Consolidated financial position of ASI and its Consolidated Subsidiaries as at
such date, as adjusted, as described above, assuming such events had occurred at
such date. The balance sheets, income statements and cash flow projections of
ASI and its Consolidated Subsidiaries for the fiscal years ending
39
<PAGE>
March 31, 1998 through March 31, 2003 have been prepared on the basis of sound
financial planning practice and are complete and not misleading in any material
respect.
4.2 No Change; Solvency. (a) Since March 31, 1997 there has been no
-------------------
development or event which has had or could reasonably be expected to have a
Material Adverse Effect, and (b) except as set forth on Schedule 4.2, during the
period from March 31, 1997 to and including the date hereof no dividends or
other distributions have been declared, paid or made upon the Capital Stock of
ASI nor has any of the Capital Stock of ASI been redeemed, retired, purchased or
otherwise acquired for value by ASI or any of its Subsidiaries. As of the
Closing Date, after giving effect to the transactions contemplated by this
Agreement and the other Loan Documents, and as of each Borrowing Date, each of
the Borrowers and its Subsidiaries will be Solvent on a Consolidated basis.
4.3 Corporate Existence; Compliance with Law. Such Borrower and each
----------------------------------------
of its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the corporate
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
and (d) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. Such
-------------------------------------------------------
Borrower and each of its Subsidiaries has the corporate power and authority, and
the legal right, to make, deliver and perform the Loan Documents to which it is
a party and to borrow hereunder and has taken all necessary corporate action to
authorize the borrowings on the terms and conditions of this Agreement and any
Notes and to authorize the execution, delivery and performance of the Loan
Documents to which it is a party. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or any
other Person is required in connection with the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of the Loan
Documents to which such Borrower is a party. This Agreement has been, and each
other Loan Document to which it is a party will be, duly executed and delivered
on behalf of such Borrower. This Agreement constitutes, and each other Loan
Document to which it is a party when executed and delivered will constitute, a
legal, valid and binding obligation of such Borrower enforceable against such
Borrower in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
4.5 No Legal Bar. The execution, delivery and performance of the
------------
Loan Documents to which such Borrower is a party, the borrowings hereunder and
the use of the
40
<PAGE>
proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of such Borrower or of any of its Subsidiaries and will not result
in, or require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
4.6 No Material Litigation. No litigation, investigation or
----------------------
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of either of the Borrowers, threatened by or against such
Borrower or any of its Subsidiaries or against any of its or their respective
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) which could reasonably
be expected to have a Material Adverse Effect.
4.7 No Default. Neither such Borrower nor any of its Subsidiaries is
----------
in default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Such Borrower and each of its
----------------------------
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other property, and none of such property is
subject to any Lien except as permitted by subsection 7.3.
4.9 Intellectual Property. Such Borrower and each of its
---------------------
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does either
of the Borrowers know of any valid basis for any such claim. The use of such
Intellectual Property by ASI and each of its Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
4.10 No Burdensome Restrictions. To the best of the Borrowers'
--------------------------
knowledge, no Requirement of Law or Contractual Obligation of such Borrower or
any of its Subsidiaries could reasonably be expected to have a Material Adverse
Effect.
4.11 Taxes. Such Borrower and each of its Subsidiaries has filed or
-----
caused to be filed all tax returns which, to the knowledge of such Borrower, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which
41
<PAGE>
are currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of such Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of such Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge.
4.12 Federal Regulations. No part of the proceeds of any Loans will
-------------------
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. If requested by any Lender or the Administrative Agent,
each of the Borrowers will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-1 or FR Form U-1 referred to in said Regulation G or Regulation U, as the case
may be.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. Neither of the Borrowers nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither of the
Borrowers nor any Commonly Controlled Entity would become subject to any
liability under ERISA if either Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. Neither of the
-----------------------------------------
Borrowers is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. Neither of the Borrowers is subject to regulation under any Federal
or State statute or regulation (other than Regulation X of the Board of
Governors of the Federal Reserve System) which limits its ability to incur
Indebtedness.
4.15 Subsidiaries. The following constitute all the Subsidiaries of
------------
ASI at the date hereof (after giving effect to the Acquisition): Assessments,
Proudfoot, McLagan Partners, T3 and C3.
4.16 Purpose of Loans. The proceeds of the Revolving Credit Loans
----------------
shall be
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used by ASI to finance the working capital needs of ASI and its Subsidiaries in
the ordinary course of business and to finance up to $2,500,000 in Permitted
Acquisitions and to pay related fees and expenses. The proceeds of the Term
Loans made to McLagan Partners shall be used by McLagan Partners to finance the
McLagan Acquisition and the proceeds of the Term Loans made to ASI shall be used
to make a capital contribution to McLagan Partners to finance the McLagan
Acquisition.
4.17 Representations and Warranties Contained in the McLagan
-------------------------------------------------------
Documentation. All of the McLagan Documentation has been duly executed and
- -------------
delivered by each of the parties thereto. As of the Closing Date, the
representations and warranties contained in the McLagan Documentation (after
giving effect to any amendments, supplements, waivers or other modifications of
such McLagan Documentation prior to such Closing Date in accordance with this
Agreement) will be true and correct in all material respects except as otherwise
disclosed to the Lenders in writing prior to the date hereof.
4.18 Environmental Matters. (a) To the best knowledge of the
---------------------
Borrowers, the facilities and properties owned, leased or operated by such
Borrower or any of its Subsidiaries (the "Properties") do not contain, and have
not previously contained, any Materials of Environmental Concern in amounts or
concentrations which (i) constitute or constituted a violation of, or (ii) could
reasonably be expected to give rise to liability under, any Environmental Law.
(b) To the best knowledge of the Borrowers, the Properties and all
operations at the Properties are in compliance, and have in the last five years
been in compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by ASI
or any of its Subsidiaries (the "Business") which could materially interfere
with the continued operation of the Properties or materially impair the fair
saleable value thereof.
(c) To the best knowledge of the Borrowers, neither such Borrower nor
any of its Subsidiaries has received any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance with Environmental Laws with regard to any of the Properties or
the Business, nor does such Borrower have knowledge or reason to believe that
any such notice will be received or is being threatened.
(d) To the best knowledge of the Borrowers, materials of
Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location which could
reasonably be expected to give rise to liability under, any Environmental Law,
nor have any Materials of Environmental Concern been generated, treated, stored
or disposed of at, on or under any of the Properties in violation of, or in a
manner that could reasonably be expected to give rise to liability under, any
applicable
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Environmental Law.
(e) To the best knowledge of the Borrowers, no judicial proceeding or
governmental or administrative action is pending or, to the knowledge of such
Borrower, threatened, under any Environmental Law to which such Borrower or any
of its Subsidiaries is or will be named as a party with respect to the
Properties or the Business, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business.
(f) To the best knowledge of the Borrowers, there has been no release
or threat of release of Materials of Environmental Concern at or from the
Properties, or arising from or related to the operations of such Borrower or any
of its Subsidiaries in connection with the Properties or otherwise in connection
with the Business, in violation of or in amounts or in a manner that could
reasonably give rise to liability under Environmental Laws.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extensions of Credit. The agreement of
------------------------------------------
each Lender to make the initial extension of credit requested to be made by it
is subject to the satisfaction, immediately prior to or concurrently with the
making of such extension of credit on the Closing Date, of the following
conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
--------------
this Agreement, executed and delivered by a duly authorized officer of each
of the Borrowers, with a counterpart for each Lender, (ii) the Guarantee
and Collateral Agreement executed and delivered by a duly authorized
officer of each party thereto, with a counterpart or a conformed copy for
each Lender and (iii) for the account of each requesting Lender, a Term
Note or Revolving Credit Note, as the case may be, executed and delivered
by a Responsible Officer of the relevant Borrower.
(b) Related Agreements. The Administrative Agent shall have
------------------
received, with a copy for each Lender, true and correct copies, certified
as to authenticity by a Responsible Officer of ASI, of the Purchase
Agreement, the Intercreditor Agreement and such other documents or
instruments as may be reasonably requested by the Administrative Agent,
including, without limitation, a copy of any debt instrument, security
agreement or other material contract to which ASI and any of its
Subsidiaries may be a party.
(c) Borrowing Certificate. The Administrative Agent shall have
---------------------
received, with a counterpart for each Lender, a certificate from each of
ASI and McLagan Partners, dated the Closing Date, substantially in the form
of Exhibit F, with appropriate
---------
44
<PAGE>
insertions and attachments, satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and
the Secretary or any Assistant Secretary of ASI.
(d) Corporate Proceedings of the Loan Parties. The Administrative
-----------------------------------------
Agent shall have received, with a counterpart for each Lender, a copy of
the resolutions, in form and substance satisfactory to the Administrative
Agent, of the Boards of Directors of each Loan Party authorizing (i) the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party, (ii) the borrowings contemplated
hereunder and (iii) the granting by it of the Liens created pursuant to the
Security Documents, certified by the Secretary or an Assistant Secretary of
such Loan Party as of the Closing Date, which certificate shall be in form
and substance satisfactory to the Administrative Agent and shall state that
the resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(e) Loan Party Incumbency Certificates. The Administrative Agent
----------------------------------
shall have received, with a counterpart for each Lender, a certificate of
each Loan Party, dated the Closing Date, as to the incumbency and signature
of the officers of each Loan Party executing any Loan Document satisfactory
in form and substance to the Administrative Agent, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of such Loan Party.
(f) Corporate Documents. The Administrative Agent shall have
-------------------
received, with a counterpart for each Lender, true and complete copies of
the certificate of incorporation and by-laws of each Loan Party, certified
as of the Closing Date as complete and correct copies thereof by the
Secretary or an Assistant Secretary of the such Loan Party and a
certificate of good standing for each Loan Party issued by its jurisdiction
of incorporation.
(g) Fees. The Administrative Agent shall have received all fees and
----
expenses (including the fees and expenses of counsel to the Administrative
Agent) due on the Closing Date, including, without limitation, the fees to
be received on the Closing Date referred to (i) in the Fee Letter addressed
to ASI dated October 30, 1997 and (ii) in the Commitment Letter and Term
Sheet executed by the Administrative Agent and ASI on October 30, 1997.
The fees and expenses of Simpson Thacher & Bartlett and Rivkin, Radler &
Kiemer shall have been paid.
(h) Legal Opinions. The Administrative Agent shall have received,
--------------
with a counterpart for each Lender, the executed legal opinion of Koerner,
Silberberg & Weiner LLP, counsel to ASI and the other Loan Parties, which
shall be in form and substance reasonably satisfactory to the
Administrative Agent.
(i) Pledged Stock; Stock Powers. The Administrative Agent shall have
---------------------------
45
<PAGE>
received the certificates representing the shares pledged pursuant to the
Guarantee and Collateral Agreement, together with an undated stock power
for each such certificate executed in blank by a duly authorized officer of
the pledgor thereof.
(j) Actions to Perfect Liens. The Administrative Agent shall have
------------------------
received evidence in form and substance satisfactory to it that all
filings, recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on form UCC-1,
necessary or, in the opinion of the Administrative Agent, desirable to
perfect the Liens created by the Security Documents shall have been
completed.
(k) [intentionally omitted].
(l) Lien Searches. The Administrative Agent shall have received the
-------------
results of a recent search by a Person satisfactory to the Administrative
Agent, of the Uniform Commercial Code, judgement and tax lien filings which
may have been filed with respect to personal property of ASI and its
Subsidiaries and the results of such search shall be satisfactory to the
Administrative Agent.
(m) Audit. The Banks shall have received copies of an audit, in form
-----
and substance satisfactory, of the Accounts of ASI, Proudfoot, Assessments
and C3 prepared by an auditing firm or organization satisfactory to the
Administrative Agent.
(n) Insurance. The Administrative Agent shall have received evidence
---------
in form and substance satisfactory to it that all of the requirements of
subsection 6.5 hereof shall have been satisfied.
(o) McLagan Acquisition; McLagan Documentation. The Administrative
------------------------------------------
Agent shall have received evidence satisfactory to it that (i) the McLagan
Acquisition shall have been approved by ASI, McLagan Buyers, and the
McLagan Sellers, (ii) the aggregate purchase price of the McLagan
Acquisition shall not exceed $22,500,000 and (iii) the cash portion of the
McLagan Acquisition shall not exceed $15,500,000. All aspects of the
McLagan Acquisition and the terms and conditions of all documentation
related thereto (the "McLagan Documentation") shall be satisfactory to the
Administrative Agent. The Administrative Agent shall be satisfied that the
assets acquired pursuant to the McLagan Acquisition shall have been
purchased free and clear of any and all Liens (other than Liens permitted
under the terms of this Agreement).
(p) Fleet Credit Agreement. The Administrative Agent shall have
----------------------
received evidence satisfactory to it that (i) all Indebtedness owed to
Fleet Bank by ASI and any of its Subsidiaries shall have been fully paid
off and all commitments pursuant to the Credit Agreement, dated as of July
22, 1997, between Fleet Bank and ASI (the "Fleet Credit Agreement"), shall
have been permanently terminated, (ii) all guarantees related
46
<PAGE>
to the Fleet Credit Agreement shall have been permanently released and
(iii) all security interests created pursuant to the Fleet Credit Agreement
and any security documents related thereto shall have been terminated,
including, without limitation, by the filing of UCC-3 termination
statements in the relevant jurisdictions (it being understood and agreed
that the letter of credit (the "Fleet Letter of Credit") issued by Fleet
Bank under the Fleet Credit Agreement shall remain outstanding and shall be
fully cash collateralized).
(q) Subordinated Note. The Administrative Agent shall have received
-----------------
copies of, and approved the terms and conditions contained in, the
Subordinated Note.
(r) Certificate of Deposit. ASI shall have purchased a certificate
----------------------
of deposit from the Administrative Agent in an amount equal to the first
scheduled payment of principal and interest under the Subordinated Note.
(s) Employment Agreements; Employee Benefit Plans. The
---------------------------------------------
Administrative Agent shall have received copies of the Employment
Agreements and copies of all employee benefit plans of ASI and its
Subsidiaries in existence on the Closing Date and the terms and conditions
of such plans shall be reasonably satisfactory to the Administrative Agent.
(t) Lease Agreements. The Administrative Agent shall have received a
----------------
schedule of all material lease agreements of ASI and its Subsidiaries,
describing, in reasonable detail, the term of the applicable lease, the
lessor, the lessee, the annual lease expenditure, the expiration date
thereof and type of lease.
(u) Financial Statements. The Administrative Agent have received the
--------------------
financial statements referred to in subsection 3.1(a) and (b) hereof. The
Lenders shall have received a satisfactory balance sheet of each McLagan
Buyer, on a stand alone basis, as of the Closing Date, after giving effect
to the McLagan Acquisition, the financing thereof and the payment of
related fees and expenses.
5.2 Conditions to Each Extension of Credit. The agreement of each
--------------------------------------
Lender to make any Loan requested to be made by it on any date (including,
without limitation, its initial extension of credit) is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by each of the Borrowers and each of the other Loan Parties
in or pursuant to the Loan Documents shall be true and correct in all
material respects on and as of such date as if made on and as of such date,
except that representations and warranties made with respect to a specified
earlier date shall be true and correct in all material respects on and as
of such earlier date.
47
<PAGE>
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
(c) Borrowing Base. After giving effect to the extensions of credit
--------------
requested to be made on such date, the Aggregate Outstanding Revolving
Extensions of Credit of the Lenders shall not exceed the Borrowing Base
then in effect. In addition, in the case of a borrowing at Revolving
Credit Loans and an issuance of a Letter of Credit, ASI shall have
delivered a Borrowing Base Certificate as of the relevant Borrowing Date.
(d) Additional Matters. All corporate and other proceedings, and all
------------------
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement, the other Loan Documents and
the Purchase Agreement shall be satisfactory in form and substance to the
Administrative Agent, and the Administrative Agent shall have received such
other documents and legal opinions in respect of any aspect or consequence
of the transactions contemplated hereby or thereby as it shall reasonably
request.
Each borrowing by each of the Borrowers hereunder and each Letter of Credit
issued on behalf of ASI shall constitute a representation and warranty by such
Borrower as of the date thereof that the conditions contained in this subsection
have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
ASI hereby agrees that, so long as the Commitments remain in effect ,
or any Letter of Credit remains outstanding, or any amount is owing to any
Lender or the Administrative Agent hereunder or under any other Loan Document,
ASI shall and (except in the case of delivery of financial information, reports
and notices) shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to each Lender:
--------------------
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of ASI, a copy of the consolidated and
consolidating balance sheet of ASI and its Consolidated Subsidiaries as at
the end of such year and the related consolidated and consolidating
statements of income and retained earnings and of cash flows for such year,
setting forth in each case in comparative form the figures for the previous
year, reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by
independent certified public accountants of nationally recognized standing
reasonably satisfactory to the Agent and the Required Lenders; and
48
<PAGE>
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of ASI, the unaudited consolidated and consolidating balance sheet of
ASI and its Consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated and consolidating statements of income and
retained earnings and of cash flows of ASI and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments and the absence of certain notes thereto);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to each Lender:
-------------------------------
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained
of any Default or Event of Default in respect of subsection 7.1, except as
specified in such certificate and including a schedule demonstrating
compliance with the financial covenants contained herein;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b) a certificate of a Responsible
Officer substantially in the form attached hereto as Exhibit B (i) stating
---------
that, to the best of such Responsible Officer's knowledge, during such
period (A) no Subsidiary has been formed or acquired (or, if any such
Subsidiary has been formed or acquired, ASI has complied with the
requirements of subsection 6.10 with respect thereto), (B) neither ASI nor
any of its Subsidiaries has changed its name, its principal place of
business, its chief executive office or the location of any material item
of tangible Collateral without complying with the requirements of this
Agreement and the Security Documents with respect thereto and (C) ASI has
observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and the other Loan
Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate and (ii) setting forth the
calculations required to determine compliance with subsection 7.1 at such
time, the Revolving Credit Applicable Margin and Term Loan Applicable
Margin then in effect and, in the case of the financial statements
delivered pursuant to subsection 6.1(a), the Excess Cash Flow for the
relevant fiscal year, provided that ASI shall also deliver a Compliance
--------
Certificate satisfying the
49
<PAGE>
requirements of this paragraph on the fifth Business Day preceding the date
any payment is due on the Subordinated Note or the making of any
Subordinated Employee Payment (with calculation of compliance with the
subsection 7.1 to be made as of such Business Day);
(c) within five days after the same are sent, copies of all financial
statements and reports which ASI sends to its stockholders, and within five
days after the same are filed, copies of all financial statements and
reports which ASI may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
(d) within 15 days after the last day of each calendar month, a
Borrowing Base Certificate setting forth the Borrowing Base as of such last
day together with a detailed schedule setting forth the aging of Accounts
(by Subsidiary and by account);
(e) promptly, a copy of any management letter received from the
accountants which audited the financial statements of ASI for any period;
and
(f) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
----------------------
or before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
ASI or its Subsidiaries, as the case may be.
6.4 Conduct of Business and Maintenance of Existence. Continue to
------------------------------------------------
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to subsection 7.5; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, be reasonably expected to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. Keep all property useful and
----------------------------------
necessary in its business in good working order and condition, ordinary wear and
tear excepted; maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such
risks (but including in any event public liability, product liability and
business interruption) as are usually insured against in the same general area
by companies engaged in the same or a similar business or as shall be reasonably
required by the Administrative Agent and such insurance shall name the
Administrative Agent as an insured party or an additional loss payee; and
furnish to each
50
<PAGE>
Lender, upon written request, full information as to the insurance carried.
6.6 Inspection of Property; Books and Records; Discussions; Audits
--------------------------------------------------------------
and Field Examinations. Keep proper books of records and account in which full,
- ----------------------
true and correct entries in conformity with GAAP and all Requirements of Law
shall be made of all dealings and transactions in relation to its business and
activities; and, upon two Business Day's advance notice (unless a Default of
Event of Default shall have occurred and be continuing), permit representatives
of any Lender to visit and inspect any of its properties and examine and make
abstracts from any of its books and records at any reasonable time during normal
business hours and as often as may reasonably be desired, provided that, unless
--------
a Default or Event of Default shall have occurred and be continuing, no more
than two inspections per year shall be permitted, and to discuss the business,
operations, properties and financial and other condition of ASI and its
Subsidiaries with officers and employees of ASI and its Subsidiaries and with
its independent certified public accountants and to perform periodic audits or
field examinations (it being understood and agreed that at least one such field
examination or periodic audit shall be made each year) of the assets of ASI and
its Subsidiaries (the reasonable costs and expenses of one such audit or field
examination per year to be borne by ASI).
6.7 Notices. Promptly give notice to the Administrative Agent and
-------
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of either of ASI or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between ASI or any
of its Subsidiaries and any Governmental Authority, which in either case,
if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting ASI or any of its
Subsidiaries in which the amount involved is $50,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event within
30 days after ASI knows or has reason to know thereof: (i) the occurrence
or expected occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or ASI or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan; and
51
<PAGE>
(e) any event which could reasonably be expected to have a Material
Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action ASI proposes to take with respect thereto.
6.8 Environmental Laws. (a) Comply with, and use best commercial
------------------
efforts to ensure compliance by all tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and comply with and maintain, and
ensure that all tenants and subtenants obtain and comply with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws except to the extent that the same are being
contested in good faith and to the extent that failure to do so could not be
reasonably expected to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws except to the extent
that the same are being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not be reasonably expected to have a
Material Adverse Effect.
6.9 Interest Rate Protection. Within thirty days of the Closing
------------------------
Date, enter into an Interest Rate Protection Agreement, with any Lender or an
Affiliate thereof, with respect to the Term Loans covering a national principal
amount of at least $5,000,000 for a period of at least five years and on such
terms and conditions as the Administrative Agent may reasonably require.
6.10 Further Assurances. Upon the request of the Administrative
------------------
Agent, promptly perform or cause to be performed any and all acts and execute or
cause to be executed any and all documents (including, without limitation,
financing statements and continuation statements) for filing under the
provisions of the Uniform Commercial Code or any other Requirement of Law which
are necessary or advisable to maintain in favor of the Administrative Agent, for
the benefit of the Lenders, Liens on the Collateral that are duly perfected in
accordance with all applicable Requirements of Law.
6.11 Additional Collateral. (a) With respect to any assets acquired
---------------------
after the Closing Date by ASI or any of its Domestic Subsidiaries that are
intended to be subject to the Lien created by any of the Security Documents but
which are not so subject (other than any assets described in paragraph (b) or
(c) of this subsection, promptly (and in any event within 30 days after the
acquisition thereof): (i) execute and deliver to the Administrative Agent such
amendments to the relevant Security Documents or such other documents as the
Administrative Agent shall deem necessary or advisable to grant to the
Administrative Agent, for the benefit
52
<PAGE>
of the Lenders, a Lien on such assets, (ii) take all actions necessary or
advisable to cause such Lien to be duly perfected in accordance with all
applicable Requirements of Law, including, without limitation, the filing of
financing statements in such jurisdictions as may be requested by the
Administrative Agent, and (iii) if requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions relating to the matters
described in clauses (i) and (ii) immediately preceding, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(b) With respect to any Person that, subsequent to the Closing Date,
becomes a Subsidiary (other than a Foreign Subsidiary), promptly upon the
request of the Administrative Agent: (i) execute and deliver to the
Administrative Agent, for the benefit of the Lenders, a new pledge agreement or
such amendments to the Guarantee and Collateral Agreement as the Administrative
Agent shall deem necessary or advisable to grant to the Administrative Agent,
for the benefit of the Lenders, a Lien on the Capital Stock of such Subsidiary
which is owned by ASI or any of its Subsidiaries, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers executed and delivered in blank by a duly authorized
officer of ASI or such Subsidiary, as the case may be, (iii) cause such new
Subsidiary (A) to become a party to the Guarantee and Collateral Agreement
pursuant to documentation which is in form and substance satisfactory to the
Administrative Agent, and (B) to take all actions necessary or advisable to
cause the Lien created by the Guarantee and Collateral Agreement to be duly
perfected in accordance with all applicable Requirements of Law, including,
without limitation, the filing of financing statements in such jurisdictions as
may be requested by the Administrative Agent and (iv) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described in clauses (i), (ii) and (iii) immediately
preceding, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.
(c) With respect to any Person that, subsequent to the Closing Date,
becomes a Foreign Subsidiary, promptly upon the request of the Administrative
Agent: (i) execute and deliver to the Administrative Agent a foreign stock
pledge agreement relating to the pledge of the shares of such Foreign Subsidiary
(provided that in no event shall more than 65% of the Capital Stock of any such
Subsidiary be required to be so pledged), (ii) deliver to the Administrative
Agent any certificates representing such Capital Stock, together with undated
stock powers executed and delivered in blank by a duly authorized officer of ASI
or such Subsidiary, as the case may be, and take or cause to be taken all such
other actions under the law of the jurisdiction of organization of such Foreign
Subsidiary as may be necessary or advisable to perfect such Lien on such Capital
Stock and (iii) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described in clauses
(i) and (ii) immediately preceding, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
SECTION 7. NEGATIVE COVENANTS
53
<PAGE>
ASI hereby agrees that, so long as the Commitments remain in effect,
or any Letter of Credit remains outstanding, or any amount is owing to any
Lender or the Administrative Agent hereunder or under any other Loan Document,
ASI shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly:
7.1 Financial Condition Covenants.
-----------------------------
(a) Maintenance of Current Ratio. Permit the ratio of Consolidated
----------------------------
Current Assets of ASI to Consolidated Current Liabilities of ASI at any
time to be less than 1.25 to 1.00.
(b) Maintenance of Net Worth. Permit Consolidated Net Worth of ASI
------------------------
at any time during any period set forth below to be less than the amount
set forth opposite such period below:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
Closing Date to 3/30/99 $ 13,000,000
3/31/99 to 3/30/00 Consolidated Net Worth of ASI
as of 3/31/98 plus $2,000,000
3/31/00 to 3/30/01 Consolidated Net Worth of ASI
as of 3/31/99 plus $4,000,000
3/31/01 to 3/30/02 Consolidated Net Worth of ASI
as of 3/31/00 plus $5,000,000
3/31/02 and thereafter Consolidated Net Worth of ASI
as of 3/31/01 plus $5,000,000
</TABLE>
(c) Total Liabilities to Net Worth Ratio. Permit the ratio of
------------------------------------
Consolidated Total Liabilities of ASI to Consolidated Net Worth of ASI at
any time during any period set forth below to be greater than the amount
set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date to 3/30/99 2.00 to 1.00
3/31/99 to 3/30/00 1.40 to 1.00
3/31/00 and thereafter 1.00 to 1.00
</TABLE>
54
<PAGE>
(d) Consolidated Funded Debt to Consolidated EBITDA. Permit at any
-----------------------------------------------
time during any "Test Period" set forth below the Leverage Ratio to be
greater than the ratio set forth opposite such Test Period below:
<TABLE>
<CAPTION>
Test Period Ratio
----------- -----
<S> <C>
Closing Date to 3/30/99 5.20 to 1.00
3/31/99 to 3/30/00 2.20 to 1.00
3/31/00 to 3/30/01 1.40 to 1.00
3/31/01 and thereafter 1.00 to 1.00
</TABLE>
(e) Fixed Charge Coverage. Permit, for any period of four
---------------------
consecutive fiscal quarters ending during any "Test Period" set forth
below, the ratio of (i) Consolidated EBITDA for such period minus Unfunded
-----
Capital Expenditures for such period to (ii) Consolidated Fixed Charges of
ASI for such period to be less than the ratio set forth opposite such Test
Period below:
<TABLE>
<CAPTION>
Test Period Fixed Charge Coverage
----------- ---------------------
<S> <C>
Closing Date to 3/30/00 1.50 to 1.00
3/31/00 to 3/30/01 1.60 to 1.00
3/31/01 to 3/30/02 1.40 to 1.00
3/31/02 to 3/30/03 2.00 to 1.00
3/31/03 and thereafter 3.00 to 1.00
</TABLE>
(f) Interest Coverage. Permit, for any period of four consecutive
-----------------
fiscal quarters ending during any "Test Period" set forth below, the ratio
of Consolidated EBIT of ASI for such period to Consolidated Interest
Expense of ASI for such period to be less than the ratio set forth opposite
such test period below:
55
<PAGE>
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date to 3/30/99 4.50 to 1.00
3/31/99 to 3/30/00 4.00 to 1.00
3/31/00 and thereafter 5.00 to 1.00
</TABLE>
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to
--------------------------
exist any Indebtedness, except:
(a) Indebtedness of each of the Borrowers under this Agreement;
(b) Indebtedness of ASI to any Subsidiary and of any Subsidiary to
ASI or any other Subsidiary;
(c) Indebtedness of ASI or any of its Subsidiaries to finance the
acquisition of fixed or capital assets (whether pursuant to a loan, a
Financing Lease or otherwise) in an aggregate principal amount not
exceeding as to ASI and its Subsidiaries $250,000 at any time outstanding;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d);
---------------
(e) Indebtedness in respect of the Subordinated Note;
(f) Indebtedness under the Interest Rate Protection Agreement
required pursuant to subsection 5.1(o); and
(g) Subordinated Debt of ASI.
7.3 Limitation on Liens. Create, incur, assume or suffer to exist
-------------------
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
--------
respect thereto are maintained on the books of the applicable Borrower or
its Subsidiaries, as the case may be, in conformity with GAAP (or, in the
case of Foreign Subsidiaries, generally accepted accounting principles in
effect from time to time in their respective jurisdictions of
incorporation);
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a
56
<PAGE>
period of more than 60 days or which are being contested in good faith by
appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business either of
the Borrowers or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
---------------
securing Indebtedness permitted by subsection 7.2(d), provided that no such
--------
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrowers and their
Subsidiaries permitted by subsection 7.2(c) incurred to finance the
acquisition of fixed or capital assets, provided that (i) such Liens shall
--------
be created substantially simultaneously with the acquisition of such fixed
or capital assets, (ii) such Liens do not at any time encumber any property
other than the property financed by such Indebtedness, (iii) the amount of
Indebtedness secured thereby is not increased and (iv) the principal amount
of Indebtedness secured by any such Lien shall at no time exceed 80% of the
original purchase price of such property at the time it was acquired;
(h) Liens created pursuant to the Security Documents; and
(i) Liens to secure the Fleet Letter of Credit, provided that such
--------
Liens only cover cash and related investments and the aggregate amount of
such cash and investments shall not exceed at any time exceed the face
amount of such Letter of Credit.
7.4 Limitation on Guarantee Obligations. Create, incur, assume or
-----------------------------------
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed
on Schedule 7.4(a);
---------------
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(b) Guarantee Obligations incurred in connection with the endorsement
of negotiable instruments for deposit or collection and made in the
ordinary course of its business;
(c) Guarantee Obligations created pursuant to the Guarantee and
Collateral Agreement or any other Security Document.
7.5 Limitation on Fundamental Changes. Enter into any merger,
---------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Borrowers may be merged or consolidated
with or into either of the Borrowers (provided that the relevant Borrower
--------
shall be the continuing or surviving corporation) or with or into any one
or more wholly owned Subsidiaries of the either of Borrowers (provided that
--------
a Subsidiary which is a wholly owned Subsidiary shall be the continuing or
surviving corporation and if any Subsidiary so merged or consolidated is a
Guarantor, the surviving corporation shall be a Guarantor); and
(b) any Subsidiary may sell, lease, transfer or otherwise dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to
either ASI or a wholly owned Subsidiary of ASI, provided that if the
--------
Subsidiary whose assets are so sold, leased, transferred or otherwise
disposed of is a Guarantor, any Subsidiary to which such assets are so
sold, leased, transferred or otherwise disposed of must also be a
Guarantor.
7.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
----------------------------
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables, notes and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's Capital Stock to any Person other
than applicable Borrower or any wholly owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out property in
the ordinary course of business;
(b) the sale or other disposition of any property in the ordinary
course of business, provided that (other than inventory) the aggregate book
--------
value of all assets so sold or disposed of in any period of twelve
consecutive months shall not exceed $25,000.
(c) the sale of inventory in the ordinary course of business;
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<PAGE>
(d) the sale or discount with or without recourse of accounts
receivable arising in the ordinary course of business in connection with
the compromise or collection thereof; and
(e) as permitted by subsection 7.5(b).
7.7 Limitation on Dividends. Declare or pay any dividend (other than
-----------------------
dividends payable solely in common stock of the relevant Borrower) on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares of any class of Capital Stock of such Borrower or any warrants or
options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of such Borrower or
any Subsidiary.
7.8 Limitation on Capital Expenditures. Make or commit to make (by
----------------------------------
way of the acquisition of securities of a Person or otherwise) any expenditure
(a "Capital Expenditure") in respect of the purchase or other acquisition of
fixed or capital assets (excluding any such asset acquired in connection with
normal replacement and maintenance programs properly charged to current
operations) except for expenditures in the ordinary course of business not
exceeding, in the aggregate for ASI and its Subsidiaries, (i) $3,000,000 during
the fiscal year ending March 31, 1998, (ii) $1,000,000 for the fiscal year
ending March 31, 1999, (iii) $1,250,000 for the fiscal year ending March 31,
2000 and (iv) $1,500,000 during any fiscal year thereafter.
7.9 Limitation on Investments, Loans and Advances. Make any advance,
---------------------------------------------
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person (an "Investment"),
except :
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) Permitted Acquisitions;
(d) loans and advances to employees of either of the Borrowers or
their Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business in an aggregate amount for the Borrowers and
their Subsidiaries not to exceed $100,000 at any one time outstanding; and
(e) Investments by ASI in any Guarantor and investments by
Subsidiaries in ASI and in any Guarantor.
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7.10 Limitation on Optional Payments and Modifications of Debt
---------------------------------------------------------
Instruments. (a) Make any optional payment or prepayment on or redemption or
- -----------
purchase of any Indebtedness (other than the Loans), (b) amend, modify or
change, or consent or agree to any amendment, modification or change to any of
the terms of any such Indebtedness (other than any such amendment, modification
or change which would extend the maturity or reduce the amount of any payment of
principal thereof or which would reduce the rate or extend the date for payment
of interest thereon), or (c) amend any provisions of the Purchase Agreement, the
Subordinated Note or any other Subordinated Debt without the prior written
consent of the Administrative Agent.
7.11 Limitation on Transactions with Affiliates. Enter into any
------------------------------------------
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrowers' or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to the relevant Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate.
7.12 Limitation on Sales and Leasebacks. Enter into any arrangement
----------------------------------
with any Person providing for the leasing by either of the Borrowers or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by such Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of such Borrower or such
Subsidiary.
7.13 Limitation on Changes in Fiscal Year. Permit the fiscal year of
------------------------------------
either of the Borrowers or any of their Subsidiaries to end on a day other than
March 31.
7.14 Limitation on Negative Pledge Clauses. Enter into with any
-------------------------------------
Person any agreement, other than (a) this Agreement, (b) the Security Documents
and (c) any industrial revenue bonds, purchase money mortgages or Financing
Leases permitted by this Agreement (in which cases, any prohibition or
limitation shall only be effective against the assets financed thereby), which
prohibits or limits the ability of either of the Borrowers or any of their
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired.
7.15 Limitation on Lines of Business. Enter into any business,
-------------------------------
either directly or through any Subsidiary, except for those businesses in which
the Borrowers and their Subsidiaries are engaged on the date of this Agreement.
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7.16 Accounting Practices. Change, alter or modify the accounting and
--------------------
reporting methods and practices utilized by ASI or any of its Subsidiaries on
the date hereof unless such changes, alterations or modifications are permitted
or required by GAAP.
7.17 Employment Agreements. Amend, modify or change, or consent to
---------------------
any amendment, modification or change to any of the non-competition provisions
of the Employment Agreements, without the prior written consent of the
Administrative Agent.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Either of the Borrowers shall fail to pay any principal of any
Loan or any Reimbursement Obligation when due in accordance with the terms
thereof or hereof; or either of the Borrowers shall fail to pay any
interest on any Loan, or any other amount payable hereunder within three
days after any such interest or other amount becomes due; or
(b) Any representation or warranty made or deemed made by ASI or any
other Loan Party herein or in any other Loan Document or which is contained
in any certificate, document or financial or other statement furnished by
it at any time under or in connection with this Agreement or any such other
Loan Document shall prove to have been incorrect in any material respect on
or as of the date made or deemed made; or
(c) ASI or any other Loan Party shall default in the observance or
performance of any agreement contained in Section 7 or Section 5 of the
Guarantee and Collateral Agreement; or
(d) ASI or any other Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any other
Loan Document (other than as provided in paragraphs (a) through (c) of this
Section); or
(e) ASI or any of its Subsidiaries shall (i) default in any payment
of principal of or interest of any Indebtedness (other than the Loans) or
in the payment of any Guarantee Obligation, beyond the period of grace (not
to exceed 30 days), if any, provided in the instrument or agreement under
which such Indebtedness or Guarantee Obligation was created; or (ii)
default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or Guarantee Obligation or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or
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<PAGE>
beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries)
to then cause, with the giving of notice if required, such Indebtedness to
become due prior to its stated maturity or such Guarantee Obligation to
become payable; provided, however, that no Default or Event of Default
-------- -------
shall exist under this paragraph unless the aggregate amount of
Indebtedness and/or Guarantee Obligations in respect of which any default
or other event or condition referred to in this paragraph shall have
occurred shall be equal to at least $50,000; or
(f) (i) ASI or any of its Subsidiaries shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or ASI or any of its Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against ASI or any of its Subsidiaries any case, proceeding or
other action of a nature referred to in clause (i) above which (A) results
in the entry of an order for relief or any such adjudication or appointment
or (B) remains undismissed, undischarged or unbonded for a period of 60
days; or (iii) there shall be commenced against ASI or any of its
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(iv) ASI or any of its Subsidiaries shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in clause (i), (ii), or (iii) above; or (v) ASI or any
of its Subsidiaries shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of either
of the Borrowers or any Commonly Controlled Entity, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement
of proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) either of
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<PAGE>
the Borrowers or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of,
a Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or
conditions, if any, involve an aggregate amount which could reasonably be
expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against ASI or
any of its Subsidiaries involving in the aggregate a liability (not paid or
fully covered by insurance) of $50,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 30 days from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any reason, to
be in full force and effect, or ASI or any other Loan Party which is a
party to any of the Security Documents shall so assert or (ii) the Lien
created by any of the Security Documents shall cease to be enforceable and
of the same effect and priority purported to be created thereby; or
(j) Any Guarantee shall cease, for any reason, to be in full force
and effect or any Guarantor shall so assert; or
(k) A Change of Control shall have occurred;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to either of
the Borrowers, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement (including, without limitation, all amounts of L/C
--------------------------------------------------
Obligations, whether or not the beneficiaries of the then outstanding Letters of
- --------------------------------------------------------------------------------
Credit shall have presented the documents required thereunder) shall immediately
- --------------------------------------------------------------
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrowers
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and (ii) with the consent of the Required Lenders,
the Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrowers, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
as expressly provided above in this Section, presentment, demand,
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<PAGE>
protest and all other notices of any kind are hereby expressly waived.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, ASI shall at such time deposit in a Cash
Collateral Account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. ASI
hereby grants to the Administrative Agent, for the benefit of the Issuing Bank
and the L/C Participants, a security interest in such cash collateral to secure
all obligations of ASI under this Agreement and the other Loan Documents.
Amounts held in such Cash Collateral Account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of ASI hereunder and under the Notes. After all such Letters of
Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of the Borrowers
hereunder and under the Notes shall have been paid in full, the balance, if any,
in such Cash Collateral Account shall be returned to the Borrowers. ASI shall
execute and deliver to the Administrative Agent, for the account of the Issuing
Bank and the L/C Participants, such further documents and instruments as the
Administrative Agent may request to evidence the creation and perfection of the
within security interest in such Cash Collateral Account.
SECTION 9. THE ADMINISTRATIVE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may execute any
--------------------
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
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<PAGE>
9.3 Exculpatory Provisions. Neither the Administrative Agent nor any
----------------------
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by either of the
Borrowers or any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of either of the
Borrowers to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of either of the
Borrowers.
9.4 Reliance by Administrative Agent. The Administrative Agent shall
--------------------------------
be entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrowers), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Loan Documents in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
9.5 Notice of Default. The Administrative Agent shall not be deemed
-----------------
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
one of the Borrowers referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that unless and until the
--------
Administrative Agent shall
65
<PAGE>
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
9.6 Non-Reliance on Administrative Agent and Other Lenders. Each
------------------------------------------------------
Lender expressly acknowledges that neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
either of the Borrowers, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Lender. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrowers and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrowers. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of either of the
Borrowers which may come into the possession of the Administrative Agent or any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify the
---------------
Administrative Agent in its capacity as such (to the extent not reimbursed by
either of the Borrowers and without limiting the obligation of such Borrower to
do so), ratably according to their respective Commitment Percentages in effect
on the date on which indemnification is sought, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
--------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's gross negligence or willful misconduct. The agreements
in this subsection shall survive the payment
66
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of the Loans and all other amounts payable hereunder.
9.8 Administrative Agent in Its Individual Capacity. The
-----------------------------------------------
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with either of the Borrowers as
though the Administrative Agent were not the Administrative Agent hereunder and
under the other Loan Documents. With respect to the Loans made by it and with
respect to any Letters of Credit issued or participated in by it, the
Administrative Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall
include the Administrative Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent may
------------------------------
resign as Administrative Agent upon 10 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent (provided
that it shall have been approved by each of the Borrowers), shall succeed to the
rights, powers and duties of the Administrative Agent hereunder. Effective upon
such appointment and approval, the term "Administrative Agent" shall mean such
successor agent, and the former Administrative Agent's rights, powers and duties
as Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. After any retiring Administrative
Agent's resignation as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any other
----------------------
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with each of the
Borrowers written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of each of the Borrowers hereunder or thereunder or (b) waive, on such terms
and conditions as the Required Lenders or the Administrative Agent, as the case
may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
-------- -------
supplement or modification shall (i) reduce the amount or extend the scheduled
date of maturity of any Loan or of any installment thereof, or
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reduce the stated rate of any interest or fee payable hereunder or extend the
scheduled date of any payment thereof or increase the amount or extend the
expiration date of any Lender's Commitment, in each case without the consent of
each Lender affected thereby, (ii) amend, modify or waive any provision of this
subsection or the definition of Advance Rate or reduce the percentage specified
in the definition of Required Lenders or consent to the assignment or transfer
by either of the Borrowers of any of its rights and obligations under this
Agreement and the other Loan Documents or release all or substantially all of
the Collateral, in each case without the written consent of all the Lenders,
(iii) amend, modify or waive any provision of Section 9 without the written
consent of the then Administrative Agent or (iv) increase the Advance Rate or
the amount set forth in clause (c) of the definition of Permitted Acquisition or
amend, modify or waive any provision of the Intercreditor Agreement or consent
to or permit any Acquisition other than a Permitted Acquisition, in each case
without the consent of Lenders (including, in any event, Chase), the Commitment
Percentages of which then aggregate at least 75%. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Lenders
and shall be binding upon each of the Borrowers, the Lenders, the Administrative
Agent and all future holders of the Loans. In the case of any waiver, each of
the Borrowers, the Lenders and the Administrative Agent shall be restored to
their former positions and rights hereunder and under the other Loan Documents,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon or (iv) increase the
percentage specified in the definition of Advance Rate, without the written
consent of all the Lenders.
10.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrower and the Administrative Agent, and as set
forth in Schedule 10.2 in the case of the other parties hereto, or to such other
address as may be hereafter notified by the respective parties hereto:
The Borrowers: ASI Solutions Incorporated
780 Third Avenue
New York, New York 10017
Attention: Bernard F. Reynolds
Telecopy: (212) 319-6839
68
<PAGE>
The Administrative
Agent: The Chase Manhattan Bank
7600 Jericho Turnpike
Woodbury, New York 11797
Attention: Stephen Zajac
Telecopy: (516) 364-3307
provided that any notice, request or demand to or upon the Administrative Agent
- --------
or the Lenders pursuant to subsection 2.2, 2.4, 2.6, 2.8, 2.9 or 2.14 shall not
be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
10.5 Payment of Expenses and Taxes. The Borrowers, jointly and
-----------------------------
severally agree (a) to pay or reimburse the Administrative Agent for all its
out-of-pocket costs and expenses incurred in connection with the preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, (b) to
pay or reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
to each Lender and of counsel to the Administrative Agent, (c) to pay,
indemnify, and hold each Lender and the Administrative Agent harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other taxes, if any,
which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from and against any
69
<PAGE>
and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents, the Purchase
Agreement, the Acquisition or the use of the proceeds of the Loans in connection
with the McLagan Acquisition and any such other documents, including, without
limitation, any of the foregoing relating to the violation of, noncompliance
with or liability under, any Environmental Law applicable to the operations of
each of the Borrowers, any of its Subsidiaries or any of the Properties (all the
foregoing in this clause (d), collectively, the "indemnified liabilities"),
provided that the Borrowers shall have no obligation hereunder to the
- --------
Administrative Agent or any Lender with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of the Administrative
Agent or any such Lender. The agreements in this subsection shall survive
repayment of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a)
------------------------------------------------------
This Agreement shall be binding upon and inure to the benefit of each of the
Borrowers, the Lenders, the Administrative Agent and their respective successors
and assigns, except that neither of the Borrowers may assign or transfer any of
its rights or obligations under this Agreement without the prior written consent
of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the
Borrowers and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. No Lender shall
be entitled to create in favor of any Participant, in the participation
agreement pursuant to which such Participant's participating interest shall be
created or otherwise, any right to vote on, consent to or approve any matter
relating to this Agreement or any other Loan Document except for those specified
in clauses (i) and (ii) of the proviso to subsection 10.1. Each of the
Borrowers agrees that if amounts outstanding under this Agreement are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, provided that, in purchasing
--------
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in subsection 10.7(a) as
70
<PAGE>
fully as if it were a Lender hereunder. Each of the Borrowers also agrees that
each Participant shall be entitled to the benefits of subsections 2.16, 2.17 and
2.18 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it was a Lender; provided that, in the case
--------
of subsection 2.17, such Participant shall have complied with the requirements
of said subsection and provided, further, that no Participant shall be entitled
-------- -------
to receive any greater amount pursuant to any such subsection than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate thereof or, with the consent of the
Administrative Agent (which shall not be unreasonably withheld), to an
additional bank or financial institution (an "Assignee") all or any part of its
rights and obligations under this Agreement and the other Loan Documents
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit
-------
G, executed by such Assignee, such assigning Lender (and, in the case of an
Assignee that is not then a Lender or an affiliate thereof, by the
Administrative Agent) and delivered to the Administrative Agent for its
acceptance and recording in the Register, provided that, (i) any assignment by a
--------
Lender of a portion of its Term Loan Commitment or Term Loans must include an
assignment of an equal percentage of its Revolving Credit Commitment or, in the
case of assignments after the Revolving Credit Termination Date, Revolving
Credit Loans and (ii) any assignment by a Lender of its Revolving Credit
Commitment or in the case of assignments after the Revolving Credit Termination
Date, Revolving Credit Loans must include an assignment of an equal percentage
of its Term Loan Commitment or Term Loans,. Upon such execution, delivery,
acceptance and recording, from and after the effective date determined pursuant
to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder with a Commitment as set forth
therein, and (y) the assigning Lender thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto).
(d) The Administrative Agent, on behalf of each of the Borrowers,
shall maintain at the address of the Administrative Agent referred to in
subsection 10.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and the Commitments of, and principal amounts of the Loans owing to,
each Lender from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and each of the Borrowers, the Administrative
Agent and the Lenders may (and, in the case of any Loan or other obligation
hereunder not evidenced by a Note, shall) treat each Person whose name is
recorded in the Register as the owner of a Loan or other obligation hereunder as
the owner thereof for all purposes of this Agreement and the other Loan
Documents, notwithstanding any notice to the
71
<PAGE>
contrary. Any assignment of any Loan or other obligation hereunder not evidenced
by a Note shall be effective only upon appropriate entries with respect thereto
being made in the Register.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Administrative Agent) together
with payment to the Administrative Agent of a registration and processing fee of
$3,500, the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrowers.
(f) Each of the Borrowers authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee
any and all financial information in such Lender's possession concerning either
of the Borrowers and any of their Affiliates which has been delivered to such
Lender by or on behalf of such Borrower pursuant to this Agreement or which has
been delivered to such Lender by or on behalf of such Borrower in connection
with such Lender's credit evaluation of such Borrower and its Affiliates prior
to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
10.7 Adjustments; Set-off. (a) If any Lender (a "benefitted
--------------------
Lender") shall at any time receive any payment of all or part of its Loans or
the Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 8(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans or
the Reimbursement Obligations owing to it, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loan or the Reimbursement
Obligations owing to it, or shall provide such other Lenders with the benefits
of any such collateral, or the proceeds thereof, as shall be necessary to cause
such benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however, that
-------- -------
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to either of the
Borrowers, any such notice
72
<PAGE>
being expressly waived by such Borrower to the extent permitted by applicable
law, upon any amount becoming due and payable by such Borrower hereunder
(whether at the stated maturity, by acceleration or otherwise) to set-off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of such Borrower. Each Lender agrees promptly to notify the relevant
Borrower and the Administrative Agent after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
--------
affect the validity of such set-off and application.
10.8 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with ASI and the
Administrative Agent.
10.9 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
-----------
represent the agreement of the Borrowers, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. Each of the Borrowers
-----------------------------------
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgement in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
73
<PAGE>
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrowers at the address set forth in subsection 10.2 or at such other
address of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary, punitive or consequential
damages.
10.13 Acknowledgements. Each of the Borrowers hereby acknowledges
----------------
that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to either of the Borrowers arising out
of or in connection with this Agreement or any of the other Loan Documents,
and the relationship between Administrative Agent and Lenders, on one hand,
and each of the Borrowers, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among either of the Borrowers and the Lenders.
10.14 Covenant by McLagan Partners. McLagan Partners hereby agrees
----------------------------
that, so long as the Commitments remain in effect or any amount is owing to any
Lender or the Administrative Agent hereunder or under any other Loan Document,
McLagan Partners shall, and shall cause each of its Subsidiaries to, comply with
all covenants contained in Sections 6 and 7 hereof, to the extent such covenants
may be applicable to McLagan Partners and such Subsidiaries.
10.15 WAIVERS OF JURY TRIAL. EACH OF THE BORROWERS,
---------------------
74
<PAGE>
THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
75
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
ASI SOLUTIONS INCORPORATED
By:/s/ Michael J. Mele
----------------------------------------
Title: Vice President
McLAGAN PARTNERS, INC.
By:/s/ Michael J. Mele
----------------------------------------
Title: Vice President
THE CHASE MANHATTAN BANK,
as Administrative Agent and as a Lender
By:/s/ Stephen Zajac
----------------------------------------
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY, as a Lender
By:/s/ John D. Gaziano
----------------------------------------
Title: Vice President
EUROPEAN AMERICAN BANK, as a Lender
By:/s/ Dennis Nochowitz
----------------------------------------
Title: Vice President
76
<PAGE>
Annex I
-------
Pricing Grid
<TABLE>
<CAPTION>
=============================================================================
Leverage Ratio Level Revolving Credit Applicable Term Loan Applicable
Margin Margin
- -----------------------------------------------------------------------------
<S> <C> <C>
Level I 3.00% 3.25%
- -----------------------------------------------------------------------------
Level II 2.75% 3.00%
- -----------------------------------------------------------------------------
Level III 2.50% 2.75%
=============================================================================
</TABLE>
<PAGE>
Schedule 1.1(a)
Commitments
-----------
<TABLE>
<CAPTION>
Revolving Credit Term Loan
Lender Commitment Commitment
- ------ ---------------- -----------
<S> <C> <C>
The Chase Manhattan Bank $1,750,000 $ 5,250,000
State Street Bank and Trust $1,750,000 $ 5,250,000
Company
European American Bank $1,500,000 $ 4,500,000
---------- -----------
Total $5,000,000 $15,000,000
</TABLE>
<PAGE>
Schedule 10.2
Addresses
---------
European American Bank
335 Madison Avenue
17th Floor
New York, New York 10017
Attn: Dennis Nochowitz
Fax: 212-503-2667
State Street Bank and Trust Company
225 Franklin street
Boston, Massachusetts 2110-2804
Attn: John D. Gaziano
Fax: 617-664-4176
<PAGE>
EXHIBIT 99.4
================================================================================
ASI SOLUTIONS ACQUIRES MCLAGAN PARTNERS AND RELATED ENTITIES FOR
APPROXIMATELY $22 MILLION; TOP COMPENSATION RESEARCH & CONSULTING FIRM TO BE
SEPARATE ASI UNIT
NEW YORK-Nov. 14, 1997
ASI Solutions Incorporated (NASDAQ:ASIS), announced today that it has acquired
the assets of Mclagan Partners, Inc. and related entities, in a mainly cash
transaction valued at approximately $22 million. McLagan is the leading
compensation research and consulting firm to the investment community,
worldwide.
McLagan Partners provides comprehensive compensation research and related
consulting. Its clients include virtually every major company in the financial
services and securities industries, which use McLagan's research and consulting
services to help them compete in global markets. Headquartered in Stamford, CT,
McLagan has offices in Chicago, London, Tokyo and Hong Kong. McLagan will
operate as a wholly-owned ASI subsidiary under its current management.
Bernard F. Reynolds, chairman and chief executive officer of ASI, stated: "By
joining forces, both McLagan and ASI will be able to extend the breadth of
services we offer our clients. For ASI it means adding a fifth core capability
- -- highly regarded compensation research and related consulting -- to our
current array of human resources outsourcing services. We are particularly
pleased that all of the management and staff of McLagan will remain with the
organization and will continue to serve their clients as they have in the past.
This acquisition provides ASI with a global presence, and substantially broadens
both our revenue and client base. We expect it to be immediately accretive."
Speaking for McLagan, F. Samuel Smith, managing director, said: "ASI has well-
earned reputation of quality and professionalism across all of the services
they provide. We have had direct personal contact with the ASI management team
and staff over the years, and we hold them in the highest regard. As we move
forward together, we are excited about the opportunity to access ASI's
considerable resources, which will enable us to better serve our clients."
About ASI Solutions Incorporated
ASI Solutions Incorporated is a leading national provider of a comprehensive
range of human resources outsourcing services for large organizations seeking to
hire, train and develop a higher quality, more effective workforce. The
company's services are now organized into five core areas: assesment and
selection, training and development, customer contact monitoring, employment
process administration and compensation research and consulting services. ASI
markets its services principally to Fortune 500 companies for which customer
service, sales and call center functions are critical components of their
businesses. ASI's Internet address is www.asisolutions.com.
<PAGE>
About McLagan Partners, Inc.
McLagan Partners is perhaps best know for its annual survey program of
compensation practices for the financial services and securities industries. The
company, which was founded in 1966, also conducts market share studies and
customized projects on compensation practices and plan design.
Contact:
Dennis Stevens
ASI Solutions Incorporated
(212) 319-8400
Stuart Pearlman
Phase Two Strategies
(212) 370-4940
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